Q&A Hero

Q: A heterogeneous top management team is composed of individuals with: a. different functional backgrounds, experience, and education. b. similar commitments to the organization's core ideology and culture. c. a high level of education and industry expertise. d. long tenure in the organization who have held various functional positions.

Q: A CEO gains power from all of the following circumstances EXCEPT: a. when many of the outside directors are appointed by the CEO. b. when the CEO is also the chairman of the Board. c. when tenure of the top management team is shorter than the tenure of the Board. d. the fact that inside Board members report to the CEO.

Q: Executive headhunters have approached Charles about taking the position of senior vice president of marketing for a well-known company. Although this company has been highly successful since 1995, Charles has heard persistent rumors of overly aggressive marketing tactics, questionable reporting of sales data, and an atmosphere of intolerance of criticism. The CEO is a powerful and charismatic individual, who built the company from a small regional firm to an international powerhouse in only a decade. The other top managers have been hand-picked by the CEO, as have a number of the members of the Board of Directors. The salary for this position is very high and includes generous stock options. It would be a major step up in Charles's career and would position him to move to CEO of another company in the future. Charles has prided himself on his high moral values and is viewed as an exceptionally ethical person by his peers. What should Charles do? a. Charles should take the job because he can effect real change in the culture of the organization, and take advantage of the personal financial and career opportunities. b. Charles should realize that personal moral values and the realities of the corporate world differ in both quality and degree. Consequently, he can take a job in an ethically borderline company without tainting his personal moral standing. c. Charles should not rely on rumors to dissuade him from making an advantageous career decision. d. Charles should not take the job because the culture of the organization is set by the CEO and other top managers. He would have little influence on the organizational culture as one of many top managers.

Q: The ability to attract and manage ____ may be the most important skill a strategic leader must have. a. human capital b. financial resources c. responses to competitors' actions d. investment strategies

Q: Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT: a. relying on the fundamental goodness of individuals. b. using reward systems that recognize acts of courage. c. communicating goals that describe the firm's ethical standards. d. creating a work environment where individuals are treated with dignity.

Q: The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they: a. overemphasize financial controls and neglect strategic controls. b. overemphasize strategic control and neglect financial controls. c. overemphasize strategic and financial controls and neglect ethical controls. d. neglect short-term controls of all kinds in favor of long-term strategic controls.

Q: An example of the external labor market is the situation where: a. an assessment center operated by an external consulting firm evaluates company managers for promotion potential. b. a new vice president of marketing is hired from a competitor. c. the senior vice president of finance is promoted to CEO. d. a vice president of human resources is sent to a university executive MBA program for professional development.

Q: Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a(n): a. internal CEO with short tenure. b. external CEO with a heterogeneous top management team. c. dual CEO/chairperson with a homogenous top management team. d. CEO with long tenure who has a strong sense of hubris.

Q: Which of the following is NOT one of the five dimensions thought to characterize an employee's entrepreneurial mind-set? a. Autonomy b. Reactivity c. Risk taking d. Innovativeness

Q: The experience that results from long tenure in a firm is known to extend the breadth of an executive's knowledge base. a. True b. False Indicate the answer choice that best completes the statement or answers the question.

Q: The strategic direction of a firm usually focuses on the coming 3 to 5 years. a. True b. False

Q: The more heterogeneous and the larger the top management team, the easier it is to implement strategy effectively. a. True b. False

Q: When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive. a. True b. False

Q: A CEO may gain power by holding the titles of both CEO and Chairman of the Board. a. True b. False

Q: GM's previous CEO, Dan Akerson, was building new capabilities in technology development and marketing, especially in customer service. This is an example of a CEO developing capabilities into core competencies. a. True b. False

Q: Top management team members and CEOs who have long tenure on the team and in the organization have greater influence in Board decisions. a. True b. False

Q: The firm's envisioned future encourages employees to stretch beyond their expectations of accomplishment and requires significant change and progress to be realized. a. True b. False

Q: External social capital is increasingly critical to firm success as few if any companies have all the resources to successfully compete against their rivals. a. True b. False

Q: The training of future strategic leaders yields a competitive advantage for a firm, in part because knowledge and skills are necessary for successful execution of strategy. a. True b. False

Q: When the new CEO is from inside the firm and a heterogeneous top management team is in place, the strategy may not change, but innovation is likely to continue. a. True b. False

Q: Members with substantive expertise in the firm's core functions and businesses aid the effectiveness of the top management team. a. True b. False

Q: The balanced scorecard's perspective on learning and growth is intended to improve the firm's ability to innovate. a. True b. False

Q: Incremental changes to a firm's culture can be used to implement strategies effectively. a. True b. False

Q: Compared to homogeneous top management teams, heterogeneous top management teams with an internally promoted CEO are more likely to change their firm's strategies when necessary and to support innovation. a. True b. False

Q: Effectively managing the firm's resource portfolio (financial, human, social, and organizational capital) may be the most important strategic leadership task. a. True b. False

Q: Firm size, firm age, the executive's tolerance for ambiguity, and his or her commitment to strategic outcomes are all factors that may affect managerial discretion. a. True b. False

Q: To influence employees' judgment and behavior, ethical practices must shape the firm's decision-making process, but should be a peripheral part of organizational culture. a. True b. False

Q: Including talent from both the internal and external labor markets increases the likelihood that the firm will be able to form an effective top management team. a. True b. False

Q: Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. a. True b. False

Q: Selection of an insider as a new CEO indicates a firm's desire to encourage innovation and strategic change. a. True b. False

Q: Employees usually have a strong preference for firms to use the internal managerial labor market when selecting top management team members and the CEO. a. True b. False

Q: The more homogeneous a top management team, the more likely those managers will be innovative and willing to pursue strategic change. a. True b. False

Q: Venture capital companies a. are often limited partnerships that raise capital from other investors. b. provide for the financing needs of large companies only. c. are corporations or partnerships that operate as liquidation groups. d. no longer operate in the U.S. market.

Q: The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the Board of Directors is composed of sympathetic outside members and insiders who report to the CEO. a. True b. False

Q: Assets such as the quality of a firm's employees are considered tangible in nature and thus have substantial value as collateral. a. True b. False

Q: Internal labor markets consist of the career opportunities for managers within the firm for which they currently work. a. True b. False

Q: Williams Alternative Power, Inc. a company developing solar panels, is applying for a loan. The research the company has done for the manufacturing process would be a(n) _____ asset for the loan evaluation. a. collateral b. intangible c. revolving d. tangible

Q: Rewarding those who use proper channels and procedures to report observed wrongdoings is an example of an action that should be taken by a strategic leader to develop an ethical organizational culture. a. True b. False

Q: When a stock sale is restricted to private placement, an entrepreneur can avoid many of the demanding requirements of the securities laws. a. True b. False

Q: Financial controls provide feedback about the outcomes of the firm's past actions and predictions about the results of the firm's future actions. a. True b. False

Q: Floyds income statement showed for the current year his company had an operating income of $45,000 and his balance sheet showed total assets of $300,000. His return on assets is _________ percent. a. 30 b. 15 c. 12 d. 6

Q: For every firm, there is a "right" answer to the question of balancing debt and equity, and it is important that the small business owner find that balance. a. True b. False

Q: The CEO is the individual with primary responsibility for effective strategic leadership within an organization. a. True b. False

Q: As the dynamics of competition accelerate, people are perhaps the only truly sustainable source of competitive advantage. a. True b. False

Q: Chuck, Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigbys, a new sports bar concept. Tommy will be the general partner; Chuck and Marie will be limited partners. These three are: a. business angels. b. formal venture capitalists. c. creditors. d. informal venture capitalists.

Q: Strategic control focuses on the content of strategic actions rather than their outcomes. a. True b. False

Q: An emphasis on strategic controls encourages managers to be risk averse. a. True b. False

Q: Borrowing money rather than issuing common stock typically increases the potential for higher rates of return to owners. a. True b. False

Q: In addition to determining new strategic initiatives, top-level managers also develop the appropriate organizational structure and reward systems of a firm. a. True b. False

Q: Cameron has applied for a loan to expand his young business. When bankers look for evidence of whether he will be able to repay a loan, they usually base their assessment on a. what Camerons firm has done in the past. b. what Cameron says the firm will do in the future. c. the opinion of investment analysts. d. the business plan of the enterprise.

Q: Qualified small businesses that cannot obtain business loans through normal lending channels can get loans directly from the SBA through its 7(a) Loan Guaranty Program. a. True b. False

Q: Competitive aggressiveness, proactiveness, risk aversion, innovativeness, and autonomy are the five dimensions characterizing the entrepreneurial mind-set. a. True b. False

Q: If the firms rate of return on its assets is _____ than the cost of borrowing, then the owners rate of return on equity will _____ as the firm uses _____ debt. a. less, decrease, less b. greater, decrease, more c. greater, increase, more d. less, increase, more

Q: Strategic leaders are most likely to integrate ethical values into their decisions when the company has explicit ethics codes that are integrated into the business through extensive ethics training. a. True b. False

Q: Organizational culture is a complex set of ideologies, symbols, and core values that are shared throughout the firm, but its development is so subtle and poorly understood that top managers cannot influence its content. a. True b. False

Q: The firm's core ideology motivates the firm's employees through the company's heritage. a. True b. False

Q: For 15 years, Edward was a compensation specialist at a mid-sized firm. He was laid off when the firm experienced financial setbacks. Edward has decided to open his own business as a compensation consultant to small firms. He can expect that his main source of human capital will be a bank line of credit. a. True b. False

Q: Criteria such as asset utilization improvements and changes in employee turnover rates are part of the internal business processes perspective of the balanced scorecard. a. True b. False

Q: The balanced scorecard focuses on both financial and non-financial controls. a. True b. False

Q: The advantages of long tenure (firm-specific human and social capital, knowledge, and power) seem to outweigh the disadvantages of rigidity and maintaining the status quo. a. True b. False

Q: The Chapter 12 Strategic Focus reports on recent successes of NBC News, Nokia, and Standard Charter because of the top managers decisions. a. True b. False

Q: The decision-making discretion of top-level managers is determined partly by external environmental factors such as the industry structure, the industry's rate of growth, and the degree to which products can be differentiated. a. True b. False

Q: The most critical ability of a strategic leader is the ability to attract and then manage human capital. a. True b. False

Q: Because of the current changing competitive landscape and varying levels of performance, an increasing number of Boards of Directors are turning to insiders to succeed CEOs. a. True b. False

Q: In the past, companies had a preference for insiders to fill top-level management positions because of the desire for continuity and a continuing commitment to the firm's current vision, mission, and chosen strategies. a. True b. False

Q: The underlying premise of the balanced scorecard is that firms jeopardize their future performance possibilities when strategic controls are emphasized at the expense of financial controls. a. True b. False

Q: Transformational leadership is the most effective strategic leadership style. a. True b. False

Q: Typically, a vice president would NOT be considered to hold a high enough position to be included in the top management team of an organization. a. True b. False

Q: What is strategic leadership, who has primary responsibility for strategic leadership, and what are the five key strategic leadership actions?

Q: Define human capital and its importance to the firm's success.

Q: As a strategic leader, what actions could you take to establish and emphasize ethical practices in your firm?

Q: What are organizational controls? Why are strategic controls and financial controls important aspects of the strategic management process?

Q: What is organizational culture? What must strategic leaders do to develop and sustain an effective organizational culture?

Q: What is a top management team, and how does it affect a firm's performance and its abilities to innovate and design and implement effective strategic changes?

Q: Discuss how the managerial succession process and the composition of the top management team interact to affect strategy.

Q: Discuss the difference between strategic controls and financial controls.

Q: Describe the organizational structures used to implement the three international strategies.

Q: Discuss the organizational structures used to implement the different business-level strategies.

Q: Describe the three major types of organizational structure and their appropriate use.

Q: Define the three major dimensions of organizational structure: specialization, centralization, and formalization. How do these dimensions vary in organizations implementing the cost leadership, differentiation, and cost leadership/differentiation strategies?