CHAPTER 7 Show Implementing Strategies: Management and Operations Issues True/False The Nature of Strategy Implementation 1. Effective strategy formulation can usually guarantee successful strategy implementation. Ans: F Ans: F3. Strategy formulation requires coordination among a few individuals, but strategy implementation requires coordination among many. Ans: T 4. It is always easier to say you are going to do something (strategy formulation) than to actually do it (strategy implementation). Ans: T 5. Unlike strategy formulation, strategy implementation varies considerably among different types and sizes of organizations. 6. A bottom-up flow of communication is essential for developing top-down support. Ans: F Annual Objectives 7. Annual objectives are key components in the strategic-management process because they dictate how resources will be allocated. Ans: T 8. Horizontal consistency is more important than vertical consistency in developing annual objectives. Ans: F 9. Undesirable conduct such as distorting the record can be a result of overemphasis on achieving objectives. Ans:
T Policies 10. Policies refer to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals. Ans: T 11. Strategies clarify what can and cannot be done in pursuit of an organization’s objectives. Ans: F Resource Allocation
Ans: T 13. Four types of resources that can be used to achieve desired objectives are financial, physical, human and technological. Ans: T Managing Conflict
Ans: F 15. Conflict of any kind is avoidable in organizations. Ans: F 16. Concerning managing and resolving conflict, defusion includes such actions as ignoring the problem in hopes that the conflict will resolve itself. Ans: F 17. Holding a meeting at which conflicting parties present their views and work through their differences is part of the diffusion strategy of managing conflict. Ans: F Page: 270 18. Exchanging members of conflicting parties so each can gain an appreciation of the other’s point of view exemplifies a confrontation approach. Ans: T
Matching Structure with Strategy
Ans: T 20. Tasks and activities are grouped together by business function in a divisional organizational structure. Ans: F
Ans: F 22. Most large companies have abandoned the functional structure in favor of decentralization. Ans: T
Ans: F 24. With a divisional structure by customer, an organization can effectively cater to the requirements of clearly defined customer groups. Ans: T 25. Because activities are organized according to the way work is actually performed, a divisional structure by process is similar to the matrix structure. Ans: F
Ans: T 27. With the matrix structure it is common for functional resources to be duplicated. Ans F Some Do’s and Don’ts in Developing Organizational Charts
Ans: F 29. When developing an organizational chart, it is not wise to recommend a dual title for just one executive. Ans: T 30. In developing an organizational chart, avoid having a particular person reporting to more than one person above them in the chain of command. Ans: T
Restructuring, Reengineering and E-Engineering 31. Restructuring is also called rightsizing. Ans: T 32. In terms of number of employees, restructuring usually involves increasing the size of the firm. Ans: F 33. Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs. Ans: T 34. The focus of restructuring is changing the way work is actually carried out. Ans: F 35. Cornerstones of reengineering are decentralization, reciprocal interdependence and information sharing. Ans: T Linking Performance and Pay to Strategies
Ans: T 37. Gain sharing requires employees or departments to establish performance targets; if actual results exceed objectives, all members get bonuses. Ans: T 38. In 2004, salaries and
bonuses of CEOs in the Ans: F 39. In 2004, the highest paid CEO was Steve Jobs from Apple Computer. Ans: F Managing Resistance to Change
Ans: T 41. Resistance to change can be considered the single greatest threat to successful strategy implementation. Ans: T 42. A rational change strategy means giving orders and enforcing those orders. Ans: F 43. Ideally, the rational type change strategy is the most desirable. Ans: T 44. The fastest of all approaches to implement change is the rational change strategy. Ans: F 45. The rational change strategy is one that presents information to convince people of the need for change. Ans: F Managing the Natural Environment 46. Recently, an increasing number of companies have been implementing less rigorous environmental policies. Ans: F 47. Managing as if the earth matters requires an understanding of how international trade, competitiveness and global resources are connected. Ans: T 48. Managing environmental affairs is primarily a technical function performed by specialists in a firm. Ans: F Creating a Strategy-Supportive Culture 49. Changing a strategy to fit an existing culture is not as effective as changing a firm’s culture to fit a new strategy. Ans: T 50. An effective, multi-method technique for studying and altering a firm’s structure is known as triangulation. Ans: F
51. Individualism, achievement, competition, informality and doing more than expected are all stressed by Mexican businesses. Ans: F 52. There is substantial social pressure against becoming a successful entrepreneur in Ans: T 53. An important business activity in Ans: T Production/Operations Concerns When Implementing Strategies
Ans: F 55. JIT significantly increases the costs of implementing strategies. Ans: F
56. Besides reducing worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial depreciation savings. Ans: F 57. ESOPs work well even in firms with fluctuating payrolls and profits. Ans: F Balancing Work Life and Home Life 58. Work/family issues are typically focused on the benefit to working women. Ans: F 59. The United States leads the world in promoting women and minorities into mid- and top-level managerial positions in business. Ans: T Page 296 Multiple Choice The Nature of Strategy Implementation 60. Strategy formulation Ans: b 61. Which of these is true about strategy implementation? a. It
is positioning forces before the action. Ans: c Annual Objectives
Ans: e 63. Establishing objectives is a a. top-level activity. Ans: c 64. Considerable time and effort should be devoted to assuring objectives are well conceived because they represent the basis for a. monitoring processes. Ans: e
Ans: c 66. Which term would most likely be incorporated into written objective statements? a. Maximize Ans: c Policies 67. What are guidelines, methods, procedures, rules, forms and administrative practices known as? Ans: b 68. Which of the following issues may not require a management policy? a. To establish a high- or low-safety stock of inventory Ans: b Resource Allocation
Ans: d
70. _______ is not a major factor that commonly prohibits effective resource allocation. a. Underprotection of resources Ans: a Managing Conflict 71. A disagreement between two or more parties on one or more issues is called a(n) a. integrated solution. Ans: b 72. Conflict in an organization is a. always bad. Ans: c 73. What are three categories of approaches for managing and resolving conflict? a. Avoidance, diffusion and confrontation Ans: a 74. Which approach for managing and resolving conflict involves exchanging members of conflicting parties of that each can gain an appreciation of the others point of view? a. Avoidance Ans: e 75. Which approach for managing and resolving conflict involves ignoring the problem in hopes that the
conflict will resolve itself? Ans: a 76. Which approach for managing and resolving conflict involves playing down differences between conflicting parties while accentuating similarities and common interests? Ans: d Matching Structure with Strategy 77. Why do changes in company strategy often require changes in the way an organization is structured? a. Structure dictates how goals and objectives will be established. Ans: a 78. What type of organizational structure do most small businesses follow? a. Divisional structure by product Ans: b 79. Which organizational structure is the most simple and inexpensive? a. departmental Ans: c 80. Medium-sized firms are more likely to use which type of structure. a. divisional Ans: a 81. What is not one of the basic ways a divisional structure can be organized? a. By geographic area Ans: e 82. A divisional structure by product is most effective when a. special emphasis needs to be placed on specific products. Ans: e 83. How would Hershey’s current divisional structure most likely be classified? a. By geographic area Ans: a 84. A divisional structure by geographic area is most appropriate when a. organizations
have similar branch facilities located in widely dispersed areas. Ans: a
Ans: b 86. What is the most complex form of organizational structure? a. Divisional Ans: c
Ans: c 88. When developing an organizational chart, you should: a. Recommend dual titles for executives Ans: d Restructuring, Reengineering and E-Engineering 89. Restructuring is also referred to as a. starting over. Ans: b 90. Which term is most often concerned primarily with shareholder well-being rather than employee well-being? a.
Benchmarking Ans: e 91. Which of these involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria? a. Restructuring Ans: e 92. The primary benefit sought from restructuring is a. employee involvement. Ans: b 93. What action involves reconfiguring or redesigning work, jobs and processes for the purpose of improving costs, quality, service and speed? a. Restructuring Ans: c 94. A firm uses information technology to break down functional barriers and create a work system based on business processes, products, or outputs rather than on functions or inputs in a. restructuring. Ans: c Linking Performance and Pay to Strategies
Ans: b 96. What pay strategy requires employees or departments to establish performance targets, such as “if actual results exceed objectives then all members get bonuses.” a. Profit sharing Ans: d 97. Which of these is not one of the tests used to determine whether a performance-pay plan will benefit an organization? a. Does the plan capture attention? Ans: e 98. Which Fortune 500 CEO had the greatest salary in 2004? a. Richard Kinder from Kinder Morgan Energy Ans: b Managing Resistance to Change 99. What change strategy involves giving orders and enforcing those orders? Ans: c 100. Resistance to change can manifest itself through a.
absenteeism. Ans: e 101. A change strategy that attempts to convince people the change is to their personal advantage is a. diffusion. Ans: d Managing the Natural Environment 102. What challenge facing all organizations requires managers to formulate strategies that preserve and conserve natural resources and control pollution? Ans: b Creating a Strategy-Supportive Culture
Ans: b 104. Which strategy could be best defined as an effective, multi-method technique of studying and altering a firm’s culture? a. Benchmarking Ans: c 105. Desire for __________ is a part of the social fabric in worker-manager relations in 106. How is life in Mexico in comparison to life in the United
States? Ans: d 107. The Russian people are known for their a. drive. Ans:
a 108. Which of the following does not describe most Japanese managers? a. Reserved Ans: d Production/Operations Concerns When Implementing Strategies 109. Just in time describes a. implementing strategies just before bankruptcy. Ans: b
110. A concern in matching managers with strategy is that jobs have relatively __________ responsibilities, while people are __________ in their development. a. static; dynamic Ans: a 111. Approximately how many people in the Ans: d 112. Of the Fortune 500 firms, how many have a woman CEO? a. two Ans: c 113. What is the stated reason for Boeing’s recent firing of CEO Harry Stonecipher? a. Poor company performance Ans: c 114. What is not a major benefit of having a diverse workforce? 115. What are five differences between strategy formulation and strategy implementation? Strategy formulation is positioning forces before the action, whereas strategy implementation is managing forces during the action. Strategy formulation focuses on effectiveness, whereas strategy implementation focuses on efficiency. Strategy formulation is primarily an intellectual process, whereas strategy implementation is primarily an operational process. Strategy formulation requires good intuitive and analytical skills, whereas strategy implementation requires special motivation and leadership skills. Strategy formulation requires coordination among a few individuals, whereas strategy implementation requires coordination among many individuals. 116. List four major reasons annual objectives are essential for strategy implementation. Annual objectives are essential for strategy implementation because they 117. Name at least ten examples that may require a management policy. Possible answers include: 118. There are three major approaches for minimizing and resolving conflict in an organization. Define these three approaches and give an example of each. Various approaches for managing and resolving conflict can be classified into three categories: avoidance, diffusion and confrontation. Avoidance includes such actions as ignoring the problem in hopes the conflict will resolve itself, or physically separating the conflicting individuals. Diffusion can include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions. Confrontation is exemplified by exchanging members of conflicting parties so each can gain an appreciation of the other’s point of view, or holding a meeting at which conflicting parties present their views and work through their differences. 119. What are the advantages and disadvantages of a divisional organizational structure? A divisional structure has some clear advantages. The first is that accountability is clear. Also, it creates career development opportunities for managers, allows local control of local situations, leads to a competitive climate within an organization and allows new businesses and products to be added easily. A divisional structure does have its limitations. A divisional structure is costly because each division requires functional specialists who must be paid, there exists some duplication of staff services, facilities and personnel, and better-qualified individuals require higher salaries. It is also costly because it requires an elaborate headquarters-driven control system. Finally, certain religions, products, or customers may sometimes receive special treatment, and it may be difficult to maintain consistent, company-wide practices. 120. There are four basic ways a divisionally structured firm could be organized. What are these four ways? Give an example of each. The four basic
ways a divisionally structured firm could be organized are 121. Compare and contrast restructuring and reengineering. Restructuring involves reducing the size of the firm in terms of number of employees, number of divisions or units and number of hierarchical levels in the firm’s organizational structure. Restructuring is concerned primarily with shareholder well-being rather than employee well-being. In contrast, reengineering is concerned more with employee and customer well-being than shareholder well-being. Reengineering involves reconfiguring or redesigning work, jobs and processes for the purpose of improving cost, quality, service and speed. Whereas restructuring is concerned with eliminating or establishing, shrinking or enlarging, and moving organizational departments and divisions, the focus of reengineering is changing the way work is actually carried out. Reengineering is characterized by many tactical decisions, whereas restructuring is characterized by strategic decisions. 122. Discuss the do’s and don’ts in developing organizational charts. Students analyzing strategic management cases are often asked to revise and
develop a firm’s organizational structure. This section provides some basic guidelines for this endeavor. There are some basic do’s and don’ts in regard to devising or constructing organizational charts, especially for midsize to large firms. First of all, reserve the title CEO for the top executive of the firm. Don’t use the title “president” for the top person; use it for the division top managers if there are divisions within the firm. Also, do not use the title “president” for functional
business executives. They should have the title “chief”, or “vice president,” or “manager,” or “officer”, such as “Chief Information Officer”, or “VP of Human Resources”. Further, do not recommend a dual title (such as “CEO and President”) for just one executive. The Chairman of the Board and CEO of 123. What are the three commonly used strategies or approaches for implementing changes in an organization? Give an advantage and/or disadvantage for each type of approach. Although there are various approaches for implementing changes, three commonly used strategies are a force change strategy, an educative change strategy and a rational or self-interest change strategy. A force change strategy involves giving orders and enforcing those orders; this strategy has the advantage of being fast, but low commitment and high resistance plague it. An educative change strategy is one that presents information to convince people of the need for change; the disadvantage of an educative change strategy is that implementation becomes slow and difficult. However, this type of strategy evokes greater commitment and less resistance than does the force change strategy. Finally, a rational or self-interest change strategy is one that attempts to convince individuals the change is to their personal advantage. When this appeal is successful, strategy implementation can be relatively easy. 124. List 10 special natural environment issues. (1) ozone depletion, 125. Explain the nature and role of ESOPs in strategic management. An ESOP is a tax-qualified, defined-contribution employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions. ESOPs empower employees to work as owners. Besides reducing worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial tax savings. Principal, interest and dividend payments on ESOP-funded debt are tax-deductible. Banks lend money to ESOPs at interest rates below prime. This money can be repaid in pretax dollars, lowering the debt service as much as 30 percent in some cases. Research confirms ESOPs can have a dramatically positive effect on employee motivation and corporate performance, especially if ownership is coupled with expanded employee participation and involvement in decision-making. Market surveys indicate customers prefer to do business with firms that are employee-owned. 126. List eight benefits of a diverse workforce. Students may choose any eight of the following 13 major benefits of having a diverse workforce: What is difference between strategy formulation and strategy implementation?Strategy Formulation includes planning and decision-making involved in developing organization's strategic goals and plans. Strategy Implementation involves all those means related to executing the strategic plans.
What is strategy formulation implementation and evaluation?Strategy Formulation is an Entrepreneurial Activity based on strategic decision-making. Strategic Implementation is mainly an Administrative Task based on strategic and operational decisions. Strategy Formulation emphasizes on effectiveness. Strategy Implementation emphasizes on efficiency.
Why is it so important in strategy formulation and implementation?Strategy formulation is essential for achieving and measuring the attainability of goals. After creating strategies, an organization typically educates its employees so they know the organization's purpose, workplace objectives and goals.
Is there any relationship between strategy implementation and formulation?Strategy Formulation is a logical process, whereas Strategy Implementation is an operational process. Strategy Formulation puts emphasis on effectiveness, but Strategy Implementation gives stress on efficiency. Strategy Formulation is the responsibility of top management.
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In contrast to strategy formulation, strategy implementation focuses more on which item below?
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