Question 1

The guidelines for designing an incentive compensation system that will help drive successful strategy execution include:

Accepted Answer

A)  making the performance payoff tiered,based on the actual performance level achieved (that is,for meeting or beating performance targets a major,not minor,piece of the total compensation package). 
B)  having incentives that apply to the management team (employees should generally not be included in incentive pay plans but should have attractive wages and salaries). 
C)  having an outside wage and salary expert administer the system so there is no doubt as to its fairness and impartiality. 
D)  basing the incentives on group performance rather than individual performance. 
E)  making minimal use of non-monetary incentives and rewarding people for diligently performing their assigned duties.

Question 2

Which of the following is not integral to superior strategy execution and operating excellence?

Accepted Answer

A)  Having real-time information systems that permit company managers to stay on top of implementation initiatives and daily operations and to intervene if things seem to be drifting off course. 
B)  Having state-of-the-art operating systems,information systems,and real-time data. 
C)  Having access to online systems that provide statistical information about operating activities. 
D)  Having the systems capability to identify and diagnose problems,so as to take corrective actions. 
E)  These are all integral pieces of the process of managing strategy execution and overseeing operations.

Question 3

Which of the following is NOT characteristic of a compensation and reward system designed to help drive successful strategy execution?

Accepted Answer

A)  Tying incentives to performance outcomes directly linked to good strategy execution and financial performance. 
B)  Keeping the time between achieving the target performance outcome and the payment of the reward as short as possible. 
C)  Making sure that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect. 
D)  Generous rewards for people who turn in outstanding performances. 
E)  A reward system that involves high (say 50 percent of base salary)non-monetary rewards and a work environment that avoids placing pressure on managers and employees to perform at high levels.

Question 4

Total quality management (TQM):

Accepted Answer

A)  entails creating a total quality culture that strives for continuously improving the performance of every value chain activity and is driven by a philosophy of managing a set of business practices: 100 percent accuracy in performing tasks (zero defects),involvement and empowerment of employees at all levels,team-based work design,benchmarking,and total customer satisfaction. 
B)  is a valuable tool for helping company managers identify what the best practice is for performing a particular activity at a high level of quality. 
C)  works best when used in conjunction with Six Sigma quality control techniques. 
D)  is an excellent tool for reengineering business processes and making quantum gains in the efficiency and effectiveness with which the processes are performed. 
E)  is a philosophy of doing things that aims at mistake-free management of a company's entire business.

Question 5

A company's operating budget must be both:

Accepted Answer

A)  strategy-driven in order to amply fund the performance of key value chain activities and lean in order to operate as cost effectively as possible. 
B)  risk-averse,so as not to run the risk of inadvertently creating barriers to building the needed competencies and capabilities,and best practices-driven to drive continuous improvement. 
C)  employee-driven to gain commitment to strengthening the company's core competencies and competitive capabilities and profit-driven to ensure adequate financial resource allocations. 
D)  action-driven in order to reflect a sense of activity and lean in order to operate efficiently. 
E)  All of these.

Question 6

Installing well-conceived,state-of-the-art support systems is an important managerial component of implementing and executing strategy because:

Accepted Answer

A)  such systems are essential to being able to engage in effective benchmarking and continuous improvement. 
B)  such support systems not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals). 
C)  they help managers run a tight ship and preserve strong,centralized control over internal activities. 
D)  they are the basis for revamping value chains,boosting labor productivity,and reducing operating costs. 
E)  decentralized decision making and employee empowerment cannot work well without having well-conceived information and operating systems to accurately benchmark internally performed value chain activities against best-in-industry and best-in-class performers.

Question 7

Total quality management (TQM)programs:

Accepted Answer

A)  deal exclusively with procedures to achieve defect-free manufacturing and assembly. 
B)  nearly always contribute more to the achievement of operating excellence than either business process reengineering or Six Sigma quality control techniques. 
C)  entail creating a corporate culture bent on continuously improving the performance of every task and every value chain activity. 
D)  are considerably more effective in improving manufacturing and assembly activities than they are in improving such value chain activities as R&D,human resources management,supply chain management,information technology,sales,and marketing and finance. 
E)  are generally considered the best tool for reengineering strategy-critical business processes.

Question 8

To create a strategy-supportive system of rewards and incentives,a company must:

Accepted Answer

A)  reward people for accomplishing results,not just for dutifully performing assigned tasks. 
B)  focus jobholders' attention and energy on what to do as opposed to what to achieve. 
C)  demand jobholders' 100 percent attendance since it guarantees results. 
D)  hold jobholders' responsible for their function and not burden them with being accountable. 
E)  All of these.

Exam 11: Managing Internal Operations: Actions That Promote Good Strategy Execution