Strategy
Questions and answers
Chapter 1 Self-Test
1. Good strategy and good strategy execution are the most trustworthy signs of good management because management is ultimately responsible for a company's performance and because good execution of a good strategy is the most surefire recipe (but not a guarantee!) for good company performance.
o True
o False
2. Financial objectives are important because without acceptable financial performance an organization cannot have a good strategy nor is it likely to have the resources required for good strategy execution.
o True
o False
3. Strategic objectives relate to performance outcomes that improve a company's competitive strength and market position whereas financial objectives relate to such performance outcomes as profits, return on investment, cash flow, dividend growth, and financial strength.
o True
o False
4. Crafting strategy is an exercise in inside-out strategic thinking.
o True
o False
5. Crafting strategy is primarily an administrative task whereas implementing strategy is primarily an entrepreneurial task.
o True
o False
6. Which of the following are among the five tasks of strategic management?
o a. Forming a strategic vision of what the organization's future business
o b. Setting objectives
o c. Deciding which objectives are high priority and which are low priority
o d. Crafting a strategy to achieve the desired outcomes
o e. Doing outside-in strategic thinking
o f. Implementing and executing the strategy
o g. Evaluating performance, reviewing new developments, and initiating corrective adjustments in the organization's vision, long-term direction objectives, strategy, and/or implementation
7. A strategic vision for a company
o a. involves how fast to pursue the chosen strategy and reach the targeted levels of performance.
o b. consists of thinking through what it will take to make the chosen strategy work as planned.
o c. consists of management's view of the kind of company it is trying to create and its intent to stake out a specific business position.
o d. is pretty much the same thing as a company's strategy.
o e. concerns management's view of the company's future business makeup and long-term direction.
8. The objectives that managers set
o a. should spell out how fast the strategy is to be implemented.
o b. should require organizational stretch and disciplined effort.
o c. should include both short-range and long-range performance targets.
o d. ought to put more emphasis on achieving short-run performance targets than on long-run performance targets.
o e. indicate the company's intent to stake out a particular business position.
o f. should include both financial and strategic performance targets.
9. A company's strategy
o a. is a combination of planned actions and o-the-spot adaptive reactions to fresh developing industry and competitive events.
o b. is a company's means of achieving its objectives.
o c. is developed primarily at the same time the company is formed and then evolves slowly thereafter.
o d. is aimed more at achieving strategic objectives than at achieving financial objectives.
o e. tends to change less often and more slowly than either its strategic vision or its performance targets.
o f. reflects managerial choices among alternatives and signals organizational commitment to particular products, markets, competitive approaches, and ways of operating.
10. Crafting strategy involves outside-in strategic thinking and entrepeneurship because
o a. company managers need to keep the strategy responsive to such outside drivers as changing buyer preferences, the latest actions and moves of rivals, market opportunities and threats, and newly appearing business conditions.
o b. managers can't keep company strategy responsive to chances in the business environment unless they exhibit entrepeneurship in studying market trends, listening to customers, figuring out ways to enhance the company activities in new directions in a timely manner.
o c. strategy is more adaptive and reactive than intended and planned.
o d. good entrepeneurship and astute analysis of the external business environment are keys to a conservative, risk-avers strategy.
o e. shrewd diagnosis of changing market conditions and changing customer preferences and requirements is one of the keys to keeping company strategies market-driven and customer-driven.
11. Company strategies evolve because
o a. it is a bad idea to do too much strategizing until a company has been in business long enough to know what strategies will work best.
o b. most managers like to develop the strategy in bits and pieces rather than all at once.
o c. even a well-planned-out-in-advance strategy must be adapted to shifting market conditions, the fresh actions of competitors, altered customer needs and preferences, emerging opportunities and threats, unforeseen events, and innovative thinking about how to improve the present strategy.
o d. many managers are conservative, preferring to be late-movers in responding new developments and avoiding the risks associated with developing a complete strategy too quickly.
o e. the longer a company is in business, the more likely it becomes that the original strategy will need to be fine tuned or revised in significant ways or even overhauled entirely in order to keep the strategy in tune with changing circumstances.
12. A company's strategy consists of
o a. the game plan for out competing rivals.
o b. actions taken to capitalize on new opportunities.
o c. defensive moves to counter the actions of competitors and protect against external threats.
o d. actions to respond to changing industry conditions.
o e. creating a budget to steer resources into those organizational departments whose activities are crucial to market success.
o f. actions to strengthen its resource base and competitive capabilities.
o g. moves and approaches that define how the company manages R&D, manufacturing, marketing, finance, and other activities.
13. The task of formulating a strategic plan involves
o a. planning to create an organizational structure that will facilitate carrying out the chosen strategies.
o b. mapping out where the organization is headed.
o c. establishing objectives.
o d. deciding on a strategy.
o e. installing internal support systems that enable company personnel to carry out their strategic roles effectively on a daily basis.
o f. involves having a strategic planning staff or a special task force come up with the specifics and the details of what to do, while senior management either approves or disapproves what is recommended.
14. The managerial task of implementing strategy includes
o a. developing a strategic vision and business mission to guide how the strategy is to be communicated, implemented, and then executed on a daily basis.
o b. building an organization a capable of carrying out the strategy successfully.
o c. exerting the internal leadership needed to drive implementations forward and to keep improving on how the strategy is being executed.
o d. creating strong "fits" between the way the organization does things internally to try to execute the strategy and what wt will take for the strategy to succeed.
o e. deciding how best to improve short-term and long-term profitability.
15. A company's long term direction, strategy, and approach to strategy implementation are never final because
o a. changes in the organization's internal or external situation fuel the need for strategic adjustments.
o b. it is always incumbent on management to push for better company performance -- to find ways to improve the existing strategy and how it is being executed.
o c. strategic planners sometimes change their minds about what kind of long-range strategy is best for the company to pursue.
o d. the company's board of directors and senior executives may prefer to experiment with several different strategies and implementation approaches to wee which works best.
o e. ineffective strategic planning efforts seem to be the norm in so many companies.
16. The five task of strategic management
o a. are best performed by professional strategic planners skilled in the use of strategic analysis techniques.
o b. tend to be performed by the CEO in most companies.
o c. are primarily the responsibility of a company's board of directors.
o d. are best performed by senior executives, with the help and advice from strategic planners.
o e. tend to require the involvement of senior managers, middle managers, and lower-echelon managers -- all managers tend to have a role in the strategy-making, strategy-implementing process.
17. Delegating a strategy-making/strategy-implementing role to middle and lower-level managers
o a. is generally unwise because they lack the "big picture" knowledge to make sound strategic decisions.
o b. works bests when they can seek counsel on an as-needed basis from a well-staffed strategic planning department.
o c. is rarely done in large companies because there are plenty of experienced senior-level managers to handle the strategic management function.
o d. is normal in many companies because the more geographically scattered and diversified an organization's operations are, the more unwieldy it becomes for senior executives to craft and implement all the necessary actions and programs.
o e. is managerially complex because it is hard, if not impossible, to fix accountability for strategic success or failure.
18. The strategic role of a company's board of directors involves
o a. taking lead responsibility for deciding what the company's long-term direction should be and for crafting a strategy.
o b. reviewing important strategic moves and officially approving the strategic plans submitted by senior management.
o c. working closely with senior strategic planners and senior executives to develop consensus on a long-term direction for the company and a long-range strategic plan.
o d. evaluating the caliber of senior executives' strategy-making and strategy-implementing skills.
o e. being an active participant in the first three tasks of strategic management and taking a pretty-much hands-off approach on the other two tasks.
19. The role and tasks of strategic planners and strategic planning departments in the strategic management process should consist of
o a. helping to gather and organize information that strategy-makers need.
o b. doing most of the strategic analysis for line managers and helping free line managers of the tedium of thinking strategically.
o c. taking lead responsibility for strategy-making and allowing line managers to have lead responsibility for strategy implementation (so as to better fix responsibility for results).
o d. working closely with key managers to prepare a sound strategic plan to submit to the board of directors for final approval.
o e. working closely with key managers to prepare a sound strategic plan to submit to the board of directors for final approval.
20. The advantages of first-rate strategic thinking and conscious management of the strategy-making, strategy-implementing process include
o a. helping to unify the numerous strategy-related decisions made by managers across the organization.
o b. creating a more proactive management posture and counteracting tendencies for decisions to be reactive and defensive.
o c. decreased risk of a failed strategic vision.
o d. greater ability to out-innovate and out-maneuver rivals, thereby winning a sustainable competitive advantage.
o e. raising managers' consciousness regarding the winds of market change, new opportunities, and threatening developments.
21. ________________ are yardsticks for tracking an organization's performance and progress.
22. An organization's _________________ consists of the actions and business approaches management employees to achieve the targeted organizational performance.
23. The most complicated and time consuming part of strategic management is ______________________.
24. A ______________________ outlines an organization's mission and future direction, near-term and long-term performance targets, and strategy.
25. The term _________________________ refers to the full range of managerial activities associated with putting the chosen strategy into place, supervising its pursuit, and achieving the targeted results.
ANSWERS
1. T
2. F
3. T
4. F
5. F
6. a, b, d, f, g
7. c, e
8. b, c, f
9. a, b, f
10. a, b, e
11. c, e
12. a, b, c, d, f, g
13. b, c, d
14. b, c, d
15. a, b
16. e
17. d
18. b, d
19. a, e
20. a, b, e
21. objectives
22. strategy
23. implementing strategy
24. strategic plan
25. strategy implementation
Chapter 2
1. Strategic visions and company mission statements
o a. should be highly personalized --unique to the organization to which they apply.
o b. provide a big picture perspective of the organization's future course -- its customer focus, its target market position, and the business activities to be pursued.
o c. are generally focused on the need to make a profit and what size profits and return on investment are desired.
o d. are much more concerned with the present than the future.
o e. need to be developed after management has settled on a strategy and a set of objectives.
2. Arriving at a good definition of what business an organization is presently in usually requires considering
o a. what strategic objectives the company is trying to achieve.
o b. what opportunities management considers most appealing.
o c. the customer needs being served, or what is being satisfied.
o d. the company's target market, or who is being satisfied.
o e. the technologies used and functions performed, or how customers' needs are being satisfied.
o f. what the company's overall strategy is.
3. Forming a strategic vision for a company involves the distinct tasks of
o a. forcefully stating that the organization's fundamental purpose is to make a profit.
o b. defining what business the company is presently in.
o c. stating the company's strategic intent and agreeing on its long term strategic objectives.
o d. deciding on a long- term strategic course for the company to pursue.
o e. communicating the vision in ways that are clear, exciting, and inspiring.
o f. establishing a mission statement for each of the company's functional department.
4. A well-worded, well-conceived strategic vision/mission statement has real managerial value when
o a. it is stated in language broad enough to cover whatever the firm might later decide to do.
o b. it is no more than one sentence in length.
o c. it crystallizes senior executives' own views about the firm's long-term direction and business makeup.
o d. it is stated in narrow enough terms to pin down the company's real arena of business interest.
o e. it conveys an organizational purpose and identity that activates employees to go all out and contribute to making the vision a reality.
5. Strategic visions and mission statements
o a. should be communicated to employees in language that arouses a strong sense of organizational purpose, builds pride, and induces employee buy‑in.
o b. need to be changed when emerging opportunities and threats in a company's surrounding business environment make it desirable to revise the organization's long‑term direction.
o c. help reduce the risk of visionless management and rudderless decision‑making.
o d. provide a beacon that lower‑level managers can use to form departmental missions and set departmental objectives.
o e. help an organization prepare for the future.
6. Objectives
o a. represent a managerial commitment to achieving specific performance outcomes by a certain time.
o b. are needed for each key result that managers deem important to organizational success.