Question 1

Which of the following is not a task of the board of directors in strategic management?

Accepted Answer

Implementing strategic plans is the task of the management team or executives, not the board of directors. The board of directors is responsible for monitoring, influencing, initiating, determining, and evaluating the strategic management process.

Question 2

The term "corporate governance" refers to the relationship among the board of directors,top management,and the shareholders in determining the direction and performance of the corporation.

Accepted Answer

This is the correct definition of corporate governance. It involves the management and control of a company, including decision-making processes and the distribution of responsibilities among stakeholders.

Question 3

A 2011 McKinsey and Company survey found that less than ten percent of a board's time is spent on current strategy.

Accepted Answer

False

Question 4

Those directors who fail to act with due care and allow the corporation to be harmed may be held personally liable.

Accepted Answer

Directors have a duty of care to act in the best interests of the corporation and its shareholders. Failing to fulfill this duty and causing harm to the corporation can result in personal liability for the directors.

Question 5

Succession planning for the board and top management team is one of the five responsibilities of the board of directors.

Accepted Answer

Succession planning for the board and top management team is indeed considered one of the core responsibilities of the board of directors. This involves identifying and grooming potential candidates for key leadership positions within the organization, providing opportunities for their training and development, and creating a robust pipeline of talent that can take over from existing leaders in a smooth and seamless manner. By focusing on succession planning, the board can ensure that the organization is well-prepared for any changes in leadership and can continue to deliver strong performance and sustainable growth over the long term.

Question 6

When a board of directors is involved to a limited degree in the performance or review of selected key decisions,indicators,or programs of management,the degree of involvement is referred to as

Accepted Answer

Nominal participation refers to a limited degree of involvement of the board of directors in the performance or review of selected key decisions, indicators, or programs of management. This means that the board is present but not actively engaged or participating, and their role may be more symbolic or perfunctory (i.e. in name only). The other options do not accurately describe this level of involvement. Rubber stamp implies that the board simply approves whatever management proposes without any scrutiny or critical analysis. Active participation suggests a more engaged and involved role in decision-making and oversight. Minimal review may imply some level of scrutiny, but not necessarily limited involvement. Phantom does not accurately describe any level of involvement or engagement.

Question 7

The ________ boards typically never initiate or determine strategy unless a crisis occurs.

Accepted Answer

The rubber stamp boards typically never initiate or determine strategy unless a crisis occurs.

Question 8

The relationship among the board of directors,top management,and shareholders is referred to as

Accepted Answer

The relationship among the board of directors, top management, and shareholders is referred to as corporate governance. This includes the policies, procedures, and structure that guide the operations of a company and ensure accountability to all stakeholders. Corporate governance is a critical aspect of effective management and helps to maintain the trust and confidence of shareholders, customers, employees, and the public.

Question 9

What percentage of public corporations have periodic board meetings devoted primarily to the review of overall strategy?

Accepted Answer

The answer of What percentage of public corporations have periodic...

Question 10

More than ________ of outside directors surveyed said that they had been named as part of a lawsuit against the corporation.

Accepted Answer

It is important for corporations to have outside directors on their board to provide an independent perspective. However, serving as an outside director also comes with some risks, as they can be held liable for the actions of the corporation. According to the question, only 40% of outside directors surveyed said they had been named as part of a lawsuit against the corporation, suggesting that the majority of outside directors have not faced legal action related to their board service.

Question 11

Which of the following statements is not true regarding the board of directors?

Accepted Answer

The statement that "More than half of all publicly traded companies in the United States are incorporated in New York, requiring that the corporation be managed in accordance with NY state laws" is not true regarding the board of directors. This statement is irrelevant to the board of directors' responsibilities and duties.

Question 12

Catalyst-level boards of directors typically

Accepted Answer

Catalyst-level boards of directors are characterized by their active involvement in shaping the company's mission, objectives, and strategy, taking on leadership roles in these areas.

Question 13

The requirements of a board of directors vary significantly by country and by state; however,there is a developing consensus as to what the major responsibilities should be.Which of the following is not one of the responsibilities?

Accepted Answer

Board of directors should not become directly involved in managerial decisions as it is the responsibility of the management team to make these decisions. The board's role is to oversee and advise the management team, not to make day-to-day operational decisions.

Question 14

The board of directors has an obligation to approve all decisions that might affect the long-run performance of the corporation.

Accepted Answer

The board of directors is responsible for overseeing the management team and making major decisions that impact the long-term success and direction of the corporation. Therefore, they have an obligation to approve all decisions that might affect the long-run performance of the corporation.

Question 15

The more active professional boards are being replaced by the board as a rubber stamp of the CEO.

Accepted Answer

Active professional boards are typically established to provide governance, oversight, and strategic direction to an organization, and their role is not merely to serve as a rubber stamp for the CEO. While dynamics can vary across organizations, the general trend emphasizes the importance of active and engaged boards that work collaboratively with CEOs while maintaining their oversight responsibilities.

Question 16

The lowest degree of involvement for a board of directors is the catalyst level of interaction.

Accepted Answer

The lowest degree of involvement for a board of directors is the passive level of interaction, where they simply receive information and updates without providing any feedback or guidance. The catalyst level involves a higher level of engagement, where the board actively promotes and encourages change and progress within the organization.

Question 17

According to the text,most publicly owned large corporations today tend to have boards with what degree of involvement in the strategic management process?

Accepted Answer

The text states that publicly owned large corporations tend to have boards with "nominal to active" involvement in the strategic management process, meaning their involvement ranges from minimal to active participation. Thus, option D, which states "nominal to active," is the best choice. Options A, B, and C are incorrect as they suggest less involvement than what is typical for most publicly owned large corporations. Option E is incorrect as it suggests a higher degree of involvement than what is typical.

Question 18

A highly involved board does all of the following EXCEPT

Accepted Answer

A highly involved board does not manage the everyday operations of the organization. Their primary focus is on initiating and determining strategy, providing advice, and keeping management alert.

Question 19

From the perspective of the public,the primary job of the board of directors is

Accepted Answer

The primary job of the board of directors from the perspective of the public is to closely monitor the actions of management. This is because the board of directors is responsible for ensuring that the company is being run in an ethical and efficient manner that is consistent with the interests of shareholders and the public. By closely monitoring management, the board can identify and correct any issues that may arise and ensure that the company is functioning at an optimal level.

Question 20

A careless director or directors can be held personally liable for harm done to the corporation if they failed to act with

Accepted Answer

"Due care" refers to the legal obligation of directors to act with prudence, reasonableness, and diligence in carrying out their duties to the corporation. If a director fails to exercise due care and harm is done to the corporation, they can be held personally liable for any resulting damages or losses.

Quiz 2: Corporate Governance