Strategic Management and Business Policy - Chapter 9

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Strategy Implementation: Organizing for Action
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1

Strategy formulation is the sum total of the activities and choices required for the execution of a strategic plan.

FALSE

2

Strategy formulation and strategy implementation should be considered as two sides of the same coin.

TRUE

3

Poor implementation is often blamed for strategic failure.

TRUE

4

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.

TRUE

5

Those who implement strategy will probably be a much more diverse set of people than those who formulate it.

TRUE

6

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.

TRUE

7

The matrix of change was designed to help managers decide how quickly change should proceed, in what order changes should take place, whether to start at a new site, and whether the proposed systems are stable and coherent.

TRUE

8

The purpose of a program or tactic is to make the strategy action-oriented.

TRUE

9

After programs have been developed, the budget process begins.

TRUE

10

Standard operating procedures typically detail the various activities that must be carried out to complete a corporation's programs.

TRUE

11

Once in place, procedures seldom have to be updated to reflect changes in technology or strategy.

FALSE

12

One of the goals to be achieved in strategy implementation is synergy between and among functions and business units.

TRUE

13

Successful late movers tend to be large firms with considerable resources and related experience.

TRUE

14

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.

TRUE

15

The concept that structure follows strategy was developed by Alfred Chandler.

TRUE

16

Research generally supports Chandler's proposition that structure follows strategy as well as the reverse proposition that structure influences strategy.

TRUE

17

Firms in the same industry seldom organize themselves in similar ways.

FALSE

18

The first stage of corporate development is the simple structure.

TRUE

19

The greatest strengths of a Stage I corporation are its flexibility and dynamism.

TRUE

20

The greatest weakness of a Stage II corporation is that all its eggs are in one basket.

TRUE

21

A crisis of control may develop in the Stage III divisional structure.

TRUE

22

Stage III (Divisional Structure) is the point when the entrepreneur is replaced by a team of managers who have functional specialization.

FALSE

23

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.

TRUE

24

Stage IV of a corporation could involve a pressure-cooker crisis.

TRUE

25

Asking "What would Walt do" at Disney years after his death could present blocks to needed change.

TRUE

26

The second stage of the organizational life cycle is maturity.

FALSE

27

The corporation's life cycle can be extended by managerial and product innovation.

TRUE

28

Microbreweries that make beer for sale for local customers, use guerilla warfare against national brewers like Anheuser-Busch.

TRUE

29

Pioneered in the automobile industry, the matrix structure was developed to combine the flexibility of the functional structure with the stability of the product formulation.

FALSE

30

When using a network structure, many corporate activities are outsourced.

TRUE

31

The network structure becomes most useful when the environment of a firm is unstable and is expected to remain so.

TRUE

32

In order to implement reengineering, Hammer suggests that those who use the output of the process perform the reengineering process.

TRUE

33

Studies of the performance of reengineering programs show clear, consistent, and overwhelming evidence of success and improved productivity.

FALSE

34

Lean Six Sigma incorporates the statistical approach of Six Sigma with the lean manufacturing program originally developed by Toyota.

TRUE

35

Job enlargement is the movement of workers through several jobs to increase variety.

FALSE

36

Stage 4 of international development is a multinational corporation with global emphasis — denationalizing its operations.

FALSE

37

The geographic-area structure allows the company to introduce and manage a similar line of products around the world.

FALSE

38

As industries move from being multidomestic to more globally integrated, multinational corporations are increasingly switching from the geographic-area to the product-group structure.

TRUE

39

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.

Answer: C

40

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.

Answer: D

41

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?

  1. A) ineffective coordination of activities
  2. B) uncontrollable external environmental factors
  3. C) time allocated for implementation was adequate, but was used inappropriately
  4. D) poor definition of key implementation tasks and activities
  5. E) crises that distracted attention away from implementation

Answer: C

42

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

Answer: E

43

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.

Answer: C

44

The term used in strategic implementation that describes a statement of activities or steps needed to accomplish a single-use plan and whose use is to make the strategy action-oriented is

A) program.

B) guidelines.

C) budgets.

D) course of action.

E) procedures.

Answer: A

45

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.

Answer: B

46

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) program.

B) guidelines.

C) budgets.

D) course of action.

E) procedures.

Answer: E

47

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.

Answer: A

48

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

Answer: B

49

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.

Answer: D

50

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

Answer: C

51

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.

Answer: C

52

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

Answer: C

53

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.

Answer: D

54

Objectives which 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

Answer: A

55

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.

Answer: B

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.

Answer: E

57

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, 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.

Answer: A

58

Under Stage III, when various units of the company optimize their sales and profits without regard to the overall corporation, the organization may be experiencing a

A) crisis of leadership.

B) crisis of control.

C) crisis of autonomy.

D) crisis of decentralization.

E) crisis of empowerment.

Answer: B

59

A candidate for a fourth stage in corporate development is

A) conglomerate structure.

B) strategic business units.

C) divisional structure.

D) matrix structure.

E) hybrid structure.

Answer: D

60

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 operating efficiency.

E) lack of managerial resources.

Answer: A

61

Stage III in the organizational life cycle is the

A) birth stage.

B) growth stage.

C) maturity stage.

D) decline stage.

E) death stage.

Answer: C

62

Stage V in the organizational life cycle is the

A) birth stage.

B) growth stage.

C) maturity stage.

D) decline stage.

E) death stage.

Answer: E

63

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

64

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.

Answer: C

65

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

Answer: E

66

Which structure simultaneously combines functional and product forms at the same level of the organization?

A) strategic business units

B) functional structure

C) network structure

D) divisional structure

E) matrix structure

Answer: E

67

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.

Answer: B

68

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

Answer: C

69

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.

Answer: B

70

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

Answer: A

71

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

Answer: E

72

Which structure is described as a "non-structure" by its virtual elimination of inhouse business functions?

A) strategic business units

B) functional structure

C) network structure

D) divisional structure

E) matrix structure

Answer: C

73

Which structure is often called a virtual organization?

A) strategic business units

B) functional structure

C) divisional structure

D) network structure

E) matrix structure

Answer: D

74

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.

Answer: C

75

An organization which 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.

Answer: C

76

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.

Answer: B

77

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 outcomes, not tasks

C) treats geographically dispersed resources as though they were centralized

D) links parallel activities

E) captures information once at the source

Answer: A

78

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.

Answer: B

79

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

80

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.

Answer: B

81

The combining of 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.

Answer: D

82

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

Answer: B

83

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

Answer: C

84

Which of the following is 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) all of the above

Answer: E

85

Which defensive tactic was used by Southwest Airlines when deliberately keeping their prices low and constantly investing in cost-reducing measures?

  1. A) guerilla warfare
  2. B) lower the inducement for attack
  3. C) encirclement
  4. D) raise structural barriers
  5. E) increase expected retaliation

Answer: B

86

Which of the following is NOT an offensive tactic?

A) frontal assault

B) flanking maneuver

C) guerilla warfare

D) raising structural barriers

E) encirclement

Answer: D

87

According to the job characteristics model, how might a manager redesign work to provide workers information on how they are performing?

A) combine tasks

B) form natural work units

C) establish client relationships

D) vertically load the job

E) open feedback channels

Answer: E

88

According to the job characteristics model, how might a manager redesign work to make workers more responsible and accountable for the performance of the job?

A) combine tasks

B) form natural work units

C) establish client relationships

D) vertically load

E) open feedback channels

Answer: B

89

A highly developed international company with a deep involvement throughout the world, plus a worldwide perspective in its management and decision making is called a(n)

A) international corporation.

B) multidomestic corporation.

C) multinational corporation.

D) global corporation.

E) Stage IV corporation.

Answer: C

90

A multinational corporation

A) is synonymous with an international corporation.

B) has limited involvement through the world.

C) has a worldwide perspective in its decision making.

D) has limited perspective in its management.

E) manages worldwide operations as if they were independent.

Answer: C

91

Which of the following is NOT identified as a key driver for strategic fit between alliance partners?

A) The alliance must be important to both partners.

B) Joint activities must have added value for customers and the partners.

C) The alliance must be accepted by key stakeholders.

D) Partners contribute key strengths, but protect core competencies.

E) Partners must independently achieve their goals.

Answer: E

92

What is the activity that occurs in Stage I of international development?

A) The company invests in production facilities in key countries.

B) The company exports, but trade is minor and handled by an export department.

C) The company establishes its own export division with sales offices in other countries.

D) The company operates in a global industry and establishes worldwide personnel, R&D, and financing strategies.

E) The company establishes local operating divisions in host countries to better serve individual country markets.

Answer: B

93

The establishment of its own sales company with offices in other countries to eliminate the middlemen and to better control marketing occurs in which stage of international development?

A) I

B) II

C) III

D) IV

E) V

Answer: B

94

What is the activity that occurs in the last stage of international development?

A) The company invests in production facilities in key countries.

B) The company exports, but trade is minor and handled by an export department.

C) The company establishes its own export division with sales offices in other countries.

D) The company operates in a global industry and establishes worldwide HR, R&D, and financing strategies thereby denationalizing its operations.

E) The company establishes local operating divisions in host countries to better serve individual country markets.

Answer: D

95

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

Answer: C

96

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

Answer: A

97

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

Answer: B

98

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

Answer: A

99

What is strategy implementation? What questions must strategy makers consider to begin the implementation process?

Answer: Strategy implementation is the sum total of the activities and choices required for the execution of a strategic plan. 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?

100

What is the matrix of change? What types of questions does it answer?

Answer: The matrix of change was proposed by Brynjolfsson, Renshaw, and Van Alstyne to help managers decide how quickly change should proceed, in what order changes should take place, whether to start at a new site, and whether the proposed systems are stable and coherent. The matrix of change can be used to address questions focused on feasibility, sequence of execution, location, pace and nature of change, and stakeholder evaluations.

101

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:

Shared know how: combined units often benefit from sharing knowledge or skills.

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.

Shared tangible resources: combined units can sometimes save money by sharing resources.

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.

Pooled negotiating power: combined units can combine their purchasing to gain bargaining power over common suppliers to reduce costs and improve quality.

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.

102

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.

103

What are the four stages of corporate development?

Answer: 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.

104

How can a corporation's life cycle be extended?

Answer: 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. This often occurs during the implementation of a turnaround strategy. A revival phase may occur sometime during the maturity or decline stages.

105

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. The matrix structure is often found in an organization or within an SBU when the following three conditions exist:

Ideas need to be cross-fertilized across projects or products.

Resources are scarce.

Abilities to process information and to make decisions need to be improved.

106

Discuss the network structure.

Answer: The network structure is an example of what could be termed a "non-structure" by its virtual elimination of inhouse 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.

107

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.

The principles of reengineering proposed by Michael Hammer are as follows:

Organize around outcomes, not tasks.

Have those who use the output of the process perform the process.

Subsume information-processing work into the real work that produces the information.

Treat geographically dispersed resources as though they were centralized.

Link parallel activities instead of integrating their results.

Put the decision point where the work is performed, and build control into the process.

Capture information once and at the source.

108

Discuss the five stages of international development.

Answer: The five stages of international development are as follows:

Stage 1 (Domestic Company): The primarily domestic company exports some of is products through local dealers and distributors in the foreign countries.

Stage 2 (Domestic Company with Export Division): Success in Stage I leads the company to establish its own sales company with offices in other countries to eliminate the middlemen and to better control marketing. Because exports have now become more important, the company establishes an export division to oversee foreign sales offices.

Stage 3 (Primarily Domestic Company with International Division): The company now adds an international division with responsibilities for most of the business functions conducted in other countries.

Stage 4 (Multinational Corporation with Multidomestic Emphasis): Now a full-fledged multinational corporation, the company increases its investments in other countries. The company establishes a local operating division or company in the host country. The product line is expanded, and local manufacturing capacity is established. Managerial functions are organized locally. Over time, the parent company acquires other related businesses, broadening the base of the local operating division.

Stage 5 (Multinational Corporation with Global Emphasis): The most successful multinational corporations move into a fifth stage in which they have worldwide personnel, R&D, and financing strategies. Global considerations now dominate organizational design.


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