Deck 4: Governance and Stakeholders

Question 1

Which of the following are advantages claimed for the shareholder model of governance? Choose all that apply.

A) It makes it easier for management to make objective strategic decisions.
B) It reduces the risk of short- termism.
C) Investors get a higher rate of return.
D) It encourages economic growth and entrepreneurship.

Answer 1

A, C, D

Question 2

Which framework has been used to give more rights to individual consumers of public services?

A) Local government regulations
B) Audit Commission
C) Annual reports
D) Best value framework

Answer 2

D

Question 3

Which of the following is not a source of power within an organisation?

A) Formal power
B) Basic technological skills
C) Charismatic leadership
D) Negotiating skills

Answer 3

B

Question 4

Which of the following is not an argument in favour of corporate social responsibility?

A) To avoid corruption and ensure the law is upheld, decision- making processes and other corporate governance issues should be transparent.
B) Large organisations exert so much influence on the lives of people (i.e. jobs, product safety, the environment, health and safety at work, etc.) that they must be held accountable as part of a democratic society.
C) Large organisations should concentrate on what they are good at, which is wealth creation, and help society through the creation of jobs and incomes.
D) Organisations control such large amounts of resources that they can destabilise national economies by moving these resources to another country and so their decision- making must be more transparent.
E) Large organisations influence many aspects of our lives, such as education, the environment, health care and housing, and so should be made legally responsible in respect of these issues.

Question 5

Which of the following is not a key indicator of power within an organisation?

A) A charismatic personality
B) Claim on resources
C) Representation in powerful positions
D) Symbols such as office size, executive car

Question 6

Which of the following is not one of the corporate social responsibility stances?

A) Laissez- faire
B) Forum for stakeholder interaction
C) Enlightened self- interest
D) Shaper of society
E) Stakeholder- focused

Question 7

Which of the corporate social responsibility stances involves supportive leadership, the development of systems of ensure good practice, and and interactive relationship with stakeholders?

A) Laissez- faire
B) Shaper of society
C) Forum for stakeholder interaction
D) Enlightened self- interest

Question 8

Which of the following are reasons why corporate governance has become an increasingly important issue for organisations? Choose all that apply.

A) Decreased power for middle managers.
B) The occurrence of corporate scandals in the late 1990s.
C) The need for increased accountability to wider stakeholder interests.
D) The separation of ownership and management control of organisations.

Question 9

Supervisors and employees may not understand how their work contributes to the organisation's overall aims. How can organisations avoid this problem?

A) By monitoring performance more closely.
B) By creating a cascade of objectives.
C) By setting clear targets.
D) By stating the aims as a mission.

Question 10

Which of the corporate social responsibility stances involves a championing leadership style, involvement of the board and the development of organisation- wide monitoring, and and proactive relationship with stakeholders?

A) Shaper of society
B) Laissez- faire
C) Enlightened self- interest
D) Forum for stakeholder interaction

Question 11

Which of the following is not an example of a stakeholder?

A) Lending institution
B) Customer
C) Competitor
D) Employee
E) Shareholder

Question 12

What is corporate social responsibility?

A) Just another management fad
B) The ways an organisation seeks to exceed the minimum obligations to stakeholders
C) It is another way of saying business ethics.
D) The formal ways in which an organisation has to present its performance to the public at the annual shareholders meeting and in the Annual Report

Question 13

Which of the following is not a strength of the Anglo- Saxon governance system?

A) Extensive internationalisation
B) Dynamic market orientation
C) Fluid capital investment
D) Short- termism

Question 14

Which of the following is most likely to be expressed in a quantifiable way?

A) Vision
B) Core values
C) Objectives
D) Mission

Question 15

Which of the following is not one of the major expectations influencing organisational purpose?

A) Corporate governance
B) Business ethics
C) Government policy
D) Stakeholders
E) Cultural context

Question 16

In organisations where innovation and flexibility are important, managers need to be very clear about the few, over- arching objectives. What term is used for these objectives?

A) Mission
B) Simple rules
C) Targets
D) Vision

Question 17

Where an organisation has an ethical stance that incorporates multiple stakeholder obligations:

A) Shareholders interests and expectations should be more explicitly incorporated in the organisation's purposes and strategies.
B) Stakeholder interests and expectations (wider than just shareholders) should be more explicitly incorporated in the organisation's profit performance criteria.
C) Management should focus on their key stakeholders' views when developing strategies.
D) Performance of the organisation should be measured in a much more pluralistic way than just through the bottom line.

Question 18

When identifying stakeholders you should:

A) Realise that individuals tend to belong to only one group.
B) Take note of the formal structure of an organisation as a basis of identification.
C) Ignore the fact that stakeholders 'line- up' differently depending on the issue or strategy in hand.
D) Include the 'informal stakeholder groups' and assess their importance.

Question 19

Which of the following does stakeholder mapping not help us to understand?

A) Whether the levels of interest and power of stakeholders properly reflect the corporate governance framework
B) Whether repositioning of certain stakeholders is desirable or feasible
C) Who the key blockers and facilitators of a strategy are
D) What the sources of funding for the organisation are

Question 20

Which of the following important issues that affect the management of strategy are highlighted by the governance chain? Choose all that apply.

A) Which management structure will lead to greatest production efficiency?
B) How can financial beneficiaries ensure scrutiny and control?
C) Who are the shareholders?
D) Who are executives responsible to?
E) How can production costs be minimised?

Question 21

In respect of mergers and take- overs the continental European model of corporate governance is particularly useful in:

A) Avoiding a potential conflict of interest between the target company shareholders and the bidders' shareholders
B) Avoiding a potential conflict of interest between the target company management and their key stakeholders
C) Avoiding a potential conflict of interest between the bidder company management and the target company shareholders
D) Avoiding a potential conflict of interest between the target company management and their shareholders

Question 22

Which of the following are advantages claimed for the stakeholder model of governance? Choose all that apply.

A) There are greater incentives for entrepreneurs.
B) Major investors are more likely to regard their investments as being long term.
C) Employee influence may deter management from adopting high- risk policies.
D) Investment by blocks of investors may increase the level of scrutiny of management decisions.

Question 23

What do you understand by the term 'corporate social responsibility'?

A) It refers to an organisation that is more accountable to its board of directors.
B) It refers to an organisation that is more responsive to the needs of their various stakeholder groups.
C) It refers to an organisation that acts in a responsible manner in relation to the social, economic and environmental impacts of its actions and decisions.
D) It refers to an organisation that takes more responsibility for the social interaction of their employees.

Question 24

Useful indicators of internal stakeholder power are:

A) Commercial success and profitability
B) The status of the individual or group; available resources; symbols of power
C) A senior position in the organisation
D) The status of the individual or group; the claim on resources; representation in powerful positions; symbols of power

Question 25

Using the power/interest matrix management identify that one group has a high level of interest and a high level of power. What strategy should be adopted in relation to this group? Choose all that apply.

A) Key players
B) Keep informed
C) Keep satisfied
D) Minimal effort

Question 26

Which of the following is not an argument against corporate social responsibility?

A) Organisations control such large amounts of resources that they can destabilise national economies by moving these resources to another country and so their decision- making must be more transparent.
B) It is not realistic to expect organisations to make their internal business public when they are trying to compete in global markets.
C) The most efficient use of the world's resources results from the operation of free markets and so to constrain the movement of such resources would lead to inefficiency.
D) Managers are trained to manage businesses not education, health and environmental policy. They do not have expertise in these areas. Politicians are elected for this purpose.
E) Business organisations exist to make profits for shareholders and to use their resources to further the interests of groups other than the owners of the business would be an abuse of managerial power.

Question 27

Which of the following are disadvantages claimed for the stakeholder model of governance? Choose all that apply.

A) Employees suffer financially as a larger proportion of funds are diverted to pay dividends.
B) Growth and entrepreneurial activity suffers because there are fewer alternatives for raising finance.
C) Without pressure from shareholders, projects may be adopted that lead to results that are below market expectations.
D) Close monitoring of management makes it difficult for them to make decisions quickly.

Question 28

Which of the following is a description of the governance chain?

A) The governance chain describes the reporting relationships between managers and their subordinates.
B) The governance chain concerns how the HR department looks after its employees.
C) The chain represents the linkage between current government legislation and the actions of an organisation.
D) The chain represents all groups that have influence on an organisation's purposes either through ownership or management.

Question 29

Which of the following are reasons why the governance chain typically operates imperfectly? Choose all that apply.

A) There is unequal division of power between different players in the chain.
B) Agents may act in their own self interest.
C) Legislative requirements make the sharing of information impracticable.
D) Identical information must be made available to all players.
E) There is a lack of clarity about who the final beneficiaries are?

Question 30

In which countries is the exposure of managers to the threat of take- over regarded as a primary means of ensuring the good performance of organisations?

A) France, Italy and Spain
B) Germany, Switzerland, Austria and the Netherlands
C) Japan
D) UK and USA

Question 31

Which of the following is not a reason for the increasing importance of corporate governance?

A) The need to separate ownership and management
B) The incidence of scandals such as Enron and Parmalat
C) The business ethics of the organisation
D) The need to make organisations visibly accountable to a wide range of stakeholders

Question 32

Which of the following is not a weakness of the Japanese model of governance?

A) Financial speculation
B) Weak accountability
C) Very long term industrial strategy
D) Secretive and sometimes corrupt governance procedures

Question 33

Which of the following statements is correct?

A) Internal stakeholders are the most important stakeholders in the strategic development of an organisation.
B) Individual external stakeholders are the most important stakeholders in the strategic development of an organisation.
C) Few individuals have sufficient power unilaterally to determine the strategy of an organisation.
D) Normally only a few individuals have sufficient power to determine unilaterally the strategy of an organisation.

Question 34

In most countries the least protected stakeholder is:

A) The banks providing loans
B) The trade creditor
C) The employees
D) Shareholders

Question 35

A key source of power that corporate governance attempts to control is:

A) Finance
B) Leadership
C) Information
D) Communication processes

Question 36

Using the power/interest matrix management identify that one group has a low level of interest but a high level of power. What strategy should be adopted in relation to this group?

A) Keep satisfied
B) Minimal effort
C) Keep informed
D) Key players

Question 37

Which of the following is not one of the three levels of business ethics?

A) The corporate governance framework
B) The broad ethical stance of the organisation towards its stakeholders and society
C) Corporate social responsibility
D) Individual behaviour and actions

Question 38

What term is used for the underlying principles that guide an organisation's strategy?

A) Aims
B) Core values
C) Mission
D) Vision

Question 39

Which three types of stakeholder is it useful to consider in terms of how they might affect the success or failure of a strategy?

A) Stakeholders from outside and from inside the organisation
B) Stakeholders from the public sector, from the private sector and from the not- for- profit sector
C) Stakeholders from the market environment, from the economic environment and from the technological environment
D) Stakeholders from the market environment, from the socio- political environment and from the technological environment

Question 40

Which three of the following are likely to make up the governance chain in a small family business?

A) Managers
B) The family shareholders.
C) Employees
D) Members of the board

Question 41

Since the expectations of stakeholder groups differ, it is normal for conflict to exist regarding the importance of many aspects of strategy.

Question 42

The governance chain illuminates the roles and relationships of management involved in the governance of an organisation.

Question 43

Corporate social responsibility is concerned with the ways in which an organisation can satisfy its minimum legal obligations to stakeholders.

Question 44

Stakeholder mapping consists of making judgements on:

A) Whether stakeholders have the means to impress their expectations on the organisation's choice of strategies. This is concerned with the power of stakeholder groups.
B) How interested each shareholder group is to impress its expectations on the organisation's choice of strategies
C) How interested each stakeholder group is to impress its expectations on the organisation's choice of strategies and whether it has the power to do so
D) How interested each stakeholder group is to impress its expectations on the organisation's choice of strategies

Question 45

Which of the following are disadvantages claimed for the shareholder model of governance? Choose all that apply.

A) It increases the risk of short- termism.
B) The lack of control over management allows them to rewards themselves with large bonuses.
C) Close monitoring make it more difficult for managers to make decisions quickly.
D) Dispersed shareholders prevent close monitoring of management.

Question 46

A vision statement aims to provide employees and stakeholders with clarity about the overall purpose of the organisation.

Question 47

In the private sector, a Board of Directors is responsible for strategy development on behalf of all of the organisation's stakeholders.

Question 48

Which of the following is the main assumption of the principal- agent model?

A) Principals will work diligently for agents provided they are offered incentives.
B) Agents will not work diligently for principals unless incentives are carefully and appropriately aligned.
C) Principals will not work diligently for agents unless incentives are carefully and appropriately aligned.
D) Agents will work diligently for principals provided they are offered incentives.

Question 49

Stakeholders are those people who hold a monetary stake in an organisation.