Implementing Strategy Through Resource Allocation

Chapter 11 Test Bank
Student: ___________________________________________________________________________
1. A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the
appropriate organizational units is important to the strategy execution process because:
A. changes in strategy often require resource reallocation, and organizational units need the proper funding to carry
out their part of the strategic plan effectively and efficiently.
B. accurate budgets are the key to exercising tight financial controls over what organization units can and cannot do
in carrying out management's directives to execute the chosen strategy proficiently.
C. tight budget control is management's most powerful tool for first-rate strategy
execution.
D. lean, carefully managed budgets protect the company's financial condition and eliminate the wasteful
use of cash.
E. lean, strictly enforced budgets are management's best and most used means of getting organizational units to
exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner.
2. Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and
resource allocation process because of all the following reasons EXCEPT:
A. too little funding deprives organizational units of the necessary resources to execute their piece of the strategic
plan while too much funding wastes organizational resources and reduces financial performance.
B. resource allocation involves screening of requests for people, facilities and equipment, and approving them,
whether they contribute to the strategy execution effort or not.
C. without major budget reallocations there is little chance that desired core competencies and organizational
capabilities will emerge.
use of cash.
E. a change in strategy nearly always calls for budget reallocations and resource
shifting.
3. From a strategy-implementing/strategy-executing perspective, operating budget allocations should:
A. primarily be based on the number of new strategic initiatives being implemented in each operating
department.
B. be based on the number of people employed in each of the
divisions.
C. be strategy-driven and based on how much each organizational unit needs to carry out its piece of the strategic
plan efficiently and effectively.
D. be linked to the costs of performing value chain activities as determined by benchmarking against best-in-
industry competitors.
E. depend on how much stretch there is in each department's objectives and what additional resources are needed
to help reach these performance targets.
4. New strategies often entail budget reallocations because:
A. revamping the performance of value chain activities can be

costly.
B. the accompanying policy revisions and compensation incentives tend to require different levels of funding
than before.
C. business units important in the prior strategy but having a lesser role in the new strategy may need downsizing,
while units and activities that now have a bigger and more critical strategic role may need more people, new
equipment, additional facilities, and above-average increases in their operating budgets.
D. empowering employees to carry out the new strategy elements and shifting to a total quality management type
of culture to build skills in competent strategy execution typically require substantial new funding and budget
revisions.
E. adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall
resource requirements.
5. Visible actions to reallocate operating funds and move people into different and new organizational units:
A. can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big changes
in budgets cause among company personnel.
B. signal a determined commitment to strategic change and can help catalyze and give credibility to the
implementation process.
C. run the risk of inadvertently creating barriers to building the needed competencies and
capabilities.
D. tend to impede the task of empowering employees and shifting to a new, more strategy-
supportive culture.
E. are rarely necessary in implementing a new strategy unless the new strategy entails a radically different set of
value chain activities.
6. A company's operating budget must:
A. be strategy-driven in order to amply fund the performance of key value chain

activities.
B. be risk-averse, so as not to run the risk of inadvertently creating barriers to building the needed competencies
and capabilities.
C. be employee-driven to gain commitment to strengthening the company's core competencies and
competitive capabilities.
D. trim costs of key value chain activities to achieve cost efficiency in new strategic
initiatives.
E. follow traditional and time-tested methods of budgeting to support rapid adjustments
in strategy.
7. Merely fine-tuning the execution of a company's existing strategy normally requires :
A. big shifts of resources from one area to

another.
B. a larger allocation of resources to the
effort.
C. trimming costs and shifting resources to activities that have a higher
priority.
D. creativity in finding ways for cost reductions, i.e. ways to do less
with less .
E. cost-cutting in key value chain
activities.
8. Apple decides to reallocate resources by curtailing online ad budgets and investing heavily in scratch-resistant
Sapphire, the material that differentiates iPhone from competitive brands. What is MOST LIKELY the reason for
reallocation of resources?
A. Making critical value chain activities less

effective
B. Supporting the new strategic initiative of the
brand
C. Signalling commitment to online sales of the
brand
D. Signalling commitment to offline sales of the
brand
E. Impeding the efforts of rivals to hoard
Sapphire
9. Kimberly-Clark, the manufacturer of Kleenex tissues and Huggies diapers, streamlines its healthcare business by
listing Halyard Health as a separately traded company. The company's move is likely to:
A. promote healthcare wings of rival

companies.
B. increase the cost of manufacturing medical
devices.
C. curtail the cost of manufacturing medical
devices.
D. enhance the strategy execution capabilities of the
company.
E. increase the demand for personal protective
equipment.
10. Cavco Construction divests funds from its commercial property ventures to invest in gated community properties
close to New York, signaling a change of strategy. Which of the following statements about Cavco is most likely
true?
A. Cavco is impeding the efforts to proficiently execute the

strategy.
B. Cavco is merely fine-tuning its existing strategy to test
efficiency.
C. Cavco is marshalling resources to support new strategic
initiative.
D. Cavco is hampering work climate conducive for good strategy
execution.
E. Cavco is focusing on activities that are a low priority in the strategy
execution effort.
11. Well-conceived policies and operating procedures facilitate strategy execution in all of the following ways EXCEPT
they:
A. provide top-down guidance regarding how things are to

be done.
B. help ensure consistency in how execution-critical activities are
performed.
C. promote the creation of a work climate that facilitates good strategy
execution.
D. facilitate cost cutting (finding ways to do less with less) while undertaking new strategic
initiatives.
E. channel individual and group efforts along a strategy-
supportive path.
12. Prescribing policies and operating procedures aids the task of implementing strategy by:
A. helping ensure that worker eligibility for incentive bonuses is measured consistently and
awarded fairly.
B. fostering the use of best practices, TQM, Six Sigma, and continuous
improvement efforts.
C. acting as a powerful lever for changing employee attitudes about the need for a different incentive and
reward system.
D. helping build employee commitment to strengthening the company's core competencies and
E. placing limits on ineffective independent action and channelling efforts of individuals along a path more
conducive to good strategy execution and operating excellence.
13. Providing top-down guidance can aid the task of implementing strategy:
A. provided they promote greater use of and commitment to best practices and total quality
management.
B. because really effective internal policies and procedures are not easily duplicated by
other firms.
C. because astutely conceived policies or procedures can result in competitive
advantage.
D. by helping align the actions and behavior of company personnel with the requirements for good strategy
execution, placing limits on independent action, and helping overcome resistance to change.
E. by making it easier to impose tight budget controls and avoid wasting scarce
resources.
14. A useful guideline in designing strategy-facilitating policies and operating procedures is:
A. to prescribe enough policies to give organizational members clear direction in implementing strategy and to place
reasonable boundaries on their actions. This then empowers them to act within these boundaries in pursuit of
company goals.
B. that strictly enforced policies work better than loosely enforced
policies.
C. that more policies/procedures work better than fewer policies/procedures, and that strict enforcement always
beats lax enforcement.
D. to let individuals act in an empowered and self-directed way, subject only to the constraint that their actions and
behavior be ethical and in step with the corporate culture.
E. to prescribe enough policies and procedures that little is left to chance in performing value chain activities, and
employees should have no leeway to do things in a manner that deviates from the company's best-practices
standard.
15. Which of the following is NOT a benefit of prescribing policies and operating procedures to aid management's task
of implementing strategy?
A. Placing limits on independent action and helping overcome resistance

to change
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 of effort in how particular activities are performed in geographically scattered
organization units
16. In prescribing policies and procedures that facilitate independent action on the part of empowered employees for
good strategy execution companies need to do ALL of the following EXCEPT:
A. give organization members clear direction and place reasonable boundaries on

their actions.
B. empower employees to act within the company's set boundaries in pursuit of
company goals.
C. allow company personnel to act with some defined degree of freedom, especially when individual creativity and
initiative are more essential to good strategy execution than standardization and strict conformity.
D. institute policies that give employees substantial leeway to carry out activities the way they
think best.
E. produce policy manuals on strategy execution that prescribe exactly how daily operations are to be
conducted.
17. Which of the following exemplifies good strategy execution?
A. The policy document of Dominos ensures consistency in service behavior patterns

across outlets.
B. The policy document of Pizza Today allows for differences in product range and quality
across outlets.
C. The policy document of Boston Pizza leaves ample scope for each member of the staff to act
independently.
D. The policy document of Little Caesars discusses strategy but not the routines for running
the outlets.
E. The policy document of Pizza Inn is averse to standardization of the way activities are
performed.
18. Which of the following does NOT facilitate strategy execution?
A. Hyundai service centers follow same routines when receiving vehicles for
servicing.
B. Ford encourages staff to skip practices out of sync with the company's
mission.
C. General Motors showrooms have similar operating practices across
regions.
D. Chevrolet Service center replicates the caliber of customer service across
locations.
E. Renault is averse to standardization of the way activities are performed at its
service centers.
19. Company managers can significantly advance the cause of superior strategy execution by doing all of the following
EXCEPT:
A. employing best practices methods and using process management tools to drive continuous improvement in how
internal operations are conducted.
B. adopting benchmarking of the company's operating activities and business processes against "best-in-industry"
and "best in world" performers.
C. adopting "best-in-company" operating activities and processes when a company's various organizational units are
performing the same functions differently.
D. instituting operating practices that generate economies of scale and scope with current value
chain activities.
E. develop performance yardsticks for judging effectiveness and efficiency for particular value chain activities and
business processes deemed strategically critical.
20. A "best practice" refers to:
A. a policy or procedure that is unusually

effective.
B. a method of performing an activity or business process that consistently delivers superior results compared to
other approaches and that at least one company has demonstrated works particularly well in terms of delivering
operating excellence.
C. a strategy-critical activity that results in sustainable competitive
advantage.
D. a 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.
A. a method of 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.
B. the best-known procedure for performing a specific task or activity so as to achieve the lowest
possible costs.
C. performing activities in a manner that conforms to established industry
standards.
D. a company's core
competence.
E. performing a particular value chain activity in "world-class" fashion (one unmatched by any other company in
the world).
22. The idea behind benchmarking and best practices is to:
A. identify which companies are the best performers of a strategically relevant activity and then copy their
methods exactly.
B. search the world for a company that performs a strategically relevant task or value chain activity at the lowest
possible cost and then use business process reengineering techniques to try to meet or beat the costs of the
world's low-cost performer of that activity.
C. perform each activity in the industry value chain according to standard industry practice and then regularly
benchmark the company's performance to see if it is actually achieving the industry standard.
D. identify companies that are the best performers of an activity and then "adapt" their practices to fit the
company's own specific circumstances and operating requirements.
E. determine whether a company has a "world-class"
value chain.
23. The backbone of the process of identifying, studying, and implementing best practices is:
A. business process
reengineering
B. a corporate culture that has a core value of operating
excellence
C. benchmarki
ng
D. Six Sigma quality control
techniques
E. the innovative application of TQM
techniques
24. Which of the following is NOT a method that company managers can use to promote operating excellence in
performing value chain activities?
A. Utilize
benchmarking.
B. Adapt best
practices.
C. Install TQM and/or Six Sigma quality control
techniques.
D. Undertake business process
reengineering.
E. Adopt standard industry
techniques.
25. Which of the following is NOT a tool or method that managers can use to promote operating excellence and further
the cause of good strategy execution?
A. Benchmarkin
g
B. Business process
reengineering
C. Strategic resource
training
D. TQM and Six Sigma quality control
techniques
E. Best
practices
26. Because functional organization structures often result in pieces of strategically relevant activities and capabilities
being scattered across many different functional departments, companies have found that:
A. it is necessary to give these functional departments the freedom to collaborate closely with each other to
achieve the desired degree of coordination.
B. it is necessary to outsource those activities that are fragmented to strategic partners in order to achieve the
needed coordination.
C. there is merit in using business process reengineering to radically redesign and streamline strategy-critical
processes and workflow from different departments and unifying their performance into a single department or
cross-functional work group that has charge over the whole process.
D. TQM is a potent way to reengineer the work effort, avoid the shortcomings of a functional organization structure,
and achieve rapid-response capability.
E. it makes good organizational sense to combine those functional departments where fragmentation is a problem
into a single department.
27. Business process reengineering is a tool for:
A. expediting the redesign of existing products and shortening the design-to-

market cycle.
B. radically redesigning and streamlining how an activity (workflow) is performed, by pulling the pieces of strategy-
critical activities out of different departments and unifying their performance in a single department or cross-
functional work group.
C. instituting total quality
management.
D. making the most effective use of Six Sigma
techniques.
E. the rapid redesign of an organization's structure so as to quickly create organizational competencies and
capabilities.
28. 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 is in charge of the whole process.
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 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.
29. Total quality management (TQM):
A. entails creating a total quality culture that strives for continuously improving the performance of every value
chain activity and is driven by a philosophy of managing a set of business practices: 100 percent accuracy in
performing tasks (zero defects), involvement and empowerment of employees at all levels, team-based work
design, benchmarking, and total customer satisfaction.
B. is a valuable tool for helping company managers identify what the best practice is for performing a particular
activity at a high level of quality.
C. works best when used in conjunction with Six Sigma quality control
techniques.
D. is an excellent tool for reengineering business processes and making quantum gains in the efficiency and
effectiveness with which the processes are performed.
E. is a philosophy of doing things that aims at mistake-free management of a company's
entire business.
30. Total quality management (TQM) emphasizes all of the following EXCEPT which?
A. 100 percent accuracy in performing

tasks
B. Continuous improvement in all phases of
operations
C. Adoption of industry standard operating
practices
D. Benchmarking and total customer
satisfaction
E. Empowerment of employees and team-based work
design
31. Total quality management (TQM) programs:
A. deal exclusively with procedures to achieve defect-free manufacturing and

assembly.
B. nearly always contribute more to the achievement of operating excellence than either business process
reengineering or Six Sigma quality control techniques.
C. entail creating a corporate culture bent on continuously improving the performance of every task and every value
chain activity.
D. are considerably more effective in improving manufacturing and assembly activities than they are in improving
such value chain activities as R&D, human resources management, supply chain management, information
technology, sales, and marketing and finance.
E. are generally considered the best tool for reengineering strategy-critical business
processes.
32. Which of the following statements about total quality management (TQM) is FALSE?
A. TQM aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the
organization.
B. TQM produces significant results very quickly, with very little benefit emerging after the first six
months.
C. TQM doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility to
participate in continuous improvement.
D. Effective use of TQM entails creating a corporate culture bent on continuously improving the performance of
every task and every value chain activity.
E. Total quality management (TQM) is a philosophy of managing a set of business practices that emphasizes
continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and
empowerment of employees at all levels, team-based work design, benchmarking, and total customer
satisfaction.
33. Six Sigma programs:
A. utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of
business processes.
B. consist of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million
iterations for a manufacturing or assembly process.
C. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process
allows variability; and (3) defect-free work requires tight statistical controls.
D. suggest that all activities can be controlled, employee empowerment is the best control tool, and 100 percent
control is possible.
E. radically redesign and streamline how an activity is
performed.
34. Six Sigma quality control:
A. is a strategy implementer's best, most reliable tool for simultaneously achieving top-notch product quality and
low manufacturing costs.
B. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million
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.
35. Six Sigma processes:
A. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process
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
E. can be used for developing new products or new business processes but not for improving existing products or
business processes.
36. The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is:
A. an improvement system for existing processes falling below specification and needing incremental
improvement.
B. an improvement system used to develop new processes or products at 100 percent
defect-free levels.
C. a system of statistical procedures for achieving 100 percent control over how a task is
performed.
D. an improvement system used to develop new processes or products at Six
Sigma levels.
E. a system of statistical procedures for eliminating 100 percent of the variability in how a task is
performed.
37. Six Sigma's DMADV process of define, measure, analyze, design, and verify is a particularly good vehicle for:
A. improving performance when there are small variations in how well an activity is performed. If there are wide
variations, then the Six Sigma DMVSI process has to be used.
B. achieving 100 percent control over how a task is performed and eliminating 100 percent of the variability in how
a task is performed.
C. improving performance when there are wide variations in how well an activity is
performed.
D. developing new processes or products at Six Sigma quality
levels.
E. improving customer satisfaction, whereas Six Sigma improves manufacturing
processes.
38. The statistical thinking underlying Six Sigma is based on which of the following three principles?
A. All activities can be controlled, employee empowerment is the best control tool, and 100 percent
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, 100percent 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.
39. Which of the following statements about Six Sigma quality programs is true?
A. While Six Sigma programs often improve the efficiency of numerous operating processes, there is evidence that
the approach can stifle innovative activities.
B. Six Sigma is a philosophy of managing a set of business practices that emphasizes continuous improvement in all
phases of operations and 100 percent accuracy in performing tasks.
C. Six Sigma's DMAIC process is a particularly good vehicle for improving performance when there are only small
variations in how well an activity is performed.
D. The focus of Six Sigma programs is on the development of new products or new business processes but not on
improving existing products or business processes.
E. Six Sigma is a system of statistical procedures for eliminating 92 percent of the variability in how a task is
performed.
40. A company that successfully and methodically applies Six Sigma methods to its value chain, activity by activity, can:
A. clearly consider what it will take to overtake rivals with the industry's overall best
strategy.
B. make major strides in improving the proficiency with which its strategy is executed without sacrificing
innovation.
C. increase its bargaining power with suppliers and create better sellersupplier
collaborations.
D. assess the extent to which rivals have competitively valuable competencies or
capabilities.
E. construct a business model that entails a value proposition based
on quality.
41. An ambidextrous organization is one that:
A. pursues incremental improvements in operating efficiency, while R&D and other processes that allow the
company to develop new ways of offering value to customers are given freer rein.
B. is capable of using efficiency and effectiveness with
equal skill.
C. is very skillful and versatile with operating
activity.
D. is managed by employing continuous improvement in operating practices while managing employees as a loosely
integrated network of efficiency.
E. employs identical improvement methods for both operating processes
and R&D.
42. The big difference between business process reengineering and continuous improvement programs like TQM or Six
Sigma is that:
A. reengineering is a tool for installing process organization, whereas TQM/Six Sigma concern defect-free production
methods and delivering world-class customer service.
B. reengineering helps create core competencies, whereas TQM/Six Sigma are tools for making a core competence
stronger and more efficient.
C. reengineering is a tool for achieving one-time quantum improvement, whereas TQM and Six Sigma programs aim
at ongoing incremental improvements.
D. business process reengineering requires benchmarking, whereas TQM and Six
Sigma do not.
E. reengineering represents an effort to totally revamp a firm's value chain, whereas TQM looks at incrementally
improving the performance of two or three targeted value chain activities and Six Sigma is primarily for reducing
manufacturing defects.
43. To obtain maximum benefits from benchmarking, best practices, reengineering, TQM, and Six Sigma programs
aimed at facilitating better strategy execution, managers need to:
A. start with a clear idea of what specific outcomes really matter, such as a Six Sigma defect rate or superior
customer satisfaction, and then build a total quality culture that is genuinely committed to achieving these
outcomes.
B. have annual contests to see which part of the company is making the greatest strides in approaching
C. strive for 100 percent control over the variability in how each and every value chain activity is
performed.
D. have at least 50 percent of company personnel earn "green belts" in Six Sigma
techniques.
E. build core competencies in TQM, Six Sigma, benchmarking, best practices adoption, and business process
reengineering.
44. Without a strategic framework, managers lack the context in which to:
A. fix things that really matter to business-unit performance and

competitive success.
B. carry out company-wide goals related to the dynamics of a single
business model.
C. employ the company's resources in the pursuit of sustainable competitive
advantage.
D. communicate aspirations for the
company.
E. analyze the emerging market opportunities more
precisely.
45. To build a total quality culture and achieve full value from the use of TQM or Six Sigma initiatives, managers can take
such action steps as:
A. signaling unequivocal and unyielding commitment to total quality, continuous improvement, 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 percent accurate individual performance rather than group or team
performance.
E. dismissing employees who repeatedly fail to achieve 100percent accuracy in their work after a 12-month
trial period.
46. Although it is relatively easy for rivals to implement process management tools, it is much more difficult and time-
consuming for them to:
A. instill a deeply ingrained culture of operating

excellence.
B. keep employees well-informed about the strides being made with continuous
improvement.
C. unify the managerial efforts behind improving operating practices as a
commendable goal.
D. combine the pursuit of financial objectives with the pursuit of its strategic
objectives.
E. understand the barriers to installing new operating
activities.
47. Which of the following exemplifies one of the most widely used methods of gauging how well a company is
executing its strategy?
A. Merrill & Company has a disconnected organizational arrangement whereby pieces of an activity are performed
in different functional departments.
B. Oceania identifies agents of change who are convinced about sticking to the old ways of
doing things.
C. Honwell narrates success stories of rival brands to convince its personnel about
traditional wisdom.
D. Fizz-Cola judges the efficiency of internal operations by benchmarking them against best-in-industry
performers.
E. Motorola develops the data to measure how poorly rival brands perform against the best-practice standards
across industry.
48. Which of the following does NOT exemplify business process reengineering?
A. Blue Mountain creates teams of mixed-occupation freelancers to design

Christmas cards.
B. Speedmore integrates three distribution units to form a consolidated zonal
distribution center.
C. Bank of America automates global transaction services in a quest for operational
efficiencies.
D. PayPal segregates payment notification operations from mobile transfer operations to expand its
customer base.
E. Florida Power eliminates work depots, entrusting the task of repair to crew members in a
mobile van.
49. Which of the following takes the route of business process reengineering to attain operational excellence?
A. AT&T works toward creating a total quality culture by continuously reviewing the performance of every value
chain activity.
B. Acer Phones uses advanced statistical methods to remove the causes of defects at its
manufacturing units.
C. Ericsson introduces continuous-improvement business philosophy at its customer
care centers.
D. Cellkon pulls the pieces of an activity out of different departments to create a cross-functional
work group.
E. Honeywell strives to incrementally reduce defects through an ongoing
assessment process.
50. Which of the following makes use of Six Sigma programs to improve quality and strategy execution?
A. Memphis & Company applies advanced statistical methods to identify and remove the causes
of defects.
B. Milwaukee Hospital relocates its pathological lab to reach out to consumers in
suburbs.
C. LG Electronics reengineers its value chain activities by creating cross-functional
teams.
D. La Tagliata Boutiques offers a different range of products at different outlets across
London.
E. Duke Energy replaces work depots by mobile repair vans reducing operational costs by
40 percent.
51. Installing well-conceived, state-of-the-art support systems is 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.
52. Well-conceived, state-of-the-art information and operating systems:
A. are essential because business process reengineering efforts, TQM, Six Sigma, and benchmarking programs can't
be carried out effectively without them.
B. not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to
provide a competitive edge over rivals).
C. make it simple and easy to spot cost overruns and
inefficiencies.
D. are valuable tools for shortening a company's value chain, boosting workforce morale and productivity, and
simplifying the task of adopting best practices.
E. help managers run a tight ship and preserve strong, centralized control over
internal activities
53. The broad areas that internal information business systems need to cover include all of the following EXCEPT:
A. financial performance
data.
B. supplier/strategic partner
data.
C. customer
data.
D. operations
data.
E. competitor
data.
data.
B. corporate culture
data.
C. customer
data.
D. operations
data.
E. employee
data.
55. Information systems provide managers with a means for monitoring all of the following EXCEPT:
A. the results that flow from the actions of

subordinates.
B. the performance of empowered
workers.
C. weekly operating
statistics.
D. employees with over-the-shoulder
supervision.
E. daily operating
statistics.
56. Which of the following is NOT integral to superior strategy execution and operating excellence?
A. Having real-time information systems that permit company managers to stay on top of implementation initiatives
and daily operations and to intervene if things seem to be drifting off course
B. Having state-of-the-art operating systems, information systems, and real-
time data
C. Having access to online systems that provide statistical information about operating
activities
D. Having the systems capability to identify and diagnose problems, so as to take
corrective actions
E. Having access to employee data of
competitors
57. Which of the following is NOT a recommended way for managers to monitor the operating performance of
employees to ensure superior strategy execution?
A. Scrutinizing daily and weekly operating statistics without resorting to constant over-the-shoulder
supervision
B. Utilizing self-managed work groups in peer-based control
environments
C. Removing some layer of management hierarchy and relying on strong peer pressure to keep team members
operating between the white lines
D. Leaving employees to their own devices in meeting performance
standards
E. Using information systems capability to monitor team performance in
real time
58. A company wants to plan a state-of-the-art information and operating system to enable better strategy execution.
Which of the following is the most likely reason for the company's move?
A. It wants to embrace modern

technology.
B. It wants to gain a competitive edge over
rivals.
C. It wants to spot cost overruns and
inefficiencies.
D. It wants to increase workforce productivity and
retention.
E. It wants to boost management
morale.
59. Management's most powerful tool for mobilizing organizational commitment to competent strategy execution and
operating excellence is the:
A. diligent and persistent use of benchmarking and best

practices.
B. proper use of a reward structure with motivational
incentives.
C. implementation of TQM and/or Six Sigma
programs.
D. periodic giving of inspirational speeches aimed at arousing employees'
emotional energy.
E. process of providing employees with a high degree of job security (ideally, via a no-layoff
policy).
60. Management's most powerful tool for winning employee commitment to good strategy execution is:
A. the establishment of strategy-supportive policies and

procedures.
B. empowering employees and encouraging them to adopt best
practices.
C. setting stretch
objectives.
D. a structure of rewards and incentives tied tightly to the achievement of the organization's
strategic priorities.
E. aggressive use of TQM and Six Sigma quality control
programs.
61. The strategic role of a company's reward system is to:
A. compensate employees for performing their assigned duties in a diligent

fashion.
B. boost employee morale in ways that create widespread job
satisfaction.
C. enlist employees' commitment to successful strategy execution by rewarding them, both monetarily and non-
monetarily, for their valuable contributions.
D. relieve managers of the burden of closely monitoring each employee's
performance.
E. boost labor productivity and help lower the firm's overall
labor costs.
62. Reward and incentive systems serve as a(n):
A. direct stimulus for satisfying the basic expectations of the standard job and
mechanisms.
B. indirect motivational tool designed to convert employee commitment into high-powered
incentives.
C. indirect type of control mechanism that conserves on more costly control mechanisms of
supervisory oversight.
D. direct base-pay financial compensation mechanism that competes with rival companies' salary bands for similar
work efforts.
E. negative motivational
element.
63. Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the
strategic priorities and financial objectives is best done by:
A. having top executives commit to making employees the company's most valuable
competitive asset.
B. developing core competencies in the use of TQM, Six Sigma programs, and business process
reengineering.
C. resourceful and effective use of motivational incentives, both monetary and
nonmonetary.
D. clever and innovative use of benchmarking and best
practices.
E. providing employees with a high degree of job security and
attractive perks.
64. In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence,
managers are well advised to use all of the following incentives EXCEPT:
A. providing attractive perks and fringe

benefits.
B. giving awards and public recognition to high performers and showcasing company
successes.
C. creating a work atmosphere in which there is genuine caring and mutual respect among workers and between
management and employees.
D. relying on opportunities for promoting from within wherever
possible.
E. .withholding information from employees about financial performance, strategy, and
competitors' actions.
65. Which of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to good
strategy execution?
A. Strictly enforcing all rules in the employee handbook with the use
of fines.
B. Giving awards and public recognition to high performers and showcasing company
successes.
C. Providing a comfortable and attractive working
environment
D. Providing opportunities for promotion from within wherever
possible
E. Providing attractive perks and fringe
benefits
66. A motivation and incentive system that is aimed at spurring stronger employee commitment to good strategy
execution:
A. should focus on incorporating more positive than negative motivational

elements.
B. should be tied first and foremost to whether employees satisfactorily perform their assigned duties in an ethical
and honorable manner.
C. must involve deliberately assigning employees heavy workloads and tight
deadlines.
D. 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.
67. From the standpoint of promoting successful strategy execution, it is important that the firm's motivation and
reward system:
A. be completely free of such elements as tension, pressure, anxiety, job insecurity, and tight deadlinesa no-
pressure/no-adverse-consequences work environment is essential.
B. emphasize only positive types of
rewards.
C. accentuate positive rewards but also carry out the "up-or-out" policy for performance that does not meet
expectations.
D. not deny rewards to employees who put forth good effort and try hard, though
performance is subpar.
E. reduce job insecurity and give employees an incentive to stay busy and
work hard.
68. A reward system that accentuates positive rewards for good performance:
A. works best in strong culture organizations, while negative motivational approaches and reward systems tend to
be most successful in weak culture organizations.
B. is especially effective in aligning the well-being of organizational members with achieving the company's
performance targets; reward systems with negative elements tend to be very dysfunctional in motivating
employees.
C. seldom works very well because the threat of denying rewards to sub-par performers is typically the most
powerful motivator.
D. works fine so long as 100 percent emphasis is placed on monetary
incentives.
E. has considerable appeal because when cooperation is positively enlisted and rewarded, rather than strong-armed
by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication, creativity,
and initiative.
69. A no-pressure/no-adverse-consequences work environment does not necessarily lead to:
A. superior strategy execution or operating

excellence.
B. satisfactory outcomes because there is always a cadre of ambitious people who relish the
challenge.
C. workforce morale
issues.
D. establishing more positive than negative motivational reward
elements.
E. excessive shortfall in
performance.
70. To create a strategy-supportive system of rewards and incentives, a company must:
A. reward people for accomplishing results, not just for dutifully performing
assigned tasks.
B. focus jobholders' attention and energy on what to do as opposed to what
to achieve.
C. demand jobholders' 100 percent attendance since it
guarantees results.
D. hold jobholders' responsible for their function and not burden them with being
accountable.
E. incorporate negative motivational elements to assure
results.
71. Motivational and incentive compensation practices that aim at winning the commitment of company personnel to
good strategy execution typically:
A. use only positive rewards and never involve the use of tension, fear, job insecurity, stress,
or anxiety.
B.
entail decidedly positive rewards for meeting or beating performance targets, but also impose sufficiently
negative consequences when actual performance falls short of the target.
C. aim at creating a no-pressure/no-adverse-consequences work

environment.
D. entail paying the highest wages and salaries in the industry for all jobholder positions and also stressing
nonmonetary rewards, like cash bonuses for high-performing employees.
E. put top priority on making employees happy and secure in
their jobs.
72. The first principle in designing an effective compensation system and the most dependable way to keep people
focused on strategy execution and the achievement of performance targets is to:
A. establish ethical compensation policies and convince employees that they are the firm's most valuable
competitive asset.
B. design monetary and nonmonetary incentives that boost labor productivity and help lower the firm's
overall labor costs.
C. generously reward and recognize people who meet or beat performance targets and to deny rewards and
recognition to those who don't.
D. pay employees a bonus for each strategic and financial objective that the company
achieves.
E. allow employees to propose what rewards they would like to receive to achieve the company's
stretch objectives.
73. A well-designed reward system:
A. ties rewards to performance outcomes directly linked to good strategy execution and the achievement of
financial and strategic objectives.
B. should be free of elements that induce stress, anxiety, tension, pressure to perform, and
job insecurity.
C. puts the primary emphasis on denying rewards to those who fail to perform tasks in the
prescribed fashion.
D. emphasizes weeding out employees who are average
performers.
E. strives for a 50-50 balance between positive and negative rewards and a 50-50 balance between monetary and
nonmonetary rewards.
74. An important consideration in designing a strategy-supportive reward system is to:
A. link the payment of all monetary rewards to the company's bottom-line

profitability.
B. employ incentives that will help motivate employees to put in long hours and sacrifice personal ambitions and
aspirations to pursue the priorities of management.
C. choose those types of rewards and incentives that will focus employees' attention on total customer
satisfaction.
D. make across-the-board wage and salary increases the cornerstone of
monetary rewards.
E. make nonmonetary rewards and recognition an integral part of the
reward system.
75. The guidelines for designing an incentive compensation system that will help drive successful strategy execution
include:
A. making the performance payoff a major, not minor, piece of the total
compensation package.
B. having incentives that apply to the management team (employees should generally not be included in incentive
pay plans but should have attractive wages and salaries).
C. having an outside wage and salary expert administer the system so there is no doubt as to its fairness and
impartiality.
D. basing the incentives on group performance rather than individual
performance.
E. making minimal use of nonmonetary incentives and rewarding people for diligently performing their
assigned duties.
76. Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote
good strategy execution?
A. The reward system must be administered with scrupulous objectivity and

fairness.
B. The payoff for meeting or beating performance targets must be a major, not minor, piece of the total
C. The incentive plan should extend to all managers and all employees, not just top
management.
D. The reward system must reward nonperformers who, despite expending tremendous effort, have not fared well
in achieving the benchmarks under the incentive system.
E. Make sure that the performance targets each individual or team is expected to achieve involve outcomes that the
individual or team can personally affect.
77. Which of the following is NOT characteristic of a compensation and reward system designed to help drive successful
strategy execution?
A. Tying incentives to performance outcomes directly linked to good strategy execution and financial
performance
B. Keeping the time between achieving the target performance outcome and the payment of the reward as
short as possible
C. Making sure that the performance targets that each individual or team is expected to achieve involve outcomes
that the individual or team can personally affect
D. Providing generous rewards for people who turn in outstanding
performances
E. Offering rewards that amount to 3 percent of an employee's total
compensation
78. The resolute standard for judging whether individuals, teams, and organizational units have done a good job must
be measured by:
A. comparing industry performance standards against the company's own

internal criteria.
B. the level of rapid growth in industry (buyer)
demand.
C. whether they meet or beat performance targets that reflect good strategy
execution.
D. the number of rivals existing in the marketplace and their growth
results.
E. the relative competitive strengths of the industry leaders and how vulnerable they are
to mimicry.
79. The managing director of a paper products company, wanted to introduce nonmonetary incentives to enhance
employee motivation and spur strategy execution. When presented with some ideas, he chose all of the following
EXCEPT:
A. rewarding employees even for subpar

performance.
successes.
C. providing a comfortable and attractive working
environment.
D. providing opportunities for promotion from within wherever
possible.
E. providing attractive perks and fringe
benefits.
80. The top management at a new social media technology company would like to revamp its incentive compensation
system to attract ambitious employees. What would be their best approach?
A. Make the performance bonus at least 3 to 4 percent of base salary to have

some impact.
B. Make the performance bonus at least 10 to 12 percent of base salary to have
some impact.
C. Make the performance payoff equal for average and below-average
performers.
D. Set unrealistic performance standards, but with an equally high
compensation.
E. Reward people who work very hard, even if they fall short of achieving
performance targets.
81. Why does a company's budget need to be closely linked to the needs of good strategy execution?
82. Identify and describe ways that policies and procedures facilitate strategy execution.
83. It is often said that benchmarking is the backbone of the process of identifying, studying, and implementing best
practices. Explain the role of benchmarking.
84. What is the value of total quality management (TQM) and how does it differ from business process reengineering?
85. Explain what Six Sigma quality control programs are and the two types of programs that they include.
86. What is the difference between Six Sigma DMAIC programs and Six Sigma DMADV programs?
87. What three principles underlie the statistical thinking of Six Sigma quality control programs?
88. With an example, explain how the Six Sigma process of define, measure, analyze, improve, and control (DMAIC)
works.
89. While Six Sigma programs often improve the efficiency of many operating activities and processes, there is evidence
that innovation can be stifled by Six Sigma programs. True or false? Explain.
90. What action steps can managers take to realize full value from TQM or Six Sigma initiatives and promote a culture of
operating excellence?
91. Company strategies cannot be implemented or executed well without a number of real-time state-of-the-art
support and control information systems to carry out business operations. Discuss the benefits of real-time systems
by industry.
92. Name the five broad areas that information systems need to cover and explain the significance of real-time tracking
and reporting.
93. Discuss control mechanisms that managers can use to monitor the performance of empowered employees.
94. The use of incentives and rewards is the single most powerful tool at management's disposal to win strong
employee commitment to carrying out the strategic plan. True or false? Explain.
95. Give any three nonmonetary examples of motivation and rewards practices that have the capability to foster good
strategy execution and explain how they act to produce such a result.
96. Why does it make sense to create some job anxiety, insecurity, and stress as part of a company's motivational and
reward scheme for promoting competent strategy execution?
97. Discuss why it is generally undesirable for approaches to motivation, compensation, and people management to
avoid the use of negative consequences or punishment if performance targets are not achieved or if particular
people are habitual underperformers. Does striking a balance between rewards and punishment generally work
better?
98. Focusing jobholders' attention and energy on what to do as opposed to what to achieve makes the work
environment results-oriented. True or false? Explain your answer.
99. In creating a strategy-supportive reward structure, it is important to define jobs and assignments in terms of the
results to be accomplished not just in terms of the duties to be performed. True or false? Explain and justify your
answer.
100. Identify five guidelines for creating an incentive compensation system that will help drive successful strategy
execution.
Chapter 11 Test Bank Key
1. A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the
appropriate organizational units is important to the strategy execution process because:
A. changes in strategy often require resource reallocation, and organizational units need the proper funding to
carry out their part of the strategic plan effectively and efficiently.
B. accurate budgets are the key to exercising tight financial controls over what organization units can and
cannot do in carrying out management's directives to execute the chosen strategy proficiently.
C. tight budget control is management's most powerful tool for first-rate strategy
execution.
use of cash.
E. lean, strictly enforced budgets are management's best and most used means of getting organizational units
to exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner.
A company's ability to marshal the resources needed to support new strategic initiatives has a major impact on
the strategy execution process. Too little funding and an insufficiency of other types of resources slow progress
and impede the efforts of organizational units to execute their pieces of the strategic plan proficiently. Too much
funding and an overabundance of other resources waste organizational resources and reduce financial
performance. Both outcomes argue for managers to be deeply involved in reviewing budget proposals and
directing the proper kinds and amounts of resources to strategy-critical organizational units. A change in strategy
nearly always calls for budget reallocations and resource shifting.
AACSB: Analytical Thinking

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01 Why resource allocation should always be based on strategic priorities.
Topic: Understanding the Importance of a Company's Resources
2. Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and
resource allocation process because of all the following reasons EXCEPT:
A. too little funding deprives organizational units of the necessary resources to execute their piece of the
strategic plan while too much funding wastes organizational resources and reduces financial performance.
B. resource allocation involves screening of requests for people, facilities and equipment, and approving them,
whether they contribute to the strategy execution effort or not.
C. without major budget reallocations there is little chance that desired core competencies and organizational
capabilities will emerge.
use of cash.
E. a change in strategy nearly always calls for budget reallocations and resource
shifting.
Early in the strategy implementation process, managers must determine what resources (in terms of funding,
people, and so on) will be required and how they should be distributed across the company's various
organizational units. This includes carefully screening requests for such resources, approving those that will
contribute to the strategy execution effort, and turning down those that don't.

Blooms: Understand
Difficulty: 2 Medium
3. From a strategy-implementing/strategy-executing perspective, operating budget allocations should:
A. primarily be based on the number of new strategic initiatives being implemented in each operating
department.
B. be based on the number of people employed in each of the
divisions.
C. be strategy-driven and based on how much each organizational unit needs to carry out its piece of the
strategic plan efficiently and effectively.
D. be linked to the costs of performing value chain activities as determined by benchmarking against best-in-
industry competitors.
E. depend on how much stretch there is in each department's objectives and what additional resources are
needed to help reach these performance targets.
Early in the strategy implementation process, managers must determine what resources (in terms of funding,
people, and so on) will be required and how they should be distributed across the company's various
organizational units. This includes carefully screening requests for such resources, approving those that will
contribute to the strategy execution effort, and turning down those that don't.

Blooms: Understand
Topic: The Role of Operating Budgets in Strategic Planning
4. New strategies often entail budget reallocations because:
A. revamping the performance of value chain activities can be

costly.
B. the accompanying policy revisions and compensation incentives tend to require different levels of funding
than before.
C. business units important in the prior strategy but having a lesser role in the new strategy may need
downsizing, while units and activities that now have a bigger and more critical strategic role may need more
people, new equipment, additional facilities, and above-average increases in their operating budgets.
D. empowering employees to carry out the new strategy elements and shifting to a total quality management
type of culture to build skills in competent strategy execution typically require substantial new funding and
budget revisions.
E. adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall
resource requirements.
A change in strategy nearly always calls for budget reallocations and resource shifting. Previously important units
with a lesser role in the new strategy may need downsizing. Units that now have a bigger strategic role may
need more people, new equipment, additional facilities, and above-average increases in their operating budgets.

Blooms: Understand
5. Visible actions to reallocate operating funds and move people into different and new organizational units:
A. can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big
changes in budgets cause among company personnel.
B. signal a determined commitment to strategic change and can help catalyze and give credibility to the
implementation process.
C. run the risk of inadvertently creating barriers to building the needed competencies and
capabilities.
D. tend to impede the task of empowering employees and shifting to a new, more strategy-
supportive culture.
E. are rarely necessary in implementing a new strategy unless the new strategy entails a radically different set
of value chain activities.
Visible actions to reallocate operating funds and move people into new organizational units signal a determined
commitment to strategic change. Such actions can catalyze the implementation process and give it credibility.

Blooms: Understand
6. A company's operating budget must:
A. be strategy-driven in order to amply fund the performance of key value chain

activities.
B. be risk-averse, so as not to run the risk of inadvertently creating barriers to building the needed
competencies and capabilities.
C. be employee-driven to gain commitment to strengthening the company's core competencies and
D. trim costs of key value chain activities to achieve cost efficiency in new strategic
initiatives.
E. follow traditional and time-tested methods of budgeting to support rapid adjustments
in strategy.
A company's operating budget must be strategy driven (in order to amply fund the performance of key value
chain activities).

Blooms: Understand
7. Merely fine-tuning the execution of a company's existing strategy normally requires :
A. big shifts of resources from one area to

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

Blooms: Understand
8. Apple decides to reallocate resources by curtailing online ad budgets and investing heavily in scratch-resistant
Sapphire, the material that differentiates iPhone from competitive brands. What is MOST LIKELY the reason for
reallocation of resources?
A. Making critical value chain activities less

effective
B. Supporting the new strategic initiative of the
brand
C. Signalling commitment to online sales of the
brand
D. Signalling commitment to offline sales of the
brand
E. Impeding the efforts of rivals to hoard
Sapphire

Blooms: Apply
9. Kimberly-Clark, the manufacturer of Kleenex tissues and Huggies diapers, streamlines its healthcare business by
listing Halyard Health as a separately traded company. The company's move is likely to:
A. promote healthcare wings of rival

companies.
B. increase the cost of manufacturing medical
devices.
C. curtail the cost of manufacturing medical
devices.
D. enhance the strategy execution capabilities of the
company.
E. increase the demand for personal protective
equipment.
Should internal cash flows prove insufficient to fund the planned strategic initiatives, then management must
raise additional funds through borrowing or selling additional shares of stock to investors. A company's ability to
marshal the resources needed to support new strategic initiatives has a major impact on the strategy execution
process.

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

strategy.
B. Cavco is merely fine-tuning its existing strategy to test
efficiency.
C. Cavco is marshalling resources to support new strategic
initiative.
D. Cavco is hampering work climate conducive for good strategy
execution.
E. Cavco is focusing on activities that are a low priority in the strategy
execution effort.
Visible actions to reallocate operating funds and move people into new organizational units signal a determined
commitment to strategic change. Merely fine-tuning the execution of a company's existing strategy seldom
requires big shifts of resources from one area to another. In contrast, new strategic initiatives generally require
not only big shifts in resources but a larger allocation of resources to the effort as well.

Blooms: Apply
Topic: Strategy and the Strategic Management Process
11. Well-conceived policies and operating procedures facilitate strategy execution in all of the following ways
EXCEPT they:
A. provide top-down guidance regarding how things are to

be done.
B. help ensure consistency in how execution-critical activities are
performed.
C. promote the creation of a work climate that facilitates good strategy
execution.
D. facilitate cost cutting (finding ways to do less with less) while undertaking new strategic
initiatives.
E. channel individual and group efforts along a strategy-
supportive path.
Well conceived policies and operating procedures facilitate strategy execution by providing top-down guidance
regarding how things are to be done; ensuring consistency in how execution-critical activities are performed;
promoting the creation of a work climate that facilitates good strategy execution; and channeling individual and
group efforts along a strategy-supportive path.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution.
Topic: Value of Strategic Leadership
12. Prescribing policies and operating procedures aids the task of implementing strategy by:
A. helping ensure that worker eligibility for incentive bonuses is measured consistently and
awarded fairly.
B. fostering the use of best practices, TQM, Six Sigma, and continuous
improvement efforts.
C. acting as a powerful lever for changing employee attitudes about the need for a different incentive and
reward system.
D. helping build employee commitment to strengthening the company's core competencies and
E. placing limits on ineffective independent action and channelling efforts of individuals along a path more
conducive to good strategy execution and operating excellence.
Well-conceived policies and operating procedures that facilitate strategy execution place limits on ineffective
independent action, and when well matched with the requirements of the strategy implementation plan, they
channel the efforts of individuals along a path that supports the plan.

Blooms: Understand
13. Providing top-down guidance can aid the task of implementing strategy:
A. provided they promote greater use of and commitment to best practices and total quality
management.
B. because really effective internal policies and procedures are not easily duplicated by
other firms.
C. because astutely conceived policies or procedures can result in competitive
advantage.
D. by helping align the actions and behavior of company personnel with the requirements for good strategy
execution, placing limits on independent action, and helping overcome resistance to change.
E. by making it easier to impose tight budget controls and avoid wasting scarce
resources.
Providing top-down guidance can help in the following ways: channel individual and group efforts along a
strategy-supportive path; align the actions and behavior of company personnel with the requirements for good
strategy execution; and place limits on independent action and help overcome resistance to change.

Blooms: Understand
14. A useful guideline in designing strategy-facilitating policies and operating procedures is:
A. to prescribe enough policies to give organizational members clear direction in implementing strategy and to
place reasonable boundaries on their actions. This then empowers them to act within these boundaries in
pursuit of company goals.
B. that strictly enforced policies work better than loosely enforced
policies.
C. that more policies/procedures work better than fewer policies/procedures, and that strict enforcement
always beats lax enforcement.
D. to let individuals act in an empowered and self-directed way, subject only to the constraint that their actions
and behavior be ethical and in step with the corporate culture.
E. to prescribe enough policies and procedures that little is left to chance in performing value chain activities,
and employees should have no leeway to do things in a manner that deviates from the company's best-
practices standard.
There is wisdom in a middle-ground approach where designing strategy-facilitating policies and operating
procedures is concerned: Prescribe enough policies to give organization members clear direction and to place
reasonable boundaries on their actions; then empower them to act within these boundaries in pursuit of
company goals.

Blooms: Understand
Topic: The Strategic Role of Managers in Strategy Formulation and Implementation
15. Which of the following is NOT a benefit of prescribing policies and operating procedures to aid management's
task of implementing strategy?
A. Placing limits on independent action and helping overcome resistance

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

Blooms: Understand
16. In prescribing policies and procedures that facilitate independent action on the part of empowered employees
for good strategy execution companies need to do ALL of the following EXCEPT:
A. give organization members clear direction and place reasonable boundaries on

their actions.
B. empower employees to act within the company's set boundaries in pursuit of
company goals.
C. allow company personnel to act with some defined degree of freedom, especially when individual creativity
and initiative are more essential to good strategy execution than standardization and strict conformity.
D. institute policies that give employees substantial leeway to carry out activities the way they
think best.
E. produce policy manuals on strategy execution that prescribe exactly how daily operations are to be
conducted.
Prescribe enough policies to give organization members clear direction and to place reasonable boundaries on
their actions; then empower them to act within these boundaries in pursuit of company goals. These policies
give employees substantial leeway to do activities the way they think best.

Blooms: Understand
17. Which of the following exemplifies good strategy execution?
A. The policy document of Dominos ensures consistency in service behavior patterns

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

Blooms: Apply
18. Which of the following does NOT facilitate strategy execution?
A. Hyundai service centers follow same routines when receiving vehicles for
servicing.
B. Ford encourages staff to skip practices out of sync with the company's
mission.
C. General Motors showrooms have similar operating practices across
regions.
D. Chevrolet Service center replicates the caliber of customer service across
locations.
E. Renault is averse to standardization of the way activities are performed at its
service centers.
A company's policies and procedures can either support or hinder good strategy execution. Anytime a company
moves to put new strategy elements in place or improve its strategy execution capabilities, some changes in
work practices are usually needed. Managers are thus well advised to carefully review existing policies and
procedures and to revise or discard those that are out of sync. A company's policies and procedures provide a
set of well-honed routines for running the company and executing the strategy. Policies and procedures serve to
standardize the way that activities are performed. This can be important for ensuring the quality and reliability
of the strategy execution process. It helps align and coordinate the strategy execution efforts of individuals and
groups throughout the organization. Good strategy execution nearly always entails an ability to replicate product
quality and the caliber of customer service at every location where the company does business.

Blooms: Apply
19. Company managers can significantly advance the cause of superior strategy execution by doing all of the
following EXCEPT:
A. employing best practices methods and using process management tools to drive continuous improvement in
how internal operations are conducted.
B. adopting benchmarking of the company's operating activities and business processes against "best-in-
industry" and "best in world" performers.
C. adopting "best-in-company" operating activities and processes when a company's various organizational
units are performing the same functions differently.
D. instituting operating practices that generate economies of scale and scope with current value
chain activities.
E. develop performance yardsticks for judging effectiveness and efficiency for particular value chain activities
and business processes deemed strategically critical.
Company managers can significantly advance the cause of competent strategy execution by adopting best
practices and using process management tools to drive continuous improvement in how internal operations are
conducted; by benchmarking the company's performance of particular activities and business processes against
"best-in-industry" and "best-in-world" performers; by looking at "best-in-company" performers of an activity if a
company has a number of different organizational units performing much the same function at different
locations; and by providing useful yardsticks for judging the effectiveness and efficiency of internal operations
and setting performance standards for organizational units to meet or beat.

Blooms: Remember
Learning Objective: 11-03 How best practices and process management tools drive continuous improvement in the
performance of value chain activities and promote superior strategy execution.
A. a policy or procedure that is unusually

effective.
B. a method of performing an activity or business process that consistently delivers superior results compared
to other approaches and that at least one company has demonstrated works particularly well in terms of
delivering operating excellence.
C. a strategy-critical activity that results in sustainable competitive
advantage.
D. a 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.
A "best practice" refers to a method of performing an activity or business process that consistently delivers
superior results compared to other approaches and that at least one company has demonstrated works
particularly well in terms of delivering operating excellence.

Blooms: Remember
A. a method of 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.
B. the best-known procedure for performing a specific task or activity so as to achieve the lowest
possible costs.
C. performing activities in a manner that conforms to established industry
standards.
D. a company's core
competence.
E. performing a particular value chain activity in "world-class" fashion (one unmatched by any other company
in the world).
A "best practice" refers to a method of performing an activity or business process that consistently delivers
superior results compared to other approaches and that at least one company has demonstrated works
particularly well in terms of delivering operating excellence.

Blooms: Remember
22. The idea behind benchmarking and best practices is to:
A. identify which companies are the best performers of a strategically relevant activity and then copy their
methods exactly.
B. search the world for a company that performs a strategically relevant task or value chain activity at the
lowest possible cost and then use business process reengineering techniques to try to meet or beat the costs
of the world's low-cost performer of that activity.
C. perform each activity in the industry value chain according to standard industry practice and then regularly
benchmark the company's performance to see if it is actually achieving the industry standard.
D. identify companies that are the best performers of an activity and then "adapt" their practices to fit the
company's own specific circumstances and operating requirements.
E. determine whether a company has a "world-class"
value chain.
Benchmarking is the backbone of the process of identifying, studying, and implementing best practices. It
involves identifying which companies are the best performers of an activity. These best practices of other
organizations must then be adapted to fit the specific circumstances of a company's own business, strategy, and
operating requirements.

Blooms: Understand
Topic: Tools to Analyze Operating Excellence
23. The backbone of the process of identifying, studying, and implementing best practices is:
A. business process
reengineering
B. a corporate culture that has a core value of operating
excellence
C. benchmarki
ng
D. Six Sigma quality control
techniques
E. the innovative application of TQM
techniques
Benchmarking is the backbone of the process of identifying, studying, and implementing best practices. It
involves identifying which companies are the best performers of an activity. These best practices of other
organizations must then be adapted to fit the specific circumstances of a company's own business, strategy, and
operating requirements.

Blooms: Remember
24. Which of the following is NOT a method that company managers can use to promote operating excellence in
performing value chain activities?
A. Utilize
benchmarking.
B. Adapt best
practices.
C. Install TQM and/or Six Sigma quality control
techniques.
D. Undertake business process
reengineering.
E. Adopt standard industry
techniques.
Benchmarking, best practices, TQM, Six Sigma, and business process reengineering are some tools and methods
to promote operating excellence in performing value chain activities.

Blooms: Understand
25. Which of the following is NOT a tool or method that managers can use to promote operating excellence and
further the cause of good strategy execution?
A. Benchmarkin
g
B. Business process
reengineering
C. Strategic resource
training
D. TQM and Six Sigma quality control
techniques
E. Best
practices
Benchmarking, best practices, TQM, Six Sigma, and business process reengineering are some tools and methods
to promote operating excellence in performing value chain activities and further the cause of good strategy
execution.

Blooms: Understand
26. Because functional organization structures often result in pieces of strategically relevant activities and
capabilities being scattered across many different functional departments, companies have found that:
A. it is necessary to give these functional departments the freedom to collaborate closely with each other to
achieve the desired degree of coordination.
B. it is necessary to outsource those activities that are fragmented to strategic partners in order to achieve the
needed coordination.
C. there is merit in using business process reengineering to radically redesign and streamline strategy-critical
processes and workflow from different departments and unifying their performance into a single department
or cross-functional work group that has charge over the whole process.
D. TQM is a potent way to reengineer the work effort, avoid the shortcomings of a functional organization
structure, and achieve rapid-response capability.
E. it makes good organizational sense to combine those functional departments where fragmentation is a
problem into a single department.
A company can reengineer the work effort, pulling the pieces of an activity out of different departments and
creating a single department or cross-functional work group to take charge of the whole process. The use of
cross-functional teams has been popularized by the practice of business process reengineering, which involves
radically redesigning and streamlining the workflow (often enabled by cutting-edge use of online technology and
information systems), with the goal of achieving quantum gains in performance of the activity.

Blooms: Understand
27. Business process reengineering is a tool for:
A. expediting the redesign of existing products and shortening the design-to-

market cycle.
B. radically redesigning and streamlining how an activity (workflow) is performed, by pulling the pieces of
strategy-critical activities out of different departments and unifying their performance in a single department
or cross-functional work group.
C. instituting total quality
management.
D. making the most effective use of Six Sigma
techniques.
E. the rapid redesign of an organization's structure so as to quickly create organizational competencies and
capabilities.
Business process reengineering involves radically redesigning and streamlining the workflow (often enabled by
cutting-edge use of online technology and information systems), with the goal of achieving quantum gains in
performance of the activity.

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

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

Blooms: Remember
30. Total quality management (TQM) emphasizes all of the following EXCEPT which?
A. 100 percent accuracy in performing

tasks
B. Continuous improvement in all phases of
operations
C. Adoption of industry standard operating
practices
D. Benchmarking and total customer
satisfaction
E. Empowerment of employees and team-based work
design
empowerment of employees at all levels, team- work design, benchmarking, and total customer satisfaction.

Blooms: Understand
Difficulty: 1 Easy
31. Total quality management (TQM) programs:
A. deal exclusively with procedures to achieve defect-free manufacturing and

assembly.
B. nearly always contribute more to the achievement of operating excellence than either business process
reengineering or Six Sigma quality control techniques.
C. entail creating a corporate culture bent on continuously improving the performance of every task and every
value chain activity.
D. are considerably more effective in improving manufacturing and assembly activities than they are in
improving such value chain activities as R&D, human resources management, supply chain management,
information technology, sales, and marketing and finance.
E. are generally considered the best tool for reengineering strategy-critical business
processes.
Total quality management (TQM) entails creating a total quality culture, involving managers and employees at all
levels, bent on continuously improving the performance of every value chain activity. It involves reforming the
corporate culture and shifting to a continuous-improvement business philosophy that permeates every facet of
the organization.

Blooms: Understand
Difficulty: 1 Easy
32. Which of the following statements about total quality management (TQM) is FALSE?
A. TQM aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the
organization.
B. TQM produces significant results very quickly, with very little benefit emerging after the first six
months.
C. TQM doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility
to participate in continuous improvement.
D. Effective use of TQM entails creating a corporate culture bent on continuously improving the performance of
every task and every value chain activity.
E. Total quality management (TQM) is a philosophy of managing a set of business practices that emphasizes
continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement
and empowerment of employees at all levels, team-based work design, benchmarking, and total customer
satisfaction.
empowerment of employees at all levels, team- work design, benchmarking, and total customer satisfaction. It
involves reforming the corporate culture and shifting to a continuous-improvement business philosophy that
permeates every facet of the organization. TQM aims at instilling enthusiasm and commitment to doing things
right from the top to the bottom of the organization. Management's job is to kindle an organization-wide search
for ways to improve that involves all company personnel exercising initiative and using their ingenuity. TQM
doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility to
participate in continuous improvement.

Blooms: Understand
Difficulty: 1 Easy
33. Six Sigma programs:
A. utilize advanced statistical methods to improve quality by reducing defects and variability in the performance
of business processes.
B. consist of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million
C. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process
D. suggest that all activities can be controlled, employee empowerment is the best control tool, and 100
percent control is possible.
E. radically redesign and streamline how an activity is
performed.
Six Sigma programs utilize advanced statistical methods to improve quality by reducing defects and variability in
the performance of business processes.

Blooms: Remember
34. Six Sigma quality control:
A. is a strategy implementer's best, most reliable tool for simultaneously achieving top-notch product quality
and low manufacturing costs.
B. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million
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.
the performance of business processes. When performance of an activity or process reaches "Six Sigma quality,"
there are no more than 3.4 defects per million iterations (equal to 99.9997 percent accuracy).

Blooms: Remember
35. Six Sigma processes:
A. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process
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
E. can be used for developing new products or new business processes but not for improving existing products
or business processes.
The Six Sigma process of define, measure, analyze, improve, and control (DMAIC, pronounced "de-may-ic") is an
improvement system for existing processes falling below specification and needing incremental improvement.
The Six Sigma process of define, measure, analyze, design, and verify (DMADV, pronounced "de-mad-vee") is
used to develop new processes or products at Six Sigma quality levels.

Blooms: Remember
Difficulty: 3 Hard
36. The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is:
A. an improvement system for existing processes falling below specification and needing incremental
improvement.
B. an improvement system used to develop new processes or products at 100 percent
defect-free levels.
C. a system of statistical procedures for achieving 100 percent control over how a task is
performed.
D. an improvement system used to develop new processes or products at Six
Sigma levels.
E. a system of statistical procedures for eliminating 100 percent of the variability in how a task is
performed.

Blooms: Understand
37. Six Sigma's DMADV process of define, measure, analyze, design, and verify is a particularly good vehicle for:
A. improving performance when there are small variations in how well an activity is performed. If there are
wide variations, then the Six Sigma DMVSI process has to be used.
B. achieving 100 percent control over how a task is performed and eliminating 100 percent of the variability in
how a task is performed.
C. improving performance when there are wide variations in how well an activity is
performed.
D. developing new processes or products at Six Sigma quality
levels.
E. improving customer satisfaction, whereas Six Sigma improves manufacturing
processes.
The Six Sigma process of define, measure, analyze, design, and verify (DMADV, pronounced "de-mad-vee") is
used to develop new processes or products at Six Sigma quality levels.

Blooms: Understand
38. The statistical thinking underlying Six Sigma is based on which of the following three principles?
A. All activities can be controlled, employee empowerment is the best control tool, and 100 percent
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, 100percent control is possible, and every well-controlled
process is defect-free.
E. Most business processes are subject to control, Six Sigma can totally remove variability in how processes are
performed, and most defects can be eliminated.
The statistical thinking underlying Six Sigma is based on the following three principles: (1) All work is a process,
(2) all processes have variability, and (3) all processes create data that explain variability.

Blooms: Understand
39. Which of the following statements about Six Sigma quality programs is true?
A. While Six Sigma programs often improve the efficiency of numerous operating processes, there is evidence
that the approach can stifle innovative activities.
B. Six Sigma is a philosophy of managing a set of business practices that emphasizes continuous improvement
in all phases of operations and 100 percent accuracy in performing tasks.
C. Six Sigma's DMAIC process is a particularly good vehicle for improving performance when there are only
small variations in how well an activity is performed.
D. The focus of Six Sigma programs is on the development of new products or new business processes but not
on improving existing products or business processes.
E. Six Sigma is a system of statistical procedures for eliminating 92 percent of the variability in how a task is
performed.
Despite its potential benefits, there is evidence that Six Sigma techniques can stifle innovation and creativity.
The essence of Six Sigma is to reduce variability in processes, but creative processes, by nature, include quite a
bit of variability.

Blooms: Understand
40. A company that successfully and methodically applies Six Sigma methods to its value chain, activity by activity,
can:
A. clearly consider what it will take to overtake rivals with the industry's overall best
strategy.
B. make major strides in improving the proficiency with which its strategy is executed without sacrificing
innovation.
C. increase its bargaining power with suppliers and create better sellersupplier
collaborations.
D. assess the extent to which rivals have competitively valuable competencies or
capabilities.
E. construct a business model that entails a value proposition based
on quality.
An enterprise that systematically and wisely applies Six Sigma methods to its value chain, activity by activity, can
make major strides in improving the proficiency with which its strategy is executed without sacrificing
innovation.

Blooms: Understand
41. An ambidextrous organization is one that:
A. pursues incremental improvements in operating efficiency, while R&D and other processes that allow the
company to develop new ways of offering value to customers are given freer rein.
B. is capable of using efficiency and effectiveness with
equal skill.
C. is very skillful and versatile with operating
activity.
D. is managed by employing continuous improvement in operating practices while managing employees as a
loosely integrated network of efficiency.
E. employs identical improvement methods for both operating processes
and R&D.
A blended approach to Six Sigma implementation in ambidextrous organizations pursues incremental
improvements in operating efficiency, while R&D and other processes that allow the company to develop new
ways of offering value to customers are given freer rein.

Blooms: Understand
42. The big difference between business process reengineering and continuous improvement programs like TQM or
Six Sigma is that:
A. reengineering is a tool for installing process organization, whereas TQM/Six Sigma concern defect-free
production methods and delivering world-class customer service.
B. reengineering helps create core competencies, whereas TQM/Six Sigma are tools for making a core
competence stronger and more efficient.
C. reengineering is a tool for achieving one-time quantum improvement, whereas TQM and Six Sigma programs
aim at ongoing incremental improvements.
D. business process reengineering requires benchmarking, whereas TQM and Six
Sigma do not.
E. reengineering represents an effort to totally revamp a firm's value chain, whereas TQM looks at
incrementally improving the performance of two or three targeted value chain activities and Six Sigma is
primarily for reducing manufacturing defects.
Business process reengineering aims at one-time quantum improvement, while continuous-improvement
programs like TQM and Six Sigma aim at ongoing incremental improvements.

Blooms: Understand
43. To obtain maximum benefits from benchmarking, best practices, reengineering, TQM, and Six Sigma programs
aimed at facilitating better strategy execution, managers need to:
A. start with a clear idea of what specific outcomes really matter, such as a Six Sigma defect rate or superior
customer satisfaction, and then build a total quality culture that is genuinely committed to achieving these
outcomes.
B. have annual contests to see which part of the company is making the greatest strides in approaching
C. strive for 100 percent control over the variability in how each and every value chain activity is
performed.
D. have at least 50 percent of company personnel earn "green belts" in Six Sigma
techniques.
E. build core competencies in TQM, Six Sigma, benchmarking, best practices adoption, and business process
reengineering.
To obtain maximum benefits from benchmarking, best practices, reengineering, TQM, and Six Sigma programs
aimed at facilitating better strategy execution, managers need to start with a clear idea of what specific
outcomes really matter. Is it high on-time delivery, lower overall costs, fewer customer complaints, shorter cycle
times, a higher percentage of revenues coming from recently introduced products, or something else?
Benchmarking best-in-industry and best-in-world performance of targeted value chain activities provides a
realistic basis for setting internal performance milestones and longer-range targets. Once initiatives to improve
operations are linked to the company's strategic priorities, then comes the managerial task of building a total
quality culture that is genuinely committed to achieving the performance outcomes that strategic success
requires.

Blooms: Understand
44. Without a strategic framework, managers lack the context in which to:
A. fix things that really matter to business-unit performance and

competitive success.
B. carry out company-wide goals related to the dynamics of a single
business model.
C. employ the company's resources in the pursuit of sustainable competitive
advantage.
D. communicate aspirations for the
company.
E. analyze the emerging market opportunities more
precisely.
Without a strategic framework, managers lack the context in which to fix things that really matter to business-
unit performance and competitive success.

Blooms: Understand
45. To build a total quality culture and achieve full value from the use of TQM or Six Sigma initiatives, managers can
take such action steps as:
A. signaling unequivocal and unyielding commitment to total quality, continuous improvement, 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 percent accurate individual performance rather than group or team
performance.
E. dismissing employees who repeatedly fail to achieve 100percent accuracy in their work after a 12-month
trial period.
Managers can take the following action steps to realize full value from TQM or Six Sigma initiatives and promote
a culture of operating excellence: 1. Demonstrating visible, unequivocal, and unyielding commitment to total
quality and continuous improvement, including specifying measurable objectives for increasing quality and
making continual progress. 2. Nudging people toward quality-supportive behaviors 3. Empowering employees so
that authority for delivering great service or improving products is in the hands of the doers rather than the
overseersimproving quality has to be seen as part of everyone's job. 4. Using online systems to provide all
relevant parties with the latest best practices, thereby speeding the diffusion and adoption of best practices
throughout the organization. 5. Emphasizing that performance can and must be improved, because competitors
are not resting on their laurels and customers are always looking for something better.

Blooms: Understand
46. Although it is relatively easy for rivals to implement process management tools, it is much more difficult and
time-consuming for them to:
A. instill a deeply ingrained culture of operating

excellence.
B. keep employees well-informed about the strides being made with continuous
improvement.
C. unify the managerial efforts behind improving operating practices as a
commendable goal.
D. combine the pursuit of financial objectives with the pursuit of its strategic
objectives.
E. understand the barriers to installing new operating
activities.
While it is relatively easy for rivals to also implement process management tools, it is much more difficult and
time-consuming for them to instill a deeply ingrained culture of operating excellence (as occurs when such
techniques are religiously employed and top management exhibits lasting commitment to operational
excellence throughout the organization).

Blooms: Understand
47. Which of the following exemplifies one of the most widely used methods of gauging how well a company is
executing its strategy?
A. Merrill & Company has a disconnected organizational arrangement whereby pieces of an activity are
performed in different functional departments.
B. Oceania identifies agents of change who are convinced about sticking to the old ways of
doing things.
C. Honwell narrates success stories of rival brands to convince its personnel about
traditional wisdom.
D. Fizz-Cola judges the efficiency of internal operations by benchmarking them against best-in-industry
performers.
E. Motorola develops the data to measure how poorly rival brands perform against the best-practice standards
across industry.
One of the most widely used methods for gauging how well a company is executing its strategy entails
benchmarking the company's performance of particular activities and business processes against "best-in-
industry" and "best-in-world" performers. Benchmarking is the backbone of the process of identifying, studying,
and implementing best practices. The role of benchmarking is to look outward to find best practices and then to
develop the data for measuring how well a company's own performance of an activity stacks up against the best-
practice standard. A best practice remains little more than another company's interesting success story unless
company personnel buy into the task of translating what can be learned from other companies into real action
and results. The agents of change must be frontline employees who are convinced of the need to abandon the
old ways of doing things and switch to a best-practice mindset. Companies searching for ways to improve their
operations have sometimes discovered that the execution of strategy-critical activities is hampered by a
disconnected organizational arrangement whereby pieces of an activity are performed in several different
functional departments, with no one manager or group being accountable for optimal performance of the entire
activity.

Blooms: Apply
48. Which of the following does NOT exemplify business process reengineering?
A. Blue Mountain creates teams of mixed-occupation freelancers to design

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

Blooms: Apply
49. Which of the following takes the route of business process reengineering to attain operational excellence?
A. AT&T works toward creating a total quality culture by continuously reviewing the performance of every value
chain activity.
B. Acer Phones uses advanced statistical methods to remove the causes of defects at its
manufacturing units.
C. Ericsson introduces continuous-improvement business philosophy at its customer
care centers.
D. Cellkon pulls the pieces of an activity out of different departments to create a cross-functional
work group.
E. Honeywell strives to incrementally reduce defects through an ongoing
assessment process.
Business process reengineering aims at one-time quantum improvement, while continuous-improvement
programs like TQM and Six Sigma aim at ongoing incremental improvements. Six Sigma approach entails the use
of advanced statistical methods to identify and remove the causes of defects (errors) and undesirable variability
in performing an activity or business process. Total quality management (TQM) entails creating a total quality
culture, involving managers and employees at all levels, bent on continuously improving the performance of
every value chain activity. Hence, AT&T, Acer Phones, Ericcson, and Honeywell strive to attain operational
excellence through either Six Sigma or TQM approaches. On the other hand, Cellkon opts for one-time quantum
improvement by creating a cross-functional work group.

Blooms: Apply
50. Which of the following makes use of Six Sigma programs to improve quality and strategy execution?
A. Memphis & Company applies advanced statistical methods to identify and remove the causes
of defects.
B. Milwaukee Hospital relocates its pathological lab to reach out to consumers in
suburbs.
C. LG Electronics reengineers its value chain activities by creating cross-functional
teams.
D. La Tagliata Boutiques offers a different range of products at different outlets across
London.
E. Duke Energy replaces work depots by mobile repair vans reducing operational costs by
40 percent.
the performance of business processes. To address the suboptimal performance problems that can arise from
this type of situation, a company can reengineer the work effort, pulling the pieces of an activity out of different
departments and creating a single department or cross-functional work group to take charge of the whole
process. The use of cross-functional teams has been popularized by the practice of business process re-
engineering, which involves radically redesigning and streamlining the workflow. Duke Energy's move to replace
work depots by mobile repair vans involves radically redesigning and streamlining how an activity is performed,
and therefore, it pertains to business process reengineering.

Blooms: Apply
51. Installing well-conceived, state-of-the-art support systems is 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.
Well-conceived state-of-the-art operating systems not only enable better strategy execution but also strengthen
organizational capabilitiesenough at times to provide a competitive edge over rivals.
AACSB: Technology
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 11-04 The role of information and operating systems in enabling company personnel to carry out
their strategic roles proficiently.
Topic: How Managers Execute Strategy Successfully
52. Well-conceived, state-of-the-art information and operating systems:
A. are essential because business process reengineering efforts, TQM, Six Sigma, and benchmarking programs
can't be carried out effectively without them.
B. not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to
provide a competitive edge over rivals).
C. make it simple and easy to spot cost overruns and
inefficiencies.
D. are valuable tools for shortening a company's value chain, boosting workforce morale and productivity, and
simplifying the task of adopting best practices.
E. help managers run a tight ship and preserve strong, centralized control over
internal activities
organizational capabilitiesenough at times to provide a competitive edge over rivals.
AACSB: Technology
Blooms: Understand
Difficulty: 3 Hard
Topic: How Managers Execute Strategy Successfully
data.
B. supplier/strategic partner
data.
C. customer
data.
D. operations
data.
E. competitor
data.
Information systems need to cover five broad areas: (1) customer data, (2) operations data, (3) employee data,
(4) supplier and/or strategic partner data, and (5) financial performance data. All key strategic performance
indicators must be tracked and reported in real time whenever possible.
AACSB: Technology
Blooms: Remember
Topic: Information and Operating Systems
data.
B. corporate culture
data.
C. customer
data.
D. operations
data.
E. employee
data.
indicators must be tracked and reported in real time whenever possible.
AACSB: Technology
Blooms: Remember
Difficulty: 1 Easy
55. Information systems provide managers with a means for monitoring all of the following EXCEPT:
A. the results that flow from the actions of

subordinates.
B. the performance of empowered
workers.
C. weekly operating
statistics.
D. employees with over-the-shoulder
supervision.
E. daily operating
statistics.
Information systems also provide managers with a means for monitoring the performance of empowered
workers to see that they are acting within the specified limits. Scrutinizing daily and weekly operating statistics is
one of the ways in which managers can monitor the results that flow from the actions of subordinates without
resorting to constant over-the-shoulder supervision.
AACSB: Technology
Blooms: Understand
56. Which of the following is NOT integral to superior strategy execution and operating excellence?
A. Having real-time information systems that permit company managers to stay on top of implementation
initiatives and daily operations and to intervene if things seem to be drifting off course
B. Having state-of-the-art operating systems, information systems, and real-
time data
C. Having access to online systems that provide statistical information about operating
activities
D. Having the systems capability to identify and diagnose problems, so as to take
corrective actions
E. Having access to employee data of
competitors
Having state-of-the art operating systems, information systems, and real-time data is integral to superior
strategy execution and operating excellence. Real-time information systems permit company managers to stay
on top of implementation initiatives and daily operations and to intervene if things seem to be drifting off
course. Tracking key performance indicators, gathering information from operating personnel, quickly identifying
and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing
strategy execution and overseeing operations.
AACSB: Technology
Blooms: Understand
57. Which of the following is NOT a recommended way for managers to monitor the operating performance of
employees to ensure superior strategy execution?
A. Scrutinizing daily and weekly operating statistics without resorting to constant over-the-shoulder
supervision
B. Utilizing self-managed work groups in peer-based control
environments
C. Removing some layer of management hierarchy and relying on strong peer pressure to keep team members
operating between the white lines
D. Leaving employees to their own devices in meeting performance
standards
E. Using information systems capability to monitor team performance in
real time
Scrutinizing daily and weekly operating statistics is one of the ways in which managers can monitor the results
that flow from the actions of subordinates without resorting to constant over-the-shoulder supervision. Another
valuable lever of control in companies that rely on empowered employees, especially in those that use self-
managed work groups or other such teams, is peer-based control. Because peer evaluation is such a powerful
control device, companies organized into teams can remove some layers of the management hierarchy and rely
on strong peer pressure to keep team members operating between the white lines. This is especially true when
a company has the information systems capability to monitor team performance daily or in real time.
AACSB: Technology
Blooms: Understand
58. A company wants to plan a state-of-the-art information and operating system to enable better strategy
execution. Which of the following is the most likely reason for the company's move?
A. It wants to embrace modern

technology.
B. It wants to gain a competitive edge over
rivals.
C. It wants to spot cost overruns and
inefficiencies.
D. It wants to increase workforce productivity and
retention.
E. It wants to boost management
morale.
organizational capabilitiesenough at times to provide a competitive edge over rivals. If the systems it employs
are advanced systems that have not yet been adopted by rivals, the systems may provide the company with a
competitive advantage as long as the costs of deploying the systems do not outweigh their benefits.
AACSB: Technology
Blooms: Apply
59. Management's most powerful tool for mobilizing organizational commitment to competent strategy execution
and operating excellence is the:
A. diligent and persistent use of benchmarking and best

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

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-05 How and why the use of well-designed incentives and rewards can be management's single
most powerful tool for promoting adept strategy execution.
Topic: The Role of Incentives and Rewards in Promoting Strategy Execution
60. Management's most powerful tool for winning employee commitment to good strategy execution is:
A. the establishment of strategy-supportive policies and

procedures.
B. empowering employees and encouraging them to adopt best
practices.
C. setting stretch
objectives.
D. a structure of rewards and incentives tied tightly to the achievement of the organization's
strategic priorities.
E. aggressive use of TQM and Six Sigma quality control
programs.
A properly designed reward structure is management's single most powerful tool for mobilizing employee
commitment to successful strategy execution and aligning efforts throughout the organization with strategic
priorities.

Blooms: Understand
61. The strategic role of a company's reward system is to:
A. compensate employees for performing their assigned duties in a diligent

fashion.
B. boost employee morale in ways that create widespread job
satisfaction.
C. enlist employees' commitment to successful strategy execution by rewarding them, both monetarily and
non-monetarily, for their valuable contributions.
D. relieve managers of the burden of closely monitoring each employee's
performance.
E. boost labor productivity and help lower the firm's overall
labor costs.
Monetary rewards and nonmonetary incentives generally head the list of motivating tools for gaining
wholehearted employee commitment to good strategy execution and focusing attention on strategic priorities.

Blooms: Understand
62. Reward and incentive systems serve as a(n):
A. direct stimulus for satisfying the basic expectations of the standard job and
mechanisms.
B. indirect motivational tool designed to convert employee commitment into high-powered
incentives.
C. indirect type of control mechanism that conserves on more costly control mechanisms of
supervisory oversight.
D. direct base-pay financial compensation mechanism that competes with rival companies' salary bands for
similar work efforts.
E. negative motivational
element.
Reward systems serve as an indirect type of control mechanism that conserves on the more costly control
mechanism of supervisory oversight.

Blooms: Understand
63. Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the
strategic priorities and financial objectives is best done by:
A. having top executives commit to making employees the company's most valuable
competitive asset.
B. developing core competencies in the use of TQM, Six Sigma programs, and business process
reengineering.
C. resourceful and effective use of motivational incentives, both monetary and
nonmonetary.
D. clever and innovative use of benchmarking and best
practices.
E. providing employees with a high degree of job security and
attractive perks.
Monetary rewards and nonmonetary incentives generally head the list of motivating tools for gaining
wholehearted employee commitment to good strategy execution and focusing attention on strategic priorities.

Blooms: Understand
64. In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence,
managers are well advised to use all of the following incentives EXCEPT:
A. providing attractive perks and fringe

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

Blooms: Understand
Difficulty: 1 Easy
65. Which of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to
A. Strictly enforcing all rules in the employee handbook with the use
of fines.
B. Giving awards and public recognition to high performers and showcasing company
successes.
C. Providing a comfortable and attractive working
environment
D. Providing opportunities for promotion from within wherever
possible
E. Providing attractive perks and fringe
benefits
Evidence shows that managerial initiatives to improve strategy execution should incorporate more positive than
negative motivational elements because when cooperation is positively enlisted and rewarded, rather than
coerced by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication,
creativity, and initiative.

Blooms: Understand
Difficulty: 1 Easy
66. A motivation and incentive system that is aimed at spurring stronger employee commitment to good strategy
execution:
A. should focus on incorporating more positive than negative motivational

elements.
B. should be tied first and foremost to whether employees satisfactorily perform their assigned duties in an
ethical and honorable manner.
C. must involve deliberately assigning employees heavy workloads and tight
deadlines.
D. D. needs to put top priority on making employees happy and secure in
their jobs.
E. must avoid the potential for negative consequences if performance
is subpar.
If an organization's motivational approaches and reward structure induce too much stress, internal
competitiveness, job insecurity, and fear of unpleasant consequences, the impact on workforce morale and
strategy execution can be counterproductive. Evidence shows that managerial initiatives to improve strategy
execution should incorporate more positive than negative motivational elements because when cooperation is
positively enlisted and rewarded, rather than coerced by orders and threats (implicit or explicit), people tend to
respond with more enthusiasm, dedication, creativity, and initiative.

Blooms: Understand
67. From the standpoint of promoting successful strategy execution, it is important that the firm's motivation and
reward system:
A. be completely free of such elements as tension, pressure, anxiety, job insecurity, and tight deadlinesa no-
pressure/no-adverse-consequences work environment is essential.
B. emphasize only positive types of
rewards.
C. accentuate positive rewards but also carry out the "up-or-out" policy for performance that does not meet
expectations.
D. not deny rewards to employees who put forth good effort and try hard, though
performance is subpar.
E. reduce job insecurity and give employees an incentive to stay busy and
work hard.
While most approaches to motivation, compensation, and people management accentuate the positive,
companies also make it clear that lackadaisical or indifferent effort and subpar performance can result in
negative consequences. Companies that look for and expect top-notch individual performance also have an "up-
or-out" policymanagers and professionals whose performance is not good enough to warrant promotion are
first denied bonuses and stock awards and eventually weeded out

Blooms: Understand
68. A reward system that accentuates positive rewards for good performance:
A. works best in strong culture organizations, while negative motivational approaches and reward systems tend
to be most successful in weak culture organizations.
B. is especially effective in aligning the well-being of organizational members with achieving the company's
performance targets; reward systems with negative elements tend to be very dysfunctional in motivating
employees.
C. seldom works very well because the threat of denying rewards to sub-par performers is typically the most
powerful motivator.
D. works fine so long as 100 percent emphasis is placed on monetary
incentives.
E. has considerable appeal because when cooperation is positively enlisted and rewarded, rather than strong-
armed by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication,
creativity, and initiative.
If an organization's motivational approaches and reward structure induce too much stress, internal
competitiveness, job insecurity, and fear of unpleasant consequences, the impact on workforce morale and
strategy execution can be counterproductive. Evidence shows that managerial initiatives to improve strategy
execution should incorporate more positive than negative motivational elements because when cooperation is
positively enlisted and rewarded, rather than coerced by orders and threats (implicit or explicit), people tend to
respond with more enthusiasm, dedication, creativity, and initiative.

Blooms: Understand
69. A no-pressure/no-adverse-consequences work environment does not necessarily lead to:
A. superior strategy execution or operating

excellence.
B. satisfactory outcomes because there is always a cadre of ambitious people who relish the
challenge.
C. workforce morale
issues.
D. establishing more positive than negative motivational reward
elements.
E. excessive shortfall in
performance.
There is scant evidence that a no-pressure, no-adverse-consequences work environment leads to superior
strategy execution or operating excellence.

Blooms: Understand
70. To create a strategy-supportive system of rewards and incentives, a company must:
A. reward people for accomplishing results, not just for dutifully performing
assigned tasks.
B. focus jobholders' attention and energy on what to do as opposed to what
to achieve.
C. demand jobholders' 100 percent attendance since it
guarantees results.
D. hold jobholders' responsible for their function and not burden them with being
accountable.
E. incorporate negative motivational elements to assure
results.
To create a strategy-supportive system of rewards and incentives, a company must reward people for
accomplishing results, not for just dutifully performing assigned tasks. Showing up for work and performing
assignments do not, by themselves, guarantee results. To make the work environment results-oriented,
managers need to focus jobholders' attention and energy on what to achieve as opposed to what to do. Ideally,
every organizational unit, every manager, every team or work group, and perhaps every employee should be
held accountable for achieving outcomes that contribute to good strategy execution and business performance.

Blooms: Understand
71. Motivational and incentive compensation practices that aim at winning the commitment of company personnel
to good strategy execution typically:
A. use only positive rewards and never involve the use of tension, fear, job insecurity, stress,
or anxiety.
B.
entail decidedly positive rewards for meeting or beating performance targets, but also impose sufficiently
negative consequences when actual performance falls short of the target.
C. aim at creating a no-pressure/no-adverse-consequences work

environment.
D. entail paying the highest wages and salaries in the industry for all jobholder positions and also stressing
nonmonetary rewards, like cash bonuses for high-performing employees.
E. put top priority on making employees happy and secure in
their jobs.
negative consequences.

Blooms: Understand
72. The first principle in designing an effective compensation system and the most dependable way to keep people
focused on strategy execution and the achievement of performance targets is to:
A. establish ethical compensation policies and convince employees that they are the firm's most valuable
competitive asset.
B. design monetary and nonmonetary incentives that boost labor productivity and help lower the firm's
overall labor costs.
C. generously reward and recognize people who meet or beat performance targets and to deny rewards and
recognition to those who don't.
D. pay employees a bonus for each strategic and financial objective that the company
achieves.
E. allow employees to propose what rewards they would like to receive to achieve the company's
stretch objectives.
negative consequences.

Blooms: Understand
73. A well-designed reward system:
A. ties rewards to performance outcomes directly linked to good strategy execution and the achievement of
financial and strategic objectives.
B. should be free of elements that induce stress, anxiety, tension, pressure to perform, and
job insecurity.
C. puts the primary emphasis on denying rewards to those who fail to perform tasks in the
prescribed fashion.
D. emphasizes weeding out employees who are average
performers.
E. strives for a 50-50 balance between positive and negative rewards and a 50-50 balance between monetary
and nonmonetary rewards.
priorities. Financial rewards provide high-powered incentives when rewards are tied to specific outcome
objectives.

Blooms: Understand
74. An important consideration in designing a strategy-supportive reward system is to:
A. link the payment of all monetary rewards to the company's bottom-line

profitability.
B. employ incentives that will help motivate employees to put in long hours and sacrifice personal ambitions
and aspirations to pursue the priorities of management.
C. choose those types of rewards and incentives that will focus employees' attention on total customer
satisfaction.
D. make across-the-board wage and salary increases the cornerstone of
monetary rewards.
E. make nonmonetary rewards and recognition an integral part of the
reward system.
priorities. In this regard, monetary rewards and nonmonetary incentives generally head the list of motivating
tools for gaining wholehearted employee commitment.

Blooms: Understand
75. The guidelines for designing an incentive compensation system that will help drive successful strategy execution
include:
A. making the performance payoff a major, not minor, piece of the total
B. having incentives that apply to the management team (employees should generally not be included in
incentive pay plans but should have attractive wages and salaries).
C. having an outside wage and salary expert administer the system so there is no doubt as to its fairness and
impartiality.
D. basing the incentives on group performance rather than individual
performance.
E. making minimal use of nonmonetary incentives and rewarding people for diligently performing their
assigned duties.
The guidelines for designing an incentive compensation system that will help drive successful strategy execution
include making the performance payoff a major, not minor, piece of the total compensation package.
Performance bonuses must be at least 10 to 12 percent of base salary to have much impact. Incentives that
amount to 20 percent or more of total compensation are big attention-getters, likely to really drive individual or
team efforts. Incentives amounting to less than 5 percent of total compensation have a comparatively weak
motivational impact.

Blooms: Understand
76. Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote
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
C. The incentive plan should extend to all managers and all employees, not just top
management.
D. The reward system must reward nonperformers who, despite expending tremendous effort, have not fared
well in achieving the benchmarks under the incentive system.
E. Make sure that the performance targets each individual or team is expected to achieve involve outcomes
that the individual or team can personally affect.
For designing a reward and incentive system that helps promote good strategy execution: make the performance
payoff a major, not minor, piece of the total compensation package; have incentives that extend to all managers
and all workers, not just top management; administer the reward system with scrupulous objectivity and
fairness; ensure that the performance targets set for each individual or team involve outcomes that the
individual or team can personally affect; keep the time between achieving the performance target and receiving
the reward as short as possible; and avoid rewarding effort rather than results.

Blooms: Understand
77. Which of the following is NOT characteristic of a compensation and reward system designed to help drive
successful strategy execution?
A. Tying incentives to performance outcomes directly linked to good strategy execution and financial
performance
B. Keeping the time between achieving the target performance outcome and the payment of the reward as
short as possible
C. Making sure that the performance targets that each individual or team is expected to achieve involve
outcomes that the individual or team can personally affect
D. Providing generous rewards for people who turn in outstanding
performances
E. Offering rewards that amount to 3 percent of an employee's total
compensation
The guidelines for designing an incentive compensation system that will help drive successful strategy execution
include making the performance payoff a major, not minor, piece of the total compensation package.
Performance bonuses must be at least 10 to 12 percent of base salary to have much impact. Incentives that
amount to 20 percent or more of total compensation are big attention-getters, likely to really drive individual or
team efforts. Incentives amounting to less than 5 percent of total compensation have a comparatively weak
motivational impact.

Blooms: Understand
Difficulty: 1 Easy
78. The resolute standard for judging whether individuals, teams, and organizational units have done a good job
must be measured by:
A. comparing industry performance standards against the company's own

internal criteria.
B. the level of rapid growth in industry (buyer)
demand.
C. whether they meet or beat performance targets that reflect good strategy
execution.
D. the number of rivals existing in the marketplace and their growth
results.
E. the relative competitive strengths of the industry leaders and how vulnerable they are
to mimicry.
The unwavering standard for judging whether individuals, teams, and organizational units have done a good job
must be whether they meet or beat performance targets that reflect good strategy execution.

Blooms: Understand
Difficulty: 1 Easy
79. The managing director of a paper products company, wanted to introduce nonmonetary incentives to enhance
employee motivation and spur strategy execution. When presented with some ideas, he chose all of the
following EXCEPT:
A. rewarding employees even for subpar

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

Blooms: Apply
80. The top management at a new social media technology company would like to revamp its incentive
compensation system to attract ambitious employees. What would be their best approach?
A. Make the performance bonus at least 3 to 4 percent of base salary to have

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

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

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

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

Blooms: Understand
84. What is the value of total quality management (TQM) and how does it differ from business process
reengineering?
empowerment of employees at all levels, team-based work design, benchmarking, and total customer
satisfaction. While TQM concentrates on producing quality goods and fully satisfying customer expectations, it
achieves its biggest successes when it is extended to employee efforts in all departments that may lack pressing,
customer-driven incentives to improve.
Business process reengineering, on the other hand, addresses suboptimal performance problems that can arise
in a disconnected organizational arrangement whereby pieces of an activity are performed in several different
functional departments. Here a company can reengineer the work effort, pulling the pieces of an activity out of
different departments and creating a single department or cross-functional work group to take charge of the
whole process.

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

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

Blooms: Remember
Difficulty: 3 Hard
87. What three principles underlie the statistical thinking of Six Sigma quality control programs?
The statistical thinking underlying Six Sigma is based on the following three principles: (1) All work is a process,
(2) all processes have variability, and (3) all processes create data that explain variability.

Blooms: Understand
Difficulty: 3 Hard
88. With an example, explain how the Six Sigma process of define, measure, analyze, improve, and control (DMAIC)
works.
The DMAIC process is a particularly good vehicle for improving performance when there are wide variations in
how well an activity is performed. For instance, airlines striving to improve the on-time performance of their
flights have more to gain from actions to curtail the number of flights that are late by more than 30 minutes
than from actions to reduce the number of flights that are late by less than 5 minutes.

Blooms: Understand
Difficulty: 3 Hard
89. While Six Sigma programs often improve the efficiency of many operating activities and processes, there is
evidence that innovation can be stifled by Six Sigma programs. True or false? Explain.
The statement is true. Despite its potential benefits, Six Sigma is not without its problems. There is evidence, for
example, that Six Sigma techniques can stifle innovation and creativity. The essence of Six Sigma is to reduce
variability in processes, but creative processes, by nature, include quite a bit of variability. In many instances,
breakthrough innovations occur only after thousands of ideas have been abandoned and promising ideas have
gone through multiple iterations and extensive prototyping.

Blooms: Understand
90. What action steps can managers take to realize full value from TQM or Six Sigma initiatives and promote a
culture of operating excellence?
Managers can take the following action steps to realize full value from TQM or Six Sigma initiatives and promote
a culture of operating excellence:
1. Demonstrating visible, unequivocal, and unyielding commitment to total quality and continuous
improvement, including specifying measurable objectives for increasing quality and making continual progress.
2. Nudging people toward quality-supportive behaviors.
3. Empowering employees so that authority for delivering great service or improving products is in the hands of
the doers rather than the overseersimproving quality has to be seen as part of everyone's job.
4.Using online systems to provide all relevant parties with the latest best practices, thereby speeding the
diffusion and adoption of best practices throughout the organization. Online systems can also allow company
personnel to exchange data and opinions about how to upgrade the prevailing best-in-company practices.
5. Emphasizing that performance can and must be improved, because competitors are not resting on their
laurels and customers are always looking for something better.

Blooms: Understand
Difficulty: 3 Hard
91. Company strategies cannot be implemented or executed well without a number of real-time state-of-the-art
support and control information systems to carry out business operations. Discuss the benefits of real-time
systems by industry.
Real-time information systems permit company managers to stay on top of implementation initiatives and daily
operations and to intervene if things seem to be drifting off course. Tracking key performance indicators,
gathering information from operating personnel, quickly identifying and diagnosing problems, and taking
corrective actions are all integral pieces of the process of managing strategy execution and overseeing
operations. Statistical information gives managers a feel for the numbers, briefings and meetings provide a feel
for the latest developments and emerging issues, and personal contacts add a feel for the people dimension. All
are good barometers of how well things are going and what operating aspects need management attention.
Managers must identify problem areas and deviations from plans before they can take action to get the
organization back on course, by either improving the approaches to strategy execution or fine-tuning the
strategy.

Blooms: Understand
92. Name the five broad areas that information systems need to cover and explain the significance of real-time
tracking and reporting.
indicators must be tracked and reported in real time whenever possible. Real-time information systems permit
company managers to stay on top of implementation initiatives and daily operations and to intervene if things
seem to be drifting off course. Tracking key performance indicators, gathering information from operating
personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of
the process of managing strategy execution and overseeing operations.
AACSB: Technology
Blooms: Understand
93. Discuss control mechanisms that managers can use to monitor the performance of empowered employees.
Scrutinizing daily and weekly operating statistics is one of the ways in which managers can monitor the results
that flow from the actions of subordinates without resorting to constant over-the-shoulder supervision; if the
operating results look good, then it is reasonable to assume that empowerment is working. But close monitoring
of operating performance is only one of the control tools at management's disposal. Another valuable lever of
control in companies that rely on empowered employees, especially in those that use self-managed work groups
or other such teams, is peer-based control. Because peer evaluation is such a powerful control device,
companies organized into teams can remove some layers of the management hierarchy and rely on strong peer
pressure to keep team members operating between the white lines. This is especially true when a company has
the information systems capability to monitor team performance daily or in real time.
AACSB: Technology
Blooms: Understand
94. The use of incentives and rewards is the single most powerful tool at management's disposal to win strong
employee commitment to carrying out the strategic plan. True or false? Explain.
The statement is true. An effectively designed reward structure is the single most powerful tool management
has for mobilizing employee commitment to successful strategy execution. But incentives and rewards do more
than just strengthen the resolve of company personnel to succeedthey also focus employees' attention on the
accomplishment of specific strategy execution objectives. Not only do they spur the efforts of individuals to
achieve those aims, but they also help to coordinate the activities of individuals throughout the organization by
aligning their personal motives with the goals of the organization. In this manner, reward systems serve as an
indirect type of control mechanism that conserves on the more costly control mechanism of supervisory
oversight.

Blooms: Understand
95. Give any three nonmonetary examples of motivation and rewards practices that have the capability to foster
good strategy execution and explain how they act to produce such a result.
The following are three nonmonetary examples of motivation and rewards practices that have the capability to
foster good strategy execution:
1. Relying on promotion from within whenever possible. This practice helps bind workers to their employer, and
employers to their workers. Moreover, it provides strong incentives for good performance. Promoting from
within also helps ensure that people in positions of responsibility have knowledge specific to the business,
technology, and operations they are managing.
2. Inviting and acting on ideas and suggestions from employees. Many companies find that their best ideas for
nuts-and-bolts operating improvements come from the suggestions of employees. Moreover, research indicates
that giving decision-making power to down-the-line employees increases their motivation and satisfaction as
well as their productivity. The use of self-managed teams has much the same effect.
3. Providing a comfortable and attractive working environment. An appealing workplace environment can have
decidedly positive effects on employee morale and productivity. Providing a comfortable work environment,
designed with ergonomics in mind, is particularly important when workers are expected to spend long hours at
work.

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

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

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

Blooms: Understand
99. In creating a strategy-supportive reward structure, it is important to define jobs and assignments in terms of the
results to be accomplished not just in terms of the duties to be performed. True or false? Explain and justify your
answer.
The statement is true. To create a strategy-supportive system of rewards and incentives, a company must reward
people for accomplishing results, not for just dutifully performing assigned tasks. Showing up for work and
performing assignments do not, by themselves, guarantee results. To make the work environment results-
oriented, managers need to focus jobholders' attention and energy on what to achieve as opposed to what to
do.

Blooms: Understand
100. Identify five guidelines for creating an incentive compensation system that will help drive successful strategy
execution.
The following are five guidelines for creating an incentive compensation system that will help drive successful
strategy execution:
Make the performance payoff a major, not minor, piece of the total compensation package.
Have incentives that extend to all managers and all workers, not just top management.
Administer the reward system with scrupulous objectivity and fairness.
Ensure that the performance targets set for each individual or team involve outcomes that the individual or
team can personally affect.
Keep the time between achieving the performance target and receiving the reward as short as possible.

Blooms: Understand
Chapter 11 Test Bank Summary
Category # of Que
stions
AACSB: Analytical Thinking 90
AACSB: Technology 10
Accessibility: Keyboard Navigation 80
Blooms: Apply 12
Blooms: Remember 16
Blooms: Understand 72
Difficulty: 1 Easy 11
Difficulty: 2 Medium 82
Difficulty: 3 Hard 7
Learning Objective: 11-01 Why resource allocation should always be based on strategic priorities. 11
Learning Objective: 11-02 How well-designed policies and procedures can facilitate good strategy execution. 9
Learning Objective: 11-03 How best practices and process management tools drive continuous improvement in 40
the performance of value chain activities and promote superior strategy execution.
Learning Objective: 11-04 The role of information and operating systems in enabling company personnel to car 11
ry out their strategic roles proficiently.
Learning Objective: 11-05 How and why the use of well-designed incentives and rewards can be management's 29
single most powerful tool for promoting adept strategy execution.
Topic: How Managers Execute Strategy Successfully 2
Topic: Information and Operating Systems 8
Topic: Strategy and the Strategic Management Process 1
Topic: The Role of Incentives and Rewards in Promoting Strategy Execution 30
Topic: The Role of Operating Budgets in Strategic Planning 5
Topic: The Strategic Role of Managers in Strategy Formulation and Implementation 5
Topic: Tools to Analyze Operating Excellence 35
Topic: Understanding the Importance of a Company's Resources 4
Topic: Value of Strategic Leadership 10

Implementing Strategy Through Resource Allocation

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Implementing Strategy Through Resource Allocation

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Chapter 11 Test Bank

4. New strategies often entail budget reallocations because:

A. revamping the performance of value chain activities can be

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

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

A. big shifts of resources from one area to

A. Making critical value chain activities less

A. promote healthcare wings of rival

A. Cavco is impeding the efforts to proficiently execute the

A. provide top-down guidance regarding how things are to

A. Placing limits on independent action and helping overcome resistance

A. give organization members clear direction and place reasonable boundaries on

17. Which of the following exemplifies good strategy execution?

A. The policy document of Dominos ensures consistency in service behavior patterns

20. A "best practice" refers to:

A. a policy or procedure that is unusually

22. The idea behind benchmarking and best practices is to:

A. expediting the redesign of existing products and shortening the design-to-

28. Reengineering how a firm performs a business process:

29. Total quality management (TQM):

A. 100 percent accuracy in performing

31. Total quality management (TQM) programs:

A. deal exclusively with procedures to achieve defect-free manufacturing and

34. Six Sigma quality control:

35. Six Sigma processes:

41. An ambidextrous organization is one that:

A. fix things that really matter to business-unit performance and

A. instill a deeply ingrained culture of operating

A. Blue Mountain creates teams of mixed-occupation freelancers to design

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

A. the results that flow from the actions of

A. It wants to embrace modern

A. diligent and persistent use of benchmarking and best

A. the establishment of strategy-supportive policies and

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

A. compensate employees for performing their assigned duties in a diligent

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

A. providing attractive perks and fringe

A. should focus on incorporating more positive than negative motivational

A. superior strategy execution or operating

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

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

73. A well-designed reward system:

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

A. link the payment of all monetary rewards to the company's bottom-line

A. The reward system must be administered with scrupulous objectivity and

A. comparing industry performance standards against the company's own

A. rewarding employees even for subpar

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

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

A. revamping the performance of value chain activities can be

AACSB: Analytical Thinking

AACSB: Analytical Thinking

6. A company's operating budget must:

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

AACSB: Analytical Thinking

A. big shifts of resources from one area to

AACSB: Analytical Thinking

A. Making critical value chain activities less

AACSB: Analytical Thinking