Deck 12: Strategic Leadership

Question 1

Transformational leadership is the most effective strategic leadership style.

Answer 1

True

Question 2

The firm's envisioned future encourages employees to stretch beyond their expectations of accomplishment and requires significant change and progress to be realized.

Answer 2

True

Question 3

Employees usually have a strong preference for firms to use the internal managerial labor market when selecting top management team members and the CEO.

Answer 3

True

Question 4

Rewarding those who use proper channels and procedures to report observed wrongdoings is an example of an action that should be taken by a strategic leader to develop an ethical organizational culture.

Question 5

The experience that results from long tenure in a firm is known to extend the breadth of an executive's knowledge base.

Question 6

In the past, companies had a preference for insiders to fill top-level management positions because of the desire for continuity and a continuing commitment to the firm's current vision, mission, and chosen strategies.

Question 7

Strategic control focuses on the content of strategic actions rather than their outcomes.

Question 8

Firm size, firm age, the executive's tolerance for ambiguity, and his or her commitment to strategic outcomes are all factors that may affect managerial discretion.

Question 9

Financial controls provide feedback about the outcomes of the firm's past actions and predictions about the results of the firm's future actions.

Question 10

Selection of an insider as a new CEO indicates a firm's desire to encourage innovation and strategic change.

Question 11

As the dynamics of competition accelerate, people are perhaps the only truly sustainable source of competitive advantage.

Question 12

Effectively managing the firm's resource portfolio (financial, human, social, and organizational capital) may be the most important strategic leadership task.

Question 13

The more homogeneous a top management team, the more likely those managers will be innovative and willing to pursue strategic change.

Question 14

The Chapter 12 Strategic Focus reports on recent successes of NBC News, Nokia, and Standard Charter because of the top managers' decisions.

Question 15

When the new CEO is from inside the firm and a heterogeneous top management team is in place, the strategy may not change, but innovation is likely to continue.

Question 16

Criteria such as asset utilization improvements and changes in employee turnover rates are part of the internal business processes perspective of the balanced scorecard.

Question 17

The more heterogeneous and the larger the top management team, the easier it is to implement strategy effectively.

Question 18

The balanced scorecard's perspective on learning and growth is intended to improve the firm's ability to innovate.

Question 19

Strategic leaders are most likely to integrate ethical values into their decisions when the company has explicit ethics codes that are integrated into the business through extensive ethics training.

Question 20

Internal labor markets consist of the career opportunities for managers within the firm for which they currently work.

Question 21

Competitive aggressiveness, proactiveness, risk aversion, innovativeness, and autonomy are the five dimensions characterizing the entrepreneurial mind-set.

Question 22

Including talent from both the internal and external labor markets increases the likelihood that the firm will be able to form an effective top management team.

Question 23

The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the Board of Directors is composed of sympathetic outside members and insiders who report to the CEO.

Question 24

The CEO is the individual with primary responsibility for effective strategic leadership within an organization.

Question 25

The advantages of long tenure (firm-specific human and social capital, knowledge, and power) seem to outweigh the disadvantages of rigidity and maintaining the status quo.

Question 26

GM's previous CEO, Dan Akerson, was building new capabilities in technology development and marketing, especially in customer service. This is an example of a CEO developing capabilities into core competencies.

Question 27

Members with substantive expertise in the firm's core functions and businesses aid the effectiveness of the top management team.

Question 28

When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive.

Question 29

The most critical ability of a strategic leader is the ability to attract and then manage human capital.

Question 30

The training of future strategic leaders yields a competitive advantage for a firm, in part because knowledge and skills are necessary for successful execution of strategy.

Question 31

An emphasis on strategic controls encourages managers to be risk averse.

Question 32

The strategic direction of a firm usually focuses on the coming 3 to 5 years.

Question 33

The firm's core ideology motivates the firm's employees through the company's heritage.

Question 34

Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.

Question 35

To influence employees' judgment and behavior, ethical practices must shape the firm's decision-making process, but should be a peripheral part of organizational culture.

Question 36

Compared to homogeneous top management teams, heterogeneous top management teams with an internally promoted CEO are more likely to change their firm's strategies when necessary and to support innovation.

Question 37

Typically, a vice president would NOT be considered to hold a high enough position to be included in the top management team of an organization.

Question 38

Organizational culture is a complex set of ideologies, symbols, and core values that are shared throughout the firm, but its development is so subtle and poorly understood that top managers cannot influence its content.

Question 39

The decision-making discretion of top-level managers is determined partly by external environmental factors such as the industry structure, the industry's rate of growth, and the degree to which products can be differentiated.

Question 40

Because of the current changing competitive landscape and varying levels of performance, an increasing number of Boards of Directors are turning to insiders to succeed CEOs.

Question 41

Incremental changes to a firm's culture can be used to implement strategies effectively.

Question 42

Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate, the following statements are made. Which of the statements is FALSE?

A) If Clarita Cosmetics lays off a large number of employees, there will be a significant loss of human capital that will cause further downturns in the firm's performance.
B) A moderate-sized layoff at Clarita Cosmetics will probably improve firm performance.
C) If Clarita Cosmetics restructures, it ought to increase investments in training and development.
D) A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.

Question 43

Billy Kroghmen is the son of a very prominent Fortune 500 CEO. Billy has had troubles. He failed out of multiple colleges, universities, and correspondence schools. He finally received his undergraduate degree from a university with only a post office box for an address. He then enrolled in the school's combined graduate accounting and law school programs, graduating with honor with degrees in both areas. After graduation, he twice failed both the CPA and bar exams, managing to set record low scores on the ethics portions of both. Despite these academic setbacks, Billy's career now seems to be thriving. He has been appointed to a number of "blue ribbon" government committees, is on the Board of Directors of two corporations and one prestigious not-for-profit organization. In at least one instance, a donor credited Billy with the idea for making a large contribution to the not-for-profit. Widespread speculation is that his career advancement is based largely on social relationships through friends and family. We would classify Billy as ____ on ____ capital, and ____ on ____ capital.

A) high; social; low; human
B) high; human; high; social
C) high; human; low; social
D) None of these options are correct.

Question 44

Shaping and reinforcing a new organizational culture requires all of the following EXCEPT:

A) effective communication.
B) effective performance appraisals.
C) adherence to the firm's traditional core values.
D) an appropriate reward system.

Question 45

The balanced scorecard focuses on both financial and non-financial controls.

Question 46

The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they:

A) overemphasize financial controls and neglect strategic controls.
B) overemphasize strategic control and neglect financial controls.
C) overemphasize strategic and financial controls and neglect ethical controls.
D) neglect short-term controls of all kinds in favor of long-term strategic controls.

Question 47

For 15 years, Edward was a compensation specialist at a mid-sized firm. He was laid off when the firm experienced financial setbacks. Edward has decided to open his own business as a compensation consultant to small firms. He can expect that his main source of human capital will be a bank line of credit.

Question 48

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in:

A) managerial opportunism.
B) white-collar crime.
C) vindictive disloyalty.
D) an act of courage.

Question 49

An example of the external labor market is the situation where:

A) an assessment center operated by an external consulting firm evaluates company managers for promotion potential.
B) a new vice president of marketing is hired from a competitor.
C) the senior vice president of finance is promoted to CEO.
D) a vice president of human resources is sent to a university executive MBA program for professional development.

Question 50

In addition to determining new strategic initiatives, top-level managers also develop the appropriate organizational structure and reward systems of a firm.

Question 51

In the balanced scorecard framework, ____ controls are used to assess the organization's success in creating a climate that supports change and innovation.

A) learning and growth
B) financial
C) operational
D) innovational

Question 52

Top management team members and CEOs who have long tenure on the team and in the organization have greater influence in Board decisions.

Question 53

The most effective leadership style is ____ leadership.

A) pragmatic
B) charismatic
C) inspirational
D) transformational

Question 54

The effective development and management of the firm's ____ may be its only sustainable competitive advantage.

A) capital base
B) human capital
C) technology
D) organizational culture

Question 55

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?

A) Appointing many outside Board members.
B) Increasing the firm's sales.
C) Increasing the homogeneity of the top management team.
D) Training and development programs.

Question 56

A heterogeneous top management team is composed of individuals with:

A) different functional backgrounds, experience, and education.
B) similar commitments to the organization's core ideology and culture.
C) a high level of education and industry expertise.
D) long tenure in the organization who have held various functional positions.

Question 57

Two key strategic leadership actions include:

A) monitoring the hiring of key employees and focusing on growth but not learning initiatives.
B) designing and then implementing the balanced scorecard.
C) setting appropriate financial targets and establishing an effective business level synergy.
D) determining strategic direction and establishing balanced organizational controls.

Question 58

A CEO may gain power by holding the titles of both CEO and Chairman of the Board.

Question 59

The underlying premise of the balanced scorecard is that firms jeopardize their future performance possibilities when strategic controls are emphasized at the expense of financial controls.

Question 60

External social capital is increasingly critical to firm success as few if any companies have all the resources to successfully compete against their rivals.

Question 61

Determining the strategic direction of a firm involves:

A) implementation of a balanced scorecard.
B) developing an entrepreneurial mind set.
C) specifying the vision and the strategy to achieve that vision over time.
D) exploiting and maintaining core competencies.

Question 62

Which of the following factors most encourages stability in a firm's strategy?

A) A new CEO hired from outside the firm but within the industry
B) Internal CEO succession and a homogeneous top management team
C) External CEO succession and a heterogeneous top management team
D) A new CEO hired from outside the industry

Question 63

Strategic control focuses on the ________ of strategic actions, whereas financial controls focus on the _____ of strategic actions.

A) revenues; costs
B) long-term financial outcomes; short-term financial performance
C) content; outcomes
D) outcomes; content

Question 64

Which of the following statements is TRUE regarding effective organizational cultures?

A) Once a corporate culture is developed, strategic leaders can focus on other activities.
B) A strategy that is historically new for a firm should be implemented by incremental changes in the organization's culture.
C) A central task of strategic leaders is to revise the corporate culture on an annual basis after analyzing the changes occurring in the competitive environment.
D) Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.

Question 65

The top management team is composed of the:

A) heterogeneous group of advisors selected by the CEO.
B) CEO and chairperson of the Board.
C) key individuals who are responsible for selecting and implementing a firm's strategy.
D) officers listed in a firm's annual report and the Board of Directors.

Question 66

A characteristic of the manager that may affect managerial discretion is his/her:

A) amount of industry experience.
B) level of education.
C) tolerance for ambiguity.
D) length of tenure.

Question 67

Which of the statements about CEO duality is FALSE?

A) CEO duality is associated with high CEO power.
B) CEO duality has been blamed for slow response to change by the organization.
C) CEO duality is relatively rare in the U.S. except in large Fortune 500 firms.
D) If the CEO acts a steward, CEO duality facilitates effective decisions and actions.

Question 68

Which of the following is NOT related to a CEO having long tenure in his or her position?

A) More effective strategic control
B) Greater influence on board decisions
C) More limited perspective
D) A broader knowledge base

Question 69

Competitive aggressiveness describes a firm's:

A) tendency to engage in new ideas and creative processes.
B) willingness to allow employees to take actions free of organizational constraints.
C) ability to be a leader in the marketplace.
D) propensity to take actions that allow it to outperform rivals consistently and substantially.

Question 70

The top management team at Ingenuity, Inc., has assigned a team of scientists to a multi-year project to investigate the viability of growing large amounts of fur from cloned cells of minks and foxes to produce no-kill fur products for coats and other clothing items. This idea would satisfy all the dimensions of the entrepreneurial orientation EXCEPT:

A) innovativeness.
B) risk taking.
C) proactiveness.
D) competitive autonomy.

Question 71

Normally, the more involved a Board of Directors is in shaping the firm's strategic direction, the:

A) more balanced the organization is.
B) higher the corporation's performance is.
C) more rapidly executive decisions can be made.
D) more difficult it becomes to make effective executive decisions.

Question 72

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior?

A) Effectively Managing the Firm's Resource Portfolio.
B) Determining Strategic Direction.
C) Regulating and Controlling Employees.
D) Sustaining an Effective Organizational Culture.

Question 73

The more heterogeneous the top management team, the:

A) more difficult it will be for the team to implement strategies.
B) more likely it is that the team will be cohesive.
C) less innovative the team's decisions will tend to be.
D) less diverse the team membership will be.

Question 74

The ____ is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance.

A) managerial model
B) holistic control system
C) balanced scorecard
D) internal auditing system

Question 75

The Board of Directors for TundraPro, Inc., is searching for a new CEO. The firm is in need of new direction after suffering several years of declining performance and increasingly demoralized management and employees. The Board has decided it needs a CEO who can be a transformational leader. To this specific end, the Board needs to identify applicants who have

A) high levels of honesty, trustworthiness, and integrity.
B) high emotional intelligence.
C) Both A and B are correct.
D) low tolerance for ambiguity.

Question 76

Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the:

A) customer.
B) employee.
C) shareholder.
D) general society.

Question 77

Which of the following is NOT associated with heterogeneous top management teams?

A) Higher firm performance
B) Innovation and strategic change
C) Diminished debate among top managers
D) Better strategic decisions

Question 78

Firms needing to change their strategies should:

A) create more heterogeneous top management teams.
B) focus on their core customer base.
C) implement transformational leadership.
D) emphasize the training and development of internal managerial talent.

Question 79

Organizational controls provide:

A) the parameters within which strategies are to be implemented.
B) goals and objectives that must be achieved.
C) information on action steps to be taken to implement the corporate strategy.
D) managers with guidelines on how to treat employees.

Question 80

Human capital refers to:

A) the net present value of the future competencies of the workforce.
B) the amount of money purchasers of the firm would pay for the continuing employment of the present workforce.
C) the value-added that the firm's workforce contributes to each product produced or service rendered.
D) knowledge and skills of the firm's work force.