Management MCQ: August 2017

Archive for August 2017

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. Generous rewards for people who turn in outstanding performances
E. A reward system that involves 50 percent non-monetary rewards and a work environment that avoids placing pressure on managers and employees to perform at high levels

Answer: E

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. Ways must be found to reward deserving non-performers 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.

Answer: D

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 non-monetary incentives and rewarding people for diligently performing their assigned duties.

Answer: A

An important consideration in designing a strategy-supportive 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 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 non-monetary rewards and recognition an integral part of the reward system.

Answer: E

A well-designed reward system

A. aligns the well-being of organization members with their contributions to competent strategy execution and the achievement of performance targets.
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 consistently low performers.
E. strives for 50-50 balance between positive and negative rewards and 50-50 balance between monetary and non-monetary rewards.

Answer: A

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 non-monetary 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.

Answer: C

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. strike a middle ground—entailing decidedly positive rewards for meeting or beating performance targets but also imposing 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 and also stressing non-monetary rewards for high-performing employees.
E. put top priority on making employees happy and secure in their jobs.

Answer: B

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% 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.

Answer: E

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 the risk of punishment for poor performance.
D. not deny rewards to employees who put forth good effort and try hard.
E. reduce job insecurity and give employees an incentive to stay busy and work hard.

Answer: C

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 incentives.
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.

Answer: A

Which one of the following is not likely to be effective in trying to gain employees' wholehearted commitment to good strategy execution and operating excellence?

A. Aggressive management efforts to eliminate stress, anxiety, and job insecurity from the work environment
B. Extensive use of such non monetary carrot-and-stick incentives as frequent words of praise (or constructive criticism), special recognition at company gatherings, and being given stimulating assignments
C. More (or less) job security, and opportunities for high-performing employees to transfer to attractive locations
D. Opportunities for rapid promotion (or the risk of being sidelined in a routine job)
E. Performance bonuses

Answer: A

In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence, managers are well advised to use such incentives as

A. attractive perks and fringe benefits.
B. frequent words of praise, special recognition at company gatherings, stimulating assignments, and opportunities to transfer to attractive locations.
C. more (or less) job security.
D. opportunities for rapid promotion (or the risk of being sidelined).
E. All of these.

Answer: E

Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the targeted strategic 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 non-monetary.
D. clever and innovative use of benchmarking and best practices.
E. providing employees with a high degree of job security and attractive perks.

Answer: C

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' energetic commitment to competent strategy execution and operating excellence by rewarding them, both monetarily and non-monetarily, for their 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.

Answer: C

Management's most powerful tool for winning employee commitment to good strategy execution and operating excellence 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 system of rewards and incentives tied tightly to the achievement of the targeted strategic and financial performance.
E. aggressive use of TQM and Six Sigma quality control programs.

Answer: D

Management's most powerful tool for mobilizing employee commitment to competent strategy execution and operating excellence is

A. diligent and persistent use of benchmarking and best practices.
B. proper use of incentives and rewards.
C. TQM and/or Six Sigma programs.
D. periodic inspirational speeches aimed at arousing employees' emotional energy.
E. providing employees with a high degree of job security (ideally, via a no-layoff policy).

Answer: B

Information systems provide managers with a means for monitoring

A. daily team performance in real time.
B. the performance of empowered workers to see that they are acting within the specified limits.
C. daily and weekly operating statistics.
D. All of these.
E. None of these.

Answer: D

The areas that information systems need to cover include all but which one of the following?

A. Financial performance data
B. Corporate culture data
C. Customer data
D. Operations data
E. Employee data

Answer: B

The areas that information systems need to cover include

A. Financial performance data
B. Supplier/partner/collaborative data
C. Customer data
D. Operations data
E. All of these

Answer: E

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 work force morale and productivity, and simplifying the task of adopting best practices.
E. All of these.

Answer: B

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

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

Answer: B

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. signaling unequivocal and unyielding commitment to total quality and operating excellence; encouraging quality-supportive behaviors on the part of employees, empowering employees to make changes to improve quality; and using online systems to give employees immediate access to best practice information and experiences.
B. requiring all company personnel 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. stressing 100% accurate individual performance rather than group or team performance.
E. dismissing employees who repeatedly fail to achieve 100% accuracy in their work after a 12-month trial period.

Answer: A

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% control over the variability in how each and every value chain activity is performed.
D. have at least 50% 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.

Answer: A

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 incremental improvement (striving for inch-by-inch gains again and again in a never-ending stream).
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.

Answer: C

Which one 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 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% of the variability in how a task is performed.

Answer: A

The statistical thinking underlying Six Sigma is based on the following three principles:

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

Answer: B

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% control over how a task is performed and eliminating 100% 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.

Answer: D

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% defect-free levels.
C. a system of statistical procedures for achieving 100% 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% of the variability in how a task is performed.

Answer: A

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.

Answer: B

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.

Answer: C

Which one 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—very little benefit emerges 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.

Answer: B

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.

Answer: C

Total quality management (TQM) emphasizes all but which one of the following?

A. 100% accuracy in performing tasks
B. Continuous improvement in all phases of operations
C. Widespread adoption of industry standard operating practices
D. Benchmarking and total customer satisfaction
E. Empowerment of employees and team-based work design

Answer: C

Total quality management (TQM)

A. is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100% accuracy in performing tasks, 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.
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.

Answer: A

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 that has charge over the whole process and can be held accountable for performing the activity in a cheaper, better, and/or more strategy-supportive fashion.
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.

Answer: A

Business process reengineering is a tool for

A. expediting the redesign of existing products and shortening the design-to-market cycle.
B. pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group that has charge over the whole process and can be held accountable for performing the activity in a more strategy-supportive fashion.
C. instituting total quality management.
D. making the most effective use of Six Sigma techniques.
E. rapid redesign of an organization's structure so as to rapidly create organizational competencies and capabilities.

Answer: B

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's merit in using business process reengineering to pull the pieces of strategy-critical processes out of different departments and unify their performance in a single department or cross-functional work group that has charge over the whole process.
D. TQM is a potent way to re engineer 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.

Answer: C

Which of the following is not a tool that managers can use to promote operating excellence and further the cause of good strategy execution?

A. Benchmarking and the adoption of best practices
B. Business process reengineering
C. Strategic resource training
D. TQM
E. Six Sigma quality control techniques

Answer: C

Which one of the following is not a tool that company managers can use to promote operating excellence in performing value chain activities?

A. Benchmarking
B. Adoption of best practices
C. TQM and/or Six Sigma quality control techniques
D. Business process reengineering
E. Adoption of standard industry techniques

Answer: E

The backbone 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. innovative application of TQM techniques.

Answer: C

The idea behind benchmarking and best practices is to

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

Answer: D

A "best practice" refers to

A. a policy or procedure that is unusually effective.
B. a technique for performing an activity or business process that at least one company has demonstrated works particularly well in terms of delivering some highly positive operating outcome.
C. performing a strategy-critical activity in a fashion that results in sustainable competitive advantage.
D. the value chain activity that is a company's distinctive competence.
E. a particular value chain activity that management has given top priority to performing in world class fashion.

Answer: B

Company managers can significantly advance the cause of superior strategy execution by

A. using various process management tools to drive continuous improvement in how internal operations are conducted.
B. benchmarking the company's performance of particular activities and business processes against "best-in-industry" performers.
C. examining "best-in-company" performers if a company's different organizational units is performing the same functions at different locations.
D. benchmarking the company's performance of particular activities and business processes against "best-in-world" performers.
E. All of these.

Answer: E

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

A. Painting a set of white lines that places limits on independent behavior and channels individual and group efforts along a path more conducive to executing the strategy.
B. Providing top-down guidance to operating managers, supervisory personnel, and employees regarding how things need to be done and what behavior is expected
C. Promoting the creation of a work climate that facilitates good strategy execution
D. Helping build employee commitment to adopting best practices and using the tools of TQM and Six Sigma
E. Helping enforce consistency in how particular activities are performed in geographically scattered organization units

Answer: D

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.

Answer: A

Prescribing new policies and operating procedures 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 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.

Answer: D

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 independent action and painting new white lines to steer the actions and behavior of company personnel in a manner that is more conducive to good strategy execution and operating excellence.

Answer: E

Visible actions to reallocate operating funds and move people into different 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 tothe 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 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.

Answer: B

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. 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.

Answer: C

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

A. primarily be based on the number of new strategic initiatives being implemented in each department.
B. be based on the number of people employed in each of the divisions.
C. be strategy-driven and based primarily 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.

Answer: C

Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and resource allocation process because

A. too little funding deprives organizational units of the resources to carry out their piece of the strategic plan and too much funding wastes organizational resources.
B. a change in strategy nearly always calls for budget reallocations and resource shifting.
C. without major budget reallocations there is no chance for the desired core competencies and organizational capabilities to emerge.
D. lean, carefully managed budgets protect the company's financial condition and eliminate wasteful use of cash.
E. Both A and B.

Answer: E

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 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.

Answer: A

Performance-based compensation systems

A) have to be used cautiously and sometimes toned down in certain foreign countries, because incentive compensation runs counter to local customs and cultural norms.
B) can have an adverse effect on employee performance because some managers and employees are not psychologically and emotionally strong enough to cope with performance-based pay systems.
C) tend to be less effective if the performance-based pay exceeds 10-15 percent of total compensation because failure to receive incentive rewards can hurt employee morale and curb their living standards.
D) should be used sparingly because too much emphasis on pay-for-performance tends to have a negative impact on employee productivity.
E) have the disadvantage of making it harder for employees to focus diligently on the duties and functions they are supposed to perform.

Answer: A

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 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) not skirting the system to find ways to reward non-performers.
E) Both A and D.

Answer: E

Which of the following is not a desirable feature of a well-designed, strategy-supportive compensation and reward system?

A) Administering the reward system with scrupulous care and fairness
B) Avoiding performance incentives where the payoff is less than 20% of total compensation
C) Making sure that the performance targets each individual is expected to achieve involve outcomes the individual can affect
D) Making liberal use of non-monetary rewards
E) Keeping the time between performance reviews and payment of the rewards short

Answer: B

Which of the following is the most important aspect of developing a strategy-supportive reward structure?

A) Motivating organizational units and individuals to work energetically to execute the strategy effectively and achieve the organization's vision
B) Making sure that individuals' rewards are tightly linked to meeting or beating strategically-relevant performance targets
C) Making sure that the rewards actually boost employee morale and job satisfaction
D) Selecting rewards that will boost worker productivity and lower labor costs
E) Motivating employees to be good team players

Answer: B

Motivational and incentive compensation practices that contribute to high levels of employee performance typically

A) entail paying the highest wages and salaries in the industry to high-performing employees and stressing non-monetary rewards for low-performing employees.
B) incorporate only positive motivational approaches and are carefully designed to avoid subjecting employees to job insecurity, stress, or anxiety.
C) incorporate a blend of positive and negative motivational features and also utilize both monetary and non-monetary rewards.
D) emphasize making employees happy and secure in their jobs through both hard times and good times.
E) involve reducing the compensation of low-performing employees while, at the same time, giving high-performing employees lucrative bonuses and making them eligible to participate in an assortment of incentive compensation plans.

Answer: C

Which of the following statements regarding the strategy-executing role of internal support systems and information systems is inaccurate?

A) State-of-the-art internal support systems typically have the effect of raising a firm's unit costs because of the high dollar outlays required to develop and install such systems.
B) Well-conceived information and internal support systems can sometimes strengthen organizational capabilities enough to provide a competitive edge over rivals.
C) Well-conceived, state-of-the-art information and operating systems can help a company mobilize information, use knowledge effectively, redeploy resources quickly, and respond faster.
D) Well-conceived, state-of-the-art information systems help empowered employees do their jobs better and make better decisions.
E) Real-time information systems help company managers to stay on top of implementation initiatives and daily operations, and to intervene if things seem to be drifting off course.

Answer: A

Total quality management (TQM) involves managing company operations in a manner calculated to

A) identify and implement the best practice is for performing a particular value chain activity.
B) result in the lowest possible costs.
C) produce continuous improvement in all phases of operations, promote 100% accuracy in performing tasks, and move toward total customer satisfaction.
D) make quantum gains in the efficiency and effectiveness with which the value chain activities are performed.
E) result in mistake-free management of a company's entire business.

Answer: C

Identifying and adopting best practices

A) starts with benchmarking how well a company performs specific tasks and activities against best-in-industry or best-in-world performers.
B) is essential if a company is to effectively and efficiently implement and execute its strategy.
C) needs to be directed chiefly at manufacturing and customer service activities, since these two areas are generally the most critical to successful strategy implementation and execution.
D) is a prerequisite to effective reengineering of core business processes and to creating strong core competencies.
E) provides a yardstick for setting internal performance targets and for gauging organizational competence in executing strategy.

Answer: A

The managerial task of creating strategy-supportive policies and procedures

A) generally entails having many policies rather than few policies (because it usually takes many policies and procedures to adequately spell out and fully explain how things are to be done correctly).
B) is important because strategies can rarely be executed proficiently without providing employees with explicit direction in how value chain activities are to be performed.
C) is the most reliable way for management to retain control over how tasks are being performed by empowered employees (because very few employees will knowingly violate company policies).
D) must be well done if a company is to succeed in imitating the practices and procedures of best-in-industry or best-in-world performers.
E) can aid good strategy execution by placing limits on independent action and channeling individual and group efforts in the desired directions.

Answer: E

Changes in strategy often entail budget reallocations because

A) more money will be needed to fund the new strategy initiatives.
B) the policy revisions and compensation incentives that tend to accompany strategy changes typically require different levels of funding.
C) the value chain activities and organizational units critical to executing the old strategy are not necessarily as critical in executing the new strategy, thus making it desirable to reduce budget allocations to areas having a lesser strategy-executing role and to increase budget allocations for those value chain activities having a bigger strategy-executing role.
D) substantial budget revisions are usually needed to empower employees to carry out the new strategy elements.
E) adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements.

Answer: C

The use of state-of-the-art information and operating systems aid the task of implementing and executing strategy because:

A) such support systems not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals).
B) they are the most effective and technologically sophisticated way to realize a competitive edge over rivals.
C) they help managers run a tight ship and properly monitor the actions and decisions of empowered employees.
D) such systems make it easier to develop strategy-supportive policies and procedures.
E) they make the use of TQM or Six Sigma programs substantially more cost-effective.

Answer: A

Which of the following motivational practices is least likely to be effective in spurring stronger employee commitment to good strategy execution?

A) Stating the strategic vision in inspirational terms that make employees feel they are a part of doing something worthwhile in a larger social sense
B) Having knockout facilities and providing attractive perks and fringe benefits
C) Making sure that the ideas and suggestions of employees are valued and that those with merit are promptly acted on
D) Creating a "family" work atmosphere where there is genuine sincerity, caring, and mutual respect among workers and between management and employees
E) Creating a no-pressure/no-adverse-consequences work environment where employees have a high degree of job security

Answer: E

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

A) making sure that individuals' rewards are tightly linked to performing their assigned duties.
B) making sure that individuals' rewards are tightly linked to achieving the desired results (meeting or beating performance targets).
C) providing employees with a high degree of job security.
D) selecting rewards that will boost worker productivity and lower labor costs.
E) hiring job applicants that are good team players.

Answer: B

A well-designed reward system

A) makes strategically relevant measures of performance the dominant basis for incentive compensation.
B) should strive for a 75%-25% mix between positive and negative rewards.
C) should strive for a 67%-33% mix between monetary and non-monetary rewards.
D) must emphasize weeding out employees who are consistently low performers (in the bottom 10% to 15%).
E) All of these.

Answer: A

From a strategy-implementing/strategy-executing perspective, which one of the following is not a benefit of installing well conceived state-of-the-art information and operating systems?

A) Helping mobilize information and use knowledge effectively
B) Speeding decision-making and shortening organizational response times
C) Strengthening organizational capabilities
D) Better enabling company managers to stay on top of implementation initiatives and daily operations, and to intervene if things seem to be drifting off course
E) Enabling companies to wisely set stretch objectives and then to tie incentives and rewards to the achievement of these objectives

Answer: E

Building a total quality culture and realizing full value from TQM or Six Sigma initiatives does not entail which one of the following?

A) Visible, unequivocal, and unyielding commitment to total quality and continuous improvement, including a quality vision and specific, measurable objectives for boosting quality and making continuous improvement
B) Screening job applicants rigorously and hiring only those with the attitudes and aptitudes right for quality-based performance
C) Building a distinctive competence in quality control, especially as it applies to manufacturing/assembly and customer service
D) Providing quality training for most employees and stressing prevention (doing it right the first time) rather than inspection (instituting ways to correct mistakes)
E) Preaching that performance can, and must, be improved because competitors aren't resting on their laurels and customers are always looking for something better

Answer: C

Six Sigma's DMAIC process 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 DMADV process has to be used.
B) developing new processes or products at Six Sigma quality levels.
C) companies wanting to improve customer service; Six Sigma DMADV has to be used to improve manufacturing or assembly processes.
D) minimizing the number of company personnel which require Black Belt training and thus keeping the costs for Six Sigma use below $250,000 per task.
E) improving performance when there are wide variations in how well an existing activity is performed.

Answer: E

Which one 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—very little benefit emerges 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) While TQM concentrates on the production of quality goods and fully satisfying customer expectations, it achieves its biggest successes when it is also extended to employee efforts in all departments.

Answer: B

Which of the following is not a tool that managers can use to promote operating excellence and further the cause of good strategy execution?

A) Benchmarking and adoption of best practices
B) Business process reengineering
C) Operating and support systems analysis
D) Six Sigma quality control techniques
E) TQM

Answer: C

Which one of the following is false when it comes to designing strategy-facilitating policies and operating procedures?

A) More policies/procedures work better than few policies/procedures and strict enforcement of a weak policy always beats lax enforcement of a good policy.
B) Instituting strategy-facilitating policies can mean more policies, fewer policies, or different policies.
C) A useful guideline is 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.
D) The managerial role of establishing and enforcing new policies and operating practices is to paint a different set of white lines, place limits on independent behavior, and channel individual and group efforts along a path more conducive to executing the strategy.
E) One of the big policy-making issues concerns what activities need to be rigidly prescribed and what activities ought to allow room for independent action on the part of empowered personnel.

Answer: A

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

A) primarily be based on creating more core competencies than rivals have.
B) be strategy-driven and based primarily on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively.
C) be based on the resources needed to lower the costs of performing each value chain activity.
D) provide each operating unit with sufficient funds to undertake benchmarking, adopt best practices, implement Six Sigma and/or TQM, and do cutting-edge business process reengineering.
E) strongly support the company's established policies and procedures regarding how things are to be done.

Answer: B

Which one of the following is not a valid strategy-related reason why managers need to be deeply involved in the budgeting and resource allocation process?

A) Too little funding deprives organizational units of the resources to carry out their piece of the strategic plan and too much funding wastes organizational resources and reduces financial performance.
B) A change in strategy nearly always calls for budget reallocations and resource shifting.
C) The funding requirements of any change in strategy need to drive capital allocations and the size of each unit's operating budget.
D) Without budget reallocations it is hard, if not impractical, to match organization structure to the chosen strategy; moreover, aggressive resource reallocation is a prerequisite to creating needed core competencies and organizational capabilities.
E) Visible actions to reallocate operating funds and move people into new organizational units signal a determined commitment to strategic change and frequently are needed to catalyze the implementation process and give it credibility.

Answer: D

Using benchmarking and best practices as a means of achieving operating excellence

A) is a four-step process that entails (1) benchmarking how well a company performs specific tasks and activities against best-in-industry or best-in-world performers, (2) adapting the various best practices to fit the company's situation and then implementing them, (3) continuing to benchmark company performance of activities against best-in-industry or best-in-world performers, and (4) continuing to improve and refine the company's performance of its activities and thereby move closer to operating excellence.
B) is essential if a company is to effectively and efficiently implement TQM and/or Six Sigma quality control systems.
C) needs to be directed chiefly at manufacturing and customer service activities, since these two areas are generally the most critical to good strategy execution.
D) is a prerequisite to effective reengineering of core business processes and to building strong core competencies.
E) is a potent tool for helping top managers set stretch performance targets and track a company's progress in executing its strategy.

Answer: A

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

A) Making the performance payoff a major, not minor, piece of the total compensation package
B) Keeping performance incentives and bonuses to less than 15% of total compensation
C) Not skirting the system to find ways to reward effort rather than results and making sure that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can affect
D) Having incentives that extend to all managers and all workers and generously rewarding people who turn in outstanding performances
E) Tying incentives to performance outcomes directly linked to good strategy execution and financial performance and keeping the time between achieving the target performance outcome and the payment of the reward as short as possible

Answer: B

Management's most powerful tool for mobilizing employee commitment to competent strategy execution and operating excellence is

A) total quality management.
B) business process reengineering.
C) a properly designed reward structure.
D) making the company a great place to work in terms of pay scales, fringe benefits, and employee perks.
E) effective screening of job applicants such that only the most motivated and energetic people are hired.

Answer: C

The use of state-of-the-art information and operating systems

A) not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals).
B) are the most effective way to realize a competitive edge over rivals.
C) help managers run a tight ship and properly monitor the actions and decisions of empowered employees.
D) make it easier to develop strategy-supportive policies and procedures.
E) make the use of TQM or Six Sigma programs substantially more cost-effective.

Answer: A

Six Sigma quality program

A) is a tool that is superior to TQM in achieving top-notch quality in manufacturing a product.
B) consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations.
C) utilizes advanced statistical methods to improve quality by reducing defects and variability in the performance of business process.
D) is the best practice for managing manufacturing and assembly activities.
E) is a disciplined, statistics-based approach to manufacturing or assembling a product and results in 5 defects per million iterations when implemented properly.

Answer: C

Total quality management (TQM)

A) is a philosophy of managing that involves convincing employees that superior product quality is the most reliable key to competitive success in the marketplace.
B) is a tool for providing customers with the highest quality product of any company in the industry.
C) involves managing company operations in a manner calculated to quickly and efficiently make quantum gains in the quality and effectiveness with which production activities are performed.
D) is a philosophy that entails creating a total quality culture bent on continuously improving the performance of every task and value chain activity.
E) involves managing company operations in a manner calculated to result in mistake-free management of a company's entire business.

Answer: D

Business process reengineering is a tool for

A) remodeling and refreshing a strategy-critical core competence.
B) involves radically redesigning and streamlining how an activity is performed
C) reducing the size of a company's managerial bureaucracy.
D) boosting the quality of a company's product and the caliber of its customer service.
E) expediting the development of an important new competitive capability.

Answer: B

Which of the nonmonetary rewards helps ensure that people in positions of responsibility have knowledge specific to the business, technology, and operations they are managing?

A) Relying on promotion from within whenever possible
B) Inviting and acting on ideas and suggestions from employees
C) Providing attractive perks and fringe benefits
D) Giving awards and other forms of public recognition to high performers
E) Creating a work atmosphere in which there is genuine caring

Answer: A

A "best practice"

A) refers to the lowest-cost procedure for performing a specific task or activity.
B) refers to performing strategy-critical activities in a manner that results in fewer than 5 defects per million.
C) is the particular value chain activity that a firm performs best.
D) is a method of performing an activity that has been shown consistently deliver superior results compared to other methods.
E) is a procedure for performing an activity that companies in an industry have "proven" is the most reliable and failsafe way to perform that activity.

Answer: D

Prescribing policies and operating procedures aid the task of implementing strategy by

A) helping empower product champions and work teams.
B) paving the way for instituting TQM or Six Sigma programs and adopting best practices.
C) by providing top-down guidance about how certain things need to be done.
D) helping prevent the corporate culture from being unhealthy and weak.
E) pushing employees to accept the need for state-of-the-art operating and support systems.

Answer: C

From a strategy-implementing/strategy-executing perspective, a company's operating budget should

Answer: B