Deck 16: Current Trends in Strategic Management

Question 1

Applications of complexity thinking to management suggest that top management should set rules governing the interaction of organizational members and their expected behaviour,and relinquish direct supervisory control

Answer 1

True

Question 2

The rise of populist political parties (UK Independence Party,France's Front Nationale,Greece's SYRIZA)and of populist politicians such as Donald Trump in the US and Beppo Grillo in Italy is a reflection of the declining legitimacy of the capitalist market economy.

Answer 2

True

Question 3

Complexity theory predicts that complex,adaptive systems rarely have the capacity to self-organize-to avoid chaos hierarchical control is essential.

Answer 3

False

Question 4

The key feature of the "second economy" that economist Brian Arthur describes is that human decision makers have been replaced by machines.

Question 5

"Managing real options" means that firms should take a greater interest in how share option packages are managed,to achieve the best value for shareholders

Question 6

Among the mature industrialized nations,three major societal issues are impacting businesses: equity,ethics,and environmental sustainability

Question 7

Complementarity research should not be used by a company as an excuse for not adopting a best practice such as a "six-sigma" quality management systems "lean production" manufacturing processes,or a "360-degree" employee appraisal system.

Question 8

For shareholder value maximization to be a helpful goal for top management it needs to focus not on stock market value but on the fundamental drivers of value.

Question 9

Companies such as Toyota,Wal-Mart,3M,and Samsung have sustained strong performance over long periods of time by basing their competitive advantage on a single core competence.

Question 10

The growing interconnectedness of the world economy and human society cannot be regarded as a contributing factor to the increasing volatility and unpredictability of global environment of business.

Question 11

Of the 95 Chinese companies that were members of the Fortune Global 500 in 2015,few were state-owned enterprises.

Question 12

The poor performance of the shares of Goldman Sachs after the 2008 financial crisis,News Corp.after the phone hacking scandal,and VW after its emissions cheating scandal provide support to the argument that maintaining legitimacy is critical to an organization's success.

Question 13

The experiences of British retailer Marks & Spencer and chocolate maker Cadbury confirms the fact that commitment to social responsibility and the interests of employees results in a more responsive and adaptable business enterprise.

Question 14

A growing source of competition to western companies has been new computers from emerging market countries which have made the transition from supplying OEM products to Western manufactures and distributors to providing products under their own brand names.

Question 15

In a more complex business environment where companies must pursue multiple dimensions of competitive advantage is consistent with Jim Collins' recommendation that companies should seek to be "hedgehogs" rather than "foxes." (Drawing upon the categorization of intellectuals made by Isaiah Berlin.)

Question 16

If companies are to put in place the capabilities needed to build multiple layers of competitive advantage,their organizational structures need to become more complex.

Question 17

The emergence of a multipolar world where the US no longer exercises a dominant role is a force for stability in an otherwise unstable global business environment.

Question 18

The growth of the freelance economy in which taxi services,short-term accommodation,and home maintenance is provided by self-employed individuals rather than by firms has little to do with technology,it's mainly due to the preferences of individuals for the flexibility of self-employment over the rigidities of a full-time employment.

Question 19

The business environment of the 21st century has been characterized by turbulence and unpredictability.

Question 20

The complementarity of management practices implies that the effectiveness of a particular management practice depends upon how it firs with all the other management practices of the company.

Question 21

An implication of complexity theory for the leadership of business enterprises is:

A)Future CEOs should relinquish rigid control and foster significant degrees of autonomy among more junior managers
B)The CEO will have less influence on organizational performance
C)Organisations in the future will not need a CEO
D)Organisational hierarchies will be inverted

Question 22

During 2000-2013,the ratio of CEO compensation to the earnings of production workers among US companies averaged:

A)300-times
B)150-times
C)50-times
D)20-times

Question 23

According to the predictions of complexity theory,which of the following managerial actions is not likely to promote rapid evolutionary adaptation by an organization?

A)Simple rules.
B)A combination of both incremental and radical change initiatives.
C)Leaders with well-developed emotional intelligence.
D)An optimal level of adaptive tension.

Question 24

According to the economist Brian Arthur,the "second economy" comprises:

A)The "sharing economy"
B)Mobile e-commerce
C)System of transactions managed entirely by machines
D)The rise of emerging market countries to challenge the advanced industrialized nations

Question 25

Real options theory may change strategic management by:

A)Requiring top management to become familiar with the fundamental of options theory
B)Reframing the tools of industry analysis and the analysis of resources and capabilities to take account not just of the potential for profitability,but also the implications for strategic options
C)Both a and b
D)Neither a nor b

Question 26

The impact of the 2008/9 financial crisis on financial service firms suggests that loss of legitimacy is likely to have the following adverse effect:

A)Lower valuation by investors and financiers.
B)Loss of employee moral.
C)Adverse government policies.
D)All of these.

Question 27

The growing number of takeovers of Western companies by Chinese and Indian companies reflects:

A)The shifting locus of economic prosperity in the world.
B)The drive by Chinese and Indian firms to internationalize.
C)The impact of the 2008-2009 financial crisis in reducing the stock market value of many western companies.
D)The desire of Chinese and Indian firms for Western technology.

Question 28

Replacing mass manufacturing by lean manufacturing:

A)Always improves operational performance.
B)Can reduce operational performance if human resource management is not adapted to the new manufacturing processes.
C)Only improves operational performance for industries subject the unpredictable demand and intense competition.
D)Was successful for Toyota and several other Japanese companies,but is much less successful in the US and Europe.

Question 29

Achieving social legitimacy requires that businesses should:

A)Seek permission from the local community to operate.
B)Adapt to societal pressures.
C)Follow accepted ethical codes.
D)Replace shareholder value maximization by stakeholder value maximization.

Question 30

As organizations and their environments become more complex and less predictable,the kind of leadership that fosters effective organizational adaptation is increasingly characterized by:

A)Commitment clear performance goals
B)Willingness to take tough decisions
C)Management of detail
D)Management of identity,meaning,and the emotional climate of the organization

Question 31

According to systems theory,high levels of interconnectedness can lead to:

A)More pressure on governments to regulate the economy and increase their interventionism
B)A spiral of economic catastrophes and business failures
C)Greater stability in the whole system
D)A tendency for small initial disturbances to become amplified in unpredictable ways

Question 32

The most effective remedy for the problems that have arisen from top managements' pursuit of shareholder value is likely to be:

A)Increased government regulation.
B)Recognition that management should focus not on stock market capitalization but upon the underlying drivers of long run profitability.
C)Companies explicit commitment to the goal creating stakeholder value.
D)Increased shareholder activism.

Question 33

A major implication of corporate scandals,inequality,and environmental sustainability implies that company executives need for firm strategy to pay greater attention to:

A)Risk management.
B)Business ethics.
C)Social legitimacy.
D)Achieving greater diversity among boards of directors.

Question 34

Complex biological and social systems demonstrate the capacity for self-organization.Self-organizing systems require:

A)Identity,information,and relationships.
B)Identity,leadership,and relationships.
C)Identity,shared values,and communication.
D)Common vision,shared values,and goal consensus.

Question 35

The first two decades of the 20^th and 21^st centuries were similar in terms of factors that were reshaping the business environment.The most significant of these common factors were:

A)Political turbulence: in the 20^th century the collapse of the Austro-Hungarian and Ottoman empires,in the 21^st century the ethnic and religious strife and the rise of populist politicians in West.
B)Technology: in the 20^th century electricity,the telephone and the automobile; in the 21^st century the internet and mobile communication.
C)Popular disaffection with big business: in the 20^th century opposition to the concentration of economic power in trusts,in the 21^st the inequality associated with the capitalist economy.
D)Corporate social responsibility: in the 20^th century outrange against unsafe and unhealthy products and worker exploitation; in the 20^th century concerns over environmental irresponsibility and exploitation of third world workers.

Question 36

During turbulent times,real options are increasingly important sources of value.The following are strategic measures can create option value for a firm:

A)Commitment to long-term fixed price contracts for key raw materials.
B)Increasing levels of debt in order to reduce the firm's weighted-average cost of capital.
C)Initiating multiple strategic alliances.
D)Investing in projects enhances environmental sustainability.

Question 37

Research into leadership generally supports the view that complex organizations facing uncertain environments require leaders that are decisive decision makers rather than humble; empathetic individuals endowed with social and emotional intelligence.

Question 38

If competition,market turbulence,and accelerating technological change are increasing the pace at which firms' competitive advantage is eroded,to sustain competitive advantage companies need to:

A)Create multiple sources of competitive advantage.
B)Build strength in intellectual property.
C)Foster innovation.
D)Adopt global strategies that arbitrage the resource advantages of multiple countries.

Question 39

The first 16 years of the 21st century have been characterized by unprecedented turbulence in the global economy,politics,and society.Two reasons for thinking that this turbulence may continue into the future are:

A)Declining legitimacy of political leaders in many countries and growing ineffectiveness of international institutions
B)A growing ineffectiveness of international institutions and a decline in US global influence
C)Increased global interconnectedness causes disturbances be amplified while the declining global influence of the US implies a lack leadership in managing these disturbances
D)The global financial system remains fragile

Question 40

Digital technologies are increasing the intensity of competition in the markets for electronic hardware because they are causing:

A)Entry barriers to fall.
B)Chinese companies that were once contract manufactures for Western and Japanese electronics producers are becoming direct competitors.
C)Production costs to fall.
D)The markets for once-separate products to converge.

Question 41

Organizational identity refers to:

A)A collective understanding among employees of what is core,enduring,and distinctive about the character of an organization.
B)The set of an organization's recipes for successfully competing in the marketplace.
C)Organizational values that are shared at the system level.
D)The norms,values,symbols,and traditions of the organization.