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STRATEGIC MANAGEMENT > Final exam > Flashcards

Final exam Flashcards

1
Q

Generally speaking, discussions of the relationship between strategy and structure strongly imply that

A

Structure follows Strategy

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2
Q

When an organization with a simple structure increases its sales revenue and volume of outputs, it is most likely to develop a

A

Functional Structure

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3
Q

When an organization with a functional structure diversifies into related product-markets, it generally

A

develops a divisional structure

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4
Q

A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to a(n)

A

develops a divisional structure.

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5
Q

All of the following statements about simple organizational structures are true EXCEPT which?

A

Creativity and individualism are rare.

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6
Q

A simple structure is characterized by

A

low specialization and high centralization.

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7
Q

Functional structures are usually found in organizations where there is

A

high volume production

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8
Q

At ABC Corporation, work is divided into units that specialize in production, marketing, research and development, and other management tasks. This is an example of a

A

functional structure

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9
Q

Which of the following is an advantage of a functional type of organizational structure?

A

Pooling of specialists enhances coordination and control.

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10
Q

Which of the following is a disadvantage of a functional type of organizational structure?

A

Differences in functional orientation may impede communication and coordination.

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11
Q

A divisional structure

A

facilitates the development of general managers.

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12
Q

Which of the following is an advantage of a divisional type of organizational structure?

A

An enhanced ability to respond quickly to changes in the external environment.

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13
Q

All of the following are disadvantages of a divisional type of organizational structure EXCEPT

A

there is separation of strategic and operating control.

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14
Q

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?

A

Strategic business unit structure

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15
Q

All of the following are advantages of a strategic business unit (SBU) type of organizational structure EXCEPT

A

the corporate office is more removed from the individual divisions

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16
Q

Important advantages of a holding company structure include

A

savings in personnel and overhead expenses associated with a small corporate office

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17
Q

Strategic business unit (SBU) and holding company structures result from extensive

A

diversification.

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18
Q

Complete the following sentence: “Strategic business unit (SBU) structures are best suited for corporations pursuing __________, whereas holding company structures are best suited for companies with __________ strategies.”

A

related diversification; unrelated diversification

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19
Q

A matrix organizational structure is characterized by

A

all of these

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20
Q

Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of what type of organizational structure?

A

Matrix

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21
Q

Which of the following is considered to be an advantage of a matrix structure?

A

increased responsiveness to the market

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22
Q

If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is

A

worldwide matrix.

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23
Q

If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is

A

worldwide product division

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24
Q

The relationship between strategy and structure can be best described as

A

strategy and structure influence each other.

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25
Q

In firms with overall low cost strategies, the culture should foster __________ levels of interdependence and rewards should be based primarily on __________ measures of output.

A

low; financial

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26
Q

In firms with differentiation strategies, the culture should foster __________ levels of interdependence and rewards should be based primarily on __________ measures of output.

A

high; behavioral

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27
Q

In firms with related diversification strategies, the culture should foster __________ levels of interdependence and rewards should be based primarily on __________ measures of output.

A

high; behavioral

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28
Q

In firms with unrelated diversification strategies, the culture should foster __________ levels of interdependence and rewards should be based primarily on __________ measures of output.

A

low; financial

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29
Q

Which of the following is not a boundaryless organizational design?

A

Matrix

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30
Q

Which of the following is NOT an advantage of teams?

A

Because teams interact so closely, coordination and integration becomes unnecessary

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31
Q

According to the text, there are elements of team building that influence a team’s success. These include all of the following EXCEPT

A

titles. Titles are important to a team’s success.

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32
Q

Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be

A

the way team members treat each other.

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33
Q

Which of the following is NOT a disadvantage of the barrier-free form of organization?
A. Lack of strong leadership can lead to coordination problems

A

Additional integration issues result is a slower response to market changes

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34
Q

What type of organization is defined as “a central hub surrounded by networks of outside suppliers and specialists”?

A

modular

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35
Q

What is the name of the practice that many modular organizations use to grow?

A

outsourcing

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36
Q

What advantages does outsourcing provide an organization?

A
  1. accessing best in class goods and services
  2. enabling rapid expansion with relatively low capital investment
  3. focusing scarce resources on core competencies
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37
Q

Which of the following is NOT a strategic risk of outsourcing?

A

loss of non-vital functions

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38
Q

Nike is a company that makes use of the concept of “product expatriates.” Product expatriates are

A

managers of the company sent abroad to work at the plants of its suppliers

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39
Q

The phrase that best defines a virtual organization is

A

a continually evolving network of independent companies

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40
Q

Lockheed Martin uses a coalition of three entities, its own company, academia, and government, to achieve its goals. This is an example of a

A

virtual organization.

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41
Q

Complete the following sentence: “Virtual organizations __________ whereas modular organizations __________.”

A

give up part of their strategic control; retain full strategic control

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42
Q

Which of the following is not a disadvantage of virtual structures?

A

difficulty in individual and organizational knowledge sharing

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43
Q

Technical Computer Graphics uses small project teams and forms alliances with its teams, customers, and suppliers to accomplish projects. This is an example of

A

combining forms of boundaryless organizations.

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44
Q

Organizations generally tend to become internally focused when faced with

A
  1. resource scarcity.
  2. declining performance.
  3. external pressures
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45
Q

Tools and techniques used to achieve effective coordination and integration of key activities in an organization include all of the following EXCEPT

A

horizontal diversification

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46
Q

Effective ambidextrous organizations have alignment, which means that

A

there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.

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47
Q

According to the study by O’Reilly and Tushman, effective ambidextrous structures had all of the following attributes EXCEPT

A

managerial efforts were highly focused on revenue enhancement.

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48
Q

The “traditional” approach to strategic control is sequential. Which of the following is not one of the steps in the sequence?

A

Action plans are submitted by lower-level managers

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49
Q

The primary drawback of “traditional” strategic control systems is

A

they lack the flexibility needed to adjust to changes in the environment.

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50
Q

In large organizations, a strategy of diversification requires a need to reorganize around ______________ or _____________.

A

product lines; geographic markets

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51
Q

Which of the following is not a primary factor that a large firm with international operations should consider when choosing the appropriate structure for its organization?

A

the degree of market diversity

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52
Q

When an organization with a simple structure increases its sales revenue and volume of outputs, it is most likely to develop a ______________ structure.

A

functional

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53
Q

When an organization with a functional structure diversifies into related product-markets, it generally

A

develops a divisional structure.

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54
Q

A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to a(n) ______________ structure.

A

divisional

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55
Q

Successful organizations create ______ boundaries among the _____ activities as well as between the organization and its external customers, suppliers, and alliance partners.

A

permeable; internal

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56
Q

The two vital ongoing activities necessary for creating boundaryless organizations that managers today must concern themselves with are

A

type of structure, mechanisms, processes, and techniques for enhancing permeability.

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57
Q

Organizational structure refers to the formalized patterns of interactions that link company ___________, ___________, and _____________

A

tasks; technologies; people

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58
Q

Structures help to ensure that ____________ are used effectively in accomplishing the mission of the organization.

A

resources

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59
Q

As illustrated in the opening case for Chapter 10, Boeing lost a lot of control and therefore incurred high operating costs for its build out of the 787 Dreamliner, because it ____________ design and manufacturing

A

outsourced

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60
Q

Which of the following activities is not identified structure?

A

social responsibility

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61
Q

Organizations that make it to the growth stage design strategies to

A

increase the overall scope of operations.

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62
Q

The appropriateness of the type of organizational structure depends upon the ___________ and _______ of growth.

A

nature; magnitude

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63
Q

Which of the following statements about simple organizational structures is false?

A

Creativity and individualism are rare

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64
Q

A simple structure is characterized by

A

low specialization and high centralization.

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65
Q

Functional structures are usually found in organizations where there

A

is high volume production.

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66
Q

Which of the following is an advantage of a functional type of organizational structure?

A

Pooling of specialists enhances coordination and control.

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67
Q

Which of the following is a disadvantage of a functional type of organizational structure?

A

Differences in functional orientation may impede communication and coordination

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68
Q

Which of the following is an advantage of a divisional type of organizational structure?

A

an enhanced ability to respond quickly to changes in the external environment

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69
Q

Which of the following is not a disadvantage of a divisional type of organizational structure?

A

There is separation of strategic and operating control.A divisional structure can be very expensive; there can be increased costs due to the duplication of personnel, operations, and investment since each division must staff multiple functional departments. There also can be dysfunctional competition among divisions since each division tends to become concerned solely about its own operations. Since each division is evaluated in terms of financial measures such as return on investment and revenue growth, there is often an urge to focus on short-term performance.

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70
Q

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?

A

strategic business unit structure

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71
Q

Which of the following is not an advantage of a strategic business unit (SBU) type of organizational structure?

A

The corporate office is more removed from the individual divisions. With an SBU structure, divisions with similar products, markets, and/or technologies are grouped into homogeneous units to achieve synergies. It makes planning and control by the corporate office more manageable. With greater decentralization of authority, individual businesses can react more quickly to important changes in the environment than if all divisions had to report directly to the corporate office.

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72
Q

Important advantages of a holding company structure include

A

savings in personnel and overhead expenses associated with a small corporate office.

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73
Q

Strategic business unit (SBU) and holding company structures result from extensive

A

diversification.

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74
Q

Strategic business unit (SBU) structures are best suited for corporations pursuing _____________, whereas holding company structures are best suited for companies with ______________ strategies.

A

related diversification; unrelated diversification

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75
Q

A matrix organizational structure is characterized by a combination of the ______________ and _____________.

A

functional structure; divisional structure

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76
Q

Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of which type of organizational structure?

A

matrix

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77
Q

Which of the following is considered to be an advantage of a matrix structure?

A

increased responsiveness to the market

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78
Q

Generally speaking, discussions of the relationship between strategy and structure strongly imply that

A

structure follows strategy.

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79
Q

If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is a(n) ______________ structure.

A

worldwide matrix

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80
Q

If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is a(n) ______________ structure.

A

worldwide product division

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81
Q

The relationship between strategy and structure can be best described as

A

strategy and structure influence each other.

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82
Q

A global start-up faces many management challenges including

A

communication and coordination across time zones.

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83
Q

As firms expand into foreign markets, they generally follow a pattern of change in structure that parallels the changes in their strategies. Which one of the following is not a major contingency that influences the structure they choose?

A

the research and development budget commitment

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84
Q

Which one of the following is not a primary types of organizational structures used to manage the international operations of a company?

A

home country product division As international operations become an important part of the overall operations of a firm, managers must make changes that are consistent with the structure of the company. The primary types of structures used to manage company international operations are: international division, geographic-area division, worldwide functional, worldwide product division, and worldwide matrix.

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85
Q

Which of the following is not a boundaryless organizational design?

A

matrix

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86
Q

According to author, Jeffrey Pfeffer, which of the following is not an advantage of teams?

A

Teams interact so closely and therefore coordination and integration becomes unnecessary.

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87
Q

Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be

A

the way team members treat each other.

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88
Q

Which of the following is not a disadvantage of the barrier-free form of organization?

A

. Additional integration issues result in a slower response to market changes.

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89
Q

What type of organization is defined as a central hub surrounded by networks of outside suppliers and specialists?

A

modular organization

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90
Q

What is the name of the practice that many modular organization use to grow?

A

outsourcing

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91
Q

What advantages does outsourcing not provide an organization?

A

improved buyer positioning In a modular company, outsourcing the noncore functions offers several advantages. A firm can tap into the knowledge and expertise of best in class suppliers, can focus scarce resources on the areas where it holds a competitive advantage, and the modular structure enables a company to leverage relatively small amounts of capital and a small management team to achieve seemingly unattainable strategic objectives.

92
Q

Which of the following is not a strategic risk of outsourcing?

A

loss of non-vital functions The main strategic concerns of outsourcing are (1) loss of critical skills or developing the wrong skills, (2) loss of cross-functional skills, and (3) loss of control over a supplier.

93
Q

Nike is a company that makes use of the concept of product expatriates. Product expatriates are

A

managers of the company sent abroad to work at the plants of its suppliers.

94
Q

The phrase that best defines a virtual organization is a(n)

A

continually evolving network of independent companies. The virtual organization can be viewed as a continually evolving network of independent companies (suppliers, customers, even competitors) linked together to share skills, costs, and access to the markets of each other

95
Q

A virtual organization may be most appropriate for firms

A

whose strategies require merging technologies.

96
Q

Virtual organizations ______________ whereas modular organizations _____________.

A

give up part of their strategic control; retain full strategic control Unlike the modular type, in which the local firm maintains full strategic control, the virtual organization is characterized by participating firms that give up part of their control and accept interdependent destinies.

97
Q

Which of the following is not a disadvantage of virtual structures?

A

difficulty in individual and organizational knowledge sharing

98
Q

Coca-Cola, Ford Motor Company, H. J. Heinz, Nike, and Procter & Gamble are working together to develop plant-based plastics. Each company brings its own competency to the table. This collaboration is an example of a _____________ organization.

A

virtual

99
Q

Organizations generally tend to become internally focused when faced with ______________ and _____________.

A

resource scarcity; declining performance

100
Q

If a firm outsources some parts of its value chain in order to reduce costs and increase quality and at the same time engages in multiple alliances to penetrate new markets, this is a example of a firm using a ______________ of organizational types.

A

combination

101
Q

Tools and techniques used to achieve effective coordination and integration of key activities in an organization include all of the following except

A

horizontal diversification.

102
Q

Effective ambidextrous organizations have alignment, which means that

A

there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.

103
Q

Effective ambidextrous organizations maintain adaptability, which means that

A

managers must remain proactive in expanding and/or modifying their product-market scope to anticipate and satisfy market conditions. First, managers must explore new opportunities and adjust to volatile markets in order to avoid complacency. They must ensure that they maintain adaptability and remain proactive in expanding and/or modifying their product-market scope to anticipate and satisfy market conditions.

104
Q

According to the study by O’Reilly and Tushman, effective ambidextrous structures had all of the following attributes except

A

managerial efforts were highly focused on revenue enhancement.

105
Q

In an ambidextrous firm, if too much focus is placed on _______ the firm with suffer low profitability in the short run.

A

adaptability

106
Q

In the ambidextrous firm, if managers direct their efforts primarily at _______, they are likely to miss out on promising business opportunities.

A

alignment

107
Q

Behavioral controls are aspects of strategic change that involve finding the appropriate ______________ and ______________ among the culture, rewards, and boundaries of the firm.

A

balance; alignment

108
Q

Tesco was forced to restate its earnings for the first half of 2014 to 431 million USD because senior managers in the UK food business had booked income early and delayed the booking of costs in order to improve appearances of financial performance. This scandal results from ____________ and __________.

A

poor governance; control

109
Q

The traditional approach to strategic control is sequential. Which of the following is not one of the steps in the sequence?

A

. Action plans are submitted by lower level managers.

110
Q

Which of the following is the primary drawback of traditional strategic control systems?

A

They lack the flexibility needed to adjust to changes in the environment. Some question the value of rigid planning and goal-setting processes. Fixed strategic goals also become dysfunctional for firms competing in highly unpredictable competitive environments. Strategies need to change frequently and opportunistically. An inflexible commitment to predetermined goals and milestones can prevent the very adaptability that is required of a good strategy.

111
Q

For businesses facing complex and turbulent business environments, which of the following is true?

A

Traditional strategic controls are usually inappropriate.

112
Q

Single-loop learning, according to Chris Argyris, is most appropriate when the environment is ___________, goals and objective can be measured with a _________ of certainty, and there is ________ need for complex measures of performance.

A

stable; high level; little

113
Q

In the contemporary approach to strategic control, adapting to and anticipating both internal and external environmental change is an integral part. The relationships between _________, __________, and __________ are highly interactive.

A

strategy formulation; implementation; control

114
Q

Contemporary approaches to strategic control rely primarily o

A

double-loop learning.

115
Q

Informational control systems are concerned with which of the following?

A

Is the organization doing the right things?

116
Q

Continuous monitoring, in the contemporary approach, is beneficial because

A

it reduces time lags.

117
Q

Which of the following is not one of the characteristics of a contemporary control system?

A

It circumvents the need for face-to-face meetings among superiors, subordinates, and peers.

118
Q

Top managers at ABC Company meet every Friday to review daily operational reports and year to date data. This is an example of

A

informational control.

119
Q

As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on ______________ is dysfunctional.

A

. boundaries and constraints

120
Q

Which of the following is not an example of how organizational culture exerts behavioral control?

A

Culture sets explicit boundaries. Organizational culture is a system of shared values (what is important) and beliefs (how things work) that shape the people of a company, organizational structures, and control systems to produce behavioral norms (the way we do things around here). Culture sets implicit boundaries, unwritten standards of behavior, in dress, ethical matters, and the way an organization conducts its business. By creating a framework of shared values, culture encourages individual identification with the organization and its objectives.

121
Q

The late Sam Walton, founder of Walmart, used to give pep rallies at local Walmart stores. What purpose did this serve?

A

It helped reinforce and sustain the Walmart culture

122
Q

Which of the following is not one of the characteristics of reward and incentive systems?

A

They represent a poor means of influencing the culture of an organization.

123
Q

Individual rationality ______________ organizational rationality.

A

does not always guarantee Generally speaking, people in organizations act rationally, each motivated by their personal best interest. However, the collective sum of individual behaviors of the employees of the organization does not always result in what is best for the organization; individual rationality is no guarantee of organizational rationality.

124
Q

When subcultures emerge that have shared values opposite from the dominant culture of an organization

A

individuals begin working at cross purposes

125
Q

Which of the following is not a characteristic of effective reward and incentive systems?

A

The structure is fixed to assure employees of consistency.

126
Q

Lack of a clear understanding of organizational goals and objectives is a probable cause of

A

motivated self-interest. Counterproductive behavior can arise because of motivated self-interest, lack of a clear understanding of goals and objectives, or outright malfeasance.

127
Q

Effective boundaries and constraints

A

minimize improper and unethical conduct.

128
Q

Effective short-term objectives should be ______________ and _____________.

A

specific; measurable

129
Q

Which of the following statements about action plans is true?

A

Action plans must be specific so that managers will have a clear understanding of the resource requirements necessary to implement the plan

130
Q

Rules and regulations are examples of ______________ and _____________.

A

boundaries; constraints Boundaries and constraints are rules that specify behaviors that are acceptable and unacceptable.

131
Q

The best way to minimize improper and unethical conduct is to ________ and _______.

A

set boundaries; constraints

132
Q

Which of the following approaches to behavioral strategic control would be the least appropriate for an organization in which there is a great need for innovation and a high degree of autonomy?

A

rules

133
Q

Most successful organizations minimize the need for explicit rules, regulations, and other boundaries by

A

designing effective reward systems.

134
Q

Rule-based controls are least appropriate in organizations with which one of the following characteristics?

A

Employees are highly skilled and independent

135
Q

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

A

manufacturer of mass produced products

136
Q

Most organizations with strong cultures and a sound system of rewards and incentives can eventually internalize boundaries rather than use explicit rules and regulations. Which of the following is not a technique for moving in that direction?

A

Minimize training and indoctrination.

137
Q

The primary participants in corporate governance do not include the

A

financial institutions

138
Q

For the maximum benefit of each part, a corporation is a mechanism created to allow different parties to contribute all of the following except

A

buildings.

139
Q

Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems?

A

Stockholders and management align with external stakeholders. Agency theory is concerned with resolving two problems that can occur in agency relationships. The first is the agency problem that arises (1) when the goals of the principals and agents conflict and (2) when it is difficult or expensive for the principal to verify what the agent is actually doing. The second issue is the problem of risk sharing. This arises when the principal and the agent have different attitudes and preferences toward risk.

140
Q

In order to minimize the temptation for managers to act in their own self-interest, governance mechanisms exist for implementation consideration. Which of the following is not a primary means for monitoring managerial behavior?

A

a board of directors that acts in the best interests of shareholders to create short-term value

141
Q

Individual and institutional shareholders have the same rights that include all of the following except

A

the right to bring suit for damages, if the economy declines.

142
Q

Shareholders rely on CEOs to adopt policies and strategies that maximize the value of their shares. To motivate CEOs to maximize the value of their companies, boards of directors can consider all of the following options except one. Which one is it?

A

Dismissal for poor performance is not an option. Shareholders rely on CEOs to adopt policies and strategies that maximize the value of their shares. A combination of three basic policies may create the right monetary incentives for CEOs to maximize the value of their companies: Boards can require that the CEOs become substantial owners of company stock; salaries, bonuses, and stock options can be structured so as to provide rewards for superior performance and penalties for poor performance; dismissal for poor performance should be a realistic threat.

143
Q

Boards of directors have responded to financial crises, corporate scandals, regulator obligations, and investor requests for structural changes. In the 2011 Harvard Business Review study of the changes in configuration of boards since 1987, which change has been brought about by government legislation?

A

Percentage of the directors that are independent has increased. The Sarbanes-Oxley Act and pressure from investors have led to an increase in the number of independent directors. In fact, over half the S & P 500 firms now have no insiders other than the CEO on the board.

144
Q

CEO duality refers to a situation in which the CEO

A

serves as both the CEO and the chair of the board of directors.

145
Q

In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would not be a consideration for the Unity of Command school of thought?

A

CEO duality slows down decision-making. CEO duality is one of the most controversial issues in corporate governance. It refers to the dual leadership structure where the CEO acts simultaneously as the chair of the board of directors. Advocates of the unity of command perspective believe that when one person holds both roles, he or she is able to act more efficiently and effectively. CEO duality provides firms with a clear focus on both objectives and operations as well as eliminates confusion and conflict between the CEO and the chairman. Thus, it enables smoother, more effective strategic decision making.

146
Q

In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would not be a consideration for the agency theory school of thought?

A

Firm performance always is improved under CEO duality. CEO duality is one of the most controversial issues in corporate governance. It refers to the dual leadership structure where the CEO acts simultaneously as the chair of the board of directors. Supporters of agency theory argue that the positions of CEO and chairman should be separate. The case for separation is based on the simple principle of the separation of power. Duality also complicates the issue of CEO succession. Duality also serves to reinforce popular doubts about the legitimacy of the system as a whole and evokes images of bosses writing their own performance reviews and setting their own salaries. When the positions are broken apart, there is a clear shift in the performance of the firm. If the firm has been doing well, its performance declines after the separation. If the firm has been doing poorly, it experiences improvement after separating the two roles.

147
Q

External governance control mechanisms include all of the following except

A

competitors.

148
Q

In trying to assure that managerial actions lead to shareholder value maximization, a risk can come about if the market value of a firm becomes less than its book value. The risk is

A

it becomes an attractive takeover target.

149
Q

By takeover constraint, we mean

A

the risk of being acquired by a hostile raider. The risk of being acquired by a hostile raider is often referred to as the takeover constraint.

150
Q

It is generally argued that the takeover constraint deters management from

A

engaging in opportunistic behavior

151
Q

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors except the

A

failure of U.S. audit firms to hire technically qualified professionals. The failure of auditing leading to the bankruptcy of Enron and WorldCom likely had several causes. First, auditors are appointed by the firm being audited. The desire to continue that business relationship sometimes makes them overlook financial irregularities. Second, most auditing firms also do lucrative consulting work with the firms that they audit. Understandably, some of them tend not to ask too many difficult questions, because they fear jeopardizing the consulting business.

152
Q

The reasons analyst recommendations are often more optimistic than warranted by an objective analysis of the facts include all of the following except that

A

sell recommendations generate lower commissions than buy recommendations.

153
Q

All of the following are types of information that a firm is required to disclose except

A

details of new products under development.

154
Q

In emerging economies and continental Europe, firms often can be characterized by all of the following except

A

low family ownership and control.

155
Q

In principal-principal conflicts (conflicts between controlling shareholders and minority shareholders), the ownership (of equity) is

A

concentrated.

156
Q

Conditions that must be met for principal-principal (PP) conflicts to occur include all of the following except

A

legislation that protects the interests of minority shareholders.

157
Q

Expropriation of minority shareholders means that minority shareholders

A

are adversely affected by the actions of controlling shareholders. Expropriation of minority shareholders is defined as activities that enrich the controlling shareholders at the expense of minority shareholders.

158
Q

Which of the following is an important characteristic of a leader?

A

goal-oriented

159
Q

Which of the following statements about leadership is false?

A

Leaders support the status quo and seek control mechanisms to maintain it.

160
Q

Effective leadership is like a three-legged stool. Which of the following is not represented by one of the stool legs?

A

dedication to maintaining the status quo

161
Q

A strategic vision provides many benefits. Which of the following is not one of those benefits?

A

diminished employee participation A strategic vision provides many benefits: a clear future direction; a framework for the organization mission and goals; and enhanced employee communication, participation, and commitment.

162
Q

Poor organizational design by leaders can result in all of the following except

A

teams, systems, and organizational processes that facilitate implementation. Many leaders have difficulty implementing their vision and strategies. Such problems may stem from a variety of issues in the design of the organization, such as: a lack of understanding of responsibility and accountability among managers, reward systems that do not motivate individuals (or collectives such as groups and divisions) toward desired organizational goals, inadequate or inappropriate budgeting and control systems, or insufficient mechanisms to integrate activities across the organization.

163
Q

The CEO scraps the company commission-based reward system, because it rewards employees for inappropriate behavior. This is an example of

A

designing the organization.

164
Q

Leaders play a key role in developing and sustaining organization

A

culture

165
Q

Alan Mulally took over Ford Motor Company in 2006 at a time when it was struggling, losing money, and market share. Under his leadership, the firm returned to high profitability. Which of the following is not one of the interdependent activities of leadership that he used to accomplish this task?

A

He nurtured a culture dedicated to profits at any cost.

166
Q

According to Michael Williams, director of Entrepreneurship Activities and the Business and Entrepreneurship Clinic at the University of Wisconsin-Madison School of Business, effective leaders ____________ themselves with exceptional people and are trusted and fantastic ____________.

A

surround; communicators

167
Q

According to Michael Williams, director of Entrepreneurship Activities and the Business and Entrepreneurship Clinic at the University of Wisconsin-Madison School of Business, effective leaders must design an organization to achieve the direction they have laid out for the business. Which of the following is not a key element in that design?

A

creating core values that matter only to shareholders The highest priority of a company trying to design an effective organization is to create core values that are simple, clear, and direct. Core values are those values that guide the way employees interact with each other, and the rest of the world, and they also guide the way the company interacts with the customer. Two other key elements in designing an effective organization are transparency and accountability.

168
Q

Barriers in which the design of organization structure, information processing, and reporting relationships, impede the proper flow and evaluation of information are known as

A

systemic barriers.

169
Q

Barriers associated with a managerial tendency to look at issues from a biased or limited perspective are known as

A

behavioral barriers.

170
Q

Refusal to share information, conflicts over resources, conflicts between departments and divisions, and petty interpersonal differences are symptoms of which type of barrier to change?

A

political barriers

171
Q

Which of the following does not explain why organizations are prone to inertia and slow to change?

A

entry barriers Organizations at all levels are prone to inertia and are slow to learn, adapt, and change because many people have vested interests in the status quo; there are systemic, behavioral, and political barriers; and some people have personal time constraints.

172
Q

To overcome barriers to organizational change, companies work more collaboratively than in the past. In companies such as Microsoft, an important obstacle to effective collaboration is

A

higher-level political battles.

173
Q

When faced with barriers to change, leaders can create a good climate for advancing the aims of the organization and making progress towards its goals by building ______________ and _____________.

A

a learning organization; an ethical organization

174
Q

Which of the following does not constitute organizational bases of leader power?

A

referent power

175
Q

Expert power

A

is derived from leader capability and knowledge in a particular field. The source of expert power is leader expertise and knowledge in a particular field. The leader is the expert on whom subordinates depend for information that they need to do their jobs successfully

176
Q

Coercive power is the

A

power exercised by use of fear of punishment for errors of omission or commission by employees.

177
Q

The source of referent power is

A

subordinate identification with the leader.

178
Q

Which of the following is not a part of the three broad sets of capabilities that a leader should possess?

A

physical abilities

179
Q

All of the following are components of emotional intelligence (EI) except

A

self-promotion.

180
Q

Which component of emotional intelligence (EI) enables a manager to have a deep understanding of the existence and importance of cultural and ethnic differences?

A

empathy

181
Q

Which two components of emotional intelligence (EI) deal with personal ability to manage relationships with others?

A

empathy and social skill

182
Q

According to research, effective leaders at all levels of organizations have high levels of Emotional Intelligence (EI). CEOs with high EI excel in all of the following except

A

ability to discourage outside stakeholders. High-EI CEOs excel in managing relationships, influencing people, and forging alliances both inside and outside the firm. These CEOs can also benefit the firm since their ability to connect with and relate to outside stakeholders helps build the firm’s reputation. Thus, firms would benefit from considering more than cognitive ability and easily measured performance metrics when choosing corporate leaders. Including EI as an element to consider would help firms choose superior corporate leaders.

183
Q

Leaders who are _______________ show a passion for the work itself, such as seeking out creative challenges, a love of learning, and taking pride in a job well done.

A

motivated Motivated people show a passion for the work itself, such as seeking out creative challenges, a love of learning, and taking pride in a job well done. They have a high level of energy to do things better, as well as restlessness with the status quo. They are eager to explore new approaches to their work.

184
Q

CEOs who are _____________ tend to have a wide circle of acquaintances as well as a knack for finding common ground and building rapport.

A

socially skilled Socially skilled people tend to have a wide circle of acquaintances as well as a knack for finding common ground and building rapport. They recognize that nothing gets done alone, and they have a network in place when the time for action comes.

185
Q

Which of the following social skills do many executives find challenging to acquire?

A

being a good listener

186
Q

A drawback of EI is that a leader can find it easy to over-identify with others and confuse ________ with __________.

A

empathy; sympathy

187
Q

Leaders risk creating a culture of fear and micromanagement if they

A

create personal connections with their people through frequent unannounced visits.

188
Q

Which of the following is not a characteristic of a successful learning organization?

A

It regularly engages in activities to reinforce the status quo.

189
Q

Inspiring and motivating people with a mission or purpose is a ______________ for developing an organization that can learn and adapt.

A

necessary but not sufficient condition

190
Q

In order to create an environment where employees can achieve their potential as they move the organization towards its goals, the manager role needs to be that of

A

a flexible resource.

191
Q

When important decisions need to be made at WBG Construction, CEO Greg Burrill asks all employees with relevant knowledge or a stake in the outcome for their thoughts. This collaborative approach recently led to a decision that not only sold a house but also inspired a new floor plan that appealed to a whole new segment of buyers. This is an example of

A

employee empowerment. This is an example of empowering employees, enabling them to feel that their ideas and initiatives will be valued and will enhance firm performance.

192
Q

Functional benchmarking

A

endeavors to determine best practices regardless of industry.

193
Q

Which of the following is not a guideline an organization can use to promote the challenging of the status quo?

A

creating a results-based reward system Perhaps the best way to challenge the status quo is for the leader to forcefully create a sense of urgency. Establishing a culture of dissent can be another effective means of questioning the status quo and serving as a spur toward creativity. Closely related to the culture of dissent is the fostering of a culture that encourages risk taking.

194
Q

Companies that cultivate cultures of experimentation and curiosity make sure that ______________ is not, in essence, to be avoided at all costs.

A

failure

195
Q

According to the CEO of Hanover Insurance, learning organizations require that everyone feels and supports a compelling purpose. What is the most difficult aspect of creating this learning organization?

A

Communicating an image of the future that draws people in and speaks to them

196
Q

Research suggests that not all leadership development programs are equally effective. Which of the following is not a common trait shared in all successful development programs?

A

Managers and trainers only assess the impact of the training immediately upon completion. Research suggests that successful development programs share four common traits. First, the programs are designed to fit the firm’s overall strategy. Second, effective leadership development programs combine real-world experiences with classroom learning to build the desired skills. Third, leader development programs need to have hard conversations to identify and overcome organizational biases that keep the firm from learning and being more flexible. Fourth, top managers and trainers need to assess the impact of the training by following up with participants several months after the training to assess how effectively they have implemented the training, overcome the barriers to marking it work, and learned from the process.

197
Q

Empowering individuals by soliciting their input helps an organization to enjoy better employee

A

morale.

198
Q

Effective learning organizations must redistribute _______, _________, and _________ in order to assure that there is a common body of knowledge.

A

information; knowledge; rewards Effective organizations must redistribute information, knowledge (skills to act on the information), and rewards. A company might give frontline employees the power to act as customer advocates, doing whatever is necessary to satisfy customers. The company needs to disseminate information by sharing customer expectations and feedback as well as financial information. The employees must know about the goals of the business as well as how key value-creating activities in the organization are related to each other. Finally, organizations should allocate rewards on how effectively employees use information, knowledge, and power to improve customer service quality and the overall performance of the company.

199
Q

Which of the following statements about ethics is false?

A

Ethics is not concerned with whether or not an act is socially desirable.

200
Q

As a manager, when faced with ethical crises you should

A

take the initiative to address the problem.

201
Q

Unethical business practices typically involve the _______ cooperation of others and reflect the values, attitudes, and behavior patterns that define the operating culture of the organization

A

tacit Unethical business practices typically involve the tacit, if not explicit, cooperation of others and reflect the values, attitudes, and behavior patterns that define an organization’s operating culture.

202
Q

In organizations, ethical behavior must start with _______ before _________ can be expected to perform accordingly.

A

the leader; the employees

203
Q

The chance of ethical crises occurring is enhanced if

A

the organization has a weak ethical culture.

204
Q

Which of the following positive relationships is not supported with consistent results?

A

between ethical performance and measures of financial performance

205
Q

Less than 18 percent of voluntary customer contributions in a recent year went to renewable energy development in the Duke Power of Indiana program called GoGreen Power. This is an example of

A

greenwashing.

206
Q

A strong ethical orientation can have __________ on employee commitment and motivation to excel.

A

a positive effect

207
Q

An ethically sound organization, drawing on the concepts of stakeholder management, can also strengthen its bonds among its ____________, ____________, and ___________.

A

suppliers; customers; governmental agencies

208
Q

____________ is rarely self-sustaining in an organization.

A

Individual integrity

209
Q

Creating an ethical framework and developing organizational capabilities to make it operational is the responsibility of

A

leadership. An important responsibility of leadership is to create this ethical framework and develop the organizational capabilities to make it operational.

210
Q

In the compliance-based approach to ethics management, the objective is to

A

prevent criminal misconduct.

211
Q

In the integrity-based approach to ethics management, the objective is to

A

enable responsible conduct.

212
Q

enable responsible conduct.

A

reduced discretion, training, controls, audits, penalties

213
Q

In the compliance-based approach to ethics management, leadership is driven by

A

the legal office.

214
Q

In the integrity-based approach to management, ethics is the responsibility of the

A

management.

215
Q

Compliance-based ethic programs typically are designed by

A

corporate counsel. Faced with the prospect of litigation, several organizations reactively implement compliance-based ethics programs. Such programs are typically designed by a corporate counsel with the goal of preventing, detecting, and punishing legal violations.

216
Q

Texas Instruments teaches ethics to its employees. They include all levels of the organization in the exchange of knowledge and auditing of behaviors. This is a good example of a(n) ____________ ethics program.

A

integrity-based

217
Q

The ethical compass of an organization, in the integrity-based ethics approach to management, consists of the expected ________ and ____________.

A

responsibilities; aspirations

218
Q

Proactive measures to prevent organizational ethics problems do not includ

A

instituting a reward system which considers outcomes as its primary criterion

219
Q

Which of the following statements would least likely be found in a corporate credo?

A

Maximize financial benefits for stakeholders at any cost.

220
Q

A highly ethical organization must have all of the following elements except

A

payment plans.

221
Q

Leaders as good role models must walk the talk. This means they must be _______ in their words and actions.

A

consistent

222
Q

The expression the dark side of competition means that

A

unethical behaviors are more like to take place when competition is intense.

223
Q

Which of the following are used to evaluate whether a manager is acting in an ethical manner?

A

reward and evaluation systems Many companies have developed reward and evaluation systems that evaluate whether a manager is acting in an ethical manner.

224
Q

Many situations that a firm faces have regular, identifiable patterns. Leaders tend to handle such routines by establishing ______ or ___________ to be followed that can be applied _______________ to each occurrence.

A

a policy; a procedure; uniformly

225
Q

While carefully developed policies and procedures guide behavior, they need to be reinforced with all of the following except

A

undefined corporate governance practices.

226
Q

This legal act provides considerable legal protection to employees of publicly traded companies who report unethical or illegal practices.

A

Sarbanes-Oxley Act

STRATEGIC MANAGEMENT (3 decks)

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