MGT 498 Chapter 10 Answers

Chapter 10
Implementation
Multiple Choice Questions
1. Business strategies, grand strategies, and ______ are critically important in crafting a
successful future.
A.
B.
C.
D.
long-term objectives
core rigidities
business units
functional hierarchies
2. To make business strategies, grand strategies and long-term objectives a reality, the
people in an organization who ________ need guidance in exactly what they need to
do.
A.
B.
C.
D.
"do the work"

make corporate decisions
manage the business unit
compete
3. ___________ are measurable outcomes achievable or intended to be achieved in one

year or less.
A.
B.
C.
D.
Targets
Goals
Short-term objectives
Long-term objectives
4. Short-term objectives are usually:
A.
B.
C.
D.
Completed within two months

Quantitative
Qualitative
Set to be completed within five years
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5. Short-term objectives __________ long-term objectives.
A.
B.
C.
D.
limit the effectiveness of

operationalize
decrease the need for
justify
6. If X-Corp.'s car polish division has committed to a 30 percent gain in revenue over six
years, they must consider the specific target in revenue during the current quarter to
indicate they are making appropriate progress. This smaller objective for the fiscal
quarter is called a:
A.
B.
C.
D.
Short-term technique
Long-term objective
Strategic goal
7. Discussion about and agreement on short-term objectives help raise issues and
potential conflicts within an organization that usually:
A.
B.
C.
D.
Need little coordination

Require additional personnel
Focus on public relations
Require organizational coordination
8. Short-term objectives assist strategy implementation by identifying measurable

outcomes of action plans or functional activities, which can make feedback,
correction and evaluation:
A.
B.
C.
D.
More relevant and acceptable

More expensive
More difficult
More geared toward growth
9. Short-term objectives are usually accompanied by subsequent:
A.
B.
C.
D.
Action ideas
Action plans
Policies
10. _______ are usually accompanied by subsequent action plans.
A.
B.
C.
D.
Action ideas
Policies
11. Which of the following items is NOT an example of how action plans enhance shortterm objectives?
A.
B.
C.
D.
Specificity
Link to long-term strategy
Time frame for completion
Definition of who is responsible for what
12. ______ identify who is responsible for each action in the plan.
A.
B.
C.
D.
Action ideas
Action plans
Policies
13. Which of the following is NOT an example of a quality of effective short-term

objectives?
A.
B.
C.
D.
Measurability
Priorities
Definition of the market
Linked to long-term objectives
14. Difficulties in quantifying objectives often can be overcome by initially focusing on

measurable activity and then identifying measurable
A.
B.
C.
D.
resources
capabilities
outcomes
policies
15. Short-term objectives are more consistent when they clearly state what is to be
accomplished, when it will be accomplished and how its accomplishment will be:
A.
B.
C.
D.
Qualified
Benchmarked
Measured
Strategized
16. ________ can help avoid conflicting assumptions about the relative importance of
annual objectives, which could otherwise inhibit progress toward strategic
effectiveness.
A.
B.
C.
D.
Establishing priorities
Establishing action plans
Distinguishing the measurable objectives
Establishing measurable outcomes
17. It is far easier to quantify the objectives of ______, like production, than of certain
______ areas like personnel.
A.
B.
C.
D.
line units; function

staff units; line
outcomes; staff
line units; staff
18. Difficulties in quantifying objectives can often be overcome by initially focusing on

_________ and then identifying _________.
A.
B.
C.
D.
measurability; functions
measurable activity; measurable outcomes
measurable outcomes; measurable activity
line units; measurable activity
19. A(n) _______ does not necessarily communicate the real difference in the importance
of objectives.
A.
B.
C.
D.
simple flow
simple ranking
statistical measure
established priority
20. Words like "primary," "top," and "secondary," may be used to indicate:
A.
B.
C.
D.
Measurability
Priority
Strategic objectives
21. Some firms assign ____ to establish and communicate the relative priority of
objectives.
A.
B.
C.
D.
rewards
objectives
weights
policies
22. The link between short-term and long-term objectives should resemble ________
through the firm from basic long-term objectives to specific short-term objectives in
key operation areas.
A.
B.
C.
D.
cascades
building blocks
small barriers
fences
23. Short-term objectives and action plans give operating personnel a better
understanding of their role in the firm's ______.
A.
B.
C.
D.
goals
financial performance
strategic management
mission
24. A benefit of short-term objectives and action plans comes from the __________. If this
is done and managers participate, short-term objectives and action plans provide
valid bases for addressing and accommodating conflicting concerns that might
interfere with strategic effectiveness.
A.
B.
C.
D.
process development
strategy development
strategic control
clarity of purpose
25. Functional tactics translate thought (______) into action designed to accomplish
specific short-term objectives.
A.
B.
C.
D.
policies
mission
vision
grand strategy
26. One benefit of short-term objectives and action plans is that they provide a
__________. They can provide clear, measurable mechanisms for developing budgets,
schedules and trigger points, which help control the implementation of strategy.
A.
B.
C.
D.
basis for strategy evaluation

basis for motivation
basis for strategy implementation
basis for strategic control
27. One benefit of short-term objectives and action plans is its _________, which clarifies
personal and group roles in a firm's strategies and help realistically challenge
managers to perform well. These objectives are particularly effective when linked to
the firm's reward structure.
A.
B.
C.
D.
motivational payoff
structured clarity
compensation structure
complicated nature
28. ________ are key, routine activities that must be undertaken in each functional area.
A.
B.
C.
D.
Business tactics
Resource tactics
Functional tactics
Corporate tactics
29. Functional tactics translate _______ into action designed to accomplish specific shortterm objectives.
A.
B.
C.
D.
corporate strategy
grand strategy
competitive will
business strength
30. Every ________ in a company executes functional tactics that support the business'
strategy and help accomplish strategic objectives.
A.
B.
C.
D.
competitive rivalry
supplier/customer
value chain activity
business unit manager
31. Which is NOT one of the differences between business strategies and functional
tactics?
A.
B.
C.
D.
Reinforcement of the strategy

Time horizon
Specificity
Participants who develop them
32. __________ identify activities to be undertaken now or in the immediate future.
A.
B.
C.
D.
Long-term tactics
Business strategies
Corporate strategies
Functional tactics
33. The ___________ of functional tactics allows functional managers to adjust to changing
current conditions.
A.
B.
C.
D.
shorter time horizon

focus on growth
specificity
business focus
34. Business strategies provide _______ direction.
A.
B.
C.
D.
general
focused
generic
narrow
35. Functional tactics are more _________ than business strategies.
A.
B.
C.
D.
specific
focused on the general direction of the firm
focused on a commitment to corporate strategy
long-term
36. Which of the following is NOT a way that specificity in functional tactics contributes to
successful implementation?
A. Helping ensure that functional managers know what needs to be done and can
focus on accomplishing results
B. Limiting the need for top management's confidence in and sense of control over
the business strategy
C. Clarifying for top management how functional managers intend to accomplish the
business strategy
D. Facilitating coordination among operating units within the firm by clarifying areas
of interdependence and potential conflict
37. Operating managers must establish short-term objectives and operating strategies
that contribute to:
A.
B.
C.
D.
Business-level goals
Corporate-level goals
Goals toward diversification
Specialization
38. Involving operating managers can increase the __________ of operating managers to
the strategies developed.
A.
B.
C.
D.
resistance
limitations
commitment
evaluation
39. Outsourcing starts for most firms with:
A.
B.
C.
D.
The outsourcing of production

The outsourcing of the marketing function
The outsourcing of payroll production
The outsourcing of corporate strategy decisions
40. __________ is defined as obtaining work previously done by employees inside the
companies from sources outside the company.
A.
B.
C.
D.
Specialization
Fragmentation
Outsourcing
Acquisition or merging
41. __________ is acquiring an activity, service or product necessary to provide a

company's products or services from "outside" the people or operations controlled by
that acquiring company.
A.
B.
C.
D.
Specialization
Fragmentation
Outsourcing
42. Relentless cost cutting is the main force behind the trend of _____.
A.
B.
C.
D.
strategic planning
outsourcing
goal setting
globalization
43. _________ is the main force behind the outsourcing trend.
A.
B.
C.
D.
Relentless cost cutting

Achieving internal synergies
Better capital budgeting
Keeping control internal
44. ___________ is the most frequently outsourced functional activity at 75 percent.
A.
B.
C.
D.
Marketing
Payroll
Travel
HR
45. ________ is the act of allowing an individual or team the right and flexibility to make
decisions and initiate action.
A.
B.
C.
D.
Management
Micromanagement
Empowerment
Developing strategy
46. One way operating managers ensure decision making is consistent with the mission,
strategy and tactics of the business while allowing considerable latitude to operating
personnel is through the use of:
A.
B.
C.
D.
Empowerment
Policies
Strategic evaluation
Facilitating strategic design
47. __________ are directives designed to guide the thinking, decisions and actions of
managers and their subordinates in implementing a firm's strategy.
A.
B.
C.
D.
Functional tactics
Action plans
Policies
48. One way operating managers _____ is through the use of policies.
A.
B.
C.
D.
outsource
strategize
politicize
empower
49. __________ increase managerial effectiveness by standardizing many routine decisions

and clarifying the discretion managers and subordinates can exercise in
implementing functional tactics.
A.
B.
C.
D.
Outsourcing
Standard operating procedures
Corporate cultures
Action plans
50. _______ communicate guidelines to decisions.
A.
B.
C.
D.
Policies
Action plans
Functional tactics
Business strategy objectives
51. Policies are also sometimes called
A.
B.
C.
D.
standard operating procedures

action plans
functional tactics
business strategy objectives
52. Policies establish __________ over _________ by clearly stating how things are to be
done _________.
A.
B.
C.
D.
indirect control; dependent action; in the future

indirect control; independent action; now
direct control; independent action; in the future
direct control; dependent action; now
53. Policies establish __________ over independent action.
A.
B.
C.
D.
strategic control
indirect control
direct control
visionary control
54. Policies ________ basic aspects of organization behavior.
A.
B.
C.
D.
Negotiate
Institutionalize
Justify
Determine
55. Policies ensure ______ action.
A.
B.
C.
D.
slower
quicker
indirect
loose
56. Policies counteract resistance to or rejection of chosen _______.
A.
B.
C.
D.
vision statements
strategies
mission statements
capabilities
57. Policies reduce _______ in day to day decision making.
A.
B.
C.
D.
The need for operating personnel

The number of routine problems
The speed with which decisions can be made
Uncertainty
58. Policies may be ________ or _________.
A.
B.
C.
D.
written and informal; unwritten and formal

written and formal; unwritten and formal
written and formal; unwritten and informal
written and informal; unwritten and informal
59. Policies offer predetermined answers to _____ problems.
A.
B.
C.
D.
unique
formal
routine
informal
60. Which of the following is NOT a benefit of formal, written policies?
A. They make variation in the treatment of individual problems more likely

B.
They reduce misunderstanding
C. They systematically enhance indirect control and organization-wide coordination of
the key purposes of policies
D. They communicate the authorization or sanction of policies more clearly
61. The strategic ________ of policies can vary.
A.
B.
C.
D.
direction
plan
significance
advantage
62. Policies can be ________. One good example of this is the use of equal employment
opportunity practices.
A.
B.
C.
D.
internally derived
negative
externally imposed
very simple in nature
63. The ______ significance of policies can vary.
A.
B.
C.
D.
visionary
routine
strategic
important
64. ________ theoretically reward(s) the actions of people within an organization.
A.
B.
C.
D.
Development
Compensation
Policies
Action plans
65. Policies can be externally imposed or ______.
A.
B.
C.
D.
stakeholder driven
mandated by stockholders
internally derived
mandated by the stock market
66. The goal of an executive bonus compensation plan is to:
A. Motivate executives to achieve maximization of shareholder wealth

B. Motivate executives to achieve maximization of personal wealth
C.
Differentiate executives from other managers
D.
Ensure the success of the firm
67. The goal of ______ is not the only goal that executives may pursue.
A.
B.
C.
D.
organizational policies
organizational rewards
managerial rewards
shareholder wealth maximization
68. The success of bonus compensation as an incentive hinges on:
A.
The executive in question
B.
The success of the firm
C. The match between the plan and the firm's strategic objectives
D. The positive link between shareholder wealth and personal wealth maximization
69. A common measure of shareholder wealth creation is appreciation of company
A.
B.
C.
D.
revenues
stock price
employees
stockholders
70. ______ provide the executive with the right to purchase company stock at a fixed price
in the future.
A.
B.
C.
D.
Golden handcuffs
Stock options
Golden parachutes
Restricted stock plans
71. A common measure of _______ creation is appreciation of company stock price.
A.
B.
C.
D.
shareholder wealth
revenue
sales
job
72. Stock options have typically represented _______ of a CEO's average pay package.
A.
B.
C.
D.
less than 30 percent

more than 50 percent
73. ______ dilute shareholders' equity when they are exercised.
A.
B.
C.
D.
Golden handcuffs
Stock options
Golden parachutes
74. The rationale behind golden handcuffs is that the plan:
A. Promotes longer executive tenure than other forms of compensation

B. Offsets the limitations of focusing on market-based measures of performance
C. Offers an incentive for executives to remain with the firm
D. Provides incentive for the executive to create wealth for shareholders as measured
by increase in the firm's share price
75. There is a weak correlation between earnings measures and shareholder wealth
creation with the use of a:
A.
B.
C.
D.
Golden handcuffs plan

Cash based plan
Restricted stock plan
Stock option grant
76. Golden handcuffs:
A. Have no downside risk to executives, who always profits unlike other shareholders
B. Have a weak correlation between earnings measures and shareholder wealth
creation
C. Make it hard to explain the dimensions of managerial performance using the
movement in share price
D. May promote risk-averse decision making due to the downside risk borne by the
executive
77. ________ provide incentive for the executive to create wealth for shareholders as
measured by increases in the firm's share price.
A.
B.
C.
D.
Stock option grants

Golden handcuffs
Golden parachutes
Cash-based plans
78. __________ are much easier to value than options because they are equivalent to a
stock transfer at the market price.
A.
B.
C.
D.
Restricted stock grants

Golden handcuffs
Golden parachutes
Cash plans
79. ________ offers employees more certainty, even if there is less potential for a big win.
A.
B.
C.
D.
The use of stock options

A golden parachute
Stock grants
Restricted stock
80. A ________ is designed to provide benefits of direct executive stock ownership.
A.
B.
C.
D.
restricted stock plan

cash based plan
golden parachute
golden handcuffs plan
81. Restricted stock plans offer:
A.
B.
C.
D.
Higher downside risk to executives

More limited downside risk to executives
No downside risk to executives
Limited upside risk to executives
82. __________ represent a form of executive compensation where compensation is

deferred.
A.
B.
C.
D.
Golden handcuffs
Golden parachutes
Golden stock options
Unrestricted stock options
83. If the executive quits, is fired or simply retires, he would be best protected by a
_________, which is designed to retain talented executives.
A.
B.
C.
D.
golden handcuff
golden parachute
cash based plan
stock option
84. _______ are executive bonus compensation plans that focus on accounting measures
of performance and are designed to offset the limitations of market-based measures
of performance.
A.
B.
C.
D.
Cash restricted plans

Golden handcuffs
Cash-based plans
85. A firm with a strategic goal of growing the share price incrementally should
implement a:
A.
B.
C.
D.

Stock option plan
Cash-based plan
Golden parachute
86. A firm with a strategic goal of reducing executive turnover would use _________ to
provide an incentive for longer executive tenure.
A.
B.
C.
D.
cash
stock options
golden parachutes
golden handcuffs
87. A firm seeking to globalize operations would use ________ as its bonus compensation
plan.
A.
B.
C.
D.
restricted stock plans

golden parachutes
golden handcuffs
stock options
88. A firm with a strategic goal of streamlining operations should use ________ to reward
the long-term focus on efficiency and cost control.
A.
B.
C.
D.

stock options
cash
golden parachutes
Essay Questions
89. How do short-term objectives help implement strategy?
90. What are three important qualities of effective short-term objectives? Briefly describe
each of these in your answer.
91. What are functional tactics? Briefly describe them and provide one example of their
use.
92. In what three fundamental ways do functional tactics differ from business or
corporate strategies? Briefly describe each.
93. What is outsourcing? What are the benefits and risks of outsourcing?
94. What does it mean to empower employees? How are policies related to the idea of
empowerment?
95. How can policies control decisions while defining allowable discretion in which
operating personnel can execute business strategies? Describe several ways.
96. What are stock options? How do they motivate executives and key employees to
achieve maximization of shareholder wealth?
97. What are restricted stock options? How do they motivate executives and key
employees to achieve maximization of shareholder wealth?
98. What are golden handcuffs? How do they motivate executives and key employees to
99. What are golden parachutes? How do they motivate executives and key employees to
100 Briefly match the appropriate type of bonus compensation to the strategic goal being
.
pursued. What is the rationale behind these match-ups?
Chapter 10 Implementation Answer Key
Multiple Choice Questions
1.
(p. 288
)
Business strategies, grand strategies, and ______ are critically important in crafting
a successful future.
A.
B.
C.
D.
long-term objectives
core rigidities
business units
functional hierarchies
Difficulty: 1 Easy
Learning Objective: 10-01 Understand how short-term objectives are used in strategy implementation.
2.
(p. 288
)
To make business strategies, grand strategies and long-term objectives a reality,

the people in an organization who ________ need guidance in exactly what they
need to do.
A.
B.
C.
D.
"do the work"

make corporate decisions
manage the business unit
compete
Difficulty: 1 Easy
3.
(p. 288
)
___________ are measurable outcomes achievable or intended to be achieved in

one year or less.
A.
B.
C.
D.
Targets
Goals
Difficulty: 1 Easy
4.
Short-term objectives are usually:
(p. 288
)
A.
B.
C.
D.
Completed within two months

Quantitative
Qualitative
Set to be completed within five years
Difficulty: 2 Medium
5.
Short-term objectives __________ long-term objectives.
(p. 288
)
A.
B.
C.
D.
limit the effectiveness of

operationalize
decrease the need for
justify
6.
(p. 288
)
If X-Corp.'s car polish division has committed to a 30 percent gain in revenue over
six years, they must consider the specific target in revenue during the current
quarter to indicate they are making appropriate progress. This smaller objective
for the fiscal quarter is called a:
A.
B.
C.
D.
Short-term technique
Long-term objective
Strategic goal
Difficulty: 1 Easy
7.
(p. 288
)
Discussion about and agreement on short-term objectives help raise issues and
potential conflicts within an organization that usually:
A.
B.
C.
D.
Need little coordination

Require additional personnel
Focus on public relations
Require organizational coordination
8.
(p. 288
)
Short-term objectives assist strategy implementation by identifying measurable

outcomes of action plans or functional activities, which can make feedback,
correction and evaluation:
A.
B.
C.
D.
More relevant and acceptable

More expensive
More difficult
More geared toward growth
9.
Short-term objectives are usually accompanied by subsequent:
(p. 288
)
A.
B.
C.
D.
Action ideas
Action plans
Policies
Difficulty: 3 Hard
10.
_______ are usually accompanied by subsequent action plans.
(p. 288
)
A.
B.
C.
D.
Action ideas
Policies
Difficulty: 3 Hard
11.
(p. 289
)
Which of the following items is NOT an example of how action plans enhance
short-term objectives?
A.
B.
C.
D.
Specificity
Link to long-term strategy
Time frame for completion
Definition of who is responsible for what
12.
______ identify who is responsible for each action in the plan.
(p. 289
)
A.
B.
C.
D.
Action ideas
Action plans
Policies
Difficulty: 3 Hard
13.
(p. 289
)
Which of the following is NOT an example of a quality of effective short-term

objectives?
A.
B.
C.
D.
Measurability
Priorities
Definition of the market
Linked to long-term objectives
Learning Objective: 10-02 Identify and apply the qualities of good short-term objectives to your own
experiences.
14.
(p. 289
)
Difficulties in quantifying objectives often can be overcome by initially focusing on

measurable activity and then identifying measurable
A.
B.
C.
D.
resources
capabilities
outcomes
policies
Difficulty: 3 Hard
15.
(p. 289
)
Short-term objectives are more consistent when they clearly state what is to be
accomplished, when it will be accomplished and how its accomplishment will be:
A.
B.
C.
D.
Qualified
Benchmarked
Measured
Strategized
experiences.
16.
(p. 289
)
________ can help avoid conflicting assumptions about the relative importance of
annual objectives, which could otherwise inhibit progress toward strategic
effectiveness.
A.
B.
C.
D.
Establishing priorities
Establishing action plans
Distinguishing the measurable objectives
Establishing measurable outcomes
experiences.
17.
(p. 289
)
It is far easier to quantify the objectives of ______, like production, than of certain
______ areas like personnel.
A.
B.
C.
D.
line units; function

staff units; line
outcomes; staff
line units; staff
Difficulty: 3 Hard
experiences.
18.
(p. 289
)
Difficulties in quantifying objectives can often be overcome by initially focusing on

_________ and then identifying _________.
A.
B.
C.
D.
measurability; functions
measurable activity; measurable outcomes
measurable outcomes; measurable activity
line units; measurable activity
experiences.
19.
(p. 290
)
A(n) _______ does not necessarily communicate the real difference in the
importance of objectives.
A.
B.
C.
D.
simple flow
simple ranking
statistical measure
established priority
experiences.
20.
Words like "primary," "top," and "secondary," may be used to indicate:
(p. 289
)
A.
B.
C.
D.
Measurability
Priority
Strategic objectives
Difficulty: 1 Easy
experiences.
21.
(p. 290
)
Some firms assign ____ to establish and communicate the relative priority of
objectives.
A.
B.
C.
D.
rewards
objectives
weights
policies
Difficulty: 1 Easy
experiences.
22.
(p. 290
)
The link between short-term and long-term objectives should resemble ________
through the firm from basic long-term objectives to specific short-term objectives
in key operation areas.
A.
B.
C.
D.
cascades
building blocks
small barriers
fences
experiences.
23.
(p. 290
)
Short-term objectives and action plans give operating personnel a better

understanding of their role in the firm's ______.
A.
B.
C.
D.
goals
financial performance
strategic management
mission
experiences.
24.
(p. 291
)
A benefit of short-term objectives and action plans comes from the __________. If
this is done and managers participate, short-term objectives and action plans
provide valid bases for addressing and accommodating conflicting concerns that
might interfere with strategic effectiveness.
A.
B.
C.
D.
process development
strategy development
strategic control
clarity of purpose
Difficulty: 3 Hard
experiences.
25.
(p. 291
)
Functional tactics translate thought (______) into action designed to accomplish

specific short-term objectives.
A.
B.
C.
D.
policies
mission
vision
grand strategy
Difficulty: 3 Hard
experiences.
26.
(p. 291
)
One benefit of short-term objectives and action plans is that they provide a
__________. They can provide clear, measurable mechanisms for developing
budgets, schedules and trigger points, which help control the implementation of
strategy.
A.
B.
C.
D.
basis for strategy evaluation

basis for motivation
basis for strategy implementation
basis for strategic control
Difficulty: 3 Hard
experiences.
27.
(p. 291
)
One benefit of short-term objectives and action plans is its _________, which
clarifies personal and group roles in a firm's strategies and help realistically
challenge managers to perform well. These objectives are particularly effective
when linked to the firm's reward structure.
A.
B.
C.
D.
motivational payoff
structured clarity
compensation structure
complicated nature
experiences.
28.
(p. 291
)
________ are key, routine activities that must be undertaken in each functional
area.
A.
B.
C.
D.
Business tactics
Resource tactics
Functional tactics
Corporate tactics
Difficulty: 1 Easy
Learning Objective: 10-03 Illustrate what is meant by functional tactics and understand how they are used in
strategy implementation.
29.
(p. 291
)
Functional tactics translate _______ into action designed to accomplish specific

short-term objectives.
A.
B.
C.
D.
corporate strategy
grand strategy
competitive will
business strength
30.
(p. 291
)
Every ________ in a company executes functional tactics that support the business'
strategy and help accomplish strategic objectives.
A.
B.
C.
D.
competitive rivalry
supplier/customer
value chain activity
business unit manager
Difficulty: 1 Easy
31.
(p. 291
)
Which is NOT one of the differences between business strategies and functional
tactics?
A.
B.
C.
D.
Reinforcement of the strategy

Time horizon
Specificity
Participants who develop them
Difficulty: 3 Hard
32.
__________ identify activities to be undertaken now or in the immediate future.
(p. 291
)
A.
B.
C.
D.
Long-term tactics
Business strategies
Corporate strategies
Functional tactics
Difficulty: 1 Easy
33.
(p. 293
)
The ___________ of functional tactics allows functional managers to adjust to

changing current conditions.
A.
B.
C.
D.
shorter time horizon

focus on growth
specificity
business focus
34.
Business strategies provide _______ direction.
(p. 291
)
A.
B.
C.
D.
general
focused
generic
narrow
Difficulty: 1 Easy
35.
Functional tactics are more _________ than business strategies.
(p. 291
)
A.
B.
C.
D.
specific
focused on the general direction of the firm
focused on a commitment to corporate strategy
long-term
Difficulty: 1 Easy
36.
(p. 291
)
Which of the following is NOT a way that specificity in functional tactics contributes
to successful implementation?
A. Helping ensure that functional managers know what needs to be done and can
focus on accomplishing results
B. Limiting the need for top management's confidence in and sense of control over
C. Clarifying for top management how functional managers intend to accomplish
D. Facilitating coordination among operating units within the firm by clarifying
areas of interdependence and potential conflict
37.
(p. 294
)
Operating managers must establish short-term objectives and operating strategies

that contribute to:
A.
B.
C.
D.
Business-level goals
Corporate-level goals
Goals toward diversification
Specialization
Difficulty: 1 Easy
38.
(p. 294
)
Involving operating managers can increase the __________ of operating managers

to the strategies developed.
A.
B.
C.
D.
resistance
limitations
commitment
evaluation
Difficulty: 1 Easy
39.
Outsourcing starts for most firms with:
(p. 294
)
A.
B.
C.
D.
The outsourcing of production

The outsourcing of the marketing function
The outsourcing of payroll production
The outsourcing of corporate strategy decisions
Learning Objective: 10-04 Gain a general sense of what outsourcing is and how it becomes a choice of
functional tactics decisions for strategy implementation.
40.
(p. 294
)
__________ is defined as obtaining work previously done by employees inside the

companies from sources outside the company.
A.
B.
C.
D.
Specialization
Fragmentation
Outsourcing
Difficulty: 1 Easy
41.
(p. 274
)
__________ is acquiring an activity, service or product necessary to provide a

company's products or services from "outside" the people or operations controlled
by that acquiring company.
A.
B.
C.
D.
Specialization
Fragmentation
Outsourcing
Difficulty: 1 Easy
42.
Relentless cost cutting is the main force behind the trend of _____.
(p. 294
)
A.
B.
C.
D.
strategic planning
outsourcing
goal setting
globalization
Difficulty: 1 Easy
43.
_________ is the main force behind the outsourcing trend.
(p. 294
)
A.
B.
C.
D.
Relentless cost cutting

Achieving internal synergies
Better capital budgeting
Keeping control internal
44.
___________ is the most frequently outsourced functional activity at 75 percent.
(p. 295
)
A.
B.
C.
D.
Marketing
Payroll
Travel
HR
45.
(p. 296
)
________ is the act of allowing an individual or team the right and flexibility to make
decisions and initiate action.
A.
B.
C.
D.
Management
Micromanagement
Empowerment
Developing strategy
Difficulty: 1 Easy
Learning Objective: 10-05 Understand what policies are and how to use policies to empower operating
personnel in implementing business strategies and functional tactics.
46.
(p. 296
)
One way operating managers ensure decision making is consistent with the
mission, strategy and tactics of the business while allowing considerable latitude
to operating personnel is through the use of:
A.
B.
C.
D.
Empowerment
Policies
Strategic evaluation
Facilitating strategic design
47.
(p. 296
)
__________ are directives designed to guide the thinking, decisions and actions of
managers and their subordinates in implementing a firm's strategy.
A.
B.
C.
D.
Functional tactics
Action plans
Policies
Difficulty: 1 Easy
48.
One way operating managers _____ is through the use of policies.
(p. 296
)
A.
B.
C.
D.
outsource
strategize
politicize
empower
Difficulty: 1 Easy
49.
(p. 296
)
__________ increase managerial effectiveness by standardizing many routine

decisions and clarifying the discretion managers and subordinates can exercise in
implementing functional tactics.
A.
B.
C.
D.
Outsourcing
Standard operating procedures
Corporate cultures
Action plans
50.
_______ communicate guidelines to decisions.
(p. 296
)
A.
B.
C.
D.
Policies
Action plans
Functional tactics
Business strategy objectives
Difficulty: 1 Easy
51.
Policies are also sometimes called
(p. 296
)
A.
B.
C.
D.
standard operating procedures

action plans
functional tactics
business strategy objectives
Difficulty: 1 Easy
52.
(p. 296
)
Policies establish __________ over _________ by clearly stating how things are to be
done _________.
A.
B.
C.
D.
indirect control; dependent action; in the future

indirect control; independent action; now
direct control; independent action; in the future
direct control; dependent action; now
Difficulty: 3 Hard
53.
Policies establish __________ over independent action.
(p. 296
)
A.
B.
C.
D.
strategic control
indirect control
direct control
visionary control
Difficulty: 3 Hard
54.
Policies ________ basic aspects of organization behavior.
(p. 297
)
A.
B.
C.
D.
Negotiate
Institutionalize
Justify
Determine
55.
Policies ensure ______ action.
(p. 297
)
A.
B.
C.
D.
slower
quicker
indirect
loose
Difficulty: 3 Hard
56.
Policies counteract resistance to or rejection of chosen _______.
(p. 297
)
A.
B.
C.
D.
vision statements
strategies
mission statements
capabilities
Difficulty: 3 Hard
57.
Policies reduce _______ in day to day decision making.
(p. 297
)
A.
B.
C.
D.
The need for operating personnel

The number of routine problems
The speed with which decisions can be made
Uncertainty
58.
Policies may be ________ or _________.
(p. 298
)
A.
B.
C.
D.
written and informal; unwritten and formal

written and formal; unwritten and formal
written and formal; unwritten and informal
written and informal; unwritten and informal
Difficulty: 1 Easy
59.
Policies offer predetermined answers to _____ problems.
(p. 298
)
A.
B.
C.
D.
unique
formal
routine
informal
Difficulty: 1 Easy
60.
Which of the following is NOT a benefit of formal, written policies?
(p. 298
)
A. They make variation in the treatment of individual problems more likely

B.
They reduce misunderstanding
C. They systematically enhance indirect control and organization-wide
coordination of the key purposes of policies
D. They communicate the authorization or sanction of policies more clearly
61.
The strategic ________ of policies can vary.
(p. 298
)
A.
B.
C.
D.
direction
plan
significance
advantage
62.
(p. 298
)
Policies can be ________. One good example of this is the use of equal employment
opportunity practices.
A.
B.
C.
D.
internally derived
negative
externally imposed
very simple in nature
63.
The ______ significance of policies can vary.
(p. 298
)
A.
B.
C.
D.
visionary
routine
strategic
important
64.
________ theoretically reward(s) the actions of people within an organization.
(p. 299
)
A.
B.
C.
D.
Development
Compensation
Policies
Action plans
Difficulty: 1 Easy
Learning Objective: 10-06 Understand the use of financial reward in executive compensation.
65.
Policies can be externally imposed or ______.
(p. 299
)
A.
B.
C.
D.
stakeholder driven
mandated by stockholders
internally derived
mandated by the stock market
66.
The goal of an executive bonus compensation plan is to:
(p. 299
)
A. Motivate executives to achieve maximization of shareholder wealth

B. Motivate executives to achieve maximization of personal wealth
C.
Differentiate executives from other managers
D.
Ensure the success of the firm
67.
The goal of ______ is not the only goal that executives may pursue.
(p. 299
)
A.
B.
C.
D.
organizational policies
organizational rewards
managerial rewards
shareholder wealth maximization
Difficulty: 1 Easy
68.
The success of bonus compensation as an incentive hinges on:
(p. 299
)
A.
The executive in question
B.
The success of the firm
C. The match between the plan and the firm's strategic objectives
D. The positive link between shareholder wealth and personal wealth
maximization
69.
A common measure of shareholder wealth creation is appreciation of company
(p. 299
)
A.
B.
C.
D.
revenues
stock price
employees
stockholders
Learning Objective: 10-07 Identify different types of executive compensation and when to use each in strategy
implementation.
70.
(p. 299
)
______ provide the executive with the right to purchase company stock at a fixed
price in the future.
A.
B.
C.
D.
Golden handcuffs
Stock options
Golden parachutes
implementation.
71.
A common measure of _______ creation is appreciation of company stock price.
(p. 299
)
A.
B.
C.
D.
shareholder wealth
revenue
sales
job
Difficulty: 3 Hard
implementation.
72.
Stock options have typically represented _______ of a CEO's average pay package.
(p. 299
)
A.
B.
C.
D.

Difficulty: 3 Hard
implementation.
73.
______ dilute shareholders' equity when they are exercised.
(p. 299
)
A.
B.
C.
D.
Golden handcuffs
Stock options
Golden parachutes
implementation.
74.
The rationale behind golden handcuffs is that the plan:
(p. 300
)
A. Promotes longer executive tenure than other forms of compensation

B. Offsets the limitations of focusing on market-based measures of performance
C. Offers an incentive for executives to remain with the firm
D. Provides incentive for the executive to create wealth for shareholders as
measured by increase in the firm's share price
Difficulty: 3 Hard
implementation.
75.
(p. 300
)
There is a weak correlation between earnings measures and shareholder wealth

creation with the use of a:
A.
B.
C.
D.
Golden handcuffs plan

Cash based plan
Stock option grant
Difficulty: 3 Hard
implementation.
76.
Golden handcuffs:
(p. 300
)
A. Have no downside risk to executives, who always profits unlike other

shareholders
B. Have a weak correlation between earnings measures and shareholder wealth
creation
C. Make it hard to explain the dimensions of managerial performance using the
movement in share price
D. May promote risk-averse decision making due to the downside risk borne by the
executive
Difficulty: 3 Hard
implementation.
77.
(p. 300
)
________ provide incentive for the executive to create wealth for shareholders as
measured by increases in the firm's share price.
A.
B.
C.
D.
Stock option grants

Golden handcuffs
Golden parachutes
Cash-based plans
Difficulty: 3 Hard
implementation.
78.
(p. 300
)
__________ are much easier to value than options because they are equivalent to a
stock transfer at the market price.
A.
B.
C.
D.
Restricted stock grants

Golden handcuffs
Golden parachutes
Cash plans
implementation.
79.
(p. 300
)
________ offers employees more certainty, even if there is less potential for a big
win.
A.
B.
C.
D.
The use of stock options

A golden parachute
Stock grants
Restricted stock
implementation.
80.
A ________ is designed to provide benefits of direct executive stock ownership.
(p. 300
)
A.
B.
C.
D.
restricted stock plan

cash based plan
golden parachute
golden handcuffs plan
Difficulty: 1 Easy
implementation.
81.
Restricted stock plans offer:
(p. 300
)
A.
B.
C.
D.
Higher downside risk to executives

More limited downside risk to executives
No downside risk to executives
Limited upside risk to executives
implementation.
82.
(p. 300
)
__________ represent a form of executive compensation where compensation is

deferred.
A.
B.
C.
D.
Golden handcuffs
Golden parachutes
Golden stock options
Unrestricted stock options
Difficulty: 1 Easy
implementation.
83.
(p. 300
)
If the executive quits, is fired or simply retires, he would be best protected by a

_________, which is designed to retain talented executives.
A.
B.
C.
D.
golden handcuff
golden parachute
cash based plan
stock option
Difficulty: 1 Easy
implementation.
84.
(p. 305
)
_______ are executive bonus compensation plans that focus on accounting

measures of performance and are designed to offset the limitations of marketbased measures of performance.
A.
B.
C.
D.
Cash restricted plans

Golden handcuffs
Cash-based plans
implementation.
85.
(p. 305
)
A firm with a strategic goal of growing the share price incrementally should
implement a:
A.
B.
C.
D.

Stock option plan
Cash-based plan
Golden parachute
implementation.
86.
(p. 306
)
A firm with a strategic goal of reducing executive turnover would use _________ to
provide an incentive for longer executive tenure.
A.
B.
C.
D.
cash
stock options
golden parachutes
golden handcuffs
Difficulty: 1 Easy
implementation.
87.
(p. 306
)
A firm seeking to globalize operations would use ________ as its bonus

compensation plan.
A.
B.
C.
D.

golden parachutes
golden handcuffs
stock options
implementation.
88.
(p. 306
)
A firm with a strategic goal of streamlining operations should use ________ to

reward the long-term focus on efficiency and cost control.
A.
B.
C.
D.

stock options
cash
golden parachutes
implementation.
Essay Questions
89.
How do short-term objectives help implement strategy?
Please refer to the discussion titled "Short-Term Objectives," on pages 288-289.
90.
What are three important qualities of effective short-term objectives? Briefly

describe each of these in your answer.
Please refer to the discussion titled "Qualities of Effective Short-Term Objectives"

on pages 289-291.
experiences.
91.
What are functional tactics? Briefly describe them and provide one example of
their use.
Please refer to the discussion titled "Functional Tactics That Implement Business
Strategies," on page 291.
92.
In what three fundamental ways do functional tactics differ from business or

corporate strategies? Briefly describe each.
Please refer to the discussion titled "Differences between Business Strategies and
Functional Tactics," on pages 291-294.
93.
What is outsourcing? What are the benefits and risks of outsourcing?
Please refer to the discussion titled "Outsourcing Functional Activities" on pages

294-295.
94.
What does it mean to empower employees? How are policies related to the idea of
empowerment?
Please refer to the discussion titled "Empowering Operating Personnel: The Role of
Policies," on page 296.
95.
How can policies control decisions while defining allowable discretion in which
operating personnel can execute business strategies? Describe several ways.
Please refer to the discussion titled "Creating Policies That Empower," on pages
296-299.
96.
What are stock options? How do they motivate executives and key employees to
Please refer to the discussion titled "Stock options," on pages 299-302.
implementation.
97.
What are restricted stock options? How do they motivate executives and key
Please refer to the discussion titled "Restricted Stock" on pages 302-303.
implementation.
98.
What are golden handcuffs? How do they motivate executives and key employees
to achieve maximization of shareholder wealth?
Please refer to the discussion titled "Golden Handcuffs," on page 303.
implementation.
99.
What are golden parachutes? How do they motivate executives and key
Please refer to the discussion titled "Golden Parachutes," on pages 303-305.
implementation.
100. Briefly match the appropriate type of bonus compensation to the strategic goal
being pursued. What is the rationale behind these match-ups?
Please refer to the figure in the text titled "Exhibit 10.12, Compensation Plan
Selection Matrix," on page 306.
implementation.

MGT 498 Chapter 10 Answers

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Chapter 10

Multiple Choice Questions

"do the work"

3. ___________ are measurable outcomes achievable or intended to be achieved in one

4. Short-term objectives are usually:

Completed within two months

5. Short-term objectives __________ long-term objectives.

limit the effectiveness of

Need little coordination

8. Short-term objectives assist strategy implementation by identifying measurable

More relevant and acceptable

9. Short-term objectives are usually accompanied by subsequent:

10. _______ are usually accompanied by subsequent action plans.

13. Which of the following is NOT an example of a quality of effective short-term

14. Difficulties in quantifying objectives often can be overcome by initially focusing on

line units; function

18. Difficulties in quantifying objectives can often be overcome by initially focusing on

basis for strategy evaluation

Reinforcement of the strategy

32. __________ identify activities to be undertaken now or in the immediate future.

shorter time horizon

34. Business strategies provide _______ direction.

35. Functional tactics are more _________ than business strategies.

39. Outsourcing starts for most firms with:

The outsourcing of production

41. __________ is acquiring an activity, service or product necessary to provide a

43. _________ is the main force behind the outsourcing trend.

Relentless cost cutting

44. ___________ is the most frequently outsourced functional activity at 75 percent.

49. __________ increase managerial effectiveness by standardizing many routine decisions

50. _______ communicate guidelines to decisions.

51. Policies are also sometimes called

standard operating procedures

indirect control; dependent action; in the future

53. Policies establish __________ over independent action.

54. Policies ________ basic aspects of organization behavior.

55. Policies ensure ______ action.

56. Policies counteract resistance to or rejection of chosen _______.

57. Policies reduce _______ in day to day decision making.

The need for operating personnel

58. Policies may be ________ or _________.

written and informal; unwritten and formal

59. Policies offer predetermined answers to _____ problems.

60. Which of the following is NOT a benefit of formal, written policies?

A. They make variation in the treatment of individual problems more likely

63. The ______ significance of policies can vary.

64. ________ theoretically reward(s) the actions of people within an organization.

65. Policies can be externally imposed or ______.

66. The goal of an executive bonus compensation plan is to:

A. Motivate executives to achieve maximization of shareholder wealth

68. The success of bonus compensation as an incentive hinges on:

71. A common measure of _______ creation is appreciation of company stock price.

less than 30 percent

73. ______ dilute shareholders' equity when they are exercised.

74. The rationale behind golden handcuffs is that the plan:

A. Promotes longer executive tenure than other forms of compensation

Golden handcuffs plan

76. Golden handcuffs:

Stock option grants

Restricted stock grants

The use of stock options

80. A ________ is designed to provide benefits of direct executive stock ownership.

restricted stock plan

81. Restricted stock plans offer:

58. Policies may be or _.

Policies may be or _.