Deck 1: Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage

Question 1

To increase shareholder value,managers must pursue strategies that increase revenue and market share,whether the results are profitable or not.

Answer 1

False

Question 2

The profit growth of a company can be measured by the increase in its stock price over time.

Answer 2

False

Question 3

General managers bear responsibility for the overall performance of the company or for one of its major self-contained subunits or divisions.

Answer 3

True

Question 4

Time Inc.experienced an increase in its subscriber base because of early entry into Web publishing.

Question 5

Walmart's business model focused on urban and suburban locations.

Question 6

Values are personal and have little to do with organizational culture or competitive advantage.

Question 7

A firm obtains competitive advantage when its strategy results in superior performance relative to its competitors.

Question 8

The CEO is a company's principal general manager.

Question 9

ROIC is a measure of how efficiently and effectively managers use the capital at their disposal to produce profitability.

Question 10

The feedback loop in the model of the strategic management process indicates that the process is ongoing; it never ends.

Question 11

The first component of the strategic management process is crafting the organization's mission statement,which provides the framework or context within which strategies are formulated.

Question 12

A strategy can be defined as a set of related actions that managers take to increase their company's performance.

Question 13

SWOT analysis concerns identifying strengths,weaknesses,options,and threats.

Question 14

One of the factors that distinguishes organizations in the nonprofit sector from for-profit businesses is the lack of concern for strategic management.

Question 15

The concepts vision and mission can be used interchangeably.

Question 16

Well-constructed goals provide a means by which the performance of managers can be evaluated.

Question 17

SWOT analysis is implemented to fine-tune strategies.

Question 18

The vision of a company lays out some desired future state and articulates what the company would like to achieve.

Question 19

A business model is managers' conception of how the set of strategies their company pursues should mesh together into a congruent whole,thus enabling the company to gain a competitive advantage and achieve superior profitability and profit growth.

Question 20

Strategic leadership is concerned with how to most effectively manage a company's strategy-making process to create competitive advantage.

Question 21

The strategies that a company's managers pursue

A)have a major impact on the company's performance relative to its competitors.
B)have little or no effect on overall profitability.
C)typically result in higher per-unit cost of production.
D)result in significant industry structural changes.
E)none of these choices.

Question 22

Vice President Chung is responsible for executing decisions about human resources.Mr.Chung is

A)a corporate-level general manager.
B)both a corporate- and business-level general manager.
C)a business-level general manager.
D)a functional manager.
E)a corporate-level,business-level,and functional manager.

Question 23

In practice,the strategies of most organizations are probably a combination of the intended and emergent strategies.

Question 24

Emergent strategies arise in a company with careful long-term planning.

Question 25

Functional managers

A)are responsible for the specific business functions or operations that constitute a company or one of its divisions.
B)look at the overall picture of a corporation.
C)have no strategic role.
D)formulate generic strategies.
E)execute business-level decisions.

Question 26

Ivory tower planning ignores the important strategic role of autonomous action by lower-level managers.

Question 27

Leaders who exhibit a high degree of emotional intelligence tend to be more effective than those who do not.

Question 28

Which of the following is the organization's principal general manager?

A)Chairman of the Board of Directors
B)Division head
C)CFO
D)CEO
E)Controller

Question 29

Profit growth is best measured

A)by the increase in share price.
B)by the return on investment.
C)by the increase in net sales.
D)over time.
E)by increases in liquidity.

Question 30

Rules of thumb rarely if ever lead to severe errors in the decision making process.

Question 31

The principal driver(s)of shareholder value is (are)

A)profitability.
B)profit growth.
C)market share.
D)profitability and profit growth.
E)all of these choices.

Question 32

Which of the following dimensions are encompassed by a company's business model?

A)Selecting customers
B)Defining and differentiating its product offerings
C)Determining how it will produce goods and services
D)Determining how it will grow the business over time
E)All of these choices.

Question 33

Within a diversified company,the responsibilities of corporate-level strategic managers include

A)translating the corporate mission statement into concrete strategies for individual business units.
B)closely supervising the formulation of strategies at the functional level that support the company's business- and corporate-level strategies.
C)allocating resources to functions within business units.
D)overseeing the development of strategies for the total organization and allocating resources among its different business areas.
E)identifying and establishing relationships with supplier firms.

Question 34

The great virtue of scenario planning is that managers must think outside the box to anticipate what they might do in different situations.

Question 35

A competitive advantage is considered to be a sustained competitive advantage when the

A)advantage endures for a long time.
B)firm is able to spread the advantage to all of its business units.
C)advantage is very large.
D)advantage was gained at a low cost.
E)managers who developed the advantage are still employed at the firm.

Question 36

General managers are found

A)only at the corporate level.
B)only at the business level.
C)only at the functional and business levels.
D)at the functional,business,and corporate levels.
E)only at the corporate and business levels.

Question 37

Honda intended to become a market leader in the small motorbike category by approaching Sears with the idea of marketing to non-traditional customers.

Question 38

The traditional planning model suggests that a company's strategies are the result of a plan from a highly structured process orchestrated by top management.

Question 39

Using informal and unconventional ways to gather information is an unwise practice for an organization.

Question 40

Mintzberg's model suggests a company's realized strategy is the product of whatever strategies are actually put into action¾intended and emergent.

Question 41

Which of the following cognitive biases refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions on the basis of these beliefs,even when presented with evidence that their beliefs are wrong?

A)Prior hypothesis bias
B)Reasoning by analogy
C)Illusion of control
D)Escalating commitment
E)Representativeness

Question 42

Betsy Holden is the head of Kraft Foods,a division of the Philip Morris Company.Which of the following is not likely to be one of Ms.Holden's responsibilities?

A)Turning corporate-level strategy into action
B)Defining Philip Morris's mission
C)Deciding how to compete in the foods industry
D)Supervising functional-level managers
E)Developing a business-level strategy

Question 43

The fit model of strategy formulation and implementation

A)was proposed and supported by Prahalad and Hamel.
B)is not useful because the future is uncertain.
C)is useful for both intended and emergent strategies.
D)can give a company a sustainable competitive advantage.
E)focuses more on the current situation than on the future situation.

Question 44

Matching an organization's structure and control systems to the requirements of a company's strategy is

A)part of the strategy making process.
B)part of the SWOT analysis.
C)facilitated through the feedback loop.
D)part of internal analysis.
E)all of these choices.

Question 45

Edward Wrapp's ideas about the astuteness of political power suggest that successful strategic managers

A)are skilled organizational politicians who can build consensus and get their ideas pushed through.
B)are unwilling to live with less than total acceptance of their programs.
C)maintain tight control over as many decisions as possible.
D)publicly commit themselves to bold strategic agendas.
E)recognize the futility of pursuing intended strategies.

Question 46

Strategic leadership is about

A)strategy formulation.
B)strategy implementation.
C)how to effectively manage a company's strategy and create competitive advantage.
D)establishing effective contract processes.
E)reducing a company's operating costs.

Question 47

The role of corporate-level managers is to

A)define operational-level strategies.
B)outline functional-level strategies and plans.
C)oversee the development of strategies for the whole organization.
D)develop business-level strategies
E)oversee the development of business-level and functional-level strategies.

Question 48

Aaron planned to cut prices at his bicycle shop,but when a competing shop began to offer free repairs,Aaron decided to copy them.Aaron's new strategy (offer free repairs)is an example of a(n)

A)mistake.
B)emergent strategy.
C)deliberate strategy.
D)intended strategy.
E)unrealized strategy.

Question 49

Sam Walton wanted Walmart to keep costs low.Therefore,as an example to others,he drove his own car and furnished his office with plain,steel desks.In this case,Mr.Walton was displaying his

A)commitment.
B)vision.
C)astute use of power.
D)emotional intelligence.
E)eloquence.

Question 50

An effective business model

A)involves how a company selects its customers.
B)creates value for its customers.
C)achieves and sustains a high level of profitability.
D)produces goods and services.
E)all of these choices.

Question 51

Jeffrey Pfeffer believes that a manager's political power comes from his or her control over

A)employees' paychecks.
B)the firm's strategic vision.
C)important organizational resources.
D)internal communication channels.
E)the company's website.

Question 52

When considering emergent strategies,it is important for a firm's managers to

A)ensure that the chosen strategies are the result of deliberate plans.
B)ignore strategies that are not the result of a formal planning process.
C)evaluate each one carefully,using only those that show the most promise.
D)substitute emergent strategies for formal plans whenever possible.
E)develop the emergent strategies themselves.

Question 53

Scenario-based planning is a technique for coping with the problem of

A)uncertainty.
B)planning equilibrium.
C)bottom-up planning.
D)strategic fit.
E)cognitive bias.

Question 54

The first step in the strategic management process is

A)defining the mission and major goals of the organization.
B)analyzing the macroenvironment.
C)analyzing the industry environment.
D)determining the firm's strengths and weaknesses.
E)deciding on a fit between the organization's strengths and weaknesses and the environment's opportunities and threats.

Question 55

Which of the following cognitive biases occurs when decision makers commit even more resources if they receive feedback that the project is failing?

A)Prior hypothesis bias
B)Reasoning by analogy
C)Illusion of control
D)Escalating commitment
E)Representativeness

Question 56

Maximizing shareholder value is

A)a byproduct of a company's cost reduction programs.
B)not generally a viable goal for a company.
C)not the responsibility of a company's managers.
D)the ultimate goal of profit-making companies.
E)not required to attract risk capital.

Question 57

Which of the following is not a cognitive bias?

A)Escalating commitment
B)Reasoning by analogy
C)Ivory tower thinking
D)Representativeness
E)Illusion of control

Question 58

Strategy formulation refers to the

A)task of designing organizational structures and control systems.
B)process by which strategies are put into action.
C)top-down planning process that gives rise to the implementation of emergent strategies.
D)task of analyzing an organization's external and internal environment and then selecting an appropriate strategy.
E)process of choosing a realized strategy.

Question 59

The scenario approach to strategic planning involves

A)devising plans for coping with a number of different possible future states of the world.
B)homing in on a single prediction of future demand conditions using an iterative planning process.
C)functional managers setting key corporate objectives.
D)using computers to build virtual worlds for top-level managers.
E)making planning the exclusive domain of top-level managers.

Question 60

Feelings of personal responsibility for a project are most likely to lead to

A)prior hypothesis biases.
B)escalating commitment.
C)reasoning by analogy.
D)representativeness.
E)ivory tower planning.

Question 61

Strategic implementation involves

A)taking actions at the functional,business,and corporate levels.
B)comparing company performance with leading companies in the industry.
C)analyzing the macroenvironment for any last-minute changes that may have occurred.
D)only activities at the corporate level.
E)all of these choices.

Question 62

Identify and discuss the criticisms of the traditional strategic planning process and why it is useful to view strategy as an emergent process.

Question 63

Systematic errors in the decision-making process are caused by

A)inadequate information.
B)information overload.
C)cognitive biases on the part of decision makers.
D)poor data collection procedures.
E)all of these choices.

Question 64

Competition from industry to industry

A)is normally the same in all industries.
B)is characterized by different competitive conditions in different industries.
C)does not vary over time.
D)cannot be measured.
E)none of these choices.

Question 65

Which of the following is not a characteristic of emotional intelligence?

A)Self-awareness
B)Self-regulation
C)Self-esteem
D)Empathy
E)Social skills

Question 66

Explain the formal strategic planning process.Name each step in the process and describe the specific activities included in each step and the relationship between the steps.

Question 67

Holly owns a landscape company and is thinking about expanding her services to include outdoor water features (waterfalls,streams,ponds).If,before making this decision,she looks at the experience of similar firms that have added outdoor water features,she is employing

A)wishful thinking.
B)aqua-evaluation.
C)devil's advocacy.
D)outside view.
E)dialectic inquiry.

Question 68

Describe at least three characteristics of strong strategic leaders.Explain how each of the three characteristics would help motivate and lead an organization's personnel.

Question 69

Which of the following is not a characteristic of well-constructed goals?

A)They are precise and measurable.
B)They are the result of a group decision process.
C)They specify a time period.
D)They are challenging but realistic.
E)They address critical issues.

Question 70

Identify the levels of strategic managers and discuss their role in the strategic management process.

Question 71

A company's mission

A)lays out the desired future state of the company.
B)outlines the manner in which employees and managers should conduct themselves.
C)defines the manner in which strategies will be developed and attained.
D)describes what the company does.
E)answers the question,"What will our business become?"

Question 72

An emergent strategy is

A)the result of a planned strategy.
B)an unplanned response to unforeseen circumstances.
C)the product of careful top-down planning mechanisms.
D)the same as a realized strategy.
E)a group response to a problem area.

Question 73

Good strategic leaders

A)possess a willingness to delegate and empower subordinates.
B)control all facets of decision making.
C)are confident in their ability to make sound decisions without consulting others.
D)assure uniformity of purpose through the exercise of power.
E)have the ability to be inconsistent when the situation requires inconsistency.

Question 74

Describe at least three of the cognitive biases that individual decision makers experience.Then describe a real or hypothetical situation for each of the three biases,explaining how the bias is evident in the situation.

Question 75

The primary goal of a SWOT analysis is to

A)benchmark a company's performance.
B)force managers to think creatively rather than analytically.
C)forecast future events.
D)develop short-run goals.
E)create,affirm,or fine-tune a company-specific business model.

Question 76

A component of strategy implementation is

A)designing the best organization structure,culture,and control systems to put a strategy into action.
B)enumerating the number and kind of periodic reports that must be submitted by functional-level managers.
C)analyzing the macroeconomic environment of the company.
D)answering the question,"What is our business?"
E)all of these choices.

Question 77

Devil's advocacy

A)is simpler than the expert approach.
B)is an example of ivory tower planning.
C)results in unproductive conflict.
D)involves one group member being responsible for questioning the assumptions of a plan.
E)results in a final plan that is a combination of a plan and a counterplan.

Question 78

In the typical scenario planning exercise,

A)most scenarios are pessimistic.
B)most scenarios are optimistic.
C)some scenarios are optimistic and some scenarios are pessimistic.
D)only worst-case outcomes should be considered.
E)only best-case outcomes should be considered.

Question 79

The first step in the strategic management process is to

A)analyze the competitive environment.
B)examine the organizational structure to see what changes may be required.
C)analyze internal strengths.
D)analyze internal weaknesses.
E)select the corporate mission and major corporate goals.

Question 80

An important first step in the process of formulating a company's mission is to

A)describe the technological processor.
B)identify the customer segment served by the company.
C)answer the question,"What is our business?"
D)decide what the company will be like ten years from now.
E)evaluate the company's most recent performance.