Question 1

From a strategy-implementing/strategy-executing perspective,operating budget allocations should:
A) primarily be based on the number of new strategic initiatives being implemented in each operating department.
B) be based on the number of people employed in each of the divisions.
C) be strategy-driven and be based on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively.
D) be linked to the costs of performing value chain activities as determined by benchmarking against best-in-industry competitors.
E) depend on how much stretch there is in each department's objectives and what additional resources are needed to help reach these performance targets.

Accepted Answer

Operating budget allocations should be strategy-driven, meaning that they should be based on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively. This approach ensures that resources are allocated in a way that supports the achievement of strategic goals and objectives. Options A, B, D, and E are not the best choices as they do not prioritize the use of resources based on the organization's strategic plan.

Question 2

Which one of the following is NOT a benefit of prescribing policies and operating procedures to aid management's task of implementing strategy?
A) Placing limits on independent behavior channels individual and group efforts along a path more conducive to executing the strategy.
B) Providing top-down guidance to operating managers,supervisory personnel,and employees regarding how things need to be done and what behavior is expected.
C) Promoting the creation of a work climate that facilitates good strategy execution.
D) Helping build employee commitment to adopting best practices and using the tools of TQM and Six Sigma.
E) Helping enforce consistency of effort in how particular activities are performed in geographically scattered organization units.

Accepted Answer

Building employee commitment to adopting best practices and using the tools of TQM and Six Sigma is not a specific benefit of prescribing policies and operating procedures to aid management's task of implementing strategy. While it may indirectly result from having clear policies and procedures in place, it is not a direct benefit. A, B, C, and E are all recognized benefits of prescribing policies and operating procedures to aid in strategy implementation.

Question 3

Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and resource allocation process because:
A) too little funding deprives organizational units of the necessary resources to execute their piece of the strategic plan while too much funding wastes organizational resources and reduces financial performance.
B) a change in strategy nearly always calls for budget reallocations and resource shifting.
C) without major budget reallocations there is little chance that desired core competencies and organizational capabilities will emerge.
D) lean,carefully managed budgets protect the company's financial condition and eliminate the wasteful use of cash.
E) All of these.

Accepted Answer

All of these reasons are valid justifications for managers charged with implementing and executing strategy to be deeply involved in the budgeting and resource allocation process. In order to ensure that organizational units have the necessary resources to execute their piece of the strategic plan, while also avoiding wasteful use of resources and protecting the company's financial condition, managers must carefully manage budgets and make reallocations as needed. Additionally, major budget reallocations may be necessary in order to bring about desired core competencies and organizational capabilities.

Question 4

A useful guideline in designing strategy-facilitating policies and operating procedures is:
A) to prescribe enough policies to give organizational members clear direction in implementing strategy and to place reasonable boundaries on their actions.This then empowers them to act within these boundaries in pursuit of company goals.
B) that strictly enforced policies work better than loosely enforced policies.
C) that more policies/procedures work better than fewer policies/procedures,and that strict enforcement always beats lax enforcement.
D) to let individuals act in an empowered and self-directed way,subject only to the constraint that their actions and behavior be ethical and in step with the corporate culture.
E) to prescribe enough policies and procedures that little is left to chance in performing value chain activities,and employees should have no leeway to do things in a manner that deviates from the company's best-practices standard.

Accepted Answer

The answer of A useful guideline in designing strategy-facilitating policies...

Question 5

Merely fine-tuning the execution of a company's existing strategy normally requires that companies embrace:
A) big shifts of resources from one area to another.
B) a larger allocation of resources to the effort.
C) trimming costs and shifting resources to activities that have a higher priority.
D) a high degree of creativity in finding ways to find and reduce cost reductions (ways to do less with less)and reallocating those resource costs to other areas.
E) All of these.

Accepted Answer

Merely fine-tuning the execution of a company's existing strategy implies that the strategy is mostly in place and needs some adjustments. Therefore, big shifts of resources (A) or a larger allocation of resources (B) are not necessary. Rather, trimming costs and shifting resources to activities that have a higher priority (C) is more appropriate. The answer D is not accurate as it mentions finding ways to do less with less, which may not be the case with fine-tuning a strategy. Therefore, the correct answer is C.

Question 6

Visible actions to reallocate operating funds and move people into different and new organizational units:
A) can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big changes in budgets cause among company personnel.
B) signal a determined commitment to strategic change and can help catalyze and give credibility to the implementation process.
C) run the risk of inadvertently creating barriers to building the needed competencies and capabilities.
D) tend to impede the task of empowering employees and shifting to new,more strategy-supportive culture.
E) are rarely necessary in implementing a new strategy unless the new strategy entails a radically different set of value chain activities.

Accepted Answer

Visible actions to reallocate operating funds and move people into different and new organizational units signal a determined commitment to strategic change and can help catalyze and give credibility to the implementation process. While there can be anxiety and insecurity among company personnel with big changes in budgets, these visible actions can also help alleviate concerns and provide clarity on the direction the company is taking. Additionally, these actions can help build the competencies and capabilities needed to support the new strategy and shift to a new, more strategy-supportive culture. However, it is important to be mindful of potential barriers that may inadvertently be created in the process. While these actions may not always be necessary, they can be beneficial in implementing a new strategy.

Question 7

A company's operating budget must be both:
A) strategy-driven in order to amply fund the performance of key value chain activities and lean in order to operate as cost effectively as possible.
B) risk-averse,so as not to run the risk of inadvertently creating barriers to building the needed competencies and capabilities,and best practices-driven to drive continuous improvement.
C) employee-driven to gain commitment to strengthening the company's core competencies and competitive capabilities and profit-driven to ensure adequate financial resource allocations.
D) action-driven in order to reflect a sense of activity and lean in order to operate efficiently.
E) All of these.

Accepted Answer

The operating budget should balance two important aspects- it needs to be strategy-driven to fund key activities and operations and at the same time, lean to be cost-effective. Option A best defines this balance. Option B is incorrect because risk-averse budgeting may limit the company's ability to build competencies and capabilities, which could hinder the organization's growth. Option C and Option D are not correct as they do not capture the balance between strategy and cost-effectiveness.

Question 8

A "best practice":
A) is a method of performing an activity or business process that at least one company has demonstrated works particularly well in terms of delivering some highly positive operating outcome.
B) refers to the best-known procedure for performing a specific task or activity so as to achieve the lowest possible costs.
C) refers to performing activities in a manner that conforms to established industry standards.
D) refers to a company's core competence.
E) refers to performing a particular value chain activity in "world-class" fashion (one unmatched by any other company in the world).

Accepted Answer

A "best practice" is a method of performing an activity or business process that has been shown to work particularly well in achieving positive outcomes. This is based on the experience of at least one company that has successfully implemented the practice. It may not necessarily be the lowest-cost option or conform to established industry standards, but it is a proven approach for delivering positive results.

Question 9

New strategies often entail budget reallocations because:
A) revamping the performance of value chain activities can be costly.
B) the accompanying policy revisions and compensation incentives tend to require different levels of funding than before.
C) business units important in the prior strategy but having a lesser role in the new strategy may need downsizing,while units and activities that now have a bigger and more critical strategic role may need more people,new equipment,additional facilities,and above-average increases in their operating budgets.
D) empowering employees to carry out the new strategy elements and shifting to a total quality management type of culture to build skills in competent strategy execution typically require substantial new funding and budget revisions.
E) adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements.

Accepted Answer

New strategies often require a shift in resources from units and activities that had a bigger role in the prior strategy to units and activities that have a bigger and more critical strategic role in the new strategy. This may involve downsizing some business units and activities and increasing the operating budgets and resources of others.

Question 10

What do companies need to do (in prescribing policies and procedures)to promote the creation of a favorable work climate that facilitates independent action on the part of empowered employees for good strategy execution?
A) Give organization members clear direction and place reasonable boundaries on their actions.
B) Empower employees to act within the company's set boundaries in pursuit of company goals.
C) Allow company personnel to act with some defined degree of freedom,especially when individual creativity and initiative are more essential to good strategy execution than standardization and strict conformity.
D) Institute policies that give employees substantial leeway to carry out activities the way they think best.
E) All of these.

Accepted Answer

To create a favorable work climate that facilitates independent action on the part of empowered employees for good strategy execution, companies need to do all of the above. They need to provide clear direction and boundaries, empower employees to act within those boundaries, allow for some defined degree of freedom when creativity and initiative are essential, and institute policies that give employees substantial leeway to carry out activities in the way they think best. By doing all of these things, companies can create a culture that promotes employee empowerment and allows for successful strategy execution.

Question 11

Prescribing new policies and operating procedures can aid the task of implementing strategy:
A) provided they promote greater use of and commitment to best practices and total quality management.
B) because really effective internal policies and procedures are not easily duplicated by other firms.
C) because astutely conceived policies or procedures can result in competitive advantage.
D) by helping align the actions and behavior of company personnel with the requirements for good strategy execution,placing limits on independent action and helping overcome resistance to change.
E) by making it easier to impose tight budget controls and avoid wasting scarce resources.

Accepted Answer

Prescribing new policies and operating procedures can help align the actions and behavior of company personnel with the requirements for good strategy execution, placing limits on independent action, and helping overcome resistance to change. This is crucial for successfully implementing a strategy. The other options also have some validity, but they are not as comprehensive as option D.

Question 12

The idea behind benchmarking and best practices is to:
A) identify which companies are the best performers of a strategically relevant activity and then copy their methods exactly.
B) search the world for a company that performs a strategically relevant task or value chain activity at the lowest possible cost and then use business process reengineering techniques to try to meet or beat the costs of the world's low-cost performer of that activity.
C) perform each activity in the industry value chain according to standard industry practice and then regularly benchmark the company's performance to see if it is actually achieving the industry standard.
D) identify companies that are the best performers of an activity and then "adapt" their practices to fit the company's own specific circumstances and operating requirements.
E) determine whether a company has a "world-class" value chain.

Accepted Answer

Benchmarking and best practices involve identifying companies that are the best performers of a strategically relevant activity and then adapting their practices to fit the company's own specific circumstances and operating requirements. It is not about blindly copying methods or trying to meet the costs of the world's lowest-cost performers. It is also not just about achieving industry standards or determining whether a company has a "world-class" value chain. The focus is on improving a company's performance through the adoption of proven practices from industry leaders.

Question 13

In what ways do well-conceived policies and operating procedures facilitate strategy execution?
A) They provide top-down guidance regarding how things are to be done.
B) They help ensure consistency in how execution-critical activities are performed.
C) They promote the creation of a work climate that facilitates good strategy execution.
D) They channel individual and group efforts along a strategy-supportive path.
E) All of these.

Accepted Answer

Well-conceived policies and operating procedures provide top-down guidance on how to perform execution-critical activities, ensure consistency in the execution process, create a work environment that is conducive to strategy execution, and channel individual and group efforts in support of the strategy. Therefore, all of the options provided accurately describe how policies and procedures facilitate strategy execution.

Question 14

Company managers can significantly advance the cause of superior strategy execution by doing all of the following,EXCEPT:
A) employing best practices methods and using process management tools to drive continuous improvement in how internal operations are conducted.
B) adopting benchmarking of the company's operating activities and business processes against "best-in-industry" and "best in world" performers.
C) adopting "best-in-company" operating activities and processes when a company's various organizational units are performing the same functions differently.
D) instituting operating practices that generate economies of scale and scope with current value chain activities.
E) develop performance yardsticks for judging effectiveness and efficiency for particular value chain activities and business processes deemed strategically critical.

Accepted Answer

The only option that does not advance the cause of superior strategy execution is D as it focuses more on generating economies of scale and scope which may not necessarily be aligned with the company's overall strategy. The other options focus on improving internal operations, benchmarking against best practices, adopting best-in-company operating activities, and developing performance yardsticks, all of which can help advance the cause of superior strategy execution.

Question 15

The backbone of the process of identifying,studying,and implementing best practices is:
A) business process reengineering.
B) a corporate culture that has a core value of operating excellence.
C) benchmarking.
D) Six Sigma quality control techniques.
E) the innovative application of TQM techniques.

Accepted Answer

Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. It involves identifying, studying, and implementing best practices, which is the backbone of the process. While the other options listed may be important elements in improving a company's operations, they rely on the foundation of identifying and implementing best practices through benchmarking.

Question 16

Prescribing policies and operating procedures aids the task of implementing strategy by:
A) helping ensure that worker eligibility for incentive bonuses is measured consistently and awarded fairly.
B) fostering the use of best practices,TQM,Six Sigma,and continuous improvement efforts.
C) acting as a powerful lever for changing employee attitudes about the need for a different incentive and reward system.
D) helping build employee commitment to strengthening the company's core competencies and competitive capabilities.
E) placing limits on ineffective independent action.They also channel efforts of individuals along a path more conducive to good strategy execution and operating excellence.

Accepted Answer

Prescribing policies and operating procedures help to place limits on ineffective independent action, ensuring that efforts are channeled along a path that is more conducive to good strategy execution and operating excellence. This helps in implementing strategy effectively. Although options A, B, C, and D are also helpful in different ways, they are not directly related to the task of implementing strategy.

Question 17

A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the appropriate organizational units is important to the strategy execution process because:
A) changes in strategy often require resource reallocation,and organizational units need the proper funding to carry out their part of the strategic plan effectively and efficiently.
B) accurate budgets are the key to exercising tight financial controls over what organization units can and cannot do in carrying out management's directives to execute the chosen strategy proficiently.
C) tight budget control is management's most powerful tool for first-rate strategy execution.
D) lean,carefully managed budgets protect the company's financial condition and eliminate the wasteful use of cash.
E) lean,strictly enforced budgets are management's best and most used means of getting organizational units to exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner.

Accepted Answer

Changes in strategy often require changes in resource allocation, and it is important to ensure that organizational units have sufficient funding to carry out their part of the strategic plan effectively and efficiently. This requires the company to marshal its resources and steer them to the appropriate units. Budgets are just one tool in the resource allocation process, and the focus should be on ensuring that organizational units have the resources they need to execute the strategy, not just on exercising tight financial controls.

Question 18

Which of the following is NOT a tool that managers can use to promote operating excellence and further the cause of good strategy execution?
A) Benchmarking and the adoption of best demonstrated practices.
B) Business process reengineering.
C) Strategic resource training.
D) TQM and Six Sigma quality control techniques.
E) Activity-based costing.

Accepted Answer

Strategic resource training is a tool for developing employee competencies and skills, but it is not directly related to promoting operating excellence or strategy execution. The other options, benchmarking, business process reengineering, TQM and Six Sigma, and activity-based costing, all directly contribute to improving operational performance and executing strategy more effectively.

Question 19

A "best practice" refers to:
A) a policy or procedure that is unusually effective.
B) a method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence.
C) performing a strategy-critical activity in a fashion that results in sustainable competitive advantage.
D) performing a value chain activity that is a company's distinctive competence.
E) a particular value chain activity that management has given top priority to performing in world-class fashion.

Accepted Answer

A best practice is a method or approach to performing a business process or activity that consistently delivers superior results compared to other approaches. This approach has been demonstrated to work particularly well in delivering operating excellence and at least one company has shown success using it.

Question 20

Which one of the following is NOT a tool that company managers can use to promote operating excellence in performing value chain activities?
A) Utilize benchmarking.
B) Adapt best practices.
C) Install TQM and/or Six Sigma quality control techniques.
D) Undertake business process reengineering.
E) Adopt standard industry techniques.

Accepted Answer

Adopting standard industry techniques is not necessarily a tool for promoting operating excellence, as these techniques may not be the most efficient or effective for a particular company's unique value chain activities. The other options listed are all commonly used tools for promoting operating excellence in performing value chain activities.

Quiz 11: Managing Internal Operations: Actions That Promote Good Strategy Execution

From a strategy-implementing/strategy-executing perspective,operating budget allocations should:

Which one of the following is NOT a benefit of prescribing policies and operating procedures to aid management's task of implementing strategy?

Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and resource allocation process because:

A useful guideline in designing strategy-facilitating policies and operating procedures is:

Merely fine-tuning the execution of a company's existing strategy normally requires that companies embrace:

Visible actions to reallocate operating funds and move people into different and new organizational units:

A company's operating budget must be both:

A "best practice":

New strategies often entail budget reallocations because:

What do companies need to do (in prescribing policies and procedures) to promote the creation of a favorable work climate that facilitates independent action on the part of empowered employees for good strategy execution?

Prescribing new policies and operating procedures can aid the task of implementing strategy:

The idea behind benchmarking and best practices is to:

In what ways do well-conceived policies and operating procedures facilitate strategy execution?

Company managers can significantly advance the cause of superior strategy execution by doing all of the following,EXCEPT:

The backbone of the process of identifying,studying,and implementing best practices is:

Prescribing policies and operating procedures aids the task of implementing strategy by:

A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the appropriate organizational units is important to the strategy execution process because:

Which of the following is NOT a tool that managers can use to promote operating excellence and further the cause of good strategy execution?

A "best practice" refers to:

Which one of the following is NOT a tool that company managers can use to promote operating excellence in performing value chain activities?