Exam Name _ TRUE/FALSE Write 'T' if the statement is true and 'F' if the statement is false 1) Effective strategy formulation can usually guarantee successful strategy implementation 1) _ 2) Strategy formulation is the managing of forces during the action, whereas strategy implementation is the positioning of forces before the action 2) _ 3) Strategy formulation requires coordination among a few individuals, but strategy implementation requires coordination among many 3) _ 4) It is always easier to say you are going to something (strategy formulation) than to actually it (strategy implementation) 4) _ 5) Unlike strategy formulation, strategy implementation varies considerably among different types and sizes of organizations 5) _ 6) A bottom-up flow of communication is essential for developing top-down support 6) _ 7) Annual objectives are key components in the strategic-management process because they dictate how resources will be allocated 7) _ 8) Horizontal consistency is more important than vertical consistency in developing annual objectives 8) _ 9) Undesirable conduct such as distorting the record can be a result of overemphasis on achieving objectives 9) _ 10) Policies refer to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals 10) 11) Strategies clarify what can and cannot be done in pursuit of an organization's objectives 11) 12) Not allocating resources according to the priorities indicated by approved objectives is detrimental to the strategic-management process 12) 13) Four types of resources that can be used to achieve desired objectives are financial, physical, human and technological 13) 14) Avoidance, infusion and confrontation are the classifications for the various approaches for minimizing and resolving conflict 14) 15) Conflict of any kind is avoidable in organizations 15) 16) Concerning managing and resolving conflict, defusion includes such actions as ignoring the problem in the hope that the conflict will resolve itself 16) 17) Holding a meeting at which conflicting parties present their views and work through their differences is part of the defusion strategy of managing conflict 17) 18) Exchanging members of conflicting parties so each can gain an appreciation of the other's point of view exemplifies a confrontation approach 18) 19) Medium-sized firms tend to be divisionally structured, whereas large firms tend to use an SBU (strategic business unit) or matrix structure 19) 20) Tasks and activities are grouped together by business function in a divisional organizational structure 20) 21) A functional structure can be effective at limiting short-term and narrow thinking 21) 22) Most large companies have abandoned the functional structure in favor of decentralization 22) 23) With a divisional structure, it is possible that competition between divisions may become so intense that it leads to the improved sharing of ideas and resources for the common good of the firm 23) 24) When an organization has a divisional structure by customer, it can effectively cater to the requirements of clearly defined customer groups 24) 25) Because activities are organized according to the way work is actually performed, a divisional structure by process is similar to the matrix structure 25) 26) The most complex of all designs is a matrix structure 26) 27) With the matrix structure it is common for functional resources to be duplicated 27) 28) When developing an organizational chart, the top executive of the firm should be reserved for the President 28) 29) When developing an organizational chart, it is not wise to recommend a dual title for just one executive 29) 30) In developing an organizational chart, avoid having a particular person reporting to more than one person above them in the chain of command 30) 31) Restructuring is also called rightsizing 31) 32) In terms of number of employees, restructuring usually involves increasing the size of the firm 32) 33) Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs 33) 34) Six Sigma is generally equally successful in retail firms and manufacturing firms 34) 35) The focus of restructuring is changing the way work is actually carried out 35) 36) Cornerstones of reengineering are decentralization, reciprocal interdependence and information sharing 36) 37) An effective bonus system should be based on two key factors annual objectives and long-term objectives 37) 38) People's anxieties are raised with the thought of change because they fear economic loss, inconvenience, uncertainty and a break in normal social patterns 38) 39) Resistance to change can be considered the single greatest threat to successful strategy implementation 39) 40) A rational change strategy means giving orders and enforcing those orders 40) 41) Ideally, the rational type change strategy is the most desirable 41) 42) The fastest of all approaches to implement change is the rational change strategy 42) 43) The rational change strategy is one that presents information to convince people of the need for change 43) 44) Recently, an increasing number of companies have been implementing less rigorous environmental policies 44) 45) Managing as if the earth matters requires an understanding of how international trade, competitiveness and global resources are connected 45) 46) Managing environmental affairs is primarily a technical function performed by specialists in a firm 46) 47) Production processes typically constitute less than 50 percent of a firm's total assets 47) 48) JIT significantly increases the costs of implementing strategies 48) 49) Besides reducing worker alienation and stimulating productivity, employee stock-ownership plans allow firms other benefits, such as substantial depreciation savings 49) 50) ESOPs work well even in firms with fluctuating payrolls and profits 50) 51) Work/family issues are typically focused on the benefit to working women 51) 52) In recent years, powerful Arab businesswomen have made their mark on the international scene 52) MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 53) Strategy formulation 53) A) focuses on effectiveness B) is primarily an operational process C) requires coordination among many people D) is managing forces during the action E) all of the above 54) Which of these is true about strategy implementation? 54) A) It is primarily an operational process B) It focuses on effectiveness C) It is primarily an intellectual process D) It is positioning forces before the action E) It requires intuitive skills 55) How are objectives in the areas of profitability, growth and market share commonly established? 55) A) Geographic location B) Customer groups C) Business segment D) Product E) all of the above 56) Establishing objectives is a 56) A) top-level activity B) command-and-control activity C) centralized activity D) decentralized activity E) centralized-decentralized activity 57) Considerable time and effort should be devoted to assuring objectives are well conceived because they represent the basis for 57) A) establishing divisional priorities B) monitoring processes C) evaluating managers D) allocating resources E) all of the above 58) Which of the following is not true about objectives? 58) A) They should be measurable B) They should be communicated throughout the organization C) They should have an appropriate time dimension D) They should incorporate policies E) They should be consistent 59) Which term would most likely be incorporated into written objective statements? 59) A) all of the above B) Maximize C) Adequate D) 10% increase E) Minimize A) Restructuring B) Reengineering C) Benchmarking D) Process management E) Product redesign 84) Which of these involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria? 84) A) Process redesign B) Benchmarking C) Reengineering D) Restructuring E) Delayering 85) The primary benefit sought from restructuring is 85) A) increased number of hierarchical levels in the organization B) increased innovation C) increased morale D) employee involvement E) cost reduction 86) What action involves reconfiguring or redesigning work, jobs and processes for the purpose of improving costs, quality, service and speed? 86) A) Reengineering B) Downsizing C) Restructuring D) Delayering E) Benchmarking 87) A firm uses information technology to break down functional barriers and to create a work system based on business processes, products, or outputs rather than on functions or inputs in 87) A) restructuring B) benchmarking C) reengineering D) delayering E) decentralization 88) Which pay strategy is not a form of incentive compensation? 88) A) Bonus system B) Hourly wage C) Profit sharing D) All of these are forms of incentive compensation E) Gain sharing 89) Which of these is not one of the tests used to determine whether a performance-pay plan will benefit an organization? 89) A) Does the plan pay out when it should? B) Do employees understand the plan? C) Does the plan reduce management layers? D) Does the plan capture attention? E) Is the plan improving communications? 90) What change strategy involves giving orders and enforcing those orders? 90) A) Self-interest B) Educative C) Rational D) Defusion Force E) 91) Resistance to change can manifest itself through 91) A) sabotaging production machines B) unwillingness to cooperate C) absenteeism D) filing unfounded grievances E) all of the above 92) A change strategy that attempts to convince people that the planned change is to their personal advantage is 92) A) diffusion B) force C) compromise D) rational E) educative 93) What challenge facing all organizations requires managers to formulate strategies that preserve and conserve natural resources and control pollution? 93) A) Economic B) Benchmarking C) Global D) Compensational E) Ecological 94) Just-in-time describes 94) A) a scheduling method for meetings B) a personnel planning method C) implementing strategies just before bankruptcy D) delivering materials just as they are needed E) a process for improving quality 95) A concern in matching managers with strategy is that jobs have relatively responsibilities, while people are in their development 95) A) quick; slow B) exciting; dull C) dynamic; static D) static; dynamic E) dull; exciting 96) There are now several Arab companies with female CEOs, some of which have appeared in Forbes' list of 96) A) the 500 Most Powerful Women in the World B) the 100 Most Powerful Women in the World C) the 1000 Most Powerful Women in the World D) the 10 Most Powerful Women in the World E) the 50 Most Powerful Women in the World 97) In 2007, organized a special interactive event to raise awareness on work/life balance issues in the UAE 97) A) the Dubai Executive Council B) the Dubai Race Club C) the Dubai World D) the Dubai Knowledge Village E) the Dubai Economic Department 98) Among the Arab states, there is awareness of the need to balance work and family affairs 98) A) stable B) decresing C) reducing D) diminishing E) increasing 99) What is not a major benefit of having a diverse workforce? 99) A) An increase in productivity B) An increase in training costs C) Improvement of the bottom line D) Higher retention of employees E) A decrease in complaints and litigation ESSAY Write your answer in the space provided or on a separate sheet of paper 100) What are five differences between strategy formulation and strategy implementation? 101) List four major reasons why annual objectives are essential for strategy implementation 102) Name at least ten examples that may require a management policy 103) There are three major approaches for minimizing and resolving conflict in an organization Define these three approaches and give an example of each 104) There are four basic ways a divisionally structured firm could be organized What are these four ways? Give an example of each 105) Compare and contrast restructuring and reengineering 106) Discuss the dos and don'ts in developing organizational charts 107) 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 108) Explain the nature and role of ESOPs in strategic management 109) List eight benefits of a diverse workforce 1) FALSE 2) FALSE 3) TRUE 4) TRUE 5) TRUE 6) FALSE 7) TRUE 8) FALSE 9) TRUE 10) TRUE 11) FALSE 12) TRUE 13) TRUE 14) FALSE 15) FALSE 16) FALSE 17) FALSE 18) TRUE 19) TRUE 20) FALSE 21) FALSE 22) TRUE 23) FALSE 24) TRUE 25) FALSE 26) TRUE 27) FALSE 28) FALSE 29) TRUE 30) TRUE 31) TRUE 32) FALSE 33) TRUE 34) FALSE 35) FALSE 36) TRUE 37) TRUE 38) TRUE 39) TRUE 40) FALSE 41) TRUE 42) FALSE 43) FALSE 44) FALSE 45) TRUE 46) FALSE 47) FALSE 48) FALSE 49) FALSE 50) FALSE 51) FALSE 52) TRUE 53) A 54) A 55) E 56) D 57) E 58) D 59) D 60) E 61) A 62) E 63) D 64) C 65) B 66) A 67) E 68) B 69) B 70) D 71) B 72) C 73) C 74) B 75) E 76) A 77) C 78) A 79) A 80) B 81) C 82) E 83) A 84) B 85) E 86) A 87) C 88) B 89) C 90) E 91) E 92) D 93) E 94) D 95) D 96) B 97) D 98) E 99) B 100) 1) Strategy formulation is positioning forces before the action, whereas strategy implementation is managing forces during the action 2) Strategy formulation focuses on effectiveness, whereas strategy implementation focuses on efficiency 3) Strategy formulation is primarily an intellectual process, whereas strategy implementation is primarily an operational process 4) Strategy formulation requires good intuitive and analytical skills, whereas strategy implementation requires special motivation and leadership skills 5) Strategy formulation requires coordination among a few individuals, whereas strategy implementation requires coordination among many individuals 101) Annual objectives are essential for strategy implementation because they 1) represent the basis for allocating resources, 2) are a primary mechanism for evaluating managers, 3) are the major instrument for monitoring progress toward achieving long-term objectives and 4) establish organizational, divisional and departmental priorities 102) Possible answers include 1) to offer extensive or limited management development workshops and seminars 2) to centralize or decentralize employee-training activities 3) to recruit through employment agencies, college campuses and/or newspapers 4) to promote from within or to hire from the outside 5) to promote on the basis of merit or on the basis of seniority 6) to tie executive compensation to long-term and/or annual goals 7) to offer numerous or few employee benefits 8) to negotiate directly or indirectly with labor unions 9) to delegate authority for large expenditures or to retain this authority centrally 10) to allow much, some, or no overtime work 11) to establish a high- or low-safety stock of inventory 12) to use one or more suppliers 13) to buy, lease, or rent new production equipment 14) to stress quality control greatly or not 15) to establish many or only a few production standards 16) to operate one, two, or three shifts 17) to discourage using insider information for personal gain 18) to discourage sexual harassment 19) to discourage smoking at work 20) to discourage insider trading 21) to discourage working on a secondary job for a different employer 103) Various approaches for managing and resolving conflict can be classified into three categories avoidance, defusion and confrontation Avoidance includes such actions as ignoring the problem in the hope that the conflict will resolve itself, or physically separating the conflicting individuals Defusion 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 Student answers will vary on the examples given for each approach 104) The four basic ways a divisionally structured firm could be organized are as follows 1) By geographic area An example of this would be any organization with similar branch facilities located in widely dispersed areas, such as General Motors, which is structured into North America and Global 2) By product or service For example The Reda Group is organized into four product divisions Specialty Chemicals, Food Ingredients, Fire and Safety Equipment, and Process Equipment 3) By customer Book publishing companies often organize their activities around customer groups, such as college, secondary schools and private commercial schools 4) By process An example of this is a manufacturing business organized into six divisions electrical work, glass cutting, welding, grinding, painting and foundry work Each division would be responsible for generating revenues and profits 105) 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 It 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 It 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 106) 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, don't 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, don't recommend a dual title (such as "CEO and President") for just one executive Do use "chairperson", which is much better than "chairman" for this title Directly below the CEO, have a COO (chief operating officer) with any division presidents reporting directly to the COO On the same level as the COO and also reporting to the CEO, are the functional business executives, such as a CFO (chief financial officer), VP of Human Resources, a CSO (Chief Strategy Officer), a CIO (Chief Information Officer), a CMO (Chief Marketing Officer), a VP of R&D, a VP of Legal Affairs, a Investment Relations Officer, Maintenance Superintendent, etc Students may refer to the textbook figure 8-9 which show these positions labeled and placed appropriately 107) Although there are various approaches for implementing changes, three commonly used strategies are force change, educative, and rational or self-interest change strategy A force change strategy involves giving and enforcing orders, which has the advantage of being fast, but plagued by low commitment and high resistance An educative change strategy is one that presents information to convince people of the need for change; its disadvantage is that implementation becomes slow and difficult, but it does evoke greater commitment and less resistance than does the force change strategy Finally, a rational or selfinterest 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 108) 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 taxdeductible 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 business with firms that are employee-owned 109) Students may choose any eight of the following 13 major benefits of having a diverse workforce 1) improves corporate culture, 2) improves employee morale, 3) leads to a higher retention of employees, 4) leads to an easier recruitment of new employees, 5) decreases complaints and litigation, 6) increases creativity, 7) decreases interpersonal conflict between employees, 8) enables the organization to move into emerging markets, 9) improves client relations, 10) increases productivity, 11) improves the bottom line, 12) maximizes brand identity and 13) reduces training costs ... comparing a firm against the best firms in the industry on a wide variety of performance-related criteria? 84) A) Process redesign B) Benchmarking C) Reengineering D) Restructuring E) Delayering... officer B) Use the title "president" for the top person C) Have division presidents report to a chief operating officer D) Recommend dual titles for executives E) Have the controller or treasurer report... strategy often require changes in the way an organization is structured? 70) A) Structure dictates authority over projects B) Structure dictates strategy C) Structure dictates how resources