Question 1

Which of the following is NOT a task of the board of directors in strategic management?

Accepted Answer

Implementing strategies is the responsibility of the organization's executives, not the board of directors. The board's main tasks in strategic management include monitoring, influencing, initiating and determining, and evaluating strategies.

Question 2

Which of the following statements is True regarding the board of directors?

Accepted Answer

All of the statements are true. The board of directors has a legal obligation to act with due care, and their failure to do so may result in personal liability. Director liability insurance is often needed to attract qualified individuals to join boards, and directors must balance the interests of all constituent groups, including shareholders, employees, and stakeholders.

Question 3

Transformational leaders transform their organizations from market leaders in one industry to market leadership in another.

Accepted Answer

Transformational leaders inspire and motivate employees to innovate and create change that will help grow and shape the future success of the company, but they do not necessarily shift the organization from one industry to another.

Question 4

The requirements of a board of directors vary significantly by country and by state; however, there is a developing consensus as to what the major responsibilities should be. Which of the following is NOT one of the responsibilities?

Accepted Answer

The responsibility of the board of directors is not to become directly involved in managerial decisions. Instead, their role is to provide strategic oversight and guidance to the organization. It is the responsibility of the management team to make operational decisions and execute the strategies set by the board.

Question 5

A careless director or directors can be held personally liable for harm done to the corporation if they failed to act with

Accepted Answer

Directors are required to act with due care, which means they must always act in good faith and with the level of care that a reasonably prudent person would use under similar circumstances. If a director fails to exercise due care, they could be held personally liable for any harm done to the corporation. Codetermination, figurehead role, and cumulative voting are not relevant to this concept of director liability. Accountability is important, but it is not the specific legal standard that directors must meet.

Question 6

The ________ boards typically never initiate or determine strategy unless a crisis occurs.

Accepted Answer

A rubber stamp board only approves strategy and decisions made by the management, but does not take an active role in initiating or determining strategy unless a crisis occurs.

Question 7

Catalyst-level board of directors typically

Accepted Answer

Catalyst-level board of directors are responsible for leading roles in establishing and modifying the company mission, objectives, and strategy.

Answer: D 
 Catalyst-level board of directors are held to a greater degree of legal responsibility.

Therefore, the best choices are B and D.

Question 8

A benefit of the increased disclosure requirements of the Sarbanes-Oxley Act has been more reliable corporate financial statements.

Accepted Answer

The increased disclosure requirements of the Sarbanes-Oxley Act were intended to improve the accuracy and reliability of corporate financial statements, and studies have found that the Act has had a positive impact in this regard.

Question 9

From the perspective of the public, the primary job of the board of directors is

Accepted Answer

The primary job of the board of directors, from the perspective of the public, is to closely monitor the actions of management. They are responsible for overseeing the decision-making process of the company and ensuring that management is acting in the best interest of the stakeholders. This is a crucial role in maintaining transparency and accountability within the company.

Question 10

The role of the board of directors in the strategic management of the corporation is likely to be less active in the future.

Accepted Answer

The board of directors plays a crucial role in the strategic management of a corporation, as they are responsible for setting the overall direction and goals for the company. Their role is unlikely to become less active in the future, as they are tasked with ensuring the long-term success and sustainability of the organization.

Question 11

More than ________ of outside directors surveyed said that they had been named as part of a lawsuit against the corporation.

Accepted Answer

It is important for corporations to have outside directors on their board to provide an independent perspective. However, serving as an outside director also comes with some risks, as they can be held liable for the actions of the corporation. According to the question, only 40% of outside directors surveyed said they had been named as part of a lawsuit against the corporation, suggesting that the majority of outside directors have not faced legal action related to their board service.

Question 12

Society increasingly expects corporate boards to balance the economic goal of profitability with the social needs of society.

Accepted Answer

This statement reflects the concept of corporate social responsibility, which has become more prevalent in recent years as stakeholders demand that businesses consider their impact on society and the environment in addition to financial performance.

Question 13

Executive leadership is the directing of activities toward the accomplishment of corporate objectives.

Accepted Answer

Executive leadership involves setting goals and strategies for an organization and directing activities towards achieving those goals.

Question 14

The SEC requires that the audit, nominating and compensation committees are staffed entirely by outside directors.

Accepted Answer

The SEC requires that audit, nominating, and compensation committees be staffed entirely by outside directors. This requirement is meant to ensure the objectivity and independence of these committees in their oversight and decision-making functions.

Question 15

Jeff Bezos, CEO of Amazon.com, uses the S team to engage in continuous strategic planning.

Accepted Answer

Jeff Bezos has been known for using the "S-Team" (short for "Senior Team") at Amazon to engage in continuous strategic planning and decision making. This team consists of executives who are responsible for overseeing different areas of the company and helping to shape its overall direction.

Question 16

The confidence levels of executive leaders may blind them to information that is contrary to a decided course of action; this may help to understand why overconfident CEOs are more likely to conduct mergers and acquisitions.

Accepted Answer

Research has shown that overconfident CEOs tend to be more bullish in their decision-making, which can lead to conducting more mergers and acquisitions even if the information suggests that it may not be in the company's best interest. This can be due to their confidence levels blinding them to contrary information or risks involved.

Question 17

Usually, the strategic planning staff is charged with supporting only top management in the strategic planning process.

Accepted Answer

Strategic planning staff often supports not only top management but also various levels of the organization in the strategic planning process, facilitating coordination and communication across different departments and teams.

Question 18

The relationship among the board of directors, top management, and shareholders is referred to as

Accepted Answer

Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. This includes the relationship and balance of power between the board of directors (who are elected by shareholders to represent their interests), top management (who are responsible for implementing the board's policies and running the day-to-day operations of the company), and shareholders (who own shares in the company and have a financial interest in its performance). Corporate governance is important because it helps ensure accountability, transparency, and ethical behavior by all parties involved.

Question 19

The combined chair/CEO position is being increasingly criticized because of the potential for conflict of interest.

Accepted Answer

The statement is true, as holding both responsibilities can create conflicts of interest between the board and management.

Question 20

A highly involved board does all of the following EXCEPT

Accepted Answer

A highly involved board typically takes their role in initiating and determining strategy seriously, provides advice as needed, and keeps management accountable. However, they do not manage the day-to-day operations of the organization, which is the responsibility of management.

Quiz 2: Corporate Governance