Deck 18: Current Trends in Strategic Management

Question 1

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 need for a strong brand and instantly recognisable corporate logo

Answer 1

A

Question 2

Lee Iaccoca at Chrysler, John Browne at BP, Michael Eisner at Disney, and Rupert Murdoch at News Corp. illustrate:

A)The need for charismatic leadership at successful companies
B)Highly visible, charismatic leaders who instigated great change at the firms they headed
C)Firms which fail as soon as the CEO leaves
D)Examples of dictatorial leadership

Answer 2

B

Question 3

What does the evolution of the environment tell firms, and how do they react to it?

Answer 3

The beginning of the 21st century has been full of good and bad events, and was finally as turbulent as the last two decades.
These changes in the political, sociological, and economic environments have considerable consequences on firms' life and strategies, and on managerial practices
a) At a general level, because the environment has become more volatile and unpredictable, firms need to increase their flexibility and their ability to respond to these changes, which impact their strategy and their organizational structure
b) More specifically, particular events call for customized answers from firms, to deal with these changes. For example, economical changes in China and in India have respectively led to major outsourcing of manufacturing and IT activities in these two countries
c) More broadly, firms and researchers need to rethink their models and representations of the corporate world, to take into consideration the evolution of the nature of strategy, the responsibilities of the corporation, and the role of management
This field is only under construction and cannot provide complete and formalized answers, but only exploratory insights to generate reflection

Question 4

What do first, Lee Iaccoca at Chrysler, Michael Eisner at Disney, Rupert Murdoch at News Corp., and second, Joseph Cullman at Philips Morris, Darwin Smith at Kimberley-Clark, and Ken Iversen at Nucor, teach us?

Question 5

The mode of leadership required to run a successful large corporation is:

A)To be a hands-off CEO, who sets frameworks rather than targets
B)To simultaneously be a hard-nosed control-oriented CEO, and to be prepared to relinquish control when needed
C)Above all, to be a charismatic leader
D)There is no such ideal or preferred mode

Question 6

Does a manager who possesses all the classic traits of personality (strength, intelligence, confidence, internally driven, prospector, etc) but lacks social and emotional intelligence, be able to deal with people effectively?

Question 7

Construction companies have always been structured:

A)Around projects
B)Around disciplines
C)Around industries
D)Around the CEO

Question 8

Jack Welch's management style at GE can be considered as an example of:

A)The Planning school of management, characterized by quantitative models
B)Managerial guidance, where few simple rules combined with powerful incentives created conditions conducive to rapid adaptation
C)Real option theory, built around the value attached to the flexibility of strategic managerial orientations
D)An informal and unsuccessful way to run a large diversified firm

Question 9

What does complexity theory teach us?

Question 10

Nokia, Apple, Nintendo, Palm, and RIM competition when they share functions illustrate:

A)Convergence toward a single model of corporate governance
B)The dissolution of industry barriers
C)Cozy collusions that typify oligopoly markets
D)Ugly rivalry between large and successful firms

Question 11

Real options theory may change strategic management by:

A)Requiring top management to attend courses on options theory
B)Reassessing the value of resources and capabilities in terms of the opportunities they offer for deployment in different businesses
C)Both a and b
D)Neither a nor b

Question 12

Complexity theory says that complex systems, such as large firms:

A)Must have complex, fluid structures which no-one fully understands
B)May have a simple structure, with simple operating rules, but exhibit complexity at the system level
C)Must have CEOs whose authority is vastly reduced
D)Need to be run in a more vague fashion

Question 13

How could one describe the general evolution in strategic management thinking?

Question 14

Why is cash management so important in recession times?

Question 15

Toyota, Wal*Mart, Canon, Dell, 3M, and L'Oreal have built different layers of competitive advantage. What does that mean?

A)They have built capabilities at different levels of the hierarchical pyramid
B)They have meshed diverse performance goals of cost efficiency, differentiation, innovation, responsiveness, and learning
C)They have diversified to enter into multipoint competition
D)This is only an expression to state that they are successful

Question 16

The Danish firm Oticon:

A)Changed its corporate governance system to better fit with Danish regulations
B)Found out that team-based structure are inappropriate in the hearing aids market
C)Dismantled hierarchy in favour of self-managed teams, which turned out to be a disastrous mistake
D)Had a weak CEO who no-one respected, and so the company failed

Question 17

What do the two Chinese firms BYD and Zhongxing Medical illustrate:

A)Firms with low cost technical solutions can quickly take market share from established market leaders
B)Chinese companies are increasing their economic power
C)Chinese companies have reached the highest level of technical sophistication
D)A structural break in the battery manufacturing and medical equipment industries

Question 18

Automobiles, fashion clothing, aerospace, machine tools, and telecom equipments, are industries that exemplify:

A)Low profitability industries
B)Fast changing industries
C)Inter-industry networks
D)Interfirm networks

Question 19

Six Sigma, Destroy-your-business.com, Be number 1 or 2 in your industry, are:

A)Corporate actions implemented at General Motors, to turn around the critical situation
B)Corporate initiatives, undertaken by Jack Welch at GE, to stimulate and focus decentralized initiatives
C)Corporate initiatives preached by large consulting firms, such as McKinsey, to improve management in general
D)Sound managerial practices founded in strategic management textbooks

Question 20

How can new styles of leadership be taught to "old leaders"?

Question 21

The critical focus of top management should be on:

A)Profit maximization
B)Factors that lead to sustained profits, and management of appropriate levels of risk
C)Customer satisfaction
D)The maximization of the firm's stock market value

Question 22

Ultimately, the only sustainable competitive advantage which matters is:

A)The ability to create new sources of competitive advantage, although this is not very practically helpful
B)The ability to perform better than rivals
C)The ability to be flexible
D)The ability to maintain an acceptable situation in terms of available cash

Question 23

In Complexity theory, the consequence of unpredictability for top management is:

A)That it's pointless being too rigid and prescriptive
B)It underlines the critical need to create an adaptable and flexible organisation
C)In reality, it is sensible to accept that they are never in absolute control
D)All of the above

Question 24

In option theory, an attractive resource:

A)Is one that can be deployed in different businesses
B)Is one that can support alternative strategies
C)Is the one that is able to generate the largest number of capabilities
D)Answers a and b

Question 25

Hierarchies have developed chiefly to achieve employee cooperation:

A)This established practice is unlikely to change
B)Future needs are likely to emphasise a shift towards coordination, with a loosening of hierarchies
C)Hierarchies will remain tight, but coordination will rise to be as important as cooperation in future
D)However, in future, hierarchies will be dismantled

Question 26

What is the main problem inside many companies regarding shareholder value creation?

A)It is interpreted in such a way as to maximise executive remuneration, and thus short-term profits
B)It is interpreted by management to mean the management of the firm's long-term prospects
C)It is interpreted by management to mean the maximisation of growth
D)It is interpreted by management to mean the management of the firm's market share

Question 27

Complexity theory portrays organisations as:

A)Inevitably unpredictable
B)Not really under the control of top management
C)Both a and b
D)Neither a nor b

Question 28

It's not absolutely clear from the text, but a power-law distribution connection with unpredictability means:

A)That any small change may result in either a small, medium or large consequence, with no way of predicting which it will be
B)The vast majority of small changes will result in small consequences, but a small number will have large consequences - but you can't predict which ones
C)That small changes can distribute a lot of power
D)Both a and b above

Question 29

One thing to bear in mind with real option value is:

A)It can be traded on an options market
B)However many options a firm identifies, it can only pursue a small number at a time
C)It's a very technical area that only corporate finance professionals really understand
D)It only applies to large, diversified firms

Question 30

Two major factors will drive changes in how to manage successful firms in future:

A)The need to deploy more capabilities and to respond to external change more quickly and effectively
B)The need to outsource, and concentrate on one core capability
C)The need to globalise and be prepared to relocate operations to low cost countries
D)The need to innovate, and downsize to just a few key employees

Question 31

Complexity theory is:

A)Well understood by academics
B)An area of mathematical research which is only just making its way through to management theory
C)In danger of being misunderstood and misinterpreted in a populist / faddish way
D)Both b and c above

Question 32

If a business is inherently unpredictable, then:

A)Only statistical management can achieve excellent results
B)The managerial challenge is to design a structure which is inherently flexible and adaptable
C)No one can act in any way to manage a firm
D)There's no longer any point in having a strategy

Question 33

In complexity theory, organizations are considered as:

A)Exhibiting similar behavior to complex systems in the natural world
B)Systems, whose system-level behavior results from the interaction of a large number of independent constituent agents
C)Probably most effective when they operate on the edge of being under control
D)All of the above

Question 34

In simple terms, Complementarity recognizes that

A)Transplanting bits you like from one system to another system, without changing anything else, rarely works well,
B)It is very difficult to know what to do
C)Employees must give new practices the benefit of the doubt, and not blindly oppose all change
D)Any new management practice must be accompanied with a pay rise

Question 35

Complexity theory says that:

A)After the recent economic crisis, firms have become complex, unpredictable systems
B)Firms will become complex, unpredictable systems at some undefined point in the future
C)Organisations always have been complex, unpredictable systems, but the theory has only just been expounded which recognises this
D)None of the above

Question 36

Complementarity and complexity theory:

A)Are competing ideas about strategy
B)Work in opposing directions to each other
C)Must be adopted together or not at all
D)None of the above

Question 37

Using "adaptive tension" to position an organisation "at the edge of chaos":

A)Is all very well - but it's impossible to be sure when you're overstepping the mark into chaos
B)Is proposed by some theorists as the ideal state
C)Risks moving into chaos, beyond the point of no return, and corporate failure
D)All of the above

Question 38

Complexity theory implies that:

A)Future CEOs should fosters the right amount of autonomy and relinquish rigid control
B)Future CEOs will be unimportant
C)Organisations in the future will not need a CEO
D)In the future, organisational hierarchies will be inverted

Question 39

The problem with highly indebted firms is:

A)They are severely limited to the extent they can borrow more to exploit attractive options which arise
B)They are operating at high financial risk, which is inadvisable in a high risk business environment
C)The banks benefit more than the shareholders
D)Answers a and b

Question 40

Which factors explain the corporate disasters of the last decade?

A)Management opting for high-risk strategies which took little account of those risks, and which overestimated their capability
B)Top managers' greed, the absence of any ethics, and human nature
C)The complexity of the environment, and a misfit between the marketing strategies of the firms involved, and their product characteristics
D)The uncertainty and the turbulence of the business environment in general

Question 41

The worldwide financial and economic crisis of 2008 may herald:

A)A strategic inflexion point for small businesses
B)A fundamental break point in the development of the business enterprise
C)The decade of crisis similar to that of the 1930s
D)A fifth economic revolution

Question 42

The most powerful antidote to the current problems is:

A)Sound strategic analysis
B)Better checks and balances on CEO power and risk-taking
C)Behaviour and implementation oriented to long-term sustainability
D)All of the above

Question 43

What does the text mean by the term "corporate scandals"?

A)When one of the top executives breaks the code of social legitimacy
B)When senior executives systematically act grossly or even criminally in their own self-interest, to the detriment of shareholders
C)When senior executives do something which the media whip up to create social outrage
D)When a senior executive acts fraudulently or licentiously

Question 44

What does excessive focus on short-term earnings, or excessive bonuses for executives, illustrate?

A)The power of stockbrokers
B)That corporate governance is inadequate
C)That senior managers exert too much power to behave in their own interests
D)Both b and c

Question 45

The world economic order has been challenged. In what way?

A)The economic and financial worlds are confirmed as more unstable than many believed
B)The established industrialised nations are seeing power shift to the newly industrialised nations.
C)Natural disasters and climate change may cause economic crises
D)Both a and b

Question 46

Recent events show that the effect of media, societal and political pressure on top management pay and bonuses has so far been;

A)Negligible
B)Decisive in curbing these excesses
C)The resignation of a large number of CEO's
D)To underline the power of social legitimacy

Question 47

In future, all businesses will need to move to an internet-based business model:

A)Yes. It will simply be too inefficient to operate with a legacy business model.
B)No. Only certain businesses are susceptible to efficiency gains via the internet
C)No. Certain industries are largely run by managers with traditional views
D)Yes. Especially if legislation is introduced making it compulsory

Question 48

If firms are social institutions that must identify with the values of society, then:

A)Shareholders will invest elsewhere if their values are not met
B)Firms have no freedom to make profit
C)When society's values change, the strategies and behaviors of firms must change as well
D)There will need to be additional members of society on the board of directors

Question 49

"Social legitimacy" is defined by sociologists to mean that:

A)A business will need permission from the local community to operate in future
B)A business should adapt to societal pressures, if it is to survive
C)It must be an honest organization
D)Ultimately, managers will be elected by the community

Question 50

What do the unexpected and undesired consequences of the search for shareholder value imply?

A)Maximizing the present value of economic profit over the lifetime of the firm is wrong
B)Maximizing the value of the firm is misguided
C)The capitalist system is fundamentally flawed
D)None of the above

Question 51

Recessionary times offer:

A)New business opportunities
B)Opportunities to exploit more customers
C)Opportunities to financially squeeze suppliers
D)Opportunities to clean up a firm's portfolio of businesses

Question 52

What are some characteristics of the 2008-2009 crisis?

A)Very few people saw it coming
B)It affected the entire global financial structure very rapidly, regardless of the place of origin
C)There was a very rapid global lack of available bank credit
D)All of the above

Question 53

How can society ensure that a firm adapts to its values and expectations?

A)Through pressure from consumers, employees, shareholders and financiers
B)Presently, sufficient numbers of consumers, employees etc do not act in concert - so the only sure way is if the government passes legislation
C)Through pressure from the media
D)Through sustained demonstrations and rallies

Question 54

Which areas and principles can help firms to navigate in the current crisis?

A)Top management need to concentrate on cashflow and survival
B)A comprehensive, exhaustive strategic review is called for
C)Management needs to cut prices
D)All of the above

Question 55

Strategies which are more likely to be successful:

A)Are deployed in markets whose characteristics support profitability in the long term
B)Create competitive advantage in accordance with emerging key success factors
C)Maintain flexibility and ability adapt to the unexpected
D)All of the above

Question 56

Which firms appear to do best through and after a recession?

A)Those in a monopoly position
B)Those with the agility to adjust operations quickly and early, with enough strength to invest at the worst point of the recession
C)Those who drastically downsize, and cut wages
D)Those with the highest social legitimacy

Question 57

Which performance criterion is paramount in times of recession?

A)Market share
B)Earnings per share
C)Liquidity: having enough cash to pay the bills
D)Long-term strategic forecasting

Question 58

We have witnessed a transition from an industrial economy to a knowledge economy. This is true;

A)For the entire global economy
B)But chiefly in the advanced developed economics
C)Everywhere except for the very poorest countries
D)But the recent economic crisis will cause it to go into reverse

Question 59

What is a "structural break"?

A)A point where the firm's organizational structure must be revamped
B)A point where trends become discontinuous and established cause-and-effect relationships break down
C)A point where the structure of the economy is threatened and must change
D)All of the above

Question 60

What are the three main issues pertinent to the social legitimacy of a firm?

A)Equity, ethics, and environmental sustainability
B)Ethical, top managers' compensation, and environmental issues
C)Financial, ethical, and power issues
D)Corporate governance, marketing power, and ethical issues

Question 61

Firms have to be more flexible and responsive because their environments are more volatile than in the past

Question 62

Given the speed of communications and global scope of networks, the volatile and unpredictable nature of the economic environment will not recede

Question 63

A consequence of complexity theory is that management should set rules of interaction and acceptable/expected behaviour, and relinquish some direct control

Question 64

In retrospect, the build-up over the past decade of Western credit levels and underestimates of the risk was a disaster waiting to happen

Question 65

In the text, "dual strategies" refers to the following principle: "survive today, compete for tomorrow"

Question 66

Whilst some predictions concerning the consequences of technology are underestimated and unforeseen, many are wide of the mark and overblown.

Question 67

"Complementarity" is the recognition that importing a new practice e.g. JIT or a cell-layout, often achieves very little unless the change is comprehensively applied - including associated HR changes

Question 68

With the recent world economic crisis - and indeed with every such crisis -management and economics are in "uncharted waters"

Question 69

Such structural breaks are associated with massive industrial change, some for the better, some calamitous

Question 70

Complexity theory essentially says that system-level complex behaviour can emerge from simple behaviour and rules of interaction at the individual level

Question 71

Three issues dominate the disdain for business corporations: equity issues, unethical behaviors, and slow corporate change

Question 72

The pursuit of shareholder value became translated by many corporate executives as the maximisation of short-term profits.

Question 73

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 the system to amplify small initial movements in unpredictable ways

Question 74

"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 75

A structural break in an industry relates to a point where trends become discontinuous and established cause-and-effect relationships break down

Question 76

Given the amount of data monitoring and computer power, isn't the world more predictable?

A)Yes. The economic crisis is just a glitch
B)No. This is a fallacy, since the global system can react violently to small changes
C)Not yet, but with the next generation of computers, it will be
D)It predicts a global economic catastrophe

Question 77

Very few people saw the recent worldwide financial and economic crisis coming, so it's only reasonable to presume that very few people will accurately predict its downstream consequences

Question 78

There is no guarantee that the new concepts and approaches influencing strategic thinking will all turn out to be useful

Question 79

The implication is that firms should move on from shareholder value maximisation to a less hard-edged and more equitable concept of stakeholder satisfaction

Question 80

There is much discussed, especially in the academic literature, about the need for firms to adapt to the expectations of society.