Deck 12: Strategic Failure and Turnaround

Question 1

Receivership occurs when a business is unable to pay its creditors.

Answer 1

True

Question 2

Sustained survival can apply if an organization failed to use its increased earning effectively and did not diversify into new,more profitable opportunities which could provide growth prospects.

Answer 2

True

Question 3

An organization may be relatively unsuccessful compared with its competitors for a prolonged period of time meaning it is failing.

Answer 3

False

Question 4

Research consistently confirms that in many cases the profits and successes anticipated from acquisitions fail to materialize.

Question 5

Early adopters of new technology often achieve higher market shares and higher returns than later adopters of the technology.

Question 6

One capability characteristic of a firm with strategic flexibility is the capacity to learn.

Question 7

Symptoms of decline show when an organization is performing unsuccessfully relative to what might be expected by an objective outsider or analyst.

Question 8

It is possible for an organization to launch specific products that fail,but for it to still be considered a 'successful' company.

Question 9

Symptoms of decline are not the causes of failure but indicators that an organization might be heading for failure.

Question 10

A failure to develop new corporate or competitive strategies will not hasten the possibility that an organization may be failing.

Question 11

Corporate failure,liquidation and lack of success are synonymous terms.

Question 12

A dominating strategic leader will protect an organization from the possibility that it may be failing.

Question 13

An organization that achieves its objectives cannot be considered to be failing.

Question 14

Organizational failure can sometimes occur just through the greed of dominant leaders.

Question 15

Symptoms of failure are limited to the financial performance of an organization.

Question 16

Poor strategic leadership in terms of building an appropriate organization might mean that key issues or key success factors are ignored or are not given the attention they deserve.

Question 17

Neglecting the core business when undergoing rapid change will ensure a strong foundation for growth.

Question 18

Sustained survival implies that a turnaround is complete with significant growth levels.

Question 19

Financial success is the only determinant of whether an organization is failing or not.

Question 20

A private-sector,profit-seeking firm may not necessarily be considered a failure if it ended up in liquidation and was closed down with its assets sold off piecemeal.

Question 21

Changing prices as part of a turnaround strategy can:

A) Result in increased revenue.
B) Motivate employees to work harder.
C) Increase a product's utility.
D) Create better marketing intelligence.

Question 22

Sustained recovery is likely to involve a genuine and successful turnaround,possibly through new product development or market repositioning.

Question 23

Organizations fail usually for more than one reason,one likely factor is:

A) A top-management team that is too large.
B) Demanding customers.
C) Poor management leading to poor financial control.
D) All of the above.

Question 24

Turnaround strategies are likely to address those areas which must be developed if there is to be a sustained recovery.

Question 25

An organization dominated by accountants or engineers might:

A) Have loose reporting mechanisms
B) Focus on developing sub-cultures of creativity and innovation
C) Fail to pay sufficient attention to changing customer requirements and competition
D) Be successful in managing change

Question 26

When managing in a recession concern needs to be given to:

A) Take tough decisions.
B) Recognize that high prices may be unsustainable and act sooner rather than later.
C) Stay in close contact with customers and look for opportunities where both parties can help each other.
D) All of the above.

Question 27

Sustained recovery is possible in a declining market.

Question 28

Acquisitions often fail to provide the profits and successes anticipated because:

A) Poor initial choice by the strategic leader
B) Overestimation of the potential benefits
C) Inability to manage the larger organization effectively because problems are underestimated
D) All of the above

Question 29

A new product development turnaround strategy allows an organization to:

A) Replace existing products with new ones.
B) Diversify its existing products into new markets.
C) Reduce the price of its existing products.
D) Find new uses for its existing products.

Question 30

Through rationalizing the product line an organization can:

A) Increase the variety of products it offers.
B) Reduce the variety of products it offers.
C) Produce new products to replace existing ones.
D) Move into new markets.

Question 31

Sustained recovery is not likely when:

A) There are fewer causes of decline
B) The crisis is not deep-rooted
C) Customers have moved to using a substitute product
D) There is support from key stakeholders for the changes required

Question 32

Rejuvenating mature businesses as a turnaround approach seeks to:

A) Employ a new group of external board members.
B) Galvanize existing businesses through a creative, entrepreneurial approach
C) Create a strategic plan for success.
D) Develop stronger external networks.

Question 33

Key questions to ask when assessing the situation and recovery potential include:

A) What are the core activities of the organization?
B) Does the organization have the people it needs, who understand the business at all levels?
C) Can the necessary resources (other than people) that are going to be required be secured?
D) All of the above

Question 34

Retrenchment strategies are:

A) Aimed at making the organization more competitive
B) Aimed at making the organization more productive and profitable
C) Aimed at making the organization more responsive to the needs of shareholders
D) Aimed at making the organization more cooperative with its external partners

Question 35

A turnaround strategy that emphasizes selling and advertising involves:

A) Reducing the advertising budget
B) Developing new products for new markets.
C) Selected additional expenditure in order to generate greater revenue.
D) Employing more sales staff.

Question 36

Sustained turnaround is never followed by a growth strategy,acquisition or diversification.

Question 37

Threats:

A) Come only from the broad environment
B) Typically cannot be overcome
C) Can stand in the way of organizational competitiveness and stakeholder satisfaction
D) Are generally the result of moving too slowly against competitors

Question 38

Sustained survival and recovery may involve divestment of assets or part of the business to enable the company to concentrate on selected market segments or products.

Question 39

An organization without adequate financial management might:

A) Ignore aspects of cost and cash-flow management
B) Have tight budget controls
C) Have clear financial reporting processes
D) Assign financial responsibility at all managerial levels

Question 40

A refocusing turnaround strategy enables an organization to:

A) Refocus its efforts gaining greater financial control.
B) Establish greater communication links internally and externally.
C) Concentrate effort on specific customers and specific products, relating the two together.
D) Put even greater effort into its vision and mission.

Question 41

Ultimate organization failure happens when:

A) Processes and procedures no longer work.
B) Customers and suppliers become dissatisfied.
C) It is liquidated or sold.
D) It's brand becomes devalued.

Question 42

The mismanagement of large projects often involves what mistakes?

Question 43

What factors are important to understand when attempting a turnaround within an industry that is declining?

Question 44

The fact that managers need to confront unique and changing market conditions and competitive situations for which there is often no historical record to guide them explains why strategic decisions are characterized as:

A) Difficult to reverse
B) Costly to implement
C) Ill-structured and non-routine
D) Having a significant effect on the subsequent actions of the organization

Question 45

Identify four reasons why organizations fail.

Question 46

What are the main features of a sustained recovery?

Question 47

A change in strategy is needed to affect a turnaround when:

A) Profits have declined to a crisis stage.
B) Senior managers cannot agree on what to do.
C) Actions are no longer consistent with an espoused strategy.
D) Financial indicators are not looking good.

Question 48

The skills required for rescue and recovery are likely to demand:

A) A greater level of concentration from all staff.
B) Changing the strategic leader.
C) Formal reporting processes to be relaxed.
D) A disengagement from external network activities.

Question 49

What are the main turnaround strategies enacted by organizations?

Question 50

What themes determine the likelihood of turnaround success?

Question 51

What are the non-financial symptoms that indicate an organization may be failing?

Question 52

What are the main characteristics of non-recoverable situations where there is little chance of an organization surviving?

Question 53

Turnaround strategies are designed to:

A) Reposition the organization.
B) Bring quick results and contribute towards long term growth.
C) Enable management rotation.
D) Develop a feeling of unease among managers.

Question 54

What should organizations do with stakeholders that have a large influence on environmental uncertainty?

A) Fight against them with competitive weapons
B) Ignore them
C) Just monitor their activities
D) Partner with them

Question 55

In a recession:

A) Budgets can be relaxed as there is more capital available.
B) The number of failing organizations reduces.
C) Retrenchment strategies are frequently required as demand falls and costs need containing.
D) Strategies become obsolete.

Question 56

Recessions alone do not put organizations in decline,but they can:

A) Highlight existing weaknesses either created in, or hidden in, boom conditions.
B) Flag up aspects of management that enable growth.
C) Show how relationships with external stakeholders are maintained.
D) Create stronger links between marketing and finance.

Question 57

Paradoxically,a recession can be an ideal time to:

A) Employ more staff.
B) Develop better relations with shareholders.
C) Loosen controls allowing managers more freedom to act.
D) Invest in the future.

Question 58

Differences in performance among firms are mostly explained by:

A) The industries in which they participate
B) Whether or not they have access to low cost capital
C) Differences in what companies do, what they fail to do and how they operate
D) Whether they are publicly held and subject to financial market scrutiny or privately held

Question 59

What are the key issues when selecting a divestment candidate?

Question 60

What competitive forces could result in a weak competitor being in decline?

Question 61

Identify the circumstances that improve the likelihood that sustained recovery is possible.

Question 62

Identify the warning signals a small organization may show when it is suffering from weak strategic leadership.