Deck 12: Leadership Implications for Strategy

Question 1

In addition to determining new strategic initiatives, top-level managers also develop the appropriate organizational structure and reward systems of a firm.

Answer 1

True

Question 2

Because of the challenges top executives face, they often are more effective when they operate as top management teams.

Answer 2

True

Question 3

The more heterogeneous and the larger the top management team, the easier it is to implement strategy effectively.

Answer 3

False

Question 4

Transformational leadership is the most effective strategic leadership style.

Question 5

Board members with substantive expertise in the firm's core functions and businesses aids the effectiveness of the top management team.

Question 6

Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.

Question 7

Typically, a vice president would NOT be considered to hold a high enough position to be included in the top management team of an organization.

Question 8

Top management team members and CEOs who have long tenure on the team and in the organization have greater influence in board decisions.

Question 9

Compared to homogeneous top management teams, heterogeneous top management teams are more likely to change their firm's strategies when necessary and to support innovation.

Question 10

A CEO may gain power by holding the titles of both CEO and Chairman of the Board.

Question 11

One challenge for the new HP CEO, Leo Apotheker, will be to rebuild HP's culture of innovation which has been lost over the last few years (Chapter 12 Opening Case).

Question 12

The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the board of directors is composed of sympathetic outside members and insiders who report to the CEO.

Question 13

The CEO is the individual with primary responsibility for effective strategic leadership within an organization.

Question 14

HP's new CEO who came from SAP (Chapter 12 Opening Case) is less likely to initiate strategic change because he is not familiar with the industry in which HP competes.

Question 15

The Chapter 12 Opening Case illustrates the role of the CEO in shaping the strategy of the firm, specifically the strategic shift at HP towards software development.

Question 16

The decision making discretion of top-level managers is determined partly by external environmental factors such as the industry structure, the industry's rate of growth, and the degree to which products can be differentiated.

Question 17

The more homogeneous a top management team, the more likely those managers will be innovative and willing to pursue strategic change.

Question 18

The most critical ability of a strategic leader is the ability to attract and then manage human capital.

Question 19

Firm size, firm age, the executive's tolerance for ambiguity, and his or her commitment to strategic outcomes are all factors that may affect managerial discretion.

Question 20

External environmental factors that may affect managerial discretion include industry structure, rate of market growth, and degree to which products an be differentiated.

Question 21

The advantages of long tenure (firm-specific human and social capital, knowledge, and power) seem to outweigh the disadvantages of rigidity and maintaining the status quo.

Question 22

The firm's envisioned future encourages employees to stretch beyond their expectations of accomplishment and requires significant change and progress to be realized.

Question 23

The experience that results from long tenure in a firm is known to extend the breadth of an executive's knowledge base.

Question 24

A firm's ability to act in a variety of competitively relevant ways is termed competitive agility.

Question 25

The firm's core ideology motivates the firm's employees through the company's heritage.

Question 26

When the new CEO is from inside the firm and a heterogeneous top management team is in place, the strategy may not change, but innovation is likely to continue.

Question 27

Internal labor markets consist of the career opportunities for managers within the firm for which they currently work.

Question 28

Evidence suggests that women are a qualified source of talent as strategic leaders that have been fully utilized especially given the current competitive landscape.

Question 29

GM's newest CEO, Dan Akerson, is building new capabilities in technology development and marketing, especially in customer service. This is an example of a CEO developing a dynamic capability as part of the key leadership action " Developing Human Capital and Social Capital."

Question 30

The strategic direction of a firm usually focuses on the coming three to five years.

Question 31

In the past, companies had a preference for insiders to fill top-level management positions because of the desire for continuity and a continuing commitment to the firm's current vision, mission, and chosen strategies.

Question 32

When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive.

Question 33

Employees usually have a strong preference for firms to use the internal managerial labor market when selecting top management team members and the CEO.

Question 34

According to the Chapter 12 Strategic Focus, Apple had a succession plan for Steve Jobs which was developed before he took his first medical leave.

Question 35

Selection of an insider as a new CEO indicates a firm's desire to encourage innovation and strategic change.

Question 36

Effectively managing the firm's resource portfolio (financial, human, social, and organizational capital) may be the most important strategic leadership task.

Question 37

Because of the current changing competitive landscape and varying levels of performance, an increasing number of boards of directors are turning to insiders to succeed CEOs.

Question 38

Including talent from both the internal and external labor markets increases the likelihood that the firm will be able to form an effective top management team.

Question 39

As noted in the Chapter 12 Strategic Focus, IBM is an example of a company with a succession plan as there are at least three candidates for the CEO position soon to be vacated by Sam Palmisano.

Question 40

The Chapter 12 Strategic Focus reports on recent surveys which found that about 90% of boards of corporations had a succession plan for their CEOs.

Question 41

Rewarding those who use proper channels and procedures to report observed wrongdoings is an example of an action that should be taken by a strategic leader to develop an ethical organizational culture.

Question 42

The training of future strategic leaders yields a competitive advantage for a firm, in part because knowledge and skills are necessary for successful execution of strategy.

Question 43

According to the Chapter 12 Strategic Focus, Alibaba's lack of response to unethical practices by its employees did more damage to the company than the original unethical actions.

Question 44

Criteria such as asset utilization improvements and changes in employee turnover rates are part of the internal business processes perspective of the balanced scorecard.

Question 45

Competitive aggressiveness, proactiveness, risk aversion, innovativeness, and autonomy are the five dimensions characterizing the entrepreneurial mind-set.

Question 46

Organizational culture is a complex set of ideologies, symbols, and core values that are shared throughout the firm, but its development is so subtle and poorly understood that top managers cannot influence its content.

Question 47

Alibaba is likely to experience loss of trust only in the short run because it took swift action once it discovered fraud by the sellers who used its` web site (Chapter 12 Strategic Focus).

Question 48

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

A) human capital
B) financial resources
C) responses to competitors' actions
D) investment strategies

Question 49

The balanced scorecard focuses on both financial and non-financial controls.

Question 50

The balanced scorecard's perspective on learning and growth is intended to improve the firm's ability to innovate.

Question 51

Financial controls provide feedback about the outcomes of the firm's past actions and predictions about the results of the firm's future actions.

Question 52

Strategic control focuses on the content of strategic actions rather than their outcomes.

Question 53

As the dynamics of competition accelerate, people are perhaps the only truly sustainable source of competitive advantage.

Question 54

The underlying premise of the balanced scorecard is that firms jeopardize their future performance possibilities when strategic controls are emphasized at the expense of financial controls.

Question 55

For 15 years, Edward was a compensation specialist at a mid-sized firm. He was laid off when the firm experienced financial setbacks. Edward has decided to open his own business as a compensation consultant to small firms. He can expect that his main source of human capital will be a bank line of credit.

Question 56

To influence employees' judgment and behavior, ethical practices must shape the firm's decision-making process, but should be a peripheral part of organizational culture.

Question 57

External social capital is increasingly critical to firm success as few if any companies have all the resources to successfully compete against their rivals.

Question 58

An emphasis on strategic controls encourages managers to be risk averse.

Question 59

Incremental changes to a firm's culture can be used to implement strategies effectively.

Question 60

Strategic leaders are most likely to integrate ethical values into their decisions when the company has explicit ethics codes which are integrated into the business through extensive ethics training.

Question 61

Firms needing to change their strategies should

A) create more heterogeneous top management teams.
B) focus on their core customer base.
C) implement transformational leadership.
D) emphasize the training and development of internal managerial talent.

Question 62

The more heterogeneous the top management team, the

A) more difficult it will be for the team to implement strategies.
B) more likely it is that the team will be cohesive.
C) less innovative the team's decisions will tend to be.
D) less diverse the team membership will be.

Question 63

A CEO gains power from all of the following circumstances EXCEPT

A) when many of the outside directors are appointed by the CEO.
B) when the CEO is also the chairman of the board.
C) when tenure of the top management team is shorter than the tenure of the board.
D) the fact that inside board members report to the CEO.

Question 64

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

A) industry structure.
B) corporate culture.
C) market growth rate.
D) potential for product differentiation.

Question 65

The top management team is composed of the

A) heterogeneous group of advisors selected by the CEO.
B) CEO and chairperson of the board.
C) key individuals who are responsible for selecting and implementing a firm's strategy.
D) officers listed in a firm's annual report and the board of directors.

Question 66

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

A) more balanced the organization is.
B) higher the corporation's performance is.
C) more rapidly executive decisions can be make.
D) more difficult it becomes to make effective executive decisions.

Question 67

An organization's ____ is composed of the key individuals who are responsible for selecting and implementing the firm's strategies.

A) top management team
B) board of directors
C) keiretsu
D) governance circle

Question 68

Which of the statements about CEO duality is FALSE?

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

Question 69

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?

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

Question 70

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

A) amount of industry experience.
B) level of education.
C) tolerance for ambiguity.
D) length of tenure.

Question 71

Which of the following is NOT a factor that determines the amount of a manager's decision discretion?

A) characteristics of the manager
B) characteristics of the organization
C) cohesiveness of the board of directors
D) the external environmental

Question 72

The Chapter 12 Opening Case illustrates the challenges of strategic leadership as HP's new CEO Leo Apotheker had to _________ while maintaining ____________.

A) cut managerial staff; current levels of innovation
B) downsize HP; diversity of products
C) diversify via acquisitions; low levels of debt
D) refocus on HP's innovation culture; short-term performance.

Question 73

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

A) there is CEO duality.
B) many of the members of the board of directors are outsiders.
C) the positions of chairman of the board and CEO are held by different persons.
D) there is an independent board leadership structure.

Question 74

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

A) high levels of honesty, trustworthiness, and integrity.
B) high emotional intelligence.
C) excellent analytical skills.
D) low tolerance for ambiguity.

Question 75

A heterogeneous top management team is composed of individuals with

A) different functional backgrounds, experience, and education.
B) similar commitments to the organization's core ideology and culture.
C) a high level of education and industry expertise.
D) long tenure in the organization who have held various functional positions.

Question 76

CEO duality refers to

A) firms where there is both a president and a CEO.
B) CEOs who sit on the board of directors of other firms.
C) CEOs who hold office in more than one company.
D) the situation where the CEO is also chairperson of the board of directors.

Question 77

The most effective leadership style is ____ leadership.

A) pragmatic
B) charismatic
C) inspirational
D) transformational

Question 78

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

A) higher firm performance
B) innovation and strategic change
C) diminished debate among top managers
D) better strategic decisions

Question 79

Executive headhunters have approached Charles about taking the position of senior vice president of marketing for a well-known company. Although this company has been highly successful since 1995, Charles has heard persistent rumors of overly aggressive marketing tactics, questionable reporting of sales data, and an atmosphere of intolerance of criticism. The CEO is a powerful and charismatic individual, who built the company from a small regional firm to an international powerhouse in only a decade. The other top managers have been hand-picked by the CEO, as have a number of the members of the board of directors. The salary for this position is very high and includes generous stock options. It would be a major step up in Charles's career and would position him to move to CEO of another company in the future. Charles has prided himself on his high moral values and is viewed as an exceptionally ethical person by his peers. What should Charles do?

A) Charles should take the job because he can effect real change in the culture of the organization, and take advantage of the personal financial and career opportunities.
B) Charles should realize that personal moral values and the realities of the corporate world differ in both quality and degree. Consequently, he can take a job in an ethically borderline company without tainting his personal moral standing.
C) Charles should not rely on rumors to dissuade him from making an advantageous career decision.
D) Charles should not take the job because the culture of the organization is set by the CEO and other top managers. He would have little influence on the organizational culture as one of many top managers.

Question 80

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

A) board of directors.
B) top management team.
C) CEO.
D) stakeholders.