Question 1

The three primary participants in corporate governance are: (1)the shareholders,(2)the management (led by the chief executive officer),and (3)the employees.

Accepted Answer

The primary participants are:(1) the shareholders, (2) the management (led by the chief executive officer), and (3) the board of directors.

Question 2

Management innovations such as total quality,just-in-time,benchmarking,business process reengineering,and outsourcing are important but not enough for building sustainable competitive advantage.

Accepted Answer

Sustainable competitive advantage cannot be achieved through operational effectiveness alone. Popular management innovations of the last two decades like total quality, just-in-time, benchmarking, business process reengineering, and outsourcing are concerned with operational effectiveness.

Question 3

All successful firms compete and outperform their rivals by developing bases for competitive advantage,which can be achieved only through cost leadership.

Accepted Answer

Successful firms strive to develop bases for competitive advantage, which can be achieved through cost leadership and/or differentiation as well as by focusing on a narrow or industrywide market segment.

Question 4

Strategic management consists of the analyses,decisions,and actions an organization undertakes in order to create and sustain competitive advantages.

Accepted Answer

According to the textbook, this is the definition of strategic management.

Question 5

Richard Branson,the founder of the Virgin Group,is well known for creating an inclusive organizational structure in which anybody in the organization can be involved in generating and acting on new business ideas.

Accepted Answer

Richard Branson, founder of the Virgin Group, whose core businesses include retail operations, hotels, communications, and an airline, is well known for creating a culture and an informal structure where anybody in the organization can be involved in generating and acting on new business ideas.

Question 6

Strategy analysis is the study of only the big picture external environments of the firm.

Accepted Answer

Strategy analysis is the study of the external and internal environments of a firm, and their fit with organizational vision and goals.

Question 7

Trade-off decisions between effectiveness and efficiency are important in the practice of strategic management.

Accepted Answer

The fourth attribute of strategic management is that it involves the recognition of trade-offs between effectiveness and efficiency. Some authors have referred to this as the difference between doing the right thing (effectiveness) and doing things right (efficiency).

Question 8

Decisions by boards of directors are always consistent with shareholder interests.

Accepted Answer

The board of directors (BOD) are the elected representatives of the shareholders, charged with ensuring that the interests and motives of management are aligned with those of the owners (i.e., shareholders). Recent scandals have resulted in criticism and cynicism that the BOD fulfills this charge.

Question 9

Shell,NEC,and Procter and Gamble have been measuring their performance according to what has been called a triple bottom line.This technique involves an assessment of financial,social,and environmental performance.

Accepted Answer

Many companies are now measuring what has been called a triple bottom line. This involves assessing financial, social, and environmental performance. Shell, NEC, Procter and Gamble, and others have recognized that failing to account for the environmental and social costs of doing business poses risks to the company and its community.

Question 10

Ensuring effective corporate governance requires an effective and engaged board of directors,uninvolved shareholders,and proper managerial rewards and incentives.

Accepted Answer

We focus on three important mechanisms to ensure effective corporate governance:(1) an effective and engaged board of directors, (2) shareholder activism, and (3) proper managerial rewards and incentives.

Question 11

Social responsibility is the idea that organizations are only accountable to stockholders.

Accepted Answer

Social responsibility is the expectation that businesses or individuals will strive to improve the overall welfare of society. From the perspective of a business, this means that managers must take active steps to make society better by virtue of the business being in existence.

Question 12

The final realized strategy of a firm is a combination of deliberate and time-tested strategies only.

Accepted Answer

Realized strategy is that strategy of a firm in which organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences.

Question 13

According to Henry Mintzberg,a management scholar,most firms do not realize their original intended strategy.

Accepted Answer

Henry Mintzberg states that the intended strategy rarely survives in its original form. Unforeseen environmental developments, unanticipated resource constraints, or changes in managerial preferences may result in at least some parts of the intended strategy remaining unrealized. On the other hand, good managers will want to take advantage of a new opportunity presented by the environment, even if it was not part of the original set of intentions.

Question 14

Lands' End's failure under the leadership of Ms.Frederica Marchionni was said to be a direct result of the quality of her leadership.According to the text,this would be an example of the "romantic" perspective of leadership.

Accepted Answer

In the romantic view of leadership, the implicit assumption is that the leader is the key force in determining an organization's success or lack thereof. Under Ms. Marchionni's leadership, the company reported a 19.5-million-dollar loss for 2016 after having reported a 73.8-million-dollar profit for the previous year under its previous CEO.

Question 15

Much research has supported the notion that individuals work much harder when they are asked to do their best rather than when they are striving toward a specific goal.

Accepted Answer

Challenging objectives can help to motivate and inspire employees to higher levels of commitment and effort. Much research has supported the notion that people work harder when they are striving toward specific goals instead of being asked simply to do their best.

Question 16

Strategic management requires managers at all levels of the organization to take a segregated view of the organization.

Accepted Answer

Strategic management requires managers to take an integrative view of the organization and assess how all of the functional areas and activities fit together to help an organization achieve its goals and objectives. This cannot be accomplished if only the top managers in the organization take an integrative, strategic perspective of issues facing the firm, and everyone else fends for themselves in their independent, isolated functional areas. Instead, people throughout the organization must strive toward overall goals.

Question 17

The vision of an organization is at the top level of its hierarchy of organizational goals.The vision statement should be massively inspiring,overarching,and long term.

Accepted Answer

A vision is a goal that is massively inspiring, overarching, and long term.

Question 18

Sustainability is being increasingly recognized as a source of cost efficiencies and revenue growth.

Accepted Answer

A CEO survey on sustainability by Accenture debunks the notion that sustainability and profitability are mutually exclusive corporate goals. The study found that sustainability is being increasingly recognized as a source of cost efficiencies and revenue growth. In many companies, sustainability activities have led to increases in revenue and profits.

Question 19

An idealistic vision can arouse employee enthusiasm and therefore is a good vision.

Accepted Answer

An idealistic vision can arouse employee enthusiasm. However, that same enthusiasm can be quickly dashed if employees find that senior management behavior is not consistent with the vision.

Question 20

The strategic management process should be addressed only by top-level executives.Mid-level and low-level employees are best equipped to implement the strategies of the organization.

Accepted Answer

To develop and mobilize people and other assets, leaders are needed throughout the organization. No longer can organizations be effective if the top level does the thinking, and the rest of the organization does the work. Everyone must be involved in the strategic management process.

Quiz 1: Strategic Management: Creating Competitive Advantages