Deck 12: Strategic Leadership

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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.

Answer 3

True

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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 10

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

Question 11

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 12

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 13

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

Question 14

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 15

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

Question 16

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

Question 17

Transformational leadership is the most effective strategic leadership style.

Question 18

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

Question 19

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

Question 20

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 21

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

Question 22

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 23

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

Question 24

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 25

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 26

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

Question 27

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 28

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 29

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 30

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

Question 31

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 32

The strategic direction of a firm usually focuses on the coming 3 to 5 years.

Question 33

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

Question 34

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

Question 35

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 36

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

Question 37

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 capabilities into core competencies.

Question 38

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

Question 39

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 40

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 41

Case Scenario 3: Zachary, Wesley & Partners.
Zachary, Wesley & Partners (ZW&P)is a leveraged buyout (LBO)firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals
retain the existing management team and provide extensive funding for what is perceived to be an already sound strategy. It focuses on this type of firm because the partners have good contacts in retailing and manufacturing and they are typically able to avoid bidding wars when the LBO is negotiated. The firm has been immensely profitable over the years, in part due to the very extensive and selective due diligence process used to winnow down the list
of prospective targets. Fewer than one out of one hundred candidates are even approached, and only a fraction of these passes further screens in the LBO negotiations. The resulting profitability has, in turn, given ZW&P a strong reputation in the financial community for successful deals, and among managers for being able to put together needed financing with good business plans.
(Refer to Case Scenario 3). What are this firm's core resources and capabilities?

Question 42

Case Scenario 2: Yepsen Timber Farms, Inc.
Yepsen Timber Farms, Inc., (YTF)was started around 1933 by Danish immigrants. The firm's primary operations were timber harvesting on several thousand acres in Oregon acquired in part under the Homestead Act, and in part through direct purchase. The firm was founded, initially as a partnership, between brothers Mogens and John (Jack)Yepsen. The Yepson brothers were among the first four graduates at Oregon Agricultural College (now Oregon State University), worked for the forest service and private industry in Oregon for a number of years, then quit their respective jobs to manage the forest they had been developing for a number of years. While timber is considered a low-tech type business, Mogens and Jack were very innovative from the standpoint that they established "tree farms," that is, harvesting then replanting acreage so that it would yield timber on a sustainable basis. At the time, and in certain parts of the world to this day, timber lands were typically "clear cut" where all the trees were stripped from a property, then the timber harvester simply moved to another parcel. This practice left thousands of acres barren, and often damaged valuable animal habitats and watershed. The brothers also introduced hybrid Pine and Douglas Fir trees that grew considerably faster than the native forest stock. These factors allowed them to grow trees that would be ready for market in 25 years, about half the time of that required to grow native trees. The brothers' idea about regeneration, care for the environment, and hybridization defined the YTF business. Never would land be harvested faster than it could replenish itself, or in a manner that threatened habitats or watersheds. Eventually, Mogens and Jack passed on and their only surviving children, Marjorie, Mary Jane, Burton, and Betty inherited the property. Two of these heirs took a strong interest in further building the portfolio of Oregon properties, and also converted the holdings to an S-Corp. to allow for the distribution of ownership and earnings to their own children. Under their guidance, YTF was tremendously successful and garnered much community acclaim for its sustainable farming practices. Now, the four siblings are in their 70s and few of their children have expressed much interest in managing the extensive portfolio of timber holdings. Among those that have expressed an interest, some are very knowledgeable about forestry, while others have a track record of incompetence and self-promotion. At the same time, ownership is now spread among some 40 children, nieces, nephews, and grandchildren of the four siblings. Many of these individuals' only interest in YTF is the annual dividend check they receive.
(Refer to Case Scenario 2). One of the Chapter 12 Key Leadership Actions that stands out in the Case Scenario is "Sustaining an Effective Organizational Culture." Both founding brothers Mogens and Jack infused a culture of innovation and sustainability. As the firm grew,however,and ownership became spread among 40 family members,that culture became diluted. This case shows that organization culture cannot be a source of competitive advantage as organizations grow.

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

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 48

Case Scenario 3: Zachary, Wesley & Partners.
Zachary, Wesley & Partners (ZW&P)is a leveraged buyout (LBO)firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals
retain the existing management team and provide extensive funding for what is perceived to be an already sound strategy. It focuses on this type of firm because the partners have good contacts in retailing and manufacturing and they are typically able to avoid bidding wars when the LBO is negotiated. The firm has been immensely profitable over the years, in part due to the very extensive and selective due diligence process used to winnow down the list
of prospective targets. Fewer than one out of one hundred candidates are even approached, and only a fraction of these passes further screens in the LBO negotiations. The resulting profitability has, in turn, given ZW&P a strong reputation in the financial community for successful deals, and among managers for being able to put together needed financing with good business plans.
(Refer to Case Scenario 3). Where are these core resources likely to be located in the firm?

Question 49

Case Scenario 1: The Walt Disney Company
The Walt Disney Company was founded as a cartoon studio in 1923 by Walt Disney and his brother Roy with a
$500 loan from an uncle. In the early 1920s, cartoonist Walt Disney visited New York to pitch his idea for a cartoon rabbit called Waldo. During that trip, through a complicated series of events, Disney lost the rights to develop Waldo. On the train-ride back to California he spoke with his wife about the importance of coming home with some alternative character. "I can't come back to our office and tell them I've lost Waldo," he bemoaned. This hardship inspired Disney to develop a new character, Mickey Mouse, and release the world's first fully- synchronized sound cartoon, "Steamboat Willie" (starring, of course, Mickey Mouse). Disney's creative genius was now coupled with a fierce instinct to protect and control his creative output. Never again would he lose "Waldo." Consequently, the Walt Disney Company was pushed by Walt to tirelessly create timeless and universal entertainment, consistently innovate and take risks to deliver that entertainment, stress a vision of being the provider of choice of quality family entertainment, and maintain rigorous control over the quality of customers' experiences with Disney products and its image. Such a personal passion for control led the Walt Disney Company into theme parks because Disney did not want Mickey's reputation sullied by the dirty, cheap theme parks that littered the land during those days. All films had to be new and of the highest quality animation (taking a minimum of five years to create, including hand-painted backgrounds); sequel films were not tolerated. Walt's vision and risk taking propensity led him in the early 1960s to buy 43,000 acres in Florida (now Walt Disney World), betting the company's future on a high-risk, uncertain venture. Amidst such a flurry of activity, Walt Disney died just before Christmas 1966, and the company was literally stopped dead in its tracks. Walt Disney's blueprint was being followed to the letter, but no further (Walt Disney World opened in 1971). No "new" creations were undertaken until 1982, when the company finally launched such businesses as the Disney Channel, Touchstone, and their home video business. Had it not been for the appointment of Michael Eisner as Disney's new CEO in 1984, the company would likely not have survived its perilous financial situation and stifled creativity. Eisner returned the company to its roots of family entertainment and values of quality, fairness, creativity, entrepreneurialism, and teamwork.
(Refer to Case Scenario 1). What value-creating legacy did Walt Disney leave to the Walt Disney Company?

Question 50

Case Scenario 1: The Walt Disney Company
The Walt Disney Company was founded as a cartoon studio in 1923 by Walt Disney and his brother Roy with a
$500 loan from an uncle. In the early 1920s, cartoonist Walt Disney visited New York to pitch his idea for a cartoon rabbit called Waldo. During that trip, through a complicated series of events, Disney lost the rights to develop Waldo. On the train-ride back to California he spoke with his wife about the importance of coming home with some alternative character. "I can't come back to our office and tell them I've lost Waldo," he bemoaned. This hardship inspired Disney to develop a new character, Mickey Mouse, and release the world's first fully- synchronized sound cartoon, "Steamboat Willie" (starring, of course, Mickey Mouse). Disney's creative genius was now coupled with a fierce instinct to protect and control his creative output. Never again would he lose "Waldo." Consequently, the Walt Disney Company was pushed by Walt to tirelessly create timeless and universal entertainment, consistently innovate and take risks to deliver that entertainment, stress a vision of being the provider of choice of quality family entertainment, and maintain rigorous control over the quality of customers' experiences with Disney products and its image. Such a personal passion for control led the Walt Disney Company into theme parks because Disney did not want Mickey's reputation sullied by the dirty, cheap theme parks that littered the land during those days. All films had to be new and of the highest quality animation (taking a minimum of five years to create, including hand-painted backgrounds); sequel films were not tolerated. Walt's vision and risk taking propensity led him in the early 1960s to buy 43,000 acres in Florida (now Walt Disney World), betting the company's future on a high-risk, uncertain venture. Amidst such a flurry of activity, Walt Disney died just before Christmas 1966, and the company was literally stopped dead in its tracks. Walt Disney's blueprint was being followed to the letter, but no further (Walt Disney World opened in 1971). No "new" creations were undertaken until 1982, when the company finally launched such businesses as the Disney Channel, Touchstone, and their home video business. Had it not been for the appointment of Michael Eisner as Disney's new CEO in 1984, the company would likely not have survived its perilous financial situation and stifled creativity. Eisner returned the company to its roots of family entertainment and values of quality, fairness, creativity, entrepreneurialism, and teamwork.
(Refer to Case Scenario 1). The Walt Disney Company had a plan for succession in the event of the death of Walt
Disney. When Walt died before Christmas 1966,the new CEO continued Walt's dream and created innovations that allowed Disney to continue along its path to success with very little interruption.

Question 51

Case Scenario 3: Zachary, Wesley & Partners.
Zachary, Wesley & Partners (ZW&P)is a leveraged buyout (LBO)firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals
retain the existing management team and provide extensive funding for what is perceived to be an already sound strategy. It focuses on this type of firm because the partners have good contacts in retailing and manufacturing and they are typically able to avoid bidding wars when the LBO is negotiated. The firm has been immensely profitable over the years, in part due to the very extensive and selective due diligence process used to winnow down the list
of prospective targets. Fewer than one out of one hundred candidates are even approached, and only a fraction of these passes further screens in the LBO negotiations. The resulting profitability has, in turn, given ZW&P a strong reputation in the financial community for successful deals, and among managers for being able to put together needed financing with good business plans.
(Refer to Case Scenario 3). Effectively managing ZW&P's portfolio of resources (in particular its human and social capital resources)may be its most important strategic leadership task.

Question 52

Case Scenario 1: The Walt Disney Company
The Walt Disney Company was founded as a cartoon studio in 1923 by Walt Disney and his brother Roy with a
$500 loan from an uncle. In the early 1920s, cartoonist Walt Disney visited New York to pitch his idea for a cartoon rabbit called Waldo. During that trip, through a complicated series of events, Disney lost the rights to develop Waldo. On the train-ride back to California he spoke with his wife about the importance of coming home with some alternative character. "I can't come back to our office and tell them I've lost Waldo," he bemoaned. This hardship inspired Disney to develop a new character, Mickey Mouse, and release the world's first fully- synchronized sound cartoon, "Steamboat Willie" (starring, of course, Mickey Mouse). Disney's creative genius was now coupled with a fierce instinct to protect and control his creative output. Never again would he lose "Waldo." Consequently, the Walt Disney Company was pushed by Walt to tirelessly create timeless and universal entertainment, consistently innovate and take risks to deliver that entertainment, stress a vision of being the provider of choice of quality family entertainment, and maintain rigorous control over the quality of customers' experiences with Disney products and its image. Such a personal passion for control led the Walt Disney Company into theme parks because Disney did not want Mickey's reputation sullied by the dirty, cheap theme parks that littered the land during those days. All films had to be new and of the highest quality animation (taking a minimum of five years to create, including hand-painted backgrounds); sequel films were not tolerated. Walt's vision and risk taking propensity led him in the early 1960s to buy 43,000 acres in Florida (now Walt Disney World), betting the company's future on a high-risk, uncertain venture. Amidst such a flurry of activity, Walt Disney died just before Christmas 1966, and the company was literally stopped dead in its tracks. Walt Disney's blueprint was being followed to the letter, but no further (Walt Disney World opened in 1971). No "new" creations were undertaken until 1982, when the company finally launched such businesses as the Disney Channel, Touchstone, and their home video business. Had it not been for the appointment of Michael Eisner as Disney's new CEO in 1984, the company would likely not have survived its perilous financial situation and stifled creativity. Eisner returned the company to its roots of family entertainment and values of quality, fairness, creativity, entrepreneurialism, and teamwork.
(Refer to Case Scenario 1). To what extent had the Walt Disney Company become a reflection of Walt up to the time that he died in 1966?

Question 53

Case Scenario 2: Yepsen Timber Farms, Inc.
Yepsen Timber Farms, Inc., (YTF)was started around 1933 by Danish immigrants. The firm's primary operations were timber harvesting on several thousand acres in Oregon acquired in part under the Homestead Act, and in part through direct purchase. The firm was founded, initially as a partnership, between brothers Mogens and John (Jack)Yepsen. The Yepson brothers were among the first four graduates at Oregon Agricultural College (now Oregon State University), worked for the forest service and private industry in Oregon for a number of years, then quit their respective jobs to manage the forest they had been developing for a number of years. While timber is considered a low-tech type business, Mogens and Jack were very innovative from the standpoint that they established "tree farms," that is, harvesting then replanting acreage so that it would yield timber on a sustainable basis. At the time, and in certain parts of the world to this day, timber lands were typically "clear cut" where all the trees were stripped from a property, then the timber harvester simply moved to another parcel. This practice left thousands of acres barren, and often damaged valuable animal habitats and watershed. The brothers also introduced hybrid Pine and Douglas Fir trees that grew considerably faster than the native forest stock. These factors allowed them to grow trees that would be ready for market in 25 years, about half the time of that required to grow native trees. The brothers' idea about regeneration, care for the environment, and hybridization defined the YTF business. Never would land be harvested faster than it could replenish itself, or in a manner that threatened habitats or watersheds. Eventually, Mogens and Jack passed on and their only surviving children, Marjorie, Mary Jane, Burton, and Betty inherited the property. Two of these heirs took a strong interest in further building the portfolio of Oregon properties, and also converted the holdings to an S-Corp. to allow for the distribution of ownership and earnings to their own children. Under their guidance, YTF was tremendously successful and garnered much community acclaim for its sustainable farming practices. Now, the four siblings are in their 70s and few of their children have expressed much interest in managing the extensive portfolio of timber holdings. Among those that have expressed an interest, some are very knowledgeable about forestry, while others have a track record of incompetence and self-promotion. At the same time, ownership is now spread among some 40 children, nieces, nephews, and grandchildren of the four siblings. Many of these individuals' only interest in YTF is the annual dividend check they receive.
(Refer to Case Scenario 2). How important is this culture to the future success of YTF?

Question 54

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 55

Case Scenario 2: Yepsen Timber Farms, Inc.
Yepsen Timber Farms, Inc., (YTF)was started around 1933 by Danish immigrants. The firm's primary operations were timber harvesting on several thousand acres in Oregon acquired in part under the Homestead Act, and in part through direct purchase. The firm was founded, initially as a partnership, between brothers Mogens and John (Jack)Yepsen. The Yepson brothers were among the first four graduates at Oregon Agricultural College (now Oregon State University), worked for the forest service and private industry in Oregon for a number of years, then quit their respective jobs to manage the forest they had been developing for a number of years. While timber is considered a low-tech type business, Mogens and Jack were very innovative from the standpoint that they established "tree farms," that is, harvesting then replanting acreage so that it would yield timber on a sustainable basis. At the time, and in certain parts of the world to this day, timber lands were typically "clear cut" where all the trees were stripped from a property, then the timber harvester simply moved to another parcel. This practice left thousands of acres barren, and often damaged valuable animal habitats and watershed. The brothers also introduced hybrid Pine and Douglas Fir trees that grew considerably faster than the native forest stock. These factors allowed them to grow trees that would be ready for market in 25 years, about half the time of that required to grow native trees. The brothers' idea about regeneration, care for the environment, and hybridization defined the YTF business. Never would land be harvested faster than it could replenish itself, or in a manner that threatened habitats or watersheds. Eventually, Mogens and Jack passed on and their only surviving children, Marjorie, Mary Jane, Burton, and Betty inherited the property. Two of these heirs took a strong interest in further building the portfolio of Oregon properties, and also converted the holdings to an S-Corp. to allow for the distribution of ownership and earnings to their own children. Under their guidance, YTF was tremendously successful and garnered much community acclaim for its sustainable farming practices. Now, the four siblings are in their 70s and few of their children have expressed much interest in managing the extensive portfolio of timber holdings. Among those that have expressed an interest, some are very knowledgeable about forestry, while others have a track record of incompetence and self-promotion. At the same time, ownership is now spread among some 40 children, nieces, nephews, and grandchildren of the four siblings. Many of these individuals' only interest in YTF is the annual dividend check they receive.
(Refer to Case Scenario 2). What culture did Mogens and Jack nurture in YTF?

Question 56

Case Scenario 1: The Walt Disney Company
The Walt Disney Company was founded as a cartoon studio in 1923 by Walt Disney and his brother Roy with a
$500 loan from an uncle. In the early 1920s, cartoonist Walt Disney visited New York to pitch his idea for a cartoon rabbit called Waldo. During that trip, through a complicated series of events, Disney lost the rights to develop Waldo. On the train-ride back to California he spoke with his wife about the importance of coming home with some alternative character. "I can't come back to our office and tell them I've lost Waldo," he bemoaned. This hardship inspired Disney to develop a new character, Mickey Mouse, and release the world's first fully- synchronized sound cartoon, "Steamboat Willie" (starring, of course, Mickey Mouse). Disney's creative genius was now coupled with a fierce instinct to protect and control his creative output. Never again would he lose "Waldo." Consequently, the Walt Disney Company was pushed by Walt to tirelessly create timeless and universal entertainment, consistently innovate and take risks to deliver that entertainment, stress a vision of being the provider of choice of quality family entertainment, and maintain rigorous control over the quality of customers' experiences with Disney products and its image. Such a personal passion for control led the Walt Disney Company into theme parks because Disney did not want Mickey's reputation sullied by the dirty, cheap theme parks that littered the land during those days. All films had to be new and of the highest quality animation (taking a minimum of five years to create, including hand-painted backgrounds); sequel films were not tolerated. Walt's vision and risk taking propensity led him in the early 1960s to buy 43,000 acres in Florida (now Walt Disney World), betting the company's future on a high-risk, uncertain venture. Amidst such a flurry of activity, Walt Disney died just before Christmas 1966, and the company was literally stopped dead in its tracks. Walt Disney's blueprint was being followed to the letter, but no further (Walt Disney World opened in 1971). No "new" creations were undertaken until 1982, when the company finally launched such businesses as the Disney Channel, Touchstone, and their home video business. Had it not been for the appointment of Michael Eisner as Disney's new CEO in 1984, the company would likely not have survived its perilous financial situation and stifled creativity. Eisner returned the company to its roots of family entertainment and values of quality, fairness, creativity, entrepreneurialism, and teamwork.
(Refer to Case Scenario 1). Why do you think the Walt Disney Company had so much difficulty being innovative in the decades following Walt's death?

Question 57

Case Scenario 3: Zachary, Wesley & Partners.
Zachary, Wesley & Partners (ZW&P)is a leveraged buyout (LBO)firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals
retain the existing management team and provide extensive funding for what is perceived to be an already sound strategy. It focuses on this type of firm because the partners have good contacts in retailing and manufacturing and they are typically able to avoid bidding wars when the LBO is negotiated. The firm has been immensely profitable over the years, in part due to the very extensive and selective due diligence process used to winnow down the list
of prospective targets. Fewer than one out of one hundred candidates are even approached, and only a fraction of these passes further screens in the LBO negotiations. The resulting profitability has, in turn, given ZW&P a strong reputation in the financial community for successful deals, and among managers for being able to put together needed financing with good business plans.
(Refer to Case Scenario 3). ZW&P's core resources are its financial and technological resources.

Question 58

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

Question 59

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 60

Case Scenario 2: Yepsen Timber Farms, Inc.
Yepsen Timber Farms, Inc., (YTF)was started around 1933 by Danish immigrants. The firm's primary operations were timber harvesting on several thousand acres in Oregon acquired in part under the Homestead Act, and in part through direct purchase. The firm was founded, initially as a partnership, between brothers Mogens and John (Jack)Yepsen. The Yepson brothers were among the first four graduates at Oregon Agricultural College (now Oregon State University), worked for the forest service and private industry in Oregon for a number of years, then quit their respective jobs to manage the forest they had been developing for a number of years. While timber is considered a low-tech type business, Mogens and Jack were very innovative from the standpoint that they established "tree farms," that is, harvesting then replanting acreage so that it would yield timber on a sustainable basis. At the time, and in certain parts of the world to this day, timber lands were typically "clear cut" where all the trees were stripped from a property, then the timber harvester simply moved to another parcel. This practice left thousands of acres barren, and often damaged valuable animal habitats and watershed. The brothers also introduced hybrid Pine and Douglas Fir trees that grew considerably faster than the native forest stock. These factors allowed them to grow trees that would be ready for market in 25 years, about half the time of that required to grow native trees. The brothers' idea about regeneration, care for the environment, and hybridization defined the YTF business. Never would land be harvested faster than it could replenish itself, or in a manner that threatened habitats or watersheds. Eventually, Mogens and Jack passed on and their only surviving children, Marjorie, Mary Jane, Burton, and Betty inherited the property. Two of these heirs took a strong interest in further building the portfolio of Oregon properties, and also converted the holdings to an S-Corp. to allow for the distribution of ownership and earnings to their own children. Under their guidance, YTF was tremendously successful and garnered much community acclaim for its sustainable farming practices. Now, the four siblings are in their 70s and few of their children have expressed much interest in managing the extensive portfolio of timber holdings. Among those that have expressed an interest, some are very knowledgeable about forestry, while others have a track record of incompetence and self-promotion. At the same time, ownership is now spread among some 40 children, nieces, nephews, and grandchildren of the four siblings. Many of these individuals' only interest in YTF is the annual dividend check they receive.
(Refer to Case Scenario 2). What must be done to continue the viability of YTF as a sustainable timber farm?

Question 61

Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate,the following statements are made. Which of the statements is FALSE?

A)If Clarita Cosmetics lays off a large number of employees, there will be a significant loss of human capital that will cause further downturns in the firm's performance.
B)A moderate-sized layoff at Clarita Cosmetics will probably improve firm performance.
C)If Clarita Cosmetics restructures, it ought to increase investments in training and development.
D)A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.

Question 62

The most effective leadership style is leadership.

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

Question 63

Case Scenario 3: Zachary, Wesley & Partners.
Zachary, Wesley & Partners (ZW&P)is a leveraged buyout (LBO)firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals
retain the existing management team and provide extensive funding for what is perceived to be an already sound strategy. It focuses on this type of firm because the partners have good contacts in retailing and manufacturing and they are typically able to avoid bidding wars when the LBO is negotiated. The firm has been immensely profitable over the years, in part due to the very extensive and selective due diligence process used to winnow down the list
of prospective targets. Fewer than one out of one hundred candidates are even approached, and only a fraction of these passes further screens in the LBO negotiations. The resulting profitability has, in turn, given ZW&P a strong reputation in the financial community for successful deals, and among managers for being able to put together needed financing with good business plans.
(Refer to Case Scenario 3). What factors may threaten the ability of ZW&P's resources and capabilities to generate continued success?

Question 64

Shaping and reinforcing a new organizational culture requires all of the following EXCEPT

A)effective communication.
B)effective performance appraisals.
C)adherence to the firm's traditional core values.
D)an appropriate reward system.

Question 65

In the balanced scorecard framework,climate that supports change and innovation.

A)learning and growth
B)financial
C)operational
D)innovational controls are used to assess the organization's success in creating a

Question 66

Organizational controls provide

A)the parameters within which strategies are to be implemented.
B)goals and objectives that must be achieved.
C)information on action steps to be taken to implement the corporate strategy.
D)managers with guidelines on how to treat employees.

Question 67

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior?

A)Effectively Managing the Firm's Resource Portfolio.
B)Determining Strategic Direction.
C)Regulating and Controlling Employees.
D)Sustaining an Effective Organizational Culture.

Question 68

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?

A)Appointing many outside board members.
B)Increasing the firm's sales.
C)Increasing the homogeneity of the top management team.
D)Training and development programs.

Question 69

The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they

A)overemphasize financial controls and neglect strategic controls.
B)overemphasize strategic control and neglect financial controls.
C)overemphasize strategic and financial controls and neglect ethical controls.
D)neglect short-term controls of all kinds in favor of long-term strategic controls.

Question 70

Billy Kroghmen is the son of a very prominent Fortune 500 CEO. Billy has had troubles. He failed out of multiple colleges,universities,and correspondence schools. He finally received his undergraduate degree from a university with only a post office box for an address. He then enrolled in the school's combined graduate accounting and law school programs,graduating with honor with degrees in both areas. After graduation,he twice failed both the CPA and bar exams,managing to set record low scores on the ethics portions of both. Despite these academic setbacks,Billy's career now seems to be thriving. He has been appointed to a number of "blue ribbon" government committees,is on the board of directors of two corporations and one prestigious not-for-profit organization. In at least one instance,a donor credited Billy with the idea for making a large contribution to the not-for-profit. Widespread speculation is that his career advancement is based largely on social relationships through friends and family. We would classify Billy as on capital,and on capital.

A)high; social; low; human
B)high; human; high; social
C)high; human; low; social
D)None of these options are correct.

Question 71

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 72

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)Both A and B are correct.
D)low tolerance for ambiguity.

Question 73

Determining the strategic direction of a firm involves

A)implementation of a balanced scorecard.
B)developing an entrepreneurial mind set.
C)specifying the vision and the strategy to achieve that vision over time.
D)exploiting and maintaining core competencies.

Question 74

Two key strategic leadership actions include

A)monitoring the hiring of key employees and focusing on growth but not learning initiatives.
B)designing and then implementing the balanced scorecard.
C)setting appropriate financial targets and establishing an effective business level synergy.
D)determining strategic direction and establishing balanced organizational controls.

Question 75

An example of the external labor market is the situation where

A)an assessment center operated by an external consulting firm evaluates company managers for promotion potential.
B)a new vice president of marketing is hired from a competitor.
C)the senior vice president of finance is promoted to CEO.
D)a vice president of human resources is sent to a university executive MBA program for professional development.

Question 76

Which of the following factors most encourages stability in a firm's strategy?

A)a new CEO hired from outside the firm but within the industry
B)internal CEO succession and a homogeneous top management team
C)external CEO succession and a heterogeneous top management team
D)a new CEO hired from outside the industry

Question 77

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 78

The effective development and management of the firm's______may be its only sustainable competitive advantage.

A)capital base
B)human capital
C)technology
D)organizational culture

Question 79

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 80

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in

A)managerial opportunism.
B)white-collar crime.
C)vindictive disloyalty.
D)an act of courage.