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business
essentials of strategic management

Questions and Answers of Essentials Of Strategic Management

15. Organizational culture is the product of _____ provided by an organization’s founder and top managers.a. strategic coordinationb. organizational normsc. strategic leadershipd. behavior
14. Beliefs and ideas about what kinds of goals members of an organization should pursue and what kinds or standards of behavior employees should use to achieve these goals constitute _____.a.
13. Output controls include all of the following except _____.a. divisional goalsb. budget goalsc. functional goalsd. individual goalse. all of the above
12. Designing an effective control system includes all of the following except _____.a. establishing standards and targets against which performance is to be measuredb. selecting financial controls
11. The characteristics of an effective control system include all of the following except _____.a. flexibilityb. formal target settingc. accurate informationd. supplying managers with information in
10. Return on investment (ROI), a measure of profitability determined by dividing net income by invested capital, is a tool used for _____.a. financial controlb. informational controlc. behavior
9. Organizational culture includes all of the following except _____.a. stock priceb. valuesc. normsd. socializatione. all of the above
8. _____ are based on the establishment of a comprehensive system of rules and procedures to direct the actions or behavior of divisions.a. Valuesb. Functional goalsc. Behavior controlsd. Financial
7. A company’s level of integration is the extent to which it seeks to coordinate its value creation activities and make them interdependent. True/False
6. The span of control is defined as the number of subordinates a manager directly manages. True/False
5. Organizational design is the process through which managers select the combination of organization structure and control systems that they believe will enable the company to create and sustain a
4. Transfer pricing establishes the prices at which the products produced by one business unit are then sold to the end user—the customer. True/False
3. Differentiation and integration are the two design concepts that govern how a structure will work. True/False
2. The basic tool of strategy implementation is organizational design. True/False
1. Control systems range from those directed at measuring outputs to those that measure behaviors or actions. True/False
2. In what ways does he hope to increase performance by making these organizational design changes?
1. How did Mulally change Ford’s organization structure—for example, the form of its vertical and horizontal differentiation and integration?
2. How does its control system help it to implement its strategies?
1. How would you characterize Google’s approach to strategic control?
3. Which of these structures do you think is more appropriate?Why?
2. Discuss the pros and cons of moving to a multidivisional or product-team structure to reduce card development time.
1. Discuss ways in which you can improve the way your current functional structure operates to speed up the product development process.
6. What kinds of control systems would likely be found in (a) a small manufacturing company, (b) a chain store, (c) a high-tech company, and (d) a Big Five accounting firm?
5. For each of the structures discussed in this chapter, outline the most suitable control system.
2. What kind of structure best describes the way your business school or university operates? Why is that structure appropriate? Would another structure fit better?
15. Means of guarding against the failure of an internal venture include all of the following except _____ .a. strategic alliancesb. a structured approach to project selectionc. a structured approach
14. The main drawbacks to joint-venture arrangements include all of the following except _____ .a. selecting partners carefullyb. sharing profitsc. the risk of giving critical know-how awayd. sharing
13. Microsoft and Toshiba pooled resources to develop embedded microprocessors that can perform a variety of entertainment functions in an automobile.This is an example of _____ .a. joint
12. The success of a strategic alliance includes all of the following except _____ .a. a supply partner with valuable low-cost manufacturing knowledgeb. partner selectionc. alliance structured.
11. Obstacles to change can be found at four levels in the organization: _____ .a. divisional, corporate, functional, research and developmentb. divisional, functional, corporate, human resource
10. Safeguards against opportunism or cheating by alliance partners include all of the following except _____ .a. walling off and protecting sensitive technologies from partnersb. establishing
9. When a company is analyzed as a portfolio of core competences, corporate development is oriented toward all of the following except _____ .a. maintaining existing competencesb. building new
8. _____ is a process whereby, in their effort to boost company performance, managers focus not on the company’s functional activities but on the business processes underlying its value creation
7. According to Hamel and Prahalad, a core competence is a central value creation capability of a company—that is, a core skill. True/False
_____ 6. A joint venture is a formal type of strategic alliance in which two companies jointly create a new, separate company to enter a new business area. True/False
_____ 5. The advantage of bottom-up change is that it removes some of the obstacles to change by including them in the strategic plan. True/False
_____ 4. The larger and more complex the organization, the harder it is to implement change, because inertia is likely to be more pervasive. True/False
_____ 3. The second step in implementing strategic change is for strategic managers to recognize the need for change—to see that there is a gap between desired company performance and actual
_____ 2. Business processes are the responsibility of one specific function in the organization. True/False
_____ 1. Strategic change is the movement of a company away from its present state toward some desired future state to increase its competitive advantage and profitability. True/False
2. Based upon the ways it is seeking to increase the value it creates, what is its corporate-level strategy?
1. In what ways is Oracle seeking to create value from its acquisitions?
5. Is UTC an example of a successful acquirer? Justify your answer.
4. How did UTC enter new business areas—through acquisitions, internal new ventures, or some combination of the two? Historically, which entry mode has been the most important for UTC?
3. What (if any) core competences do you think UTC’s major business units share? Is there any evidence that UTC creates new businesses by leveraging its core competences?
2. What (if any) changes would you make to UTC’s portfolio of businesses? Why would you make these changes?
1. In what major businesses is UTC involved? Does this portfolio make sense from a value creation perspective? Why?
2. What are the advantages and disadvantages associated with these strategies?
1. What kind of corporate-level strategies did News Corp pursue to build its multibusiness model?
4. How, if at all, does Motorola’s diversification strategy create value for the company’s stockholders?Break up into groups of three to five people. Appoint one group member as a spokesperson
3. How diversified is Motorola? Does Motorola pursue a related or an unrelated diversification strategy?Break up into groups of three to five people. Appoint one group member as a spokesperson who
2. Does vertical integration help Motorola establish a competitive advantage, or does it put the company at a competitive disadvantage?Break up into groups of three to five people. Appoint one group
1. To what extent is Motorola vertically integrated?Break up into groups of three to five people. Appoint one group member as a spokesperson who will communicate your findings to the class when
5. When is a company likely to choose related diversification, and when is it likely to choose unrelated diversification?Discuss your answers with reference to an electronics manufacturer.
3. GM integrated vertically in the 1920s, diversified in the 1930s, and expanded overseas in the 1950s. Explain these developments with reference to the profitability of pursuing each strategy.Why do
2. Under what conditions might concentration on a single business be inconsistent with the goal of maximizing stockholder wealth? Why?
1. Why was it profitable for General Motors and Ford to integrate backward into component-parts manufacturing in the past, and why are both companies now trying to buy more of their parts from
3. Collect some recent information on UTC from sources like Yahoo! Finance. How successful has it been in pursuing its strategy?United Technologies Corporation (UTC), based in Hartford, Connecticut,
2. What are the dangers and disadvantages of this strategy?United Technologies Corporation (UTC), based in Hartford, Connecticut, is a conglomerate, a company that owns a wide variety of other
1. In what ways does UTC’s corporate-level strategy of unrelated diversification create value?United Technologies Corporation (UTC), based in Hartford, Connecticut, is a conglomerate, a company
15. _____ is not one of the options a company has when choosing which industry to compete in.a. Developing the portfolio of businesses that creates the highest level of returns and growth
14. _____ refers to the manner in which the top executives of a company manage its business units, divisions, and functions.a. Management by objectiveb. Management by walking aroundc. Internal
13. The major disadvantages of vertical integration include all of the following except _____.a. increasing costsb. tying a company to old, obsolescent, high-cost technologyc. reducing profitsd.
12. A divestment _____.a. entails selling a unit to another company, a group of independent investors, or the management of that unitb. is the least attractive exit strategyc. is the same as a
11. _____ involves shutting down the operations of a business unit.a. Liquidationb. Harvestc. Management buyoutd. Divestmente. Spinoff
10. _____ involves halting investment in a unit in order to maximize short- to medium-term cash flow from that unit.a. Harvest strategyb. Liquidation strategyc. Spinoff strategyd. Management buyout
9. The choices that a company has for exiting a business area include all of the following except _____.a. divestmentb. harvestc. liquidationd. diversification discounte. none of the above
8. Creating value through diversification includes all of the following except _____.a. permitting superior internal governanceb. transferring competences among businessesc. realizing economies of
_____ 7. A diversified company is one that operates in two or more industries to find ways to increase its long-run profitability. True/False
_____ 6. A specialized asset is a value creation tool that is designed to perform a specific set of activities and whose value creation potential is significantly lower in its next-best use.
_____ 5. Vertical integration is a corporate-level strategy that involves a company’s entering new industries to increase its short-run profitability. True/False
_____ 4. A virtual corporation outsources all of its functional activities. True/False
_____ 3. Product bundling is a strategy of offering customers the opportunity to buy a complete range of products at a single, combined price. True/False
_____ 2. Horizontal integration is the process of acquiring or merging with industry competitors in an effort to achieve the competitive advantages that come with large size or scale. True/False
_____ 1. The principal concern of corporate-level strategy is to identify the industry or industries a company should participate in to maximize its long-run profitability. True/False
15. All of the following are advantages of a joint venture except _____.a. having complete control of the operation of the entityb. benefiting from local partners’ knowledge about the foreign
14. A _____ is a business in which a parent company owns 100% of the stock.a. joint ventureb. wholly owned subsidiaryc. strategic allianced. franchising operatione. licensing operation
13. The disadvantages of licensing as an entry mode include all of the following except _____.a. the inability to realize location and scale economiesb. the lack of control over qualityc. the ability
12. _____ avoids the costs of establishing manufacturing operations in the host country, which are often substantial, and may be consistent with scale economies and location economies.a. Licensingb.
11. The four main strategic postures that companies choose when competing internationally include all of the following except _____.a. global standardization strategyb. localization strategyc.
10. Creating pressure for local responsiveness are all of the following except _____.a. differences in customer tastesb. differences in customer preferencesc. differences in infrastructured.
9. Among strategies for entering into international operations, _____ offers the lowest level of control.a. exportingb. licensingc. a joint ventured. franchisinge. a wholly owned subsidiary
8. Low pressure for local responsiveness combined with low pressure for cost reductions suggests a/an _____ strategy?a. universalb. global standardizationc. localizationd. transnationale.
_____ 7. The greater the pressures for cost reductions are, the more likely it is that a company will want to pursue some combination of exporting and wholly owned subsidiaries. True/False
_____ 6. Companies that pursue a transnational strategy tend to centralize product development functions such as R&D at home. True/False
_____ 5. Companies that pursue a global standardization strategy focus on increasing profitability by reaping the cost reductions that come from scale economies and location economies. True/False
_____ 4. Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical. True/False
_____ 3. Location economies are the economic benefits that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be. True/False
_____ 2. The success of many multinational companies is based solely on the goods or services that are sold in foreign nations. True/False
_____ 1. The average tariff rate on manufactured goods traded between advanced nations has fallen from around 40% to under 4%. True/False
4. How would you characterize the strategy of IKEA today?
3. How has the strategic posture of IKEA changed as a result of its experiences in the United States? Why did it change its strategy?
2. How would you characterize IKEA’s original strategic posture in foreign markets? What were the strengths of this posture? What were its weaknesses?
1. How is IKEA profiting from global expansion? What is the essence of its strategy for creating value by expanding internationally?
3. What entry strategy to pursue—exporting, licensing, franchising, joint venture, or wholly owned subsidiary What information do you need in order to make this kind of decision? On the basis of
2. Which markets to enter first
1. What overall strategy to pursue—a global standardization strategy, localization strategy, international strategy, or transnational strategy
4. Discuss this statement: Licensing proprietary technology to foreign competitors is the best way to give up a company’s competitive advantage.
3. Discuss how the need for control over foreign operations varies with the strategy and distinctive competences of a company. What are the implications of this relationship for the choice of entry
1. Plot the positions of the following companies on Figure 6.3: Procter & Gamble, IBM, Coca-Cola, Dow Chemical, Pfizer, and McDonald’s. In each case, justify your answer.

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