Strategy – FAQ – 09

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List of FAQs

Q1

An example of the external labor market is the situation where…

  1. an assessment center operated by an external consulting firm evaluates company managers for promotion potential
  2. a new vice president of marketing is hired from a competitor
  3. the senior vice president of finance is promoted to CEO
  4. a vice president of human resources is sent to a university executive MBA program for professional development

Q2

In the balanced scorecard framework ____ controls are used to assess the organizational success in creating a climate that supports change and innovation.

  1. learning and growth
  2. financial
  3. operational
  4. innovational

Q3

Two key strategic leadership actions include…

  1. monitoring the hiring of key employees and focusing on growth but not learning initiatives
  2. designing and then implementing the balanced scorecard
  3. setting appropriate financial targets and establishing an effective business level synergy
  4. determining strategic direction and establishing balanced organizational controls

Q4

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in…

  1. managerial opportunism
  2. white-collar crime
  3. vindictive disloyalty
  4. an act of courage

Q5

Shaping and reinforcing a new organizational culture requires all of the following except…

  1. effective communication
  2. effective performance appraisals
  3. adherence to the firm’s traditional core values
  4. an appropriate reward system

Q6

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?

  1. Appointing many outside board members
  2. Increasing the firm’s sales
  3. Increasing the homogeneity of the top management team
  4. Training and development programs

Q7

The most effective leadership style is leadership is…

  1. pragmatic
  2. charismatic
  3. inspirational
  4. transformational

Q8

A heterogeneous top management team is composed of individuals with…

  1. different functional backgrounds, experience, and education
  2. similar commitments to the organization’s core ideology and culture
  3. a high level of education and industry expertise.
  4. long tenure in the organization who have held various functional positions

Q9

Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate, the following statements are made. Which of the statements is false?

  1. If Clarita Cosmetics lays off a large number of employees, there will be a significant loss of human capital that will cause further downturns in the firm’s performance.
  2. A moderate-sized layoff at Clarita Cosmetics will probably improve firm performance.
  3. If Clarita Cosmetics restructures, it ought to increase investments in training and development.
  4. A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.

Q10

The effective development and management of the firm’s _____ may be its only sustainable competitive advantage.

  1. capital base
  2. human capital
  3. technology
  4. organizational culture

Q11

The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they…

  1. overemphasize financial controls and neglect strategic controls
  2. overemphasize strategic control and neglect financial controls
  3. overemphasize strategic and financial controls and neglect ethical controls
  4. neglect short-term controls of all kinds in favor of long-term strategic controls

Q12

The board of directors for TundraPro, Inc., is searching for a new CEO. The firm is in need of new direction after suffering several years of declining performance and increasingly demoralized management and employees. The board has decided it needs a CEO who can be a transformational leader. To this specific end, the board needs to identify applicants who have…

  1. high levels of honesty, trustworthiness, and integrity
  2. high emotional intelligence
  3. Both 1 and 2 are correct
  4. low tolerance for ambiguity

Q13

Which of the following is not associated with heterogeneous top management teams?

  1. higher firm performance
  2. innovation and strategic change
  3. diminished debate among top managers
  4. better strategic decisions

Q14

Organizational controls provide…

  1. the parameters within which strategies are to be implemented
  2. goals and objectives that must be achieved
  3. information on action steps to be taken to implement the corporate strategy
  4. managers with guidelines on how to treat employees

Q15

Which of the statements about CEO duality is false?

  1. CEO duality is associated with high CEO power.
  2. CEO duality has been blamed for slow response to change by the organization.
  3. CEO duality is relatively rare in the U.S. except in large Fortune 500 firms.
  4. If the CEO acts a steward, CEO duality facilitates effective decisions and actions.

Q16

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees’ behavior?

  1. Effectively managing the firm’s resource portfolio
  2. Determining strategic direction
  3. Regulating and controlling employees
  4. Sustaining an effective organizational culture

Q17

Determining the strategic direction of a firm involves…

  1. implementation of a balanced scorecard
  2. developing an entrepreneurial mind set
  3. specifying the vision and the strategy to achieve that vision over time
  4. exploiting and maintaining core competencies

Q18

Which of the following factors most encourages stability in a firm’s strategy?

  1. a new CEO hired from outside the firm but within the industry
  2. internal CEO succession and a homogeneous top management team
  3. external CEO succession and a heterogeneous top management team
  4. a new CEO hired from outside the industry

Q19

The more heterogeneous the top management team, the…

  1. more difficult it will be for the team to implement strategies
  2. more likely it is that the team will be cohesive
  3. less innovative the team’s decisions will tend to be
  4. less diverse the team membership will be

Q20

Competitive aggressiveness describes a firm’s…

  1. tendency to engage in new ideas and creative processes
  2. willingness to allow employees to take actions free of organizational constraints
  3. ability to be a leader in the marketplace
  4. propensity to take actions that allow it to outperform rivals consistently and substantially

Q21

Which of the following is not related to a CEO having long tenure in his or her position?

  1. more effective strategic control
  2. greater influence on board decisions
  3. more limited perspective
  4. a broader knowledge base

Q22

Firms needing to change their strategies should…

  1. create more heterogeneous top management teams
  2. focus on their core customer base
  3. implement transformational leadership
  4. emphasize the training and development of internal managerial talent

Q23

The top management team is composed of the…

  1. heterogeneous group of advisors selected by the CEO
  2. CEO and chairperson of the board
  3. key individuals who are responsible for selecting and implementing a firm’s strategy
  4. officers listed in a firm’s annual report and the board of directors

Q24

A characteristic of the manager that may affect managerial discretion is his/her…

  1. amount of industry experience
  2. level of education
  3. tolerance for ambiguity
  4. length of tenure

Q25

Which of the following statements is true regarding effective organizational cultures?

  1. Once a corporate culture is developed, strategic leaders can focus on other activities.
  2. A strategy that is historically new for a firm should be implemented by incremental changes in the organization’s culture.
  3. A central task of strategic leaders is to revise the corporate culture on an annual basis after analyzing the changes occurring in the competitive environment.
  4. Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm’s conducts its business.

Q26

The _____ assess their performance is a framework firms can use to verify that they have established both strategic and financial controls.

  1. managerial model
  2. holistic control system
  3. balanced scorecard
  4. internal auditing system

Q27

The top management team at Ingenuity, Inc., has assigned a team of scientists to a multi-year project to investigate the viability of growing large amounts of fur from cloned cells of minks and foxes to produce no-kill fur products for coats and other clothing items. This idea would satisfy all the dimensions of the entrepreneurial orientation except…

  1. innovativeness
  2. risk taking
  3. proactiveness
  4. competitive autonomy

Q28

Normally, the more involved a board of directors is in shaping the firm’s strategic direction, the…

  1. more balanced the organization is
  2. higher the corporation’s performance is
  3. more rapidly executive decisions can be made
  4. more difficult it becomes to make effective executive decisions

Q29

Human capital refers to…

  1. the net present value of the future competencies of the workforce
  2. the amount of money purchasers of the firm would pay for the continuing employment of the present workforce
  3. the value-added that the firm’s workforce contributes to each product produced or service rendered
  4. knowledge and skills of the firm’s work force

Q30

Strategic control focuses on the _____ of strategic actions, whereas financial controls focus on the ____ of strategic actions.

  1. revenues; costs
  2. long-term financial outcomes; short-term financial performance
  3. content; outcomes
  4. outcomes; content

Q31

Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the…

  1. customer
  2. employee
  3. shareholder
  4. general society

Q32

When the top management team is homogeneous and a new CEO is selected from inside the firm, it is…

  1. unlikely that the current strategy will change
  2. likely that product innovation will continue
  3. likely there will be a change in strategy
  4. unlikely the new CEO will have a long tenure

Q33

Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following except…

  1. relying on the fundamental goodness of individuals
  2. using reward systems that recognize acts of courage
  3. communicating goals that describe the firm’s ethical standards
  4. creating a work environment where individuals are treated with dignity

Q34

Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a(n)…

  1. internal CEO with short tenure
  2. external CEO with a heterogeneous top management team
  3. dual CEO/chairperson with a homogenous top management team
  4. CEO with long tenure who has a strong sense of hubris

Q35

The primary responsibility for effective strategic leadership of the organization rests with the…

  1. board of directors
  2. top management team
  3. CEO
  4. stakeholders

Q36

The ability to attract and manage _____ may be the most important skill a strategic leader must have.

  1. human capital
  2. financial resources
  3. responses to competitors’ actions
  4. investment strategies

Q37

____ capital increases cooperation among individuals inside and outside the firm.

  1. Human
  2. Social
  3. Visionary
  4. Cultural

Q38

Which of the following is not a factor that determines the amount of a manager’s decision discretion?

  1. characteristics of the manager
  2. characteristics of the organization
  3. cohesiveness of the board of directors
  4. the external environmental

Q39

Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by Maximum Brands. Christina does not believe that the CEO can act as a steward. Christina will probably be most concerned if…

  1. there is CEO duality.
  2. many of the members of the board of directors are outsiders.
  3. the positions of chairman of the board and CEO are held by different persons.
  4. there is an independent board leadership structure.

Q40

Faced with declining enrollment and increased competition from not-for-profit organizations offering inexpensive art courses for new hobbyists, the for-profit Delta Academy of Art has steadfastly stayed true to its mission of offering high-quality classical art instruction for both beginners and advanced artists at high tuition. Delta has been noted for the excellence of its artistic training for decades. This is an example of…

  1. adhesion to the status quo
  2. lack of an envisioned future
  3. competence becoming a liability
  4. failure to have a clear core ideology

Q41

Criteria for reevaluating internal business processes using the balanced scorecard include all of the following except…

  1. asset utilization improvements
  2. improvements in employee morale
  3. increases in employee skills
  4. changes in turnover rates

Q42

A CEO’s breadth of knowledge base is constrained by…

  1. his or her relationship with the board of directors
  2. whether he or she is also the chairperson of the board of directors
  3. his or her long tenure with the firm
  4. the level of social capital in the firm

Q43

The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This tragedy has thrown PharmaPacifica into turmoil as there is no one in the organization qualified to step into the former CEO’s shoes. This is an example of…

  1. failure of succession management
  2. managerial hubris
  3. the risk inherent in CEO duality
  4. excessive reliance on the internal managerial labor market

Q44

The goal of investing in human capital is to…

  1. increase the number of employees in the firm
  2. reduce organizational slack
  3. maximize current productivity per employee
  4. develop a workforce capable of continuous learning

Q45

Research shows that firm’s ethical ___ is the most effective means of ensuring that employees comply with the requirements.

  1. written code of ethics
  2. statement in the firm’s mission statement
  3. speech on ethics by the CEO of the company
  4. value-based culture

Q46

Which of the following is not one of the five dimensions thought to characterize an employee’s entrepreneurial mind-set?

  1. autonomy
  2. reactivity
  3. risk taking
  4. innovativeness

Q47

The CEO of CLEO, Inc., in all her communications to employees consistently refers to her dream of CLEO becoming the company of choice for employee assistance programs. She keeps this theme uppermost and it is reflected in the firm’s motto, the title of its Web newsletter, and even on the company t-shirts and mugs. This is an example of the firm’s…

  1. core ideology
  2. organizational culture
  3. strategy
  4. envisioned future

Q48

All of the following are external environmental sources that affect managerial discretion except…

  1. industry structure
  2. corporate culture
  3. market growth rate
  4. potential for product differentiation

Q49

Which of the following is not a benefit to the firm using the internal labor market to select a new CEO?

  1. Internal hiring results in an increased level of innovation
  2. Insiders are familiar with the firm’s products, markets, technologies, and operating procedures
  3. Use of the internal labor market reduces turnover among existing employees
  4. Insiders are more familiar with a firm’s operating procedures

Q50

Omicron Artificial Intelligence is able to respond quickly to competitors’ actions and to opportunities in the marketplace. This is an example of…

  1. agility
  2. a core competency
  3. flexibility
  4. responsiveness

Q51

A CEO gains power from all of the following circumstances except…

  1. when many of the outside directors are appointed by the CEO
  2. when the CEO is also the chairman of the board
  3. when tenure of the top management team is shorter than the tenure of the board
  4. the fact that inside board members report to the CEO

Q52

Which of the following is not one of the four perspectives in the balanced scorecard framework?

  1. entrepreneurial
  2. financial
  3. customer
  4. learning and growth

Q53

______provide information about the results of past actions, but do not communicate the drivers of the firm’s future performance.

  1. Financial controls
  2. Accounting information systems
  3. Policies and procedures
  4. Strategic feedback systems

Q54

Recently, Sony selected Sir Howard Stringer as CEO. Sir Howard is not Japanese and he was not a Sony employee before his selection. Which of the following statements is false?

  1. Sony’s top management team will be more heterogeneous with the addition of Sir Howard.
  2. Sir Howard will have a broader perspective of the firm and its competitive environment than would a Sony insider.
  3. If Sony’s top management team is homogeneous, Sir Howard’s future impact on Sony’s strategy is ambiguous.
  4. The decision-making process on Sony’s top management team will be smoother and faster with the addition of Sir Howard.

Q55

To successfully implement a firm’s strategy, the workforce must be viewed as a…

  1. variable cost
  2. depreciating asset
  3. resource to be maximized
  4. renewable asset

Q56

The firm of Bergeron has existed for hundreds of years, having made exquisite clocks and watches. In its advertising it refers to clocks the firm made for such past royalty as Marie Antoinette and the Czars of Russia. Employees are constantly reminded of the firm’s rich history and its long tradition of excellence of design and execution. Bergeron is motivating its employees through its…

  1. core ideology
  2. envisioned future
  3. organizational culture
  4. business strategy

Q57

Exploiting and maintaining core competencies is part of the key strategic leadership action “Effectively Managing the Firm’s Resource Portfolio.” Which of the following is most important for developing and using core competencies?

  1. extensive financial assets
  2. transformational leadership
  3. high-quality human capital
  4. an ethical organizational culture

Q58

The CEO of Icon Image Associates wishes to radically change the corporate culture of the firm. She knows that she must convince others at Icon Image of the necessity for the culture change and gain their active support. The CEO knows that the key players in energizing the culture change and fostering alignment with the new strategic vision are…

  1. the members of the board of directors
  2. top management team members
  3. the CEO, top managers, and middle managers
  4. rank-and-file employees

Q59

CEO duality refers to…

  1. firms where there is both a president and a CEO
  2. CEOs who sit on the board of directors of other firms
  3. CEOs who hold office in more than one company
  4. the situation where the CEO is also chairperson of the board of directors

Q60

Managerial actions that support development of an ethical organizational culture include all of the following except…

  1. establishing a code of conduct
  2. disseminating the code of conduct to all stakeholders to inform them of the firm’s ethical standards and practices
  3. creating a work environment in which people are treated with dignity
  4. disciplining whistle-blowers

Q61

Effective strategic leaders either by word or by personal example, and through their ability to envision the future influence the behaviors, thoughts, feelings of those with whom they work. This influence creates which of the following in their organization?

  1. Strategic change
  2. Institutional direction
  3. Managerial optimism
  4. Fast cycle markets