Deck 17: Strategic Management Control: a Lean Perspective

Question 1

Corporate Governance can be interpreted as solely looking after shareholders.

Answer 1

True

Question 2

Corporate Responsibility can be interpreted as solely looking after a wider group of people than the shareholders.

Answer 2

True

Question 3

Feedforward control is an approach which

A)always puts more resources into future operations.
B)relies on a predictive model of processes so that errors can be anticipated and corrected for.
C)is best illustrated by a simple temperature controlled heating system.
D)is characteristic of traditional budgeting systems.

Answer 3

B

Question 4

Budgeting has not been described as one of the following

A)unnecessary evil
B)my life
C)bane of corporate America
D)the reason I wrote this book

Question 5

If Corporate Social Responsibility is to be more than lip service and change Corporate Behaviour then specific performance indicators need to be imbedded alongside financial ones.

Question 6

The problem with incrementalism is that

A)activities are not under the control of management.
B)there is too much uncertainty about future budgets.
C)it encourages managers to be over-concerned with their salary increases.
D)activities become institutionalised through the budget and there is a reluctance to ask questions about fundamental purposes.

Question 7

Double loop learning concerns

A)the use of information to learn from past performance in order to change processes.
B)the use of information to learn from past performance in order to change inputs.
C)the use of information to learn from past performance in order to alter objectives.
D)All of the above.

Question 8

A risk management system should mean that a company will

A)avoid all risks.
B)reject any attempt to categorise risk.
C)considered the likelihood of risks materializing.
D)establish risk-avoiding controls irrespective of their costs.

Question 9

Corporate governance is

A)a technique for costing in service organisations.
B)a development of budgeting and standard costing.
C)at a minimum, being concerned with protecting the interests of the suppliers of capital.
D)another name for local government management.

Question 10

The Performance Prism

A)recognises that stakeholders make contributions to the organisation.
B)derives performance measures from strategy.
C)focuses on maximising shareholder wealth.
D)is designed to focus on social objectives.

Question 11

Which of the following of four basic levers of control is most similar to traditional budgeting

A)diagnostic control systems that are used to motivate and monitor.
B)belief systems that inspire and direct.
C)boundary systems that limit opportunism.
D)interactive control systems that stimulate organisational learning.

Question 12

Zero-based budgeting

A)Is an approach to budgeting that solely applies to public sector organisations
B)Is an approach in which managers are required to justify all budgeted expenditures, not just changes in the budget from the previous year
C)Is best carried out on a quarterly basis
D)Should be undertaken on a routine basis

Question 13

'Relative performance contracts with hindsight' are a good idea because

A)They focus on historical standards such as last year's results
B)They make managers look good because "with hindsight' means that managers can adjust their targets after having seen actual outcomes
C)They encourage a philosophy of doing what is best for the firm in the light of current circumstances
D)They encourage competitiveness between individuals in an organization

Question 14

The Enterprise Governance model argues that

A)Organisations should focus mainly on conformance and accountability assurance
B)There is tension between good corporate governance and value creation
C)Management accountants need not be concerned with corporate governance
D)All of the above

Question 15

Budgeting has been criticised for

A)making organisations inflexible and unable to respond to uncertainty.
B)being mechanistic with rigid, formalised and tightly coupled systems.
C)being too time consuming.
D)All of above

Question 16

Corporate social responsiveness (or responsibility) is

A)a form of public ownership.
B)the capacity of the organisations to respond to the demands of society as a whole.
C)solely concerned with whether organisations have a policy on environmental sustainability.
D)primarily concerned with serving the interests of shareholders.

Question 17

In the clan model, control of the organisation is motivated by

A)a desire for peer approval.
B)an avoidance of deviance from the goal of profit maximization.
C)a desire to improve social responsiveness.
D)all of the above.

Question 18

Which of the following problems associated with output related performance indicators are mostly prevalent in public rather than private sector organisations?

A)Myopia- the concentration on short-term results
B)The misrepresentation of financial results
C)Gaming- deviant budgetary behaviour such as hiding reserves
D)Ossification - a reluctance to innovate or take risks

Question 19

Which of the following desirable features are not recommended in a performance measurement system

A)the measurements system should have a large number of performance indicators.
B)tthe performance measurement system must be comprehensive including non-financial as well as financial indicators.
C)there must be a system of feedback and review to ensure that the information flows enable the organization to learn and adapt from its experience.
D)the system should be aligned with the rewards/penalties that managers and other employees receive for achieving performance targets.

Question 20

Organisational control systems

A)always penalise ethical decision making.
B)rely entirely on formal controls.
C)may help to embed corporate social responsiveness.
D)are just another name for budgeting.

Question 21

Simon's old style strategy does not involve one of the following

A)rational
B)top down
C)analytical
D)forthright

Question 22

Some of the bases of budget criticism do not stem from

A)importance of intellectual capital.
B)adopts a network structure .
C)hierarchical structure.
D)changing business environment.

Question 23

Wealth has not been destroyed in the last 10 years by

A)lack of creativity
B)reckless behaviour
C)greedy behaviour
D)fraudulent behaviour

Question 24

Budgeting has not been criticised as

A)top down
B)bottom up
C)it hides knowledge sharing
D)it makes people feel undervalued

Question 25

Budgeting has not been criticised as

A)inflexible
B)historically based
C)the best thing since sliced bread
D)incrementalist

Question 26

Under levers of control analysis, one of the following is not a key variable:

A)Risks to be avoided
B)Strategic certainties
C)Core values
D)Critical performance variables

Question 27

Cohen on page 718 of Ch 17 found that there was no clear link between executive pay and management performance

Question 28

Budgeting has not been criticised as

A)mechanistic
B)encourages gaming
C)unable to respond
D)light and fluffy

Question 29

One of the following is not a desirable feature of a Performance Management System (PMS)

A)not comprehensive
B)must not focus on KPIs
C)must comply with rewards and penalties of system
D)must be owned and supported by organisation

Question 30

Simon's new style strategy does not involve one of the following

A)learning
B)indulgent
C)emergent
D)customer response

Question 31

Informal controls are of no importance

Question 32

Business failure leads to financial penalty

Question 33

The rate of CEO pay and average worker pay in the UK in 2002 was

A)20:1
B)60:1
C)80:1
D)40:1

Question 34

Simon's new style strategy does not involve one of the following

A)feasible
B)customer response
C)supplier ambivalent
D)employee empowerment

Question 35

One of the following is not a desirable feature of a Performance Management System (PMS):

A)Must be consistent with strategy
B)Must be consistent with the objectives of an organization
C)Must be consistent with the system of feedback and review
D)Must not include non-financial measures

Question 36

Simon's return-on-management aims to increase the choice available to management

Question 37

One of the following is not a lever of control

A)pyramid systems
B)belief systems
C)boundary systems
D)interactive social systems

Question 38

The rate of CEO pay and average worker pay in the US in 1999 was

A)1,016:1
B)216:1
C)516:1
D)100:1

Question 39

Simon in his levers of control appraisal states that the reductionist model of humanity must be embraced

Question 40

Management Accountants are not responsible for the integrity of financial data for reporting purposes

Question 41

A robust risk management system will not

A)only do things that have no risk
B)decide the extent of acceptable risk
C)judge its ability to reduce risk
D)estimate costs of control in managing risk

Question 42

Profit orientated firms have a number of profit-orientated reasons why they should take the environment seriously.

Question 43

Starovic's CIMA technical report doesn't argue that

A)good quality information should be relevant and focused
B)Financial and Management Accounting systems should be integrated.
C)information systems should be integrated with processes
D)good quality information should be forward looking

Question 44

A robust risk management system will not

A)understand the risks that face it
B)decide whether risks are acceptable to bear
C)make sure that risk managers have covered their backs so that nobody can accuse them of errors
D)consider the likelihood of risks materialising

Question 45

Discuss diagnostic control systems and their use in the levers of control analogy

Question 46

Agency theory

A)does not look at behaviour at all
B)looks at management behaviour and employees
C)looks at inter-management behaviour
D)looks at the link between management behaviour and shareholders interest

Question 47

A potential role for Management Accountants might be to provide non-execs with information to monitor executive directors

Question 48

Some constraints or boundary systems can enable organisational freedom and flexibility

Question 49

Discuss interactive control systems and their use in the levers of control analogy.

Question 50

Organisation/internal accounting

A)makes no contribution to corporate governance
B)makes a great contribution to corporate governance
C)makes some contribution to corporate governance
D)we don't know how much contribution it makes to corporate governance

Question 51

The importance of the distinction between Management and Financial Accounting made by Kaplan and Johnson was important in the 20th Century was rational; but in the 21st Century the destruction of wealth by Fraud is more important. Discuss.

Question 52

Define belief and boundary systems in the context of the levers of control model and discuss whether they fight against each other in a detrimental way.

Question 53

Enterprise governance stresses the duty of company boards to verify that an organisation uses resources in a responsible manner

Question 54

Compare and contrast corporate governance and corporate social responsibility. Why should companies bother about anybody other than their shareholders?