clemsonaphistudy.weebly.com€¦ · Web viewA company's ability to marshal the resources needed to support new strategic initiatives has a major impact on the strategy execution

Chapter 11 Managing Internal Operations: Actions That Promote Good Strategy Execution Answer Key

Multiple Choice Questions

1. A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the appropriate organizational units is important to the strategy execution process because

A. changes in strategy often require resource reallocation, and organizational units need the proper funding to carry out their part of the strategic plan effectively and efficiently.

B. accurate budgets are the key to exercising tight financial controls over what organization units can and cannot do in carrying out management's directives to execute the chosen strategy proficiently.

C. tight budget control is management's most powerful tool for first-rate strategy execution.D. lean, carefully managed budgets protect the company's financial condition and eliminate the

wasteful use of cash.E. lean, strictly enforced budgets are management's best and most used means of getting organizational

units to exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner.

A company's ability to marshal the resources needed to support new strategic initiatives has a major impact on the strategy execution process. Too little funding and an insufficiency of other types of resources slow progress and impede the efforts of organizational units to execute their pieces of the strategic plan proficiently. Too much funding and an overabundance of other resources waste organizational resources and reduce financial performance. Both outcomes argue for managers to be deeply involved in reviewing budget proposals and directing the proper kinds and amounts of resources to strategy-critical organizational units. A change in strategy nearly always calls for budget reallocations and resource shifting.

AACSB: Analytical Thinking

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Difficulty: 1 EasyLearning Objective: 11-01 Why resource allocation should always be based on strategic priorities.

Topic: Strategic control system

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2. Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and resource allocation process because of all the following reasons EXCEPT

A. too little funding deprives organizational units of the necessary resources to execute their piece of the strategic plan while too much funding wastes organizational resources and reduces financial performance.

B. resource allocation involves screening of requests for people, facilities and equipment, and approving them, whether they contribute to the strategy execution effort or not.

C. without major budget reallocations there is little chance that desired core competencies and organizational capabilities will emerge.

D. lean, carefully managed budgets protect the company's financial condition and eliminate the wasteful use of cash.

E. a change in strategy nearly always calls for budget reallocations and resource shifting.

Early in the strategy implementation process, managers must determine what resources (in terms of funding, people, and so on) will be required and how they should be distributed across the company's various organizational units. This includes carefully screening requests for such resources, approving those that will contribute to the strategy execution effort, and turning down those that don't.


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Learning Objective: 11-01 Why resource allocation should always be based on strategic priorities.Topic: Strategic control system

3. From a strategy-implementing/strategy-executing perspective, operating budget allocations should

A. primarily be based on the number of new strategic initiatives being implemented in each operating department.

B. be based on the number of people employed in each of the divisions.

C. be strategy-driven and based on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively.

D. be linked to the costs of performing value chain activities as determined by benchmarking against best-in-industry competitors.

E. depend on how much stretch there is in each department's objectives and what additional resources are needed to help reach these performance targets.

Early in the strategy implementation process, managers must determine what resources (in terms of funding, people, and so on) will be required and how they should be distributed across the company's various organizational units. This includes carefully screening requests for such resources, approving those that will contribute to the strategy execution effort, and turning down those that don't.






4. New strategies often entail budget reallocations because

A. revamping the performance of value chain activities can be costly.B. the accompanying policy revisions and compensation incentives tend to require different levels of

funding than before.C. business units important in the prior strategy but having a lesser role in the new strategy may need

downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.

D. empowering employees to carry out the new strategy elements and shifting to a total quality management type of culture to build skills in competent strategy execution typically require substantial new funding and budget revisions.

E. adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements.

A change in strategy nearly always calls for budget reallocations and resource shifting. Previously important units with a lesser role in the new strategy may need downsizing. Units that now have a bigger strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.




5. Visible actions to reallocate operating funds and move people into different and new organizational units

A. can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big changes in budgets cause among company personnel.

B. signal a determined commitment to strategic change and can help catalyze and give credibility to the implementation process.

C. run the risk of inadvertently creating barriers to building the needed competencies and capabilities.D. tend to impede the task of empowering employees and shifting to a new, more strategy-supportive

culture.E. are rarely necessary in implementing a new strategy unless the new strategy entails a radically

different set of value chain activities.Visible actions to reallocate operating funds and move people into new organizational units signal a determined commitment to strategic change. Such actions can catalyze the implementation process and give it credibility.






6. A company's operating budget must

A. be strategy-driven in order to amply fund the performance of key value chain activities.

B. be risk-averse, so as not to run the risk of inadvertently creating barriers to building the needed competencies and capabilities.

C. be employee-driven to gain commitment to strengthening the company's core competencies and competitive capabilities.

D. trim costs of key value chain activities to achieve cost efficiency in new strategic initiatives.E. follow traditional and time-tested methods of budgeting to support rapid adjustments in strategy.A company's operating budget must be strategy driven (in order to amply fund the performance of key value chain activities).




7. Merely fine-tuning the execution of a company's existing strategy normally requires

A. big shifts of resources from one area to another.

B. a larger allocation of resources to the effort.

C. trimming costs and shifting resources to activities that have a higher priority.D. creativity in finding ways for cost reductions, i.e. ways to do less with less.E. cost-cutting in key value chain activities.There are times when strategy changes or new execution initiatives need to be made without adding to total company expenses. In such circumstances, managers have to work their way through the existing budget line by line and activity by activity, looking for ways to trim costs and shift resources to activities that are higher-priority in the strategy execution effort.






8. Apple decides to reallocate resources by curtailing online ad budgets and investing heavily in scratch-resistant Sapphire, the material that differentiates the Apple Watch from rival wearable computing device brands. What is MOST LIKELY the reason for Apple's reallocation of resources?

A. making critical value chain activities less effectiveB. supporting the new strategic initiative of the brandC. signaling commitment to online sales of the brandD. signaling commitment to offline sales of the brandE. impeding the efforts of rivals to hoard SapphireA change in strategy nearly always calls for budget reallocations and resource shifting. Previously important units with a lesser role in the new strategy may need downsizing. Units that now have a bigger strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.


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Difficulty: 2 MediumLearning Objective: 11-01 Why resource allocation should always be based on strategic priorities.


9. eBay, an online auction business, streamlines its retail business by listing PayPal, a digital payments company, as a separately traded company. eBay's move is likely to

A. promote the entry of rival companies into the digital payments industry.B. increase the cost of handling transactions online.C. curtail the cost of handling transactions online.D. enhance eBay's strategy execution capabilities.E. increase the demand for on-line

auctions.Should internal cash flows prove insufficient to fund the planned strategic initiatives, then management must raise additional funds through borrowing or selling additional shares of stock to investors. A company's ability to marshal the resources needed to support new strategic initiatives has a major impact on the strategy execution process.







10. Cavco Construction divests funds from its commercial property ventures to invest in gated community properties close to New York, signaling a change of strategy. Which of the following statements about Cavco is most likely true?

A. Cavco is impeding the efforts to proficiently execute the strategy.B. Cavco is merely fine-tuning its existing strategy to test efficiency.C. Cavco is marshalling resources to support new strategic initiative.D. Cavco is hampering work climate conducive for good strategy

execution.E. Cavco is focusing on activities that are a low priority in the strategy execution effort.A change in strategy nearly always calls for budget reallocations and resource shifting. Previously important units with a lesser role in the new strategy may need downsizing. Units that now have a bigger strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets. Visible actions to reallocate operating funds and move people into new organizational units signal a determined commitment to strategic change. Merely fine-tuning the execution of a company's existing strategy seldom requires big shifts of resources from one area to another. In contrast, new strategic initiatives generally require not only big shifts in resources but a larger allocation of resources to the effort as well.




Topic: Functional strategy

11. Well-conceived policies and operating procedures facilitate good strategy execution by

A. leaving it up to employees regarding how things are to be done.B. removing roadblocks to creativity and innovation.C. fostering a work climate that preserves the status quo whenever possible.D. enforcing consistency in how strategy-critical activities are performed.E. channeling individual and group efforts along a strategy-supportive path.Well conceived policies and operating procedures facilitate strategy execution by providing top-down guidance regarding how things are to be done; ensuring consistency in how execution-critical activities are performed; promoting the creation of a work climate that facilitates good strategy execution; and channeling individual and group efforts along a strategy-supportive path.



Difficulty: 1 EasyLearning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.

Topic: Strategic leadership



12. Prescribing policies and operating procedures aids the task of implementing strategy by

A. helping ensure that worker eligibility for incentive bonuses is measured consistently and awarded fairly.

B. fostering the use of best practices, TQM, Six Sigma, and continuous improvement efforts.C. acting as a powerful lever for changing employee attitudes about the need for a different incentive

and reward system.D. helping build employee commitment to strengthening the company's core competencies and

competitive capabilities.E. placing limits on ineffective independent action and channeling efforts of individuals along a path

more conducive to good strategy execution and operating excellence.Well-conceived policies and operating procedures that facilitate strategy execution place limits on ineffective independent action, and when well matched with the requirements of the strategy implementation plan, they channel the efforts of individuals along a path that supports the plan.



Learning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.Topic: Strategic leadership

13. Providing top-down guidance can aid the task of implementing strategy

A. provided they promote greater use of and commitment to best practices and total quality management.

B. because really effective internal policies and procedures are not easily duplicated by other firms.

C. because astutely conceived policies or procedures can result in competitive advantage.D. by helping align the actions and behavior of company personnel with the requirements for good

strategy execution, placing limits on independent action, and helping overcome resistance to change.E. by making it easier to impose tight budget controls and avoid wasting scarce

resources.Providing top-down guidance can help in the following ways: channel individual and group efforts along a strategy-supportive path; align the actions and behavior of company personnel with the requirements for good strategy execution; and place limits on independent action and help overcome resistance to change.






14. A useful guideline in designing strategy-facilitating policies and operating procedures is

A. to prescribe enough policies to give organizational members clear direction in implementing strategy and to place reasonable boundaries on their actions. This then empowers them to act within these boundaries in pursuit of company goals.

B. that strictly enforced policies work better than loosely enforced policies.C. that more policies/procedures work better than fewer policies/procedures, and that strict

enforcement always beats lax enforcement.D. to let individuals act in an empowered and self-directed way, subject only to the constraint that their

actions and behavior be ethical and in step with the corporate culture.E. to prescribe enough policies and procedures that little is left to chance in performing value chain

activities, and employees should have no leeway to do things in a manner that deviates from the company's best-practices standard.

There is wisdom in a middle-ground approach where designing strategy-facilitating policies and operating procedures is concerned: Prescribe enough policies to give organization members clear direction and to place reasonable boundaries on their actions; then empower them to act within these boundaries in pursuit of company goals.




15. Which of the following is NOT a benefit of prescribing policies and operating procedures to aid management's task of implementing strategy?

A. placing limits on independent action and helping overcome resistance to changeB. providing top-down guidance to operating managers, supervisory personnel, and employees

regarding how things need to be done and what behavior is expectedC. promoting the creation of a work climate that facilitates good strategy executionD. helping build employee commitment to adopting best practices and using the tools of TQM and Six

SigmaE. helping enforce consistency of effort in how particular activities are performed in geographically

scattered organization unitsWell-conceived policies and operating procedures provide the following benefits: providing top-down guidance regarding how things are to be done; placing limits on independent action and helping overcome resistance to change; promoting the creation of a work climate that facilitates good strategy execution; and helping align and coordinate the strategy execution efforts of individuals and groups throughout the organization—a feature that is particularly beneficial when there are geographically scattered operating units.






16. In prescribing policies and procedures that facilitate independent action on the part of empowered employees for good strategy execution companies need to do ALL of the following EXCEPT

A. give organization members clear direction and place reasonable boundaries on their actions.B. empower employees to act within the company's set boundaries in pursuit of company goals.C. allow company personnel to act with some defined degree of freedom, especially when individual

creativity and initiative are more essential to good strategy execution than standardization and strict conformity.

D. institute policies that give employees substantial leeway to carry out activities the way they think best.

E. produce policy manuals on strategy execution that prescribe exactly how daily operations are to be conducted.

Prescribe enough policies to give organization members clear direction and to place reasonable boundaries on their actions; then empower them to act within these boundaries in pursuit of company goals. These policies give employees substantial leeway to do activities the way they think best.




17. Which of the following exemplifies good strategy execution?

A. The policy document of Dominos ensures consistency in service behavior patterns across outlets.B. The policy document of Pizza Today allows for differences in product range and quality across

outlets.C. The policy document of Boston Pizza leaves ample scope for each member of the staff to act

independently.D. The policy document of Little Caesars discusses strategy but not the routines for running the outlets.E. The policy document of Pizza Inn is averse to standardization of the way activities are performed.Good strategy execution nearly always entails an ability to replicate product quality and the calibre of customer service at every location where the company does business. Policies and procedures serve to standardize the way that activities are performed. This can be important for ensuring the quality and reliability of the strategy execution process. It helps align and coordinate the strategy execution efforts of individuals and groups throughout the organization. Dominos promotes the creation of a work climate that facilitates good strategy execution by ensuring consistency in service behavior patterns. Variance in product quality at Pizza Today outlets goes against the norms of good strategy execution. Moreover, in case of good strategy execution, a company's policies and procedures provide a set of well-honed routines for running the company and executing the strategy. Therefore, the policy document of Little Caesar is not in line with the norms of good strategy execution.



Difficulty: 2 MediumLearning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.




18. Which of the following does NOT facilitate strategy execution?

A. Hyundai service centers follow same routines when receiving vehicles for servicing.

B. Ford encourages staff to skip practices out of sync with the company's mission.C. General Motors showrooms have similar operating practices across

regions.D. Chevrolet Service center replicates the caliber of customer service across locations.E. Renault is averse to standardization of the way activities are performed at its service centers.A company's policies and procedures can either support or hinder good strategy execution. Anytime a company moves to put new strategy elements in place or improve its strategy execution capabilities, some changes in work practices are usually needed. Managers are thus well advised to carefully review existing policies and procedures and to revise or discard those that are out of sync. A company's policies and procedures provide a set of well-honed routines for running the company and executing the strategy. Policies and procedures serve to standardize the way that activities are performed. This can be important for ensuring the quality and reliability of the strategy execution process. It helps align and coordinate the strategy execution efforts of individuals and groups throughout the organization. Good strategy execution nearly always entails an ability to replicate product quality and the caliber of customer service at every location where the company does business.



Difficulty: 2 MediumLearning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.


19. Company managers can significantly advance the cause of superior strategy execution by doing all of the following EXCEPT

A. employing best practices methods and using process management tools to drive continuous improvement in how internal operations are conducted.

B. adopting benchmarking of the company's operating activities and business processes against "best-in-industry" and "best in world" performers.

C. adopting "best-in-company" operating activities and processes when a company's various organizational units are performing the same functions differently.

D. instituting operating practices that generate economies of scale and scope with current value chain activities.

E. develop performance yardsticks for judging effectiveness and efficiency for particular value chain activities and business processes deemed strategically critical.

Company managers can significantly advance the cause of competent strategy execution by adopting best practices and using process management tools to drive continuous improvement in how internal operations are conducted; by benchmarking the company's performance of particular activities and business processes against "best-in-industry" and "best-in-world" performers; by looking at "best-in-company" performers of an activity if a company has a number of different organizational units performing much the same function at different locations; and by providing useful yardsticks for judging the effectiveness and efficiency of internal operations and setting performance standards for organizational units to meet or beat.





Difficulty: 2 MediumLearning Objective: 11-03 How best practices and process management tools drive continuous improvement in the performance of value

chain activities and promote superior strategy execution.Topic: Benchmarking

20. A "best practice" refers to a

A. policy or procedure that is unusually effective.B. method of performing an activity or business process that consistently delivers superior results

compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence.

C. strategy-critical activity that results in sustainable competitive advantage.D. value chain activity that is a company's distinctive competence.E. particular value chain activity that management has given top priority to performing in world-class

fashion.A "best practice" refers to a method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence.





21. A "best practice" standard

A. helps a company move toward performing its value chain activities more effectively and efficiently.B. is the sole means of measuring whether or not a company performs a specific task or activity so as

to achieve the lowest possible costs.C. conforms to established industry standards.D. is a measure of a company's core competence.E. is often sufficient justification for maintaining the status quo.A "best practice" refers to a method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence.







22. The idea behind benchmarking and best practices is to

A. identify which companies are the best performers of a strategically relevant activity and then copy their methods exactly.

B. search the world for a company that performs a strategically relevant task or value chain activity at the lowest possible cost and then use business process reengineering techniques to try to meet or beat the costs of the world's low-cost performer of that activity.

C. perform each activity in the industry value chain according to standard industry practice and then regularly benchmark the company's performance to see if it is actually achieving the industry standard.

D. identify companies that are the best performers of an activity and then "adapt" their practices to fit the company's own specific circumstances and operating requirements.

E. determine whether a company has a "world-class" value chain.

Benchmarking is the backbone of the process of identifying, studying, and implementing best practices. It involves identifying which companies are the best performers of an activity. These best practices of other organizations must then be adapted to fit the specific circumstances of a company's own business, strategy, and operating requirements.



Learning Objective: 11-03 How best practices and process management tools drive continuous improvement in the performance of value chain activities and promote superior strategy execution.

Topic: Benchmarking

23. The backbone of the process of identifying, studying, and implementing best practices is

A. business process reengineering.B. a corporate culture that has a core value of operating

excellence.C. benchmarking.D. Six Sigma quality control techniques.E. the innovative application of TQM techniques.Benchmarking is the backbone of the process of identifying, studying, and implementing best practices. It involves identifying which companies are the best performers of an activity. These best practices of other organizations must then be adapted to fit the specific circumstances of a company's own business, strategy, and operating requirements.







24. Which of the following is NOT a method that company managers can use to promote operating excellence in performing value chain activities?

A. Utilize benchmarking.B. Adapt best practices.C. Install TQM and/or Six Sigma quality control techniques.D. Undertake business process reengineering.E. Adopt standard industry techniques.Benchmarking, best practices, TQM, Six Sigma, and business process reengineering are some tools and methods to promote operating excellence in performing value chain activities.




Topic: Benchmarking

25. Which of the following is NOT a tool or method that managers can use to promote operating excellence and further the cause of good strategy execution?

A. benchmarkingB. business process reengineeringC. strategic resource trainingD. TQM and Six Sigma quality control techniquesE. best practicesBenchmarking, best practices, TQM, Six Sigma, and business process reengineering are some tools and methods to promote operating excellence in performing value chain activities and further the cause of good strategy execution.




Topic: Benchmarking



26. Because functional organization structures often result in pieces of strategically relevant activities and capabilities being scattered across many different functional departments, companies have found that

A. it is necessary to give these functional departments the freedom to collaborate closely with each other to achieve the desired degree of coordination.

B. it is necessary to outsource those activities that are fragmented to strategic partners in order to achieve the needed coordination.

C. there is merit in using business process reengineering to radically redesign and streamline strategy-critical processes and workflow from different departments and unifying their performance into a single department or cross-functional work group that has charge over the whole process.

D. TQM is a potent way to reengineer the work effort, avoid the shortcomings of a functional organization structure, and achieve rapid-response capability.

E. it makes good organizational sense to combine those functional departments where fragmentation is a problem into a single department.

A company can reengineer the work effort, pulling the pieces of an activity out of different departments and creating a single department or cross-functional work group to take charge of the whole process. The use of cross-functional teams has been popularized by the practice of business process reengineering, which involves radically redesigning and streamlining the workflow (often enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity.




Topic: Benchmarking

27. Business process reengineering is a tool for

A. expediting the redesign of existing products and shortening the design-to-market cycle.B. radically redesigning and streamlining how an activity (workflow) is performed, by pulling the

pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group.

C. instituting total quality management.D. making the most effective use of Six Sigma techniques.E. the rapid redesign of an organization's structure so as to quickly create organizational competencies

and capabilities.Business process reengineering involves radically redesigning and streamlining the workflow (often enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity.







28. Business process reengineering

A. involves radically redesigning and streamlining the workflow (typically enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity.

B. is not a useful tool for streamlining a company's work effort and moving it closer to operational excellence.

C. is the major tool that ambidextrous organizations deploy to drive continuous improvement efforts.D. is typically cheaper and easier than using Six Sigma techniques to achieve the same cost savings.E. is a company's best justification for eliminating all nonmonetary rewards and incentives for its

employees.A company can reengineer the work effort, pulling the pieces of an activity out of different departments and creating a single department or cross-functional work group to take charge of the whole process. The use of cross-functional teams has been popularized by the practice of business process reengineering, which involves radically redesigning and streamlining the workflow (often enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity.





29. Total quality management (TQM)

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.Total quality management (TQM) is a comprehensive, structured approach to management that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-work design, benchmarking, and total customer satisfaction.







30. Total quality management (TQM) emphasizes all of the following EXCEPT which?

A. 100 percent accuracy in performing tasksB. continuous improvement in all phases of operationsC. adoption of industry standard operating practicesD. benchmarking and total customer satisfactionE. empowerment of employees and team-based work

designTotal quality management (TQM) is a comprehensive, structured approach to management that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-work design, benchmarking, and total customer satisfaction.


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Difficulty: 1 EasyLearning Objective: 11-03 How best practices and process management tools drive continuous improvement in the performance of value


31. Total quality management (TQM) programs

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.Total quality management (TQM) entails creating a total quality culture, involving managers and employees at all levels, bent on continuously improving the performance of every value chain activity. It involves reforming the corporate culture and shifting to a continuous-improvement business philosophy that permeates every facet of the organization.







32. Which of the following statements about total quality management (TQM) is FALSE?

A. TQM aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the organization.

B. TQM produces significant results very quickly, with very little benefit emerging after the first six months.

C. TQM doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility to participate in continuous improvement.

D. Effective use of TQM entails creating a corporate culture bent on continuously improving the performance of every task and every value chain activity.

E. Total quality management (TQM) is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.

Total quality management (TQM) is a comprehensive, structured approach to management that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-work design, benchmarking, and total customer satisfaction. It involves reforming the corporate culture and shifting to a continuous-improvement business philosophy that permeates every facet of the organization. TQM aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the organization. Management's job is to kindle an organization-wide search for ways to improve that involves all company personnel exercising initiative and using their ingenuity. TQM doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility to participate in continuous improvement.





33. Six Sigma programs

A. utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes.

B. consist of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process.

C. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process allows variability; and (3) defect-free work requires tight statistical controls.

D. suggest that all activities can be controlled, employee empowerment is the best control tool, and 100 percent control is possible.

E. radically redesign and streamline how an activity is performed.Six Sigma programs utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes.




chain activities and promote superior strategy execution.



Topic: Benchmarking

34. Six Sigma quality control

A. is a strategy implementer's best, most reliable tool for simultaneously achieving top-notch product quality and low manufacturing costs.

B. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process.

C. consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process.

D. consists of a disciplined, statistics-based system aimed at fewer than 5.0 complaints per million customer transactions.

E. is a powerful tool for companies whose customers are very picky about product quality and product performance and who can't afford for the product they use to break down and require repairs.

Six Sigma programs utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes. When performance of an activity or process reaches "Six Sigma quality," there are no more than 3.4 defects per million iterations (equal to 99.9997 percent accuracy).





35. Six Sigma processes

A. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process allows variability; and (3) defect-free work requires tight statistical controls.

B. can be used for both improving existing business processes and for developing new processes or products.

C. can be used for improving products or business processes but not for developing new products or new processes.

D. consists of a disciplined, statistics-based system aimed at producing not more than 10 defects per million iterations for a manufacturing or assembly process.

E. can be used for developing new products or new business processes but not for improving existing products or business processes.

The Six Sigma process of define, measure, analyze, improve, and control (DMAIC, pronounced "de-may-ic") is an improvement system for existing processes falling below specification and needing incremental improvement. The Six Sigma process of define, measure, analyze, design, and verify (DMADV, pronounced "de-mad-vee") is used to develop new processes or products at Six Sigma quality levels.



Difficulty: 3 HardLearning Objective: 11-03 How best practices and process management tools drive continuous improvement in the performance of value




36. The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is

A. an improvement system for existing processes falling below specification and needing incremental improvement.

B. an improvement system used to develop new processes or products at 100 percent defect-free levels.C. a system of statistical procedures for achieving 100 percent control over how a task is performed.D. an improvement system used to develop new processes or products at Six Sigma levels.E. a system of statistical procedures for eliminating 100 percent of the variability in how a task is

performed.The Six Sigma process of define, measure, analyze, improve, and control (DMAIC, pronounced "de-may-ic") is an improvement system for existing processes falling below specification and needing incremental improvement.




Topic: Benchmarking

37. Six Sigma's DMADV process of define, measure, analyze, design, and verify is a particularly good vehicle for

A. improving performance when there are small variations in how well an activity is performed. If there are wide variations, then the Six Sigma DMVSI process has to be used.

B. achieving 100 percent control over how a task is performed and eliminating 100 percent of the variability in how a task is performed.

C. improving performance when there are wide variations in how well an activity is performed.

D. developing new processes or products at Six Sigma quality levels.E. improving customer satisfaction, whereas Six Sigma improves manufacturing processes.The Six Sigma process of define, measure, analyze, design, and verify (DMADV, pronounced "de-mad-vee") is used to develop new processes or products at Six Sigma quality levels.




Topic: Benchmarking



38. The statistical thinking underlying Six Sigma is based on which of the following three principles?

A. All activities can be controlled, employee empowerment is the best control tool, and 100 percent control is possible.

B. All work is a process, all processes have variability, and all processes create data that explains variability.

C. All work activities can be done accurately most of the time, empowered employees are necessary for effective control, and good statistical data is an empowered employee's best control tool.

D. All work is a statistically controllable process, 100 percent control is possible, and every well-controlled process is defect-free.

E. Most business processes are subject to control, Six Sigma can totally remove variability in how processes are performed, and most defects can be eliminated.

The statistical thinking underlying Six Sigma is based on the following three principles: (1) All work is a process, (2) all processes have variability, and (3) all processes create data that explain variability.




Topic: Benchmarking

39. Which of the following statements about Six Sigma quality programs is true?

A. While Six Sigma programs often improve the efficiency of numerous operating processes, there is evidence that the approach can stifle innovative activities.

B. Six Sigma is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations and 100 percent accuracy in performing tasks.

C. Six Sigma's DMAIC process is a particularly good vehicle for improving performance when there are only small variations in how well an activity is performed.

D. The focus of Six Sigma programs is on the development of new products or new business processes but not on improving existing products or business processes.

E. Six Sigma is a system of statistical procedures for eliminating 92 percent of the variability in how a task is performed.

Despite its potential benefits, there is evidence that Six Sigma techniques can stifle innovation and creativity. The essence of Six Sigma is to reduce variability in processes, but creative processes, by nature, include quite a bit of variability.




Topic: Benchmarking



40. A company that successfully and methodically applies Six Sigma methods to its value chain, activity by activity, can

A. clearly consider what it will take to overtake rivals with the industry's overall best strategy.

B. make major strides in improving the proficiency with which its strategy is executed without sacrificing innovation.

C. increase its bargaining power with suppliers and create better seller-supplier collaborations.D. assess the extent to which rivals have competitively valuable competencies or

capabilities.E. construct a business model that entails a value proposition based on quality.An enterprise that systematically and wisely applies Six Sigma methods to its value chain, activity by activity, can make major strides in improving the proficiency with which its strategy is executed without sacrificing innovation.




Topic: Benchmarking

41. An ambidextrous organization is one that

A. pursues incremental improvements in operating efficiency, while R&D and other processes that allow the company to develop new ways of offering value to customers are given freer rein.

B. is capable of using efficiency and effectiveness with equal skill.C. is very skillful and versatile with operating activity.D. is managed by employing continuous improvement in operating practices while managing

employees as a loosely integrated network of efficiency.E. employs identical improvement methods for both operating processes and R&D.A blended approach to Six Sigma implementation in ambidextrous organizations pursues incremental improvements in operating efficiency, while R&D and other processes that allow the company to develop new ways of offering value to customers are given freer rein.




Topic: Benchmarking



42. The big difference between business process reengineering and continuous improvement programs like TQM or Six Sigma is that

A. reengineering is a tool for installing process organization, whereas TQM/Six Sigma concern defect-free production methods and delivering world-class customer service.

B. reengineering helps create core competencies, whereas TQM/Six Sigma are tools for making a core competence stronger and more efficient.

C. reengineering is a tool for achieving one-time quantum improvement, whereas TQM and Six Sigma programs aim at ongoing incremental improvements.

D. business process reengineering requires benchmarking, whereas TQM and Six Sigma do not.E. reengineering represents an effort to totally revamp a firm's value chain, whereas TQM looks at

incrementally improving the performance of two or three targeted value chain activities and Six Sigma is primarily for reducing manufacturing defects.

Business process reengineering aims at one-time quantum improvement, while continuous-improvement programs like TQM and Six Sigma aim at ongoing incremental improvements.




Topic: Benchmarking

43. To obtain maximum benefits from benchmarking, best practices, reengineering, TQM, and Six Sigma programs aimed at facilitating better strategy execution, managers need to

A. start with a clear idea of what specific outcomes really matter, such as a Six Sigma defect rate or superior customer satisfaction, and then build a total quality culture that is genuinely committed to achieving these outcomes.

B. have annual contests to see which part of the company is making the greatest strides in approaching operating excellence.

C. strive for 100 percent control over the variability in how each and every value chain activity is performed.

D. have at least 50 percent of company personnel earn "green belts" in Six Sigma techniques.E. build core competencies in TQM, Six Sigma, benchmarking, best practices adoption, and business

process reengineering.To obtain maximum benefits from benchmarking, best practices, reengineering, TQM, and Six Sigma programs aimed at facilitating better strategy execution, managers need to start with a clear idea of what specific outcomes really matter. Is it high on-time delivery, lower overall costs, fewer customer complaints, shorter cycle times, a higher percentage of revenues coming from recently introduced products, or something else? Benchmarking best-in-industry and best-in-world performance of targeted value chain activities provides a realistic basis for setting internal performance milestones and longer-range targets. Once initiatives to improve operations are linked to the company's strategic priorities, then comes the managerial task of building a total quality culture that is genuinely committed to achieving the performance outcomes that strategic success requires.






Topic: Benchmarking

44. Without a strategic framework, managers lack the context in which to

A. fix things that really matter to business-unit performance and competitive success.B. carry out company-wide goals related to the dynamics of a single business model.C. employ the company's resources in the pursuit of sustainable competitive

advantage.D. communicate aspirations for the company.E. analyze the emerging market opportunities more

precisely.Without a strategic framework, managers lack the context in which to fix things that really matter to business-unit performance and competitive success.





45. To build a total quality culture and achieve full value from the use of TQM or Six Sigma initiatives, managers can take such action steps as

A. encouraging quality-supportive behaviors on the part of employees, while empowering employees to make changes to improve quality.

B. requiring all employees to attend Six Sigma training programs and achieve "black belt" status.C. instituting greater centralization of decision making to help enforce strict compliance with quality

control policies and procedures.D. dismissing employees that do not want to be part of an ambidextrous organization.E. using online systems to discover and disseminate any unethical actions by employees.Managers can take the following action steps to realize full value from TQM or Six Sigma initiatives and promote a culture of operating excellence: (1) Demonstrate visible, unequivocal, and unyielding commitment to total quality and continuous improvement, including specifying measurable objectives for increasing quality and making continual progress. (2) Nudge people toward quality-supportive behaviors. (3) Empower employees so that authority for delivering great service or improving products is in the hands of the doers rather than the overseers—improving quality has to be seen as part of everyone's job. (4) Use online systems to provide all relevant parties with the latest best practices, thereby speeding the diffusion and adoption of best practices throughout the organization. (5) Emphasize that performance can and must be improved, because competitors are not resting on their laurels and customers are always looking for something better.







46. Although it is relatively easy for rivals to implement process management tools, it is much more difficult and time-consuming for them to

A. instill a deeply ingrained culture of operating excellence.B. keep employees well-informed about the strides being made with continuous improvement.C. unify the managerial efforts behind improving operating practices as a commendable

goal.D. combine the pursuit of financial objectives with the pursuit of its strategic objectives.E. understand the barriers to installing new operating activities.While it is relatively easy for rivals to also implement process management tools, it is much more difficult and time-consuming for them to instill a deeply ingrained culture of operating excellence (as occurs when such techniques are religiously employed and top management exhibits lasting commitment to operational excellence throughout the organization).




Topic: Benchmarking

47. Which of the following exemplifies one of the most widely used methods of gauging how well a company is executing its strategy?

A. Merrill & Company has a disconnected organizational arrangement whereby pieces of an activity are performed in different functional departments.

B. Oceania identifies agents of change who are convinced about sticking to the old ways of doing things.

C. Honwell narrates success stories of rival brands to convince its personnel about traditional wisdom.

D. Fizz-Cola judges the efficiency of internal operations by benchmarking them against best-in-industry performers.

E. Motorola develops the data to measure how poorly rival brands perform against the best-practice standards across industry.

One of the most widely used methods for gauging how well a company is executing its strategy entails benchmarking the company's performance of particular activities and business processes against "best-in-industry" and "best-in-world" performers. Benchmarking is the backbone of the process of identifying, studying, and implementing best practices. The role of benchmarking is to look outward to find best practices and then to develop the data for measuring how well a company's own performance of an activity stacks up against the best-practice standard. A best practice remains little more than another company's interesting success story unless company personnel buy into the task of translating what can be learned from other companies into real action and results. The agents of change must be frontline employees who are convinced of the need to abandon the old ways of doing things and switch to a best-practice mindset. Companies searching for ways to improve their operations have sometimes discovered that the execution of strategy-critical activities is hampered by a disconnected organizational arrangement whereby pieces of an activity are performed in several different functional departments, with no one manager or group being accountable for optimal performance of the entire activity.







48. Which of the following does NOT exemplify business process reengineering?

A. Blue Mountain creates teams of mixed-occupation freelancers to design Christmas cards.B. Speedmore integrates three distribution units to form a consolidated zonal distribution center.C. Bank of America automates global transaction services in a quest for operational efficiencies.D. PayPal segregates payment notification operations from mobile transfer operations to expand its

customer base.E. Florida Power eliminates work depots, entrusting the task of repair to crew members in a mobile

van.Business process reengineering involves radically redesigning and streamlining how an activity is performed, with the intent of achieving quantum improvements in performance. To address the suboptimal performance problems that can arise from this type of situation, a company can reengineer the work effort, pulling the pieces of an activity out of different departments and creating a single department or cross-functional work group to take charge of the whole process. The use of cross-functional teams has been popularized by the practice of business process reengineering, which involves radically redesigning and streamlining the workflow (often enabled by cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in performance of the activity. Florida Power, Speedmore, Bank of America, and Blue Mountain change their workflows in the interest of operational efficiencies. Cost efficiency is one of the impacts of change in the workflows. On the other hand, PayPal segregating payment notification operations from mobile transfer operations to expand its customer base doesn't involve reengineering processes to improve performance. In other words, it does not involve radically redesigning how an activity is performed, nor does it lead to improved performance.







49. Which of the following takes the route of business process reengineering to attain operational excellence?

A. AT&T works toward creating a total quality culture by continuously reviewing the performance of every value chain activity.

B. Acer Phones uses advanced statistical methods to remove the causes of defects at its manufacturing units.

C. Ericsson introduces continuous-improvement business philosophy at its customer care centers.D. Cellkon pulls the pieces of an activity out of different departments to create a cross-functional work

group.E. Honeywell strives to incrementally reduce defects through an ongoing assessment process.Business process reengineering aims at one-time quantum improvement, while continuous-improvement programs like TQM and Six Sigma aim at ongoing incremental improvements. Six Sigma approach entails the use of advanced statistical methods to identify and remove the causes of defects (errors) and undesirable variability in performing an activity or business process. Total quality management (TQM) entails creating a total quality culture, involving managers and employees at all levels, bent on continuously improving the performance of every value chain activity. Hence, AT&T, Acer Phones, Ericcson, and Honeywell strive to attain operational excellence through either Six Sigma or TQM approaches. On the other hand, Cellkon opts for one-time quantum improvement by creating a cross-functional work group.





50. Which of the following makes use of Six Sigma programs to improve quality and strategy execution?

A. Memphis & Company applies advanced statistical methods to identify and remove the causes of defects.

B. Milwaukee Hospital improves the accuracy of administering the proper drug doses to patients.C. LG Electronics reengineers its value chain activities by creating cross-functional teams.D. La Tagliata Boutiques offers a different range of products at different outlets across London.E. Amtrak replaces train repair facility in Beech Gorve, Indiana with mobile repair vans to cut

operational costs by 40 percent.Six Sigma programs utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes. To address the suboptimal performance problems that can arise from this type of situation, a company can reengineer the work effort, pulling the pieces of an activity out of different departments and creating a single department or cross-functional work group to take charge of the whole process. The use of cross-functional teams has been popularized by the practice of business process reengineering, which involves radically redesigning and streamlining the workflow. Froedtert Hospital in Milwaukee, Wisconsin used Six Sigma to improve the accuracy of administering the proper drug doses to patients.




chain activities and promote superior strategy execution.



Topic: Six Sigma

51. There is evidence that Six Sigma can

A. take longer than TQM to demonstrate significant results.B. stifle innovation and creativity in organizations.C. help managers run a tight ship and preserve strong, centralized control over internal activities.D. provide ample justification for becoming an ambidextrous organization.E. foster decentralized decision making and employee

empowerment.The essence of Six Sigma is to reduce variability in processes, but creative processes, by nature, include quite a bit of variability. In many instances, breakthrough innovations occur only after thousands of ideas have been abandoned and promising ideas have gone through multiple iterations and extensive prototyping.

AACSB: Technology


Difficulty: 3 HardLearning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out their strategic roles

proficiently.Topic: Six Sigma

52. Well-conceived, state-of-the-art information and operating systems

A. are essential because business process reengineering efforts, TQM, Six Sigma, and benchmarking programs can't be carried out effectively without them.

B. not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals).

C. make it simple and easy to spot cost overruns and inefficiencies.D. are valuable tools for shortening a company's value chain, boosting workforce morale and

productivity, and simplifying the task of adopting best practices.E. help managers run a tight ship and preserve strong, centralized control over internal activities.Well-conceived state-of-the-art operating systems not only enable better strategy execution but also strengthen organizational capabilities—enough at times to provide a competitive edge over rivals.

AACSB: Technology


Difficulty: 3 HardLearning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out their strategic roles

proficiently.Topic: Technology



53. The broad areas that internal information business systems need to cover include all of the following EXCEPT

A. financial performance data.B. supplier/strategic partner data.C. customer data.D. operations data.E. competitor data.Information systems need to cover five broad areas: (1) customer data, (2) operations data, (3) employee data, (4) supplier and/or strategic partner data, and (5) financial performance data. All key strategic performance indicators must be tracked and reported in real time whenever possible.

AACSB: Technology


Difficulty: 2 MediumLearning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out their strategic roles


54. The broad areas that internal information business systems need to cover include all of the following EXCEPT

A. financial performance data.B. corporate culture data.C. customer data.D. operations data.E. employee data.Information systems need to cover five broad areas: (1) customer data, (2) operations data, (3) employee data, (4) supplier and/or strategic partner data, and (5) financial performance data. All key strategic performance indicators must be tracked and reported in real time whenever possible.

AACSB: Technology


Difficulty: 1 EasyLearning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out their strategic roles




55. Information systems provide managers with a means for monitoring all of the following EXCEPT

A. the results that flow from the actions of subordinates.B. the performance of empowered

workers.C. weekly operating statistics.D. employees with over-the-shoulder supervision.E. daily operating statistics.Information systems also provide managers with a means for monitoring the performance of empowered workers to see that they are acting within the specified limits. Scrutinizing daily and weekly operating statistics is one of the ways in which managers can monitor the results that flow from the actions of subordinates without resorting to constant over-the-shoulder supervision.

AACSB: Technology


Learning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out their strategic roles proficiently.

Topic: Technology

56. Which of the following is NOT integral to superior strategy execution and operating excellence?

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 dataC. having access to online systems that provide statistical information about operating activitiesD. having the systems capability to identify and diagnose problems, so as to take corrective actionsE. having access to employee data of competitorsHaving state-of-the art operating systems, information systems, and real-time data is integral to superior strategy execution and operating excellence. Real-time information systems permit company managers to stay on top of implementation initiatives and daily operations and to intervene if things seem to be drifting off course. Tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing strategy execution and overseeing operations.

AACSB: Technology



Topic: Technology



57. Leaving employees to their own devices in meeting performance standards

A. enables managers to monitor daily and weekly operating statistics without resorting to constant over-the-shoulder supervision.

B. optimizes the performance of self-managed work groups in peer-based control environments.

C. is preferable to relying on peer pressure to keep team members operating between the white lines.

D. is NOT a recommended way for managers to monitor the operating performance of employees to ensure superior strategy execution.

E. is the best use of information systems capabilities in the strategy execution effort.Leaving empowered employees to their own devices in meeting performance standards without appropriate checks and balances can expose an organization to excessive risk. Instances abound of employees' decisions or behavior going awry, sometimes costing a company huge sums or producing lawsuits and reputation-damaging publicity. Scrutinizing daily and weekly operating statistics is one of the ways in which managers can monitor the results that flow from the actions of subordinates without resorting to constant over-the-shoulder supervision. Another valuable lever of control in companies that rely on empowered employees, especially in those that use self-managed work groups or other such teams, is peer-based control. Because peer evaluation is such a powerful control device, companies organized into teams can remove some layers of the management hierarchy and rely on strong peer pressure to keep team members operating between the white lines. This is especially true when a company has the information systems capability to monitor team performance daily or in real time.

AACSB: Technology




58. A company wants to plan a state-of-the-art information and operating system to enable better strategy execution. Which of the following is the most likely reason for the company's move?

A. It wants to embrace modern technology.B. It wants to gain a competitive edge over rivals.C. It wants to spot cost overruns and inefficiencies.D. It wants to increase workforce productivity and retention.E. It wants to boost management morale.Well-conceived state-of-the-art operating systems not only enable better strategy execution but also strengthen organizational capabilities—enough at times to provide a competitive edge over rivals. If the systems it employs are advanced systems that have not yet been adopted by rivals, the systems may provide the company with a competitive advantage as long as the costs of deploying the systems do not outweigh their benefits.

AACSB: Technology






59. Management's most powerful tool for mobilizing organizational commitment to competent strategy execution and operating excellence is the

A. diligent and persistent use of benchmarking and best practices.B. proper use of a reward structure with motivational incentives.C. implementation of TQM and/or Six Sigma programs.D. periodic giving of inspirational speeches aimed at arousing employees' emotional energy.E. process of providing employees with a high degree of job security (ideally, via a no-layoff policy).It is essential that company personnel be enthusiastically committed to executing strategy successfully and achieving performance targets. Enlisting such commitment typically requires use of an assortment of motivational techniques and rewards. Indeed, an effectively designed reward structure is the single most powerful tool management has for mobilizing employee commitment to successful strategy execution.



Difficulty: 1 EasyLearning Objective: 11-05 How and why the use of well-designed incentives and rewards can be management's single most powerful tool

for promoting adept strategy execution.Topic: Motivation

60. Management's most powerful tool for winning employee commitment to good strategy execution is

A. the establishment of strategy-supportive policies and procedures.

B. empowering employees and encouraging them to adopt best practices.C. setting stretch objectives.D. a structure of rewards and incentives tied tightly to the achievement of the organization's strategic

priorities.E. aggressive use of TQM and Six Sigma quality control programs.A properly designed reward structure is management's single most powerful tool for mobilizing employee commitment to successful strategy execution and aligning efforts throughout the organization with strategic priorities.



Learning Objective: 11-05 How and why the use of well-designed incentives and rewards can be management's single most powerful tool for promoting adept strategy execution.

Topic: Motivation



61. The strategic role of a company's reward system is to

A. compensate employees for performing their assigned duties in a diligent fashion.B. boost employee morale in ways that create widespread job satisfaction.C. enlist employees' commitment to successful strategy execution by rewarding them, both monetarily

and non-monetarily, for their valuable contributions.D. relieve managers of the burden of closely monitoring each employee's performance.E. boost labor productivity and help lower the firm's overall labor costs.Monetary rewards and nonmonetary incentives generally head the list of motivating tools for gaining wholehearted employee commitment to good strategy execution and focusing attention on strategic priorities.




Topic: Motivation

62. Reward and incentive systems serve as a(n)

A. direct stimulus for satisfying the basic expectations of the standard job and mechanisms.B. indirect motivational tool designed to convert employee commitment into high-powered incentives.C. indirect type of control mechanism that conserves on more costly control mechanisms of

supervisory oversight.D. direct base-pay financial compensation mechanism that competes with rival companies' salary bands

for similar work efforts.E. negative motivational element.Reward systems serve as an indirect type of control mechanism that conserves on the more costly control mechanism of supervisory oversight.




Topic: Motivation



63. Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the strategic priorities and financial objectives is best done by

A. having top executives commit to making employees the company's most valuable competitive asset.B. developing core competencies in the use of TQM, Six Sigma programs, and business process

reengineering.C. resourceful and effective use of motivational incentives, both monetary and nonmonetary.D. clever and innovative use of benchmarking and best practices.E. providing employees with a high degree of job security and attractive perks.Monetary rewards and nonmonetary incentives generally head the list of motivating tools for gaining wholehearted employee commitment to good strategy execution and focusing attention on strategic priorities.




Topic: Motivation

64. In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence, managers are well advised to use all of the following incentives EXCEPT

A. providing attractive perks and fringe benefits.B. giving awards and public recognition to high performers and showcasing company successes.C. creating a work atmosphere in which there is genuine caring and mutual respect among workers and

between management and employees.D. relying on opportunities for promoting from within wherever possible.E. withholding information from employees about financial performance, strategy, and competitors'

actions.Some of the most important nonmonetary approaches companies can use to enhance employee motivation include the following: providing attractive perks and fringe benefits; giving awards and public recognition to high performers and showcasing company successes; relying on promotion from within whenever possible; creating a work atmosphere in which there is genuine caring and mutual respect among workers and between management and employees; inviting and acting on ideas and suggestions from employees; stating the strategic vision in inspirational terms that make employees feel they are a part of something worthwhile in a larger social sense; sharing information with employees about financial performance, strategy, operational measures, market conditions, and competitors' actions; and providing a comfortable and attractive working environment.







65. Which of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to good strategy execution?

A. strictly enforcing all rules in the employee handbook with the use of finesB. giving awards and public recognition to high performers and showcasing company successesC. providing a comfortable and attractive working

environmentD. providing opportunities for promotion from within wherever possibleE. providing attractive perks and fringe benefitsEvidence shows that managerial initiatives to improve strategy execution should incorporate more positive than negative motivational elements because when cooperation is positively enlisted and rewarded, rather than coerced by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication, creativity, and initiative.





66. A motivation and incentive system that is aimed at spurring stronger employee commitment to good strategy execution

A. should focus on incorporating more positive than negative motivational elements.B. should be tied first and foremost to whether employees satisfactorily perform their assigned duties

in an ethical and honorable manner.C. must involve deliberately assigning employees heavy workloads and tight deadlines.D. needs to put top priority on making employees happy and secure in their jobs.E. must avoid the potential for negative consequences if performance is

subpar.If an organization's motivational approaches and reward structure induce too much stress, internal competitiveness, job insecurity, and fear of unpleasant consequences, the impact on workforce morale and strategy execution can be counterproductive. Evidence shows that managerial initiatives to improve strategy execution should incorporate more positive than negative motivational elements because when cooperation is positively enlisted and rewarded, rather than coerced by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication, creativity, and initiative.




Topic: Motivation



67. From the standpoint of promoting successful strategy execution, it is important that the firm's motivation and reward system

A. be completely free of such elements as tension, pressure, anxiety, job insecurity, and tight deadlines—a no-pressure/no-adverse-consequences work environment is essential.

B. emphasize only positive types of rewards.C. accentuate positive rewards but also carry out the "up-or-out" policy for performance that does not

meet expectations.D. not deny rewards to employees who put forth good effort and try hard, though performance is

subpar.E. reduce job insecurity and give employees an incentive to stay busy and work hard.While most approaches to motivation, compensation, and people management accentuate the positive, companies also make it clear that lackadaisical or indifferent effort and subpar performance can result in negative consequences. Companies that look for and expect top-notch individual performance also have an "up-or-out" policy—managers and professionals whose performance is not good enough to warrant promotion are first denied bonuses and stock awards and eventually weeded out.




Topic: Motivation

68. A reward system that accentuates positive rewards for good performance

A. works best in strong culture organizations, while negative motivational approaches and reward systems tend to be most successful in weak culture organizations.

B. is especially effective in aligning the well-being of organizational members with achieving the company's performance targets; reward systems with negative elements tend to be very dysfunctional in motivating employees.

C. seldom works very well because the threat of denying rewards to sub-par performers is typically the most powerful motivator.

D. works fine so long as 100 percent emphasis is placed on monetary incentives.E. has considerable appeal because when cooperation is positively enlisted and rewarded, rather than

strong-armed by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication, creativity, and initiative.

If an organization's motivational approaches and reward structure induce too much stress, internal competitiveness, job insecurity, and fear of unpleasant consequences, the impact on workforce morale and strategy execution can be counterproductive. Evidence shows that managerial initiatives to improve strategy execution should incorporate more positive than negative motivational elements because when cooperation is positively enlisted and rewarded, rather than coerced by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication, creativity, and initiative.




Topic: Motivation



69. A no-pressure/no-adverse-consequences work environment does not necessarily lead to

A. superior strategy execution or operating excellence.

B. satisfactory outcomes because there is always a cadre of ambitious people who relish the challenge.C. workforce morale

issues.D. establishing more positive than negative motivational reward elements.E. excessive shortfall in performance.There is scant evidence that a no-pressure, no-adverse-consequences work environment leads to superior strategy execution or operating excellence.




Topic: Motivation

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

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. incorporate negative motivational elements to assure results.To create a strategy-supportive system of rewards and incentives, a company must reward people for accomplishing results, not for just dutifully performing assigned tasks. Showing up for work and performing assignments do not, by themselves, guarantee results. To make the work environment results-oriented, managers need to focus jobholders' attention and energy on what to achieve as opposed to what to do. Ideally, every organizational unit, every manager, every team or work group, and perhaps every employee should be held accountable for achieving outcomes that contribute to good strategy execution and business performance.




Topic: Motivation



71. Motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution typically

A. use only positive rewards and never involve the use of tension, fear, job insecurity, stress, or anxiety.

B. entail decidedly positive rewards for meeting or beating performance targets, but also impose sufficiently negative consequences when actual performance falls short of the target.

C. aim at creating a no-pressure/no-adverse-consequences work environment.

D. entail paying the highest wages and salaries in the industry for all jobholder positions and also stressing nonmonetary rewards, like cash bonuses for high-performing employees.

E. put top priority on making employees happy and secure in their jobs.While most approaches to motivation, compensation, and people management accentuate the positive, companies also make it clear that lackadaisical or indifferent effort and subpar performance can result in negative consequences.




Topic: Motivation

72. The first principle in designing an effective compensation system and the most dependable way to keep people focused on strategy execution and the achievement of performance targets is to

A. establish ethical compensation policies and convince employees that they are the firm's most valuable competitive asset.

B. design monetary and nonmonetary incentives that boost labor productivity and help lower the firm's overall labor costs.

C. generously reward and recognize people who meet or beat performance targets and to deny rewards and recognition to those who don't.

D. pay employees a bonus for each strategic and financial objective that the company achieves.

E. allow employees to propose what rewards they would like to receive to achieve the company's stretch objectives.

While most approaches to motivation, compensation, and people management accentuate the positive, companies also make it clear that lackadaisical or indifferent effort and subpar performance can result in negative consequences.




Topic: Motivation



73. A well-designed reward system

A. ties rewards to performance outcomes directly linked to good strategy execution and the achievement of financial and strategic objectives.

B. should be free of elements that induce stress, anxiety, tension, pressure to perform, and job insecurity.

C. puts the primary emphasis on denying rewards to those who fail to perform tasks in the prescribed fashion.

D. emphasizes weeding out employees who are average performers.E. strives for a 50-50 balance between positive and negative rewards and a 50-50 balance between

monetary and nonmonetary rewards.A properly designed reward structure is management's single most powerful tool for mobilizing employee commitment to successful strategy execution and aligning efforts throughout the organization with strategic priorities. Financial rewards provide high-powered incentives when rewards are tied to specific outcome objectives.




Topic: Motivation

74. An important consideration in designing a strategy-supportive reward system is to

A. link the payment of all monetary rewards to the company's bottom-line profitability.B. employ incentives that will help motivate employees to put in long hours and sacrifice personal

ambitions and aspirations to pursue the priorities of management.C. choose those types of rewards and incentives that will focus employees' attention on total customer

satisfaction.D. make across-the-board wage and salary increases the cornerstone of monetary rewards.E. make nonmonetary rewards and recognition an integral part of the reward

system.A properly designed reward structure is management's single most powerful tool for mobilizing employee commitment to successful strategy execution and aligning efforts throughout the organization with strategic priorities. In this regard, monetary rewards and nonmonetary incentives generally head the list of motivating tools for gaining wholehearted employee commitment.




Topic: Motivation



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

A. making the performance payoff 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 nonmonetary incentives and rewarding people for diligently performing

their assigned duties.The guidelines for designing an incentive compensation system that will help drive successful strategy execution include making the performance payoff a major, not minor, piece of the total compensation package. Performance bonuses must be at least 10 to 12 percent of base salary to have much impact. Incentives that amount to 20 percent or more of total compensation are big attention-getters, likely to really drive individual or team efforts. Incentives amounting to less than 5 percent of total compensation have a comparatively weak motivational impact.




Topic: Motivation

76. Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution?

A. The reward system must be administered with scrupulous objectivity and fairness.B. The payoff for meeting or beating performance targets must be a major, not minor, piece of the total

compensation package.C. The incentive plan should extend to all managers and all employees, not just top management.D. The reward system must reward nonperformers who, despite expending tremendous effort, have not

fared well in achieving the benchmarks under the incentive system.E. Make sure that the performance targets each individual or team is expected to achieve involve

outcomes that the individual or team can personally affect.For designing a reward and incentive system that helps promote good strategy execution: make the performance payoff a major, not minor, piece of the total compensation package; have incentives that extend to all managers and all workers, not just top management; administer the reward system with scrupulous objectivity and fairness; ensure that the performance targets set for each individual or team involve outcomes that the individual or team can personally affect; keep the time between achieving the performance target and receiving the reward as short as possible; and avoid rewarding effort rather than results.




Topic: Motivation



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

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. providing generous rewards for people who turn in outstanding performancesE. offering rewards that amount to 3 percent of an employee's total compensationThe guidelines for designing an incentive compensation system that will help drive successful strategy execution include making the performance payoff a major, not minor, piece of the total compensation package. Performance bonuses must be at least 10 to 12 percent of base salary to have much impact. Incentives that amount to 20 percent or more of total compensation are big attention-getters, likely to really drive individual or team efforts. Incentives amounting to less than 5 percent of total compensation have a comparatively weak motivational impact.





78. The more a manager understands what motivates subordinates and the more he or she relies on motivational incentives as a tool for achieving the targeted strategic and financial results the

A. higher the incentives for employees to act ethically.B. greater the opportunity for the company to attune its value chains to the level of industry (buyer)

demand.C. greater the employees' commitment to day-by-day strategy execution and achievement of

performance targets.D. fewer the number of rivals will be attracted to enter the

industry.E. greater the company's relative competitive strength in its industry.The unwavering standard for judging whether individuals, teams, and organizational units have done a good job must be whether they meet or beat performance targets that reflect good strategy execution.







79. The president of a specialty bakery decided to introduce nonmonetary incentives to enhance employee motivation and spur strategy execution. When her staff presented with some ideas, she chose all of the following EXCEPT

A. eliminating perks and fringe benefits, such as maternity leave and onsite child care.B. giving awards and public recognition to high performers and showcasing company successes.C. sharing information with staff about the company's strategic plan and its operating and financial

performance.D. providing opportunities for employees to quickly move up the ranks to join the management level.E. creating a work atmosphere where there was genuine caring and mutual respect among staff and

between management and staff.A properly designed reward structure is management's single most powerful tool for mobilizing employee commitment to successful strategy execution and aligning efforts throughout the organization with strategic priorities. Some of the most important nonmonetary approaches companies can use to enhance employee motivation include the following: providing attractive perks and fringe benefits; giving awards and public recognition to high performers and showcasing company successes; relying on promotion from within whenever possible; creating a work atmosphere in which there is genuine caring and mutual respect among workers and between management and employees; inviting and acting on ideas and suggestions from employees; stating the strategic vision in inspirational terms that make employees feel they are a part of something worthwhile in a larger social sense; sharing information with employees about financial performance, strategy, operational measures, market conditions, and competitors' actions; and providing a comfortable and attractive working environment.



Difficulty: 2 MediumLearning Objective: 11-05 How and why the use of well-designed incentives and rewards can be management's single most powerful tool




80. The top management at a new social media technology company would like to revamp its incentive compensation system to attract ambitious employees. What would be their best approach?

A. Make the performance bonus at least 3 to 4 percent of base salary to have some impact.

B. Make the performance bonus at least 10 to 12 percent of base salary to have some impact.

C. Make the performance payoff equal for average and below-average performers.

D. Set unrealistic performance standards, but with an equally high compensation.E. Reward people who work very hard, even if they fall short of achieving performance

targets.The performance payoff must be a major, not minor, piece of the total compensation package. Performance bonuses must be at least 10 to 12 percent of base salary to have much impact. Incentives that amount to 20 percent or more of total compensation are big attention-getters, likely to really drive individual or team efforts. Incentives amounting to less than 5 percent of total compensation have a comparatively weak motivational impact. Moreover, the payoff for high-performing individuals and teams must be meaningfully greater than the payoff for average performers, and the payoff for average performers meaningfully bigger than that for below-average performers. The incentives must extend to all managers and all workers, not just top management. Also, if performance standards are set unrealistically high or if individual and group performance evaluations are not accurate and well documented, dissatisfaction with the system will overcome any positive benefits. It is also advisable to avoid rewarding effort rather than results. While it is tempting to reward people who have tried hard, gone the extra mile, and yet fallen short of achieving performance targets because of circumstances beyond their control, it is ill advised to do so.



Difficulty: 2 MediumLearning Objective: 11-05 How and why the use of well-designed incentives and rewards can be management's single most powerful tool




81. A change in strategy nearly always entails budget reallocations because

A. revamping the performance of value chain activities can be costly.B. the accompanying policy revisions and compensation incentives tend to require different levels of

funding than before.C. organizational units important in the prior strategy but having a lesser role in the new strategy may

need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.

D. empowering employees to carry out the new strategy elements typically requires substantial new funding and budget revisions.

E. adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements.

A change in strategy nearly always calls for budget reallocations and resource shifting. Previously important units, now having a lesser role in the new strategy, may need downsizing. Units that now have a bigger strategic role may require above-average increases in their budget allocations to afford more people, new equipment, and/or additional facilities.

AACSB: Reflective Thinking


Difficulty: 1 EasyLearning Objective: 11-01 Why resource allocation should always be based on strategic priorities.

Topic: Control systems

82. A useful guideline in designing strategy-facilitating policies and operating procedures is

A. to prescribe enough policies to give organizational members clear direction in implementing strategy and to place desirable boundaries on their actions, then empower them to act within these boundaries however they think makes sense.

B. that strictly enforced policies work better than loosely enforced policies.C. that more policies/procedures work better than few policies/procedures and that strict enforcement

always beats lax enforcement.D. to let individuals act in an empowered and self-directed way, subject only to the constraint that their

actions and behavior be ethical and in step with the corporate culture.E. to prescribe enough policies and procedures that little is left to chance in performing value chain

activities; employees should have no leeway to do things in a manner that deviates from the company's best practices standard.

Prescribe enough policies to place boundaries on employees' actions; then empower them to act within these boundaries in whatever way they think makes sense.



Learning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.Topic: Performance management



83. Reengineering how a firm performs a business process

A. is a tool for pulling the pieces of strategy-critical processes out of different departments and unifying their performance in a single department or cross-functional work group.

B. is the most frequently used tool of total quality management (TQM).C. requires that a company have many strategic partnerships and alliances with

outsiders.D. is typically cheaper and easier-to-do than using Six Sigma techniques to achieve the same cost

savings.E. is usually a company's most important "best practice" for achieving operating excellence.Business process reengineering involves pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group.

AACSB: Technology



Topic: Performance management

84. Six Sigma quality control

A. is a strategy-implementer's best, most reliable tool for simultaneously achieving top-notch product quality and low manufacturing costs.

B. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process.

C. consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process.

D. consists of a disciplined, statistics-based system aimed at fewer than 5.0 complaints per million customer transactions.

E. is a powerful tool for companies whose customers are very picky about product quality and product performance and who can't afford for the product they use to break down and require repairs.

Six Sigma quality control consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process—from manufacturing to customer transactions.

AACSB: Technology



Topic: Six Sigma



85. Company strategies and value creating processes can't be effectively executed without internal information systems that include

A. customer data, employee data, supplier/partner data, operations data, and financial performance data.

B. TQM, reengineering, and Six Sigma programs.C. monetary and nonmonetary reward

systems.D. activity-based cost accounting, benchmarking, and best practices.E. continuous access to social networks.Company strategies and value-creating internal processes cannot be executed well without a number of installed internal operating systems, which encompass: (1) all key strategic performance indicators and (2) information systems consisting of data on customers, employees, suppliers, partners, and financial performance. Data management systems for benchmarking, TQM, and Six Sigma quality control are nice-to-haves, but not essential.

AACSB: Technology


Difficulty: 1 EasyLearning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out their strategic roles


86. Essential state-of-the-art operating and information systems that support company strategies and value-creating internal processes include all of the following EXCEPT

A. customer database systems.

B. information systems to track supplier/partner/collaborative ally data.C. human resources systems that maintain employee data.D. systems to record and report financial performance data.E. data management systems for undertaking benchmarking, TQM, and Six Sigma quality control.State-of-the-art operating systems, information systems, and real-time data are integral to competent strategy execution and operating excellence. Company strategies and value-creating internal processes can't be executed well without a number of installed internal operating systems, which entail: (1) all key strategic performance indicators, and (2) information systems consisting of data on customers, employees, suppliers, partners, and financial performance. Data management systems for benchmarking, TQM, and Six Sigma quality control are nice-to-haves, but not essential.

AACSB: Technology



Topic: Technology



87. An important consideration in designing a strategy-supportive motivation and reward system is to

A. link the payment of all monetary rewards to the company's profitability.B. employ incentives that will help motivate employees to work hard at performing their assigned

duties and activities.C. choose those types of rewards and incentives that focus employees' attention on "what to do."D. make across-the-board wage and salary increases the cornerstone of monetary rewards.E. make both monetary and nonmonetary rewards integral parts of the reward system.The more a manager understands what motivates subordinates and is able to use appropriate motivational incentives, both monetary and nonmonetary, the greater will be employees' commitment to good day-in, day-out strategy execution and achievement of performance targets.




for promoting adept strategy execution.Topic: Performance management

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

A. making the payoff for meeting or beating performance targets a major, not minor, piece of the total compensation package.

B. having a bonus and incentive plan that applies to managers only (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 that 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 nonmonetary incentives and rewarding people for diligently performing

their assigned duties.Among the guidelines for creating incentive compensation systems that link employee behavior to organizational objectives is to make the performance payoff a major, not minor, piece of the total compensation package.







89. Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution?

A. The reward system must be administered with scrupulous objectivity and fairness.B. The payoff for meeting or beating performance targets must be a major, not minor, piece of the total

compensation package.C. Any incentive plan should extend to all managers and all employees, not just top management.D. Ways must be found to reward deserving nonperformers who, for some reason, do not fare well

under the incentive system.E. Make sure that the performance targets each individual or team is expected to achieve involve

outcomes that the individual or team can personally affect.Among the guidelines for creating incentive compensation systems that link employee behavior to organizational objectives are: (1) make the performance payoff a major, not minor, piece of the total compensation package; (2) offer incentives that extend to all managers and all workers, not just top management; (3) administer the reward system with scrupulous objectivity and fairness; (4) tie incentives to performance outcomes directly linked to good strategy execution and financial performance; (5) make sure the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect; (6) keep the time between achieving the target performance outcome and the payment of the reward as short as possible. Rewarding deserving nonperformers is not a sound guideline.





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

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 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 performancesE. a reward system that involves 50 percent nonmonetary rewards and a work environment that avoids

placing pressure on managers and employees to perform at high levelsAmong the guidelines for creating incentive compensation systems that link employee behavior to organizational objectives are: (1) make the performance payoff a major, not minor, piece of the total compensation package; (2) offer incentives that extend to all managers and all workers, not just top management; (3) administer the reward system with scrupulous objectivity and fairness; (4) tie incentives to performance outcomes directly linked to good strategy execution and financial performance; (5) make sure the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect; (6) keep the time between achieving the target performance outcome and the payment of the reward as short as possible. A reward system that involves 50 percent non-monetary rewards etc. is not one of the guidelines.






for promoting adept strategy execution.Topic: Performance management

Essay Questions

91. Why does a company's budget need to be closely linked to the needs of good strategy execution? Provide at least two examples of companies that have used strategic priorities to drive how capital allocations are made.

A company's budget needs to be closely linked to the needs of good strategy execution because too little funding and an insufficiency of other types of resources slow progress and impede the efforts of organizational units to execute their pieces of the strategic plan proficiently. Too much funding and an overabundance of other resources waste organizational resources and reduce financial performance. Both outcomes argue for managers to be deeply involved in reviewing budget proposals and directing the proper kinds and amounts of resources to strategy-critical organizational units.Examples:

1. In response to rapid technological change in the communications industry, AT&T has prioritized investments and acquisitions that have allowed it to offer its enterprise customers faster, more flexible networks and provide innovative new customer services, such as its Sponsored Data plan.2. In 2013, Google decided to kill its 20 percent time policy, which allowed its staff to work on side projects of their choice one day a week. While this side project program gave rise to many innovations, such as Gmail and AdSense (a big contributor to Google's revenues), it also meant that fewer resources were available for projects that were deemed closer to the core of Google's mission.3. Microsoft has made a practice of regularly shifting hundreds of programmers to new high-priority programming initiatives within a matter of weeks or even days.


Blooms: ApplyDifficulty: 3 Hard

Learning Objective: 11-01 Why resource allocation should always be based on strategic priorities.Topic: Motivation



92. Identify and describe ways that policies and procedures facilitate strategy execution.

Well-conceived policies and operating procedures facilitate strategy execution in three ways:

• By providing top-down guidance regarding how things need to be done: policies and procedures represent a store of organizational or managerial knowledge about efficient and effective ways of doing things—a set of well-honed routines for running the company.• By helping ensure consistency in how execution-critical activities are performed: Policies and procedures serve to standardize the way that activities are performed. This can be important for ensuring the quality and reliability of the strategy execution process.• By promoting the creation of a work climate that facilitates good strategy execution: A company's policies and procedures help to set the tone of a company's work climate and contribute to a common understanding of "how we do things around here."


Blooms: UnderstandDifficulty: 2 Medium


93. It is often said that benchmarking is the backbone of the process of identifying, studying, and implementing best practices. Explain the role of benchmarking.

The role of benchmarking is to look outward to find best practices and then to develop the data for measuring how well a company's own performance of an activity stacks up against the best-practice standard. However, benchmarking is more complicated than simply identifying which companies are the best performers of an activity and then trying to imitate their approaches—especially if these companies are in other industries. Normally, the best practices of other organizations must be adapted to fit the specific circumstances of a company's own business, strategy, and operating requirements. Since each organization is unique, the telling part of any best-practice initiative is how well the company puts its own version of the best practice into place and makes it work.




Topic: Benchmarking



94. What is the potential long-term payoff of total quality management (TQM)?

TQM doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility to participate in continuous improvement. TQM is thus a race without a finish. Success comes from making little steps forward each day, a process that the Japanese call kaizen. However, TQM takes a fairly long time to show significant results—very little benefit emerges within the first six months. The long-term payoff of TQM, if it comes, depends heavily on management's success in implanting a culture within which the TQM philosophy and practices can thrive. Still, TQM is a management tool that has attracted numerous users and advocates over several decades, and it can deliver good results when used properly.




Topic: Benchmarking

95. Explain what Six Sigma quality control programs are and the two types of programs that they include.

Six Sigma programs offer a way to drive continuous improvement in quality and strategy execution. This approach entails the use of advanced statistical methods to identify and remove the causes of defects (errors) and undesirable variability in performing an activity or business process. When performance of an activity or process reaches "Six Sigma quality," there are no more than 3.4 defects per million iterations (equal to 99.9997 percent accuracy). There are two important types of Six Sigma programs. The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is an improvement system for existing processes falling below specification and needing incremental improvement. The Six Sigma process of define, measure, analyze, design, and verify (DMADV) is used to develop new processes or products at Six Sigma quality levels.




Topic: Benchmarking

96. What is the difference between Six Sigma DMAIC programs and Six Sigma DMADV programs?

The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is an improvement system for existing processes falling below specification and needing incremental improvement. The Six Sigma process of define, measure, analyze, design, and verify (DMADV) is used to develop new processes or products at Six Sigma quality levels.


Blooms: RememberDifficulty: 3 Hard

Learning Objective: 11-03 How best practices and process management tools drive continuous improvement in the performance of value




97. What three principles underlie the statistical thinking of Six Sigma quality control programs?

The statistical thinking underlying Six Sigma is based on the following three principles: (1) All work is a process, (2) all processes have variability, and (3) all processes create data that explain variability.


Blooms: UnderstandDifficulty: 3 Hard


Topic: Benchmarking

98. Explain how the Six Sigma process of define, measure, analyze, improve, and control (DMAIC) works. Provide at least two examples of companies that have adopted Six Sigma.

The Six Sigma process of define, measure, analyze, improve, and control (DMAIC, pronounced "de-may-ic") is an improvement system for existing processes falling below specification and needing incremental improvement. The DMAIC process is a particularly good vehicle for improving performance when there are wide variations in how well an activity is performed. For instance, airlines striving to improve the on-time performance of their flights have more to gain from actions to curtail the number of flights that are late by more than 30 minutes than from actions to reduce the number of flights that are late by less than 5 minutes.

Examples include:Motorola, General Electric (GE), Ford, and Honeywell (Allied Signal), where the cost savings as a percentage of revenue varied from 1.2 to 4.5 percent, according to data analysis conducted by iSixSigma (an organization that provides free articles, tools, and resources concerning Six Sigma).Six Sigma at Bank of America helped the bank reap about $2 billion in revenue gains and cost savings.Pfizer embarked on 85 Six Sigma projects to streamline its R&D process and lower the cost of delivering medicines to patients in its pharmaceutical sciences division.




Topic: Benchmarking



99. While Six Sigma programs often improve the efficiency of many operating activities and processes, there is evidence that innovation can be stifled by Six Sigma programs. True or false? Explain.

The statement is true. Despite its potential benefits, Six Sigma is not without its problems. There is evidence, for example, that Six Sigma techniques can stifle innovation and creativity. The essence of Six Sigma is to reduce variability in processes, but creative processes, by nature, include quite a bit of variability. In many instances, breakthrough innovations occur only after thousands of ideas have been abandoned and promising ideas have gone through multiple iterations and extensive prototyping.




Topic: Benchmarking

100. What action steps can managers take to realize full value from TQM or Six Sigma initiatives and promote a culture of operating excellence?

Managers can take the following action steps to realize full value from TQM or Six Sigma initiatives and promote a culture of operating excellence:

1. Demonstrating visible, unequivocal, and unyielding commitment to total quality and continuous improvement, including specifying measurable objectives for increasing quality and making continual progress.2. Nudging people toward quality-supportive behaviors.3. Empowering employees so that authority for delivering great service or improving products is in the hands of the doers rather than the overseers—improving quality has to be seen as part of everyone's job.4. Using online systems to provide all relevant parties with the latest best practices, thereby speeding the diffusion and adoption of best practices throughout the organization. Online systems can also allow company personnel to exchange data and opinions about how to upgrade the prevailing best-in-company practices.5. Emphasizing that performance can and must be improved, because competitors are not resting on their laurels and customers are always looking for something better.


Blooms: UnderstandDifficulty: 3 Hard


Topic: Benchmarking



101. Discuss the importance of and provide at least three examples of the strategic benefits of real-time information systems.

Real-time information systems permit company managers to stay on top of implementation initiatives and daily operations and to intervene if things seem to be drifting off course. Tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing strategy execution and overseeing operations. Statistical information gives managers a feel for the numbers, briefings and meetings provide a feel for the latest developments and emerging issues, and personal contacts add a feel for the people dimension. All are good barometers of how well things are going and what operating aspects need management attention. Managers must identify problem areas and deviations from plans before they can take action to get the organization back on course, by either improving the approaches to strategy execution or fine-tuning the strategy.Examples include:

1. FedEx has created a series of e-business tools for customers that allow them to ship and track packages online, create address books, review shipping history, generate custom reports, simplify customer billing, reduce internal warehousing and inventory management costs, purchase goods and services from suppliers, and respond to their own quickly changing customer demands.2. Siemens Healthcare, one of the largest suppliers to the health care industry, uses a cloud-based business activity monitoring (BAM) system to continuously monitor and improve the company's processes across more than 190 countries.3. Otis Elevator, the world's largest manufacturer of elevators, with more than 2.5 million elevators and escalators installed worldwide, has a 24/7 remote electronic monitoring system that can detect when an elevator or escalator installed on a customer's site has any of 325 problems. If the system detects a problem, it analyzes and diagnoses the cause and location, then makes the service call to an Otis mechanic at the nearest location, and helps the mechanic (who is equipped with a web-enabled cell phone) identify the component causing the problem.

AACSB: Technology



Topic: Technology

102. Name the five broad areas that information systems need to cover and explain the significance of real-time tracking and reporting.

Information systems need to cover five broad areas: (1) customer data, (2) operations data, (3) employee data, (4) supplier and/or strategic partner data, and (5) financial performance data. All key strategic performance indicators must be tracked and reported in real time whenever possible. Real-time information systems permit company managers to stay on top of implementation initiatives and daily operations and to intervene if things seem to be drifting off course. Tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing strategy execution and overseeing operations.

AACSB: TechnologyBlooms: Understand





103. Discuss control mechanisms that managers can use to monitor the performance of empowered employees.

Scrutinizing daily and weekly operating statistics is one of the ways in which managers can monitor the results that flow from the actions of subordinates without resorting to constant over-the-shoulder supervision; if the operating results look good, then it is reasonable to assume that empowerment is working. But close monitoring of operating performance is only one of the control tools at management's disposal. Another valuable lever of control in companies that rely on empowered employees, especially in those that use self-managed work groups or other such teams, is peer-based control. Because peer evaluation is such a powerful control device, companies organized into teams can remove some layers of the management hierarchy and rely on strong peer pressure to keep team members operating between the white lines. This is especially true when a company has the information systems capability to monitor team performance daily or in real time.

AACSB: TechnologyBlooms: UnderstandDifficulty: 2 Medium


Topic: Technology

104. The use of incentives and rewards is the single most powerful tool at management's disposal to win strong employee commitment to carrying out the strategic plan. True or false? Explain.

The statement is true. An effectively designed reward structure is the single most powerful tool management has for mobilizing employee commitment to successful strategy execution. But incentives and rewards do more than just strengthen the resolve of company personnel to succeed—they also focus employees' attention on the accomplishment of specific strategy execution objectives. Not only do they spur the efforts of individuals to achieve those aims, but they also help to coordinate the activities of individuals throughout the organization by aligning their personal motives with the goals of the organization. In this manner, reward systems serve as an indirect type of control mechanism that conserves on the more costly control mechanism of supervisory oversight.




Topic: Motivation



105. Provide three examples of nonmonetary motivation and rewards practices that have the capability to foster good strategy execution and explain how they act to produce such a result.

Three nonmonetary examples of motivation and rewards practices that have the capability to foster good strategy execution include:

1. Relying on promotion from within whenever possible. This practice helps bind workers to their employer, and employers to their workers. Moreover, it provides strong incentives for good performance. Promoting from within also helps ensure that people in positions of responsibility have knowledge specific to the business, technology, and operations they are managing.2. Inviting and acting on ideas and suggestions from employees. Many companies find that their best ideas for nuts-and-bolts operating improvements come from the suggestions of employees. Moreover, research indicates that giving decision-making power to down-the-line employees increases their motivation and satisfaction as well as their productivity. The use of self-managed teams has much the same effect.3. Providing a comfortable and attractive working environment. An appealing workplace environment can have decidedly positive effects on employee morale and productivity. Providing a comfortable work environment, designed with ergonomics in mind, is particularly important when workers are expected to spend long hours at work. A notable company example is Google's Googleplex, where employees have access to dozens of cafés with healthy foods, break rooms with snacks and drinks, multiple fitness centers, heated swimming pools, ping-pong and pool tables, sand volleyball courts, and community bicycles and scooters to go from building to building.




Topic: Motivation

106. Why is it unwise to take off the pressure for good performance or play down the adverse consequences of shortfalls in performance as part of a company's motivational and reward scheme for promoting competent strategy execution?

As a general rule, it is unwise to take off the pressure for good performance or play down the adverse consequences of shortfalls in performance. There is scant evidence that a no-pressure, no-adverse-consequences work environment leads to superior strategy execution or operating excellence. Some managers implement a deliberate policy to create a level of anxiety. A number of companies deliberately give employees heavy workloads and tight deadlines to test their metal—personnel are pushed hard to achieve "stretch" objectives and are expected to put in long hours (nights and weekends if need be). High-performing organizations nearly always have a cadre of ambitious people who relish the opportunity to climb the ladder of success, love a challenge, thrive in a performance-oriented environment, and find some competition and pressure useful to satisfy their own drives for personal recognition, accomplishment, and self-satisfaction.




Topic: Motivation



107. Discuss why it is generally undesirable for approaches to motivation, compensation, and people management to avoid the use of negative consequences or punishment if performance targets are not achieved or if particular people are habitual underperformers. Does striking a balance between rewards and punishment generally work better?

Absence of negative consequences in a work environment can lead to slackers continuing their underperformance; this will not only lead to a drain on company resources but also discourage those who are hardworking and committed to their personal professional growth and the growth of the company. Negative consequences are also an effective means of correcting employees who are failing so that they may become productive and also of weeding out employees who are not contributing to the goals of the company.Therefore, although most approaches to motivation, compensation, and people management accentuate the positive, companies also make it clear that lackadaisical or indifferent effort and subpar performance can result in negative consequences. Managers and professionals whose performance is not good enough to warrant promotion are first denied bonuses and stock awards and eventually weeded out. At most companies, senior executives and key personnel in underperforming units are pressured to raise performance to acceptable levels and keep it there or risk being replaced.




Topic: Motivation

108. Focusing jobholders' attention and energy on what to do as opposed to what to achieve makes the work environment results-oriented. True or false? Explain your answer.

The statement is false. To create a strategy-supportive system of rewards and incentives, a company must reward people for accomplishing results, not for just dutifully performing assigned tasks. Showing up for work and performing assignments do not, by themselves, guarantee results. To make the work environment results-oriented, managers need to focus jobholders' attention and energy on what to achieve as opposed to what to do.




Topic: Motivation



109. In creating a strategy-supportive reward structure, it is important to define jobs and assignments in terms of the results to be accomplished not just in terms of the duties to be performed. True or false? Explain and justify your answer.

The statement is true. To create a strategy-supportive system of rewards and incentives, a company must reward people for accomplishing results, not for just dutifully performing assigned tasks. Showing up for work and performing assignments do not, by themselves, guarantee results. To make the work environment results-oriented, managers need to focus jobholders' attention and energy on what to achieve as opposed to what to do.




Topic: Motivation

110. Identify five guidelines for creating an incentive compensation system that will help drive successful strategy execution.

The following are five guidelines for creating an incentive compensation system that will help drive successful strategy execution:

• Make the performance payoff a major, not minor, piece of the total compensation package.• Have incentives that extend to all managers and all workers, not just top management.• Administer the reward system with scrupulous objectivity and fairness.• Ensure that the performance targets set for each individual or team involve outcomes that the individual or team can personally affect.• Keep the time between achieving the performance target and receiving the reward as short as possible.




Topic: Motivation



111. Why does a company's budget need to be closely linked to the needs of good strategy execution? Why might a change in strategy call for budget reallocations?

A change in strategy nearly always calls for budget reallocations and resource shifting. Previously important units, now having a lesser role in the new strategy, may need downsizing. Units that now have a bigger strategic role may require above-average increases in their budget allocations to afford more people, new equipment, and/or additional facilities. That is, managers must be deeply involved in reviewing budget proposals, directing the proper amounts of resources to strategy-critical organization units, and exercising their power to put enough resources behind new strategic initiatives to make things happen, and they have to make the tough decisions to kill projects and activities that are no longer justified.



Learning Objective: 11-01 Why resource allocation should always be based on strategic priorities.Topic: Control systems

112. How do well-conceived policies and procedures aid the task of implementing and executing strategy? Explain how well-conceived policies and procedures facilitate organizational change and good strategy execution.

Well-conceived policies and procedures aid strategy execution; out-of-sync ones are barriers to effective implementation. Well-conceived policies and operating procedures act to facilitate organizational change and good strategy execution in three ways: (1) enforce needed consistency in how particular strategy-critical activities are performed; (2) provide top-down guidance regarding how to alter past practice and how certain things now need to be done; and (3) promote a positive, can-do work climate or transform an unhealthy corporate culture into a healthy culture that facilitates good strategy execution.



Learning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.Topic: Performance management



113. How does TQM differ from business process reengineering? Explain the value of striving for continuous improvement in processes and activities.

An essential difference between business process reengineering and continuous improvement programs like TQM or Six Sigma is that reengineering aims at quantum gains on the order of 30-50 percent or more, whereas total quality programs stress incremental progress—striving for inch-by-inch gains again and again in a never-ending stream. Whereas when done properly, business process reengineering can produce dramatic operating benefits within a business cycle, TQM is a timeless race without a finish—success comes from making little steps forward each day.

Business process reengineering and continuous improvement efforts such as TQM and Six Sigma all aim at improved efficiency, better product quality, and greater customer satisfaction. Business process reengineering involves pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group. Total quality management (TQM) is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.

AACSB: TechnologyBlooms: Understand



114. Identify types of support systems that a company can install to support the execution of its strategy. How important are these systems to the strategy implementation process?

State-of-the-art operating systems, information systems, and real-time data are integral to competent strategy execution and operating excellence. Company strategies and value-creating internal processes can't be executed well without a number of installed internal operating systems, which entail: (1) all key strategic performance indicators and (2) information systems consisting of data on customers, employees, suppliers, partners, and financial performance. Regardless of the industry, real-time information systems permit company managers to stay on top of implementation initiatives and daily operations, and to intervene if things seem to be drifting off course.

AACSB: TechnologyBlooms: UnderstandDifficulty: 2 Medium


Topic: Technology



115. Provide a minimum of three examples of nonmonetary motivation and rewards practices that possess the capability to foster good strategy execution. Explain how they act to produce such a result.

In addition to monetary or financial rewards, most successful companies also make extensive use of nonmonetary incentives, which can include: (1) attractive perks and fringe benefits to improve employees' quality of life, reduce turnover, and curb absenteeism; (2) promotion-from-within policies to bind workers to the organization and incentivize good performance; (3) acting on suggestions from employees to empower a sense of ownership and boost productivity; (4) work milieu in which there is genuine sincerity, caring, and mutual respect to promote team-building and camaraderie; (5) information-sharing (transparency) with employees about financial performance, strategy, operational measures, market conditions, and competitors' actions etc. in order to build trust; and (6) attractive office spaces and facilities to boost morale.




Topic: Motivation



Documents

clemsonaphistudy.weebly.com€¦ · Web viewA company's ability to marshal the resources needed to support new strategic initiatives has a major impact on the strategy execution