Question 1

The achievement of financial objectives tends to be a leading indicator of a company's performance, while the achievement of strategic objectives tends to be a lagging indicator of a company's future financial performance. True or false? Support and explain your answer.

Accepted Answer

A company's financial performance measures are actually lagging indicators that reflect the results of past decisions and organizational activities. But a company's past or current financial performance is not a reliable indicator of its future prospects-poor financial performers often turn things around and do better, while good financial performers can fall upon hard times. The best and most reliable leading indicators of a company's future financial performance and business prospects are strategic outcomes that indicate whether the company's competitiveness and market position are stronger or weaker. The accomplishment of strategic objectives signals that the company is well positioned to sustain or improve its future performance.

Question 2

Identify and briefly discuss at least two examples of faulty oversight by a company's board of directors in corporate governance and/or the strategy-making, strategy-executing process.

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Question 3

An organization's strategic plan consists of the actions that management plans to take in the near future. True or false? Explain and justify your answer.

Accepted Answer

Developing a strategic vision and mission, strategic management, and crafting a strategy are basic direction-setting tasks. They map out where a company is headed, its purpose, the targeted strategic and financial outcomes, the basic business model, and the competitive moves and internal action approaches to be used in achieving the desired business results. Together, these elements constitute a strategic plan for coping with industry conditions, outcompeting rivals, meeting objectives, and making progress toward aspirational goals. Typically, a strategic plan includes a commitment to allocate resources to the plan and specifies a time period for achieving goals (usually three to five years).

Question 4

What are some of the arguments for and against adopting the balanced scorecard approach? Explain and then provide several examples of organizations that have adopted the balanced scorecard performance measurement system.

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Question 5

Brad Black and Susan Griffin-Black are cofounders and top managers of one of the last large independently owned organic beauty companies, EO Products. Explain the strategy the partners could use to strengthen EO Products' market position and build a competitive advantage over its rivals. Differentiate between a business strategy and a corporate strategy.

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Question 6

A company's board of directors plays an independent and fiduciary role in corporate governance and the strategy-making, strategy-executing process. True or false? Please explain.

Accepted Answer

Every corporation should have a strong independent board of directors that (1)is well informed about the company's performance, (2)guides and judges the CEO and other top executives, (3)has the courage to curb management actions the board believes are inappropriate or unduly risky, (4)certifies to shareholders that the CEO is doing what the board expects, (5)provides insight and advice to management, and (6)is intensely involved in debating the pros and cons of key decisions and actions. Boards of directors that lack the backbone to challenge a strong-willed or "imperial" CEO or that rubber-stamp almost anything the CEO recommends without probing inquiry and debate abdicate their fiduciary duty to represent and protect shareholder interests.

Question 7

What is the meaning of the term "balanced scorecard"? What are the merits of using a balanced scorecard in judging a company's performance?

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Question 8

Explain the role and responsibility of the CEO in the strategy-making, strategy-executing process. Name several CEOs and their companies that exemplify this role.

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Question 9

Six years after its founding, in 2009, at 25, Elizabeth Holmes, founder and CEO of Theranos, a company based in Palo Alto, California, that manufactured and marketed medical devices for testing blood, told a small group at Stanford University that her ticket to success was "conviction" that you could "make something work, no matter what." On June 15, 2018, Holmes and Theranos's former president Ramesh "Sunny" Balwani were indicted on multiple counts of wire fraud and conspiracy to commit wire fraud. According to the indictment, investors and doctors and patients were defrauded. Holmes herself had falsely claimed in 2014 that the company had annual revenues of $100 million, a thousand times more than the actual figure of $100,000. Prosecutors claimed they had engaged in an "elaborate, years-long fraud" wherein they "deceived investors into believing that its key product-a portable blood analyzer-could conduct comprehensive blood tests from finger drops of blood." It was alleged the defendants were aware of the unreliability and inaccuracy of their products, but concealed that information. If convicted, they each face a maximum fine of $250,000 and 20 years in prison. Normatively speaking, which actions should Theranos's board of directors have taken to provide good governance oversight and prevent this fraud from occurring?

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Question 10

Which is more important to a company's future financial performance, the achievement of strategic objectives or the achievement of financial objectives? Why?

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Question 11

Identify and explain three actions that top executives can take to help instill a spirit of high achievement into the corporate culture and mobilize organizational energy behind the drive for good strategy execution and operating excellence.

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Question 12

Explain why a company's strategy is really a collection of strategies.

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Question 13

Compare and contrast the strategy-making hierarchy at Patagonia, a privately owned manufacturer and marketer of sustainable outdoor clothing, with the strategy-making hierarchy at Nike, a publicly traded multinational corporation engaged in the design, development, manufacturing, and worldwide marketing and sales of diversified footwear, apparel, equipment, accessories, and services.

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Question 14

The task of crafting a company's strategy is typically a job for the company's whole management team, not just a small group of senior executives. True or false? Explain and support your answer.

Accepted Answer

The more a company's operations cut across different products, industries, and geographic areas, the more that headquarters executives have little option but to delegate considerable strategy-making authority to down-the-line managers in charge of particular subsidiaries, divisions, product lines, geographic sales offices, distribution centers, and plants. On-the-scene managers who oversee specific operating units can be reliably counted on to have more detailed command of the strategic issues and choices for the particular operating unit under their supervision-knowing the prevailing market and competitive conditions, customer requirements and expectations, and all the other relevant aspects affecting the several strategic options available. Managers with day-to-day familiarity of, and authority over, a specific operating unit thus have a big edge over headquarters executives in making wise strategic choices for their operating unit. The result is that, in most of today's companies, crafting and executing strategy is a collaborative team effort in which every company manager plays a strategy-making role-ranging from minor to major-for the area he or she heads.

Question 15

Identify and explain four actions that top executives can take that are key elements in directing organizational action and building capabilities behind the drive for good strategy execution to meet or beat performance targets.

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Question 16

Weak governance at Volkswagen contributed to the 2015 emissions-cheating scandal, which cost the company billions of dollars and the trust of its stakeholders. Explain.

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Quiz 2: Charting a Companys Direction