Question 1

What type of new strategic leader is the MOST likely to make drastic strategic changes?

Accepted Answer

A new strategic leader who is hired from outside the company brings a fresh perspective and is not biased towards the existing strategies of the company. Therefore, they are more likely to make drastic changes to improve the company's performance. On the other hand, a new leader hired from within the company may already be accustomed to the existing strategies and may not want to make drastic changes. A leader hired from an acquired firm may also be hesitant to make drastic changes because of the need to integrate with the company's existing culture and strategies.

Question 2

What type of control system focuses on the content of strategic actions rather than performance outcomes?

Accepted Answer

Strategic controls focus on the content of strategic actions, such as whether the company is pursuing the right opportunities and making sound decisions. This is in contrast to performance outcome controls, which assess whether the company is achieving its goals and objectives. Balanced control systems typically incorporate both types of controls, while organizational controls focus on the overall structure and culture of the organization, and financial controls monitor financial performance.

Question 3

Which of the following statements concerning the leadership of the Board of Directors IS CORRECT?

Accepted Answer

The trend has been towards increasing the percentage of non-employee board chairs, reflecting a move towards greater independence and oversight by separating the roles of CEO and board chair.

Question 4

Which of the following positions WOULD NOT be considered to be part of a company's top management team?

Accepted Answer

While plant managers may hold important positions within a company, they are typically not members of the top management team. The top management team usually consists of executives who hold positions such as CEO, COO, CFO, and other high-level positions that make strategic decisions for the company. The VP of Marketing and VP of Finance are examples of positions that could be part of the top management team, depending on the company structure.

Question 5

According to the text, which of the following is the most common type of succession event?

Accepted Answer

The text states that "the most common succession event is the appointment of an internal successor". Therefore, the best choice is B.

Question 6

Apple's CEO was reimbursed $1.2 million for costs he incurred while using his personal jet for company business. This is an example of

Accepted Answer

The reimbursement of the CEO for using his personal jet for company business is an example of a related party transaction. This is because the CEO is a related party to the company, and this transaction involves the transfer of funds between them. It is not necessarily unethical or fraudulent, as long as it is properly disclosed and handled according to accounting standards. However, it could be seen as an example of managerial opportunism if the CEO is using the company's resources for personal gain.

Question 7

According to the text, how can strategic leaders promote integrity and ethical behavior?

Accepted Answer

Strategic leaders can promote integrity and ethical behavior by developing standards for behavior among employees, serving as role models for ethical behavior, and expecting, praising, and rewarding ethical behavior. All of these approaches can work synergistically to foster a culture of integrity within an organization. By setting clear expectations, modeling ethical behavior, and incentivizing employees to act with integrity, strategic leaders can help create an environment in which ethical decision-making becomes the norm.

Question 8

Which of the following is the BEST way for a company to ensure that performance standards are met and employees do not misuse the firm's resources?

Accepted Answer

The best way for a company to ensure that performance standards are met and employees do not misuse the firm's resources is by establishing effective control systems. This can involve implementing policies and procedures, setting up monitoring and reporting mechanisms, and providing regular training and feedback to employees. Building an entrepreneurial culture may encourage risk-taking and innovation but may also lead to a lack of accountability and oversight. Developing an effective succession plan for top management is important for long-term planning and stability, but it does not directly address performance standards or resource misuse. Minimizing the number of institutional investors may have little impact on internal controls and may not address the root causes of performance or resource issues.

Question 9

Opportunistic behavior on the part of strategic leaders at Enron and Tyco has lead to an increase in the importance of

Accepted Answer

The opportunistic behavior of strategic leaders at Enron and Tyco highlighted the importance of corporate governance - the system of rules, practices, and processes by which a company is directed and controlled. Strong corporate governance is essential for mitigating the risks of unethical behavior on the part of executives and protecting the interests of shareholders and other stakeholders. The other options (having insiders on a company's board of directors, institutional investing, and related-party transactions) are all relevant to corporate governance, but they are not the most critical factor in addressing the specific issues that arose at Enron and Tyco.

Question 10

Which of the following statements concerning an entrepreneurial culture IS INCORRECT?

Accepted Answer

An entrepreneurial culture does not reject failure but rather embraces it as part of the learning process. Failures are opportunities for growth and improvement, and a company with an entrepreneurial culture encourages experimentation, risk-taking, and innovation.

Question 11

What type of control system uses both financial and strategic controls simultaneously?

Accepted Answer

A balanced scorecard control system uses both financial and strategic controls simultaneously. It provides a framework for monitoring and managing performance across multiple dimensions, including financial, customer, internal processes, and learning and growth. This allows organizations to align their operational activities with their overall business strategy and goals.

Question 12

Cisco Systems' CEO John Chambers analyzed the company's performance problems and decided to make fewer and more carefully planned acquisitions in order to improve performance. What type of control did Chambers' actions reflect?

Accepted Answer

Chambers' decision to make fewer and more strategic acquisitions reflects strategic control, which involves ensuring that the company's strategies align with its mission and goals. This control function helps the company to adjust its direction and make necessary changes to stay on track.

Question 13

What type of control system focuses primarily on generating sales revenue, maintaining reasonable expenses and remaining solvent?

Accepted Answer

Financial controls focus on managing financial resources and ensuring the organization remains financially stable. This includes generating sales revenue, controlling expenses, managing cash flow, and maintaining adequate levels of liquidity to remain solvent.

Question 14

Which of the following strategic leaders is credited with restoring the entrepreneurial culture at Apple?

Accepted Answer

Steve Jobs is credited with restoring the entrepreneurial culture at Apple when he returned to the company in 1997.

Question 15

Which of the following agencies is responsible for scrutinizing related party transactions?

Accepted Answer

The Securities and Exchange Commission (SEC) is responsible for scrutinizing related party transactions. Related party transactions refer to transactions between a company and its management, directors, or any entities related to them. These transactions may pose a conflict of interest and potentially harm the interests of other stakeholders, such as shareholders. The SEC requires companies to disclose related party transactions in their financial statements and takes action against any fraudulent or abusive practices. None of the other agencies listed have responsibility for scrutinizing related party transactions.

Question 16

What are the two primary types of control systems that can be used to guide managerial decision-making?

Accepted Answer

The two primary types of control systems that can be used to guide managerial decision-making are financial controls and strategic controls. Financial controls involve monitoring financial resources to ensure that they are being used effectively and efficiently, while strategic controls involve monitoring the overall direction of the organization and ensuring that it is aligned with the organization's mission and goals. Business process controls and learning and growth controls are subsets of strategic controls, and institutional controls and performance appraisal are not considered primary types of control systems.

Question 17

When managers make decisions that are in their own best interests, rather than the best interests of their company, they are

Accepted Answer

When managers make decisions that are in their own best interests, rather than the best interests of their company, they are acting opportunistically. This behavior can potentially harm the company and its stakeholders in the long term.

Question 18

What legislation was passed in the United States in 2002 to require more managerial responsibility for company activities and outcomes?

Accepted Answer

The Sarbanes-Oxley Act was passed in 2002 to require more managerial responsibility for company activities and outcomes. This was in response to corporate scandals such as Enron and WorldCom. The act requires companies to establish internal controls and reporting systems, and executives are required to certify the accuracy of financial statements. It also increases penalties for white collar crime.

Question 19

In recent years, institutional investors in U.S. firms have demanded that boards of directors include more independent outsiders than inside officers. Why do these investors prefer independent outsiders on boards of directors?

Accepted Answer

Independent outsiders are more objective and less likely to be influenced by the CEO or inside officers who may have personal interests that conflict with the interests of the company and its shareholders. This helps to ensure that the board of directors is able to effectively monitor and oversee the management team and make decisions in the best interests of the company and its shareholders.

Question 20

According to the text, strategic leaders can use all of the following behaviors to promote integrity and ethical behavior EXCEPT

Accepted Answer

The appointment of friends and associates to the company's board of directors may create conflicts of interest and compromise the integrity of the decision-making process. Therefore, this behavior is not recommended for promoting integrity and ethical behavior. The other options listed - developing standards for behavior, expecting, praising and rewarding ethical behavior, and serving as role models - are all effective strategies for promoting ethical behavior.

Quiz 2: Leading Strategically