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Chapter Review 8 - Sample 1. The task of crafting corporate strategy for a diversified company encompasses A) picking the new industries to enter and deciding on the means of entry. B) initiating actions to boost the combined performance of the businesses the firm has entered. C) pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage. D) establishing investment priorities and steering corporate resources into the most attractive business units. E) All of these. 2. Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? A) Picking new industries to enter and deciding on the means of entry B) Choosing the appropriate value chain for each business the company has entered C) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage D) Establishing investment priorities and steering corporate resources into the most attractive business units E) Initiating actions to boost the combined performance of the businesses the firm has entered 3. Diversification merits strong consideration whenever a single-business company A) has integrated backward and forward as far as it can. B) is faced with diminishing market opportunities and stagnating sales in its principal business. C) has achieved industry leadership in its main line of business. D) encounters declining profits in its mainstay business. E) faces strong competition and is struggling to earn a good profit. 4. Diversification becomes a relevant strategic option when a company A) spots opportunities to expand into industries whose technologies and products complement its present business. B) can leverage existing competencies and capabilities by expanding into industries where these same resource strengths are key success factors and valuable competitive assets. C) has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. D) can open up new avenues for reducing costs by diversifying into closely related businesses. E) All of these. 5. Diversification ought to be considered when A) a company's profits are being squeezed and it needs to increase its net profit margins and return on investment. B) a company lacks sustainable competitive advantage in its present business. C) a company begins to encounter diminishing growth prospects in its mainstay business. D) a company has run out of ways to achieve a distinctive competence in its present business. E) a company is under the gun to create a more attractive and cost-efficient value chain. 6. Diversification becomes a relevant strategic option in all but which one of the following situations? A) When a company spots opportunities to expand into industries whose technologies and products complement its present business. B) When a company is only earning a low profit margin in its principal business C) When a company has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. D) When a company can open up new avenues for reducing costs by diversifying into closely related businesses. E) When a company can leverage existing competencies and capabilities by expanding into industries where these same resource strengths are key success factors and valuable competitive assets. 7. Diversifying into new businesses is justifiable only if it A) results in increased profit margins and bigger total profits. B) builds shareholder value. C) helps a company escape the rigors of competition in its present business. D) leads to the development of a greater variety of distinctive competencies and competitive capabilities. E) helps the company overcome the barriers to entering additional foreign markets. 8. To create value for shareholders via diversification, a company must A) get into new businesses that are profitable. B) diversify into industries that are growing rapidly. C) spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries. D) diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses. E) diversify into businesses that have either key success factors or value chains that are similar to its present businesses. 9. The three tests for judging whether a particular diversification move can create value for shareholders are A) the attractiveness test, the profitability test, and the shareholder value test. B) the strategic fit test, the competitive advantage test, and the return on investment test. C) the resource fit test, the profitability test, and the shareholder value test. D) the attractiveness test, the cost-of-entry test, and the better-off test. E) the shareholder value test, the cost-of-entry test, and the profitability test. 10. To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use A) the profit test, the competitive strength test, the industry attractiveness test, and the capital gains test. B) the better-off test, the competitive advantage test, the profit expectations test, and the shareholder value test. C) the barrier to entry test, the competitive advantage test, the growth test, and the stock price effect test. D) the strategic fit test, the industry attractiveness test, the growth test, the dividend effect test, and the capital gains test. E) the attractiveness test, the cost of entry test, and the better-off test. REVIEW CHAPTER 10 SAMPLE 1.Once company managers have decided on a strategy, the emphasis turns to A) converting the strategy (and any associated strategic plan) into actions and good results. B) empowering employees to revise and reorganize value chain activities to match the strategy. C) establishing policies and procedures that instruct company personnel in the ways and means of executing the strategy. D) developing a detailed implementation plan that sets forth exactly what every department and every manager needs to do to proficiently execute the company's strategy. E) building the core competencies and competitive capabilities needed to execute the strategy. 2. Executing strategy A) is primarily an operations-driven activity revolving around the management of people and business processes. B) tests a managers ability to direct organizational change and achieve continuous improvement in operations and business processes. C) tests a managers ability to create and nurture a strategy-supportive culture . D) tests a managers ability to consistently meet or beat performance targets. E) All of these. 3. Which one of the following statements falsely characterizes the managerial task of executing strategy? A) Executing strategy is an action-oriented, make-things-happen task. B) Executing strategy tests a managers ability to direct organizational change, achieve continuous improvement in operations and business processes, create and nurture a strategysupportive culture, and consistently meet or beat performance targets. C) The challenge of successfully implementing new strategic initiatives principally involves employing managerial techniques to overcome resistance to change. D) Strategy execution requires a team effort that entails every manager thinking through the answer to What does my area have to do to implement its part of the strategic plan, and what should I do to get these things accomplished effectively and efficiently? E) Implementing and executing strategy is primarily an operations-driven activity revolving around the management of people and business processes. 4. What makes the managerial task of executing strategy so challenging and demanding is A) the trial-and-error experimentation that is required to come up with a workable organizational structure. B) the demanding people-management skills required, the resistance to change that has to be overcome, and the perseverance necessary to get a variety of initiatives launched and kept moving along. C) the time and effort it takes to build core competencies. D) the time, training, and creative effort it takes to empower employees and teach them responsible decision-making. E) the supervisory requirements associated with getting company personnel to do things the right way. 5. Which of the following statements about implementing and executing a new strategy is true? A) The managerial tasks of implementing and executing a new strategy call for essentially the same kinds of creative management talent and innovative thinking as does crafting strategy. B) Executing strategy is chiefly a financially-driven process aimed at squeezing the most profit out of conducting daily operations. C) Executing strategy is a job for a company's whole management team, not just a few senior managers; moreover, all employees are participants in the strategy execution process. D) Executing strategy depends heavily on the caliber of a CEO's business vision, industry and competitive analysis skills, and entrepreneurial creativity. E) Executing strategy tends to be a simpler, quicker management task to perform as compared to crafting a winning strategy. 6. Ultimate responsibility for seeing that strategy is executed successfully primarily falls upon the shoulders of A) a company's chief executive officer, its chief operating officer, and the heads of major units (business divisions, functional departments, and key operating units). B) first-line supervisors who have day-to-day responsibility for seeing that key value chain activities are done properly. C) the companys board of directors because board members are the final authority in overseeing and conducting daily operations. D) a companys whole management teameach manager is responsible for attending to what needs to be done in his/her respective area of authority and thus should be held accountable for success or failure. E) all company personnel because all employees are active participants in the strategy execution process and the caliber of their actions have a huge impact on the ultimate outcome. 7. While ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives, A) top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units. B) pivotal the and most decisive strategy-implementing actions are carried out by front-line supervisors who have day-to-day responsibility for seeing that key activities are done properly. C) it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail. D) the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution. E) the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive. 8. Implementing and executing a companys strategy A) is primarily the job of the companys board of directors since they direct the actions and policies of the top senior executives in executing the strategy. B) is a task for every manager and the whole management team but ultimate responsibility for success or failure falls upon the top senior executives. C) is primarily a responsibility of all company personnel because all personnel are active participants in the strategy execution process and their actions have a huge impact on the ultimate outcome. D) should be delegated to a chief strategy implementer appointed by the chief executive officer. E) is primarily a task for middle and lower-level managers because it is they who have responsibility for pushing the needed changes all the way down to the lowest levels of the organization. 9. Management's handling of the strategy implementation/execution process can be considered successful A) when the internal organization develops 2 or more core competencies in performing value chain activities. B) if and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company. C) if the company's culture is strong and strategy-supportive. D) if management is able to marshal adequate resources to put the strategy in place within 6-12 months. E) if managers and employees express strong support for the company's strategy and long-term direction. 10. Which of the following is not among the principal managerial components of the strategy execution process? A) Building an organization with the competencies, capabilities, and resource strengths needed to execute strategy successfully B) Instituting policies and procedures that facilitate rather than impede strategy execution C) Deciding which core competencies and value chain activities to leave as is and which ones to overhaul and improve D) Adopting best practices and pushing for continuous improvement in how value chain activities are performed E) Tying rewards directly to the achievement of strategic and financial targets and to good strategy execution REVIEW CHAPTER 11 - SAMPLE 1. A companys ability to marshal adequate resources in support of new strategic initiatives and steer them to the appropriate organizational units is important to the strategy execution process because A) changes in strategy often require resource reallocation and organizational units need the proper funding to carry out their part of the strategic plan effectively and efficiently. B) accurate budgets are the key to exercising tight financial controls over what organization units can and cannot do in carrying out management's directives to execute the chosen strategy proficiently. C) tight budget control is management's most powerful tool for first-rate strategy execution. D) lean, carefully managed budgets protect the company's financial condition and eliminate wasteful use of cash. E) lean, strictly enforced budgets are management's best and most used means of getting organizational units to exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner 2. Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and resource allocation process because A) too little funding deprives organizational units of the resources to carry out their piece of the strategic plan and too much funding wastes organizational resources. B) a change in strategy nearly always calls for budget reallocations and resource shifting. C) without major budget reallocations there is no chance for the desired core competencies and organizational capabilities to emerge. D) lean, carefully managed budgets protect the company's financial condition and eliminate wasteful use of cash. E) Both A and B. 3. From a strategy-implementing/strategy-executing perspective, budget allocations should A) primarily be based on the number of new strategic initiatives being implemented in each department. B) be based on the number of people employed in each of the divisions. C) be strategy-driven and based primarily on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively. D) be linked to the costs of performing value chain activities as determined by benchmarking against best-in-industry competitors. E) depend on how much stretch there is in each department's objectives and what additional resources are needed to help reach these performance targets. 4. New strategies often entail budget reallocations because A) revamping the performance of value chain activities can be costly. B) the accompanying policy revisions and compensation incentives tend to require different levels of funding than before. C) units important in the prior strategy but having a lesser role in the new strategy may need downsizing while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets. D) empowering employees to carry out the new strategy elements and shifting to a total quality management type of culture to build skills in competent strategy execution typically require substantial new funding and budget revisions. E) adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements. 5. Visible actions to reallocate operating funds and move people into different organizational units A) can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big changes in budgets cause among company personnel. B) signal a determined commitment to strategic change and can help catalyze and give credibility to the implementation process. C) run the risk of inadvertently creating barriers to building the needed competencies and capabilities. D) tend to impede the task of empowering employees and shifting to new, more strategysupportive culture. E) are rarely necessary in implementing a new strategy unless the new strategy entails a radically different set of value chain activities. 6. Prescribing policies and operating procedures aids the task of implementing strategy by A) helping ensure that worker eligibility for incentive bonuses is measured consistently and awarded fairly. B) fostering the use of best practices, TQM, Six Sigma, and continuous improvement efforts. C) acting as a powerful lever for changing employee attitudes about the need for a different incentive and reward system. D) helping build employee commitment to strengthening the company's core competencies and competitive capabilities. E) by placing limits on independent action and painting new white lines to steer the actions and behavior of company personnel in a manner that is more conducive to good strategy execution and operating excellence. 7. Prescribing new policies and operating procedures can aid the task of implementing strategy A) provided they promote greater use of and commitment to best practices and total quality management. B) because really effective internal policies and procedures are not easily duplicated by other firms. C) because astutely conceived policies or procedures can result in competitive advantage. D) by helping align the actions and behavior company personnel with the requirements for good strategy execution, placing limits on independent action, and helping overcome resistance to change. E) by making it easier to impose tight budget controls and avoid wasting scarce resources. 8. A useful guideline in designing strategy-facilitating policies and operating procedures is A) to prescribe enough policies to give organizational members clear direction in implementing strategy and to place desirable boundaries on their actions, then empower them to act within these boundaries however they think makes sense. B) that strictly-enforced policies work better than loosely-enforced policies. C) that more policies/procedures work better than few policies/procedures and that strict enforcement always beats lax enforcement. D) to let individuals act in an empowered and self-directed way, subject only to the constraint that their actions and behavior be ethical and in step with the corporate culture. E) to prescribe enough policies and procedures that little is left to chance in performing value chain activities employees should have no leeway to do things in a manner that deviates from the companys best practices standard. 9. Which one of the following is not a benefit of prescribing policies and operating procedures to aid management's task of implementing strategy? A) Painting a set of white lines that places limits on independent behavior and channels individual and group efforts along a path more conducive to executing the strategy. B) Providing top-down guidance to operating managers, supervisory personnel, and employees regarding how things need to be done and what behavior is expected C) Promoting the creation of a work climate that facilitates good strategy execution D) Helping build employee commitment to adopting best practices and using the tools of TQM and Six Sigma E) Helping enforce consistency in how particular activities are performed in geographically scattered organization units 10. Company managers can significantly advance the cause of superior strategy execution by A) using various process management tools to drive continuous improvement in how internal operations are conducted. B) benchmarking the companys performance of particular activities and business processes against best-in-industry performers. C) examining best-in-company performers if a companys different organizational units is performing the same functions at different locations. D) benchmarking the companys performance of particular activities and business processes against best-in-world performers. E) All of these. ... View Full Document

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