MGT 498 Chapter 10 Answers

Chapter 10Implementation

Multiple Choice Questions1.Business strategies, grand strategies, and ______ are critically important in crafting a successful future.

A.long-term objectives

B.core rigidities

C.business units

D.functional hierarchies

2.To make business strategies, grand strategies and long-term objectives a reality, the people in an organization who ________ need guidance in exactly what they need to do.

A."do the work"

B.make corporate decisions

C.manage the business unit

D.compete

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

A.Targets

B.Goals

C.Short-term objectives

D.Long-term objectives

4.Short-term objectives are usually:

A.Completed within two months

B.Quantitative

C.Qualitative

D.Set to be completed within five years

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

A.limit the effectiveness of

B.operationalize

C.decrease the need for

D.justify

6.If X-Corp.'s car polish division has committed to a 30 percent gain in revenue over six years, they must consider the specific target in revenue during the current quarter to indicate they are making appropriate progress. This smaller objective for the fiscal quarter is called a:

A.Short-term objectives

B.Short-term technique

C.Long-term objective

D.Strategic goal

7.Discussion about and agreement on short-term objectives help raise issues and potential conflicts within an organization that usually:

A.Need little coordination

B.Require additional personnel

C.Focus on public relations

D.Require organizational coordination

8.Short-term objectives assist strategy implementation by identifying measurable outcomes of action plans or functional activities, which can make feedback, correction and evaluation:

A.More relevant and acceptable

B.More expensive

C.More difficult

D.More geared toward growth

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

A.Action ideas

B.Long-term objectives

C.Action plans

D.Policies

10._______ are usually accompanied by subsequent action plans.

A.Action ideas



D.Policies

11.Which of the following items is NOT an example of how action plans enhance short-term objectives?

A.Specificity

B.Link to long-term strategy

C.Time frame for completion

D.Definition of who is responsible for what

12.______ identify who is responsible for each action in the plan.

A.Action ideas


C.Action plans

D.Policies

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

A.Measurability

B.Priorities

C.Definition of the market

D.Linked to long-term objectives

14.Difficulties in quantifying objectives often can be overcome by initially focusing on measurable activity and then identifying measurable

A.resources

B.capabilities

C.outcomes

D.policies

15.Short-term objectives are more consistent when they clearly state what is to be accomplished, when it will be accomplished and how its accomplishment will be:

A.Qualified

B.Benchmarked

C.Measured

D.Strategized

16.________ can help avoid conflicting assumptions about the relative importance of annual objectives, which could otherwise inhibit progress toward strategic effectiveness.

A.Establishing priorities

B.Establishing action plans

C.Distinguishing the measurable objectives

D.Establishing measurable outcomes

17.It is far easier to quantify the objectives of ______, like production, than of certain ______ areas like personnel.

A.line units; function

B.staff units; line

C.outcomes; staff

D.line units; staff

18.Difficulties in quantifying objectives can often be overcome by initially focusing on _________ and then identifying _________.

A.measurability; functions

B.measurable activity; measurable outcomes

C.measurable outcomes; measurable activity

D.line units; measurable activity

19.A(n) _______ does not necessarily communicate the real difference in the importance of objectives.

A.simple flow

B.simple ranking

C.statistical measure

D.established priority

20.Words like "primary," "top," and "secondary," may be used to indicate:

A.Long-term objectives

B.Measurability

C.Priority

D.Strategic objectives

21.Some firms assign ____ to establish and communicate the relative priority of objectives.

A.rewards

B.objectives

C.weights

D.policies

22.The link between short-term and long-term objectives should resemble ________ through the firm from basic long-term objectives to specific short-term objectives in key operation areas.

A.cascades

B.building blocks

C.small barriers

D.fences

23.Short-term objectives and action plans give operating personnel a better understanding of their role in the firm's ______.

A.goals

B.financial performance

C.strategic management

D.mission

24.A benefit of short-term objectives and action plans comes from the __________. If this is done and managers participate, short-term objectives and action plans provide valid bases for addressing and accommodating conflicting concerns that might interfere with strategic effectiveness.

A.process development

B.strategy development

C.strategic control

D.clarity of purpose

25.Functional tactics translate thought (______) into action designed to accomplish specific short-term objectives.

A.policies

B.mission

C.vision

D.grand strategy

26.One benefit of short-term objectives and action plans is that they provide a __________. They can provide clear, measurable mechanisms for developing budgets, schedules and trigger points, which help control the implementation of strategy.

A.basis for strategy evaluation

B.basis for motivation

C.basis for strategy implementation

D.basis for strategic control

27.One benefit of short-term objectives and action plans is its _________, which clarifies personal and group roles in a firm's strategies and help realistically challenge managers to perform well. These objectives are particularly effective when linked to the firm's reward structure.

A.motivational payoff

B.structured clarity

C.compensation structure

D.complicated nature

28.________ are key, routine activities that must be undertaken in each functional area.

A.Business tactics

B.Resource tactics

C.Functional tactics

D.Corporate tactics

29.Functional tactics translate _______ into action designed to accomplish specific short-term objectives.

A.corporate strategy

B.grand strategy

C.competitive will

D.business strength

30.Every ________ in a company executes functional tactics that support the business' strategy and help accomplish strategic objectives.

A.competitive rivalry

B.supplier/customer

C.value chain activity

D.business unit manager

31.Which is NOT one of the differences between business strategies and functional tactics?

A.Reinforcement of the strategy

B.Time horizon

C.Specificity

D.Participants who develop them

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

A.Long-term tactics

B.Business strategies

C.Corporate strategies

D.Functional tactics

33.The ___________ of functional tactics allows functional managers to adjust to changing current conditions.

A.shorter time horizon

B.focus on growth

C.specificity

D.business focus

34.Business strategies provide _______ direction.

A.general

B.focused

C.generic

D.narrow

35.Functional tactics are more _________ than business strategies.

A.specific

B.focused on the general direction of the firm

C.focused on a commitment to corporate strategy

D.long-term

36.Which of the following is NOT a way that specificity in functional tactics contributes to successful implementation?

A.Helping ensure that functional managers know what needs to be done and can focus on accomplishing results

B.Limiting the need for top management's confidence in and sense of control over the business strategy

C.Clarifying for top management how functional managers intend to accomplish the business strategy

D.Facilitating coordination among operating units within the firm by clarifying areas of interdependence and potential conflict

37.Operating managers must establish short-term objectives and operating strategies that contribute to:

A.Business-level goals

B.Corporate-level goals

C.Goals toward diversification

D.Specialization

38.Involving operating managers can increase the __________ of operating managers to the strategies developed.

A.resistance

B.limitations

C.commitment

D.evaluation

39.Outsourcing starts for most firms with:

A.The outsourcing of production

B.The outsourcing of the marketing function

C.The outsourcing of payroll production

D.The outsourcing of corporate strategy decisions

40.__________ is defined as obtaining work previously done by employees inside the companies from sources outside the company.

A.Specialization

B.Fragmentation

C.Outsourcing

D.Acquisition or merging

41.__________ is acquiring an activity, service or product necessary to provide a company's products or services from "outside" the people or operations controlled by that acquiring company.

A.Specialization

B.Fragmentation

C.Outsourcing


42.Relentless cost cutting is the main force behind the trend of _____.

A.strategic planning

B.outsourcing

C.goal setting

D.globalization

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

A.Relentless cost cutting

B.Achieving internal synergies

C.Better capital budgeting

D.Keeping control internal

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

A.Marketing

B.Payroll

C.Travel

D.HR

45.________ is the act of allowing an individual or team the right and flexibility to make decisions and initiate action.

A.Management

B.Micromanagement

C.Empowerment

D.Developing strategy

46.One way operating managers ensure decision making is consistent with the mission, strategy and tactics of the business while allowing considerable latitude to operating personnel is through the use of:

A.Empowerment

B.Policies

C.Strategic evaluation

D.Facilitating strategic design

47.__________ are directives designed to guide the thinking, decisions and actions of managers and their subordinates in implementing a firm's strategy.

A.Functional tactics

B.Action plans


D.Policies

48.One way operating managers _____ is through the use of policies.

A.outsource

B.strategize

C.politicize

D.empower

49.__________ increase managerial effectiveness by standardizing many routine decisions and clarifying the discretion managers and subordinates can exercise in implementing functional tactics.

A.Outsourcing

B.Standard operating procedures

C.Corporate cultures

D.Action plans

50._______ communicate guidelines to decisions.

A.Policies

B.Action plans


D.Business strategy objectives

51.Policies are also sometimes called

A.standard operating procedures

B.action plans

C.functional tactics

D.business strategy objectives

52.Policies establish __________ over _________ by clearly stating how things are to be done _________.

A.indirect control; dependent action; in the future

B.indirect control; independent action; now

C.direct control; independent action; in the future

D.direct control; dependent action; now

53.Policies establish __________ over independent action.

A.strategic control

B.indirect control

C.direct control

D.visionary control

54.Policies ________ basic aspects of organization behavior.

A.Negotiate

B.Institutionalize

C.Justify

D.Determine

55.Policies ensure ______ action.

A.slower

B.quicker

C.indirect

D.loose

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

A.vision statements

B.strategies

C.mission statements

D.capabilities

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

A.The need for operating personnel

B.The number of routine problems

C.The speed with which decisions can be made

D.Uncertainty

58.Policies may be ________ or _________.

A.written and informal; unwritten and formal

B.written and formal; unwritten and formal

C.written and formal; unwritten and informal

D.written and informal; unwritten and informal

59.Policies offer predetermined answers to _____ problems.

A.unique

B.formal

C.routine

D.informal

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

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

B.They reduce misunderstanding

C.They systematically enhance indirect control and organization-wide coordination of the key purposes of policies

D.They communicate the authorization or sanction of policies more clearly

61.The strategic ________ of policies can vary.

A.direction

B.plan

C.significance

D.advantage

62.Policies can be ________. One good example of this is the use of equal employment opportunity practices.

A.internally derived

B.negative

C.externally imposed

D.very simple in nature

63.The ______ significance of policies can vary.

A.visionary

B.routine

C.strategic

D.important

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

A.Development

B.Compensation

C.Policies

D.Action plans

65.Policies can be externally imposed or ______.

A.stakeholder driven

B.mandated by stockholders

C.internally derived

D.mandated by the stock market

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

A.Motivate executives to achieve maximization of shareholder wealth

B.Motivate executives to achieve maximization of personal wealth

C.Differentiate executives from other managers

D.Ensure the success of the firm

67.The goal of ______ is not the only goal that executives may pursue.

A.organizational policies

B.organizational rewards

C.managerial rewards

D.shareholder wealth maximization

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

A.The executive in question

B.The success of the firm

C.The match between the plan and the firm's strategic objectives

D.The positive link between shareholder wealth and personal wealth maximization

69.A common measure of shareholder wealth creation is appreciation of company

A.revenues

B.stock price

C.employees

D.stockholders

70.______ provide the executive with the right to purchase company stock at a fixed price in the future.

A.Golden handcuffs

B.Stock options

C.Golden parachutes

D.Restricted stock plans

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

A.shareholder wealth

B.revenue

C.sales

D.job

72.Stock options have typically represented _______ of a CEO's average pay package.

A.less than 30 percent

B.less than 50 percent

C.more than 50 percent

D.more than 90 percent

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

A.Golden handcuffs

B.Stock options

C.Golden parachutes


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

A.Promotes longer executive tenure than other forms of compensation

B.Offsets the limitations of focusing on market-based measures of performance

C.Offers an incentive for executives to remain with the firm

D.Provides incentive for the executive to create wealth for shareholders as measured by increase in the firm's share price

75.There is a weak correlation between earnings measures and shareholder wealth creation with the use of a:

A.Golden handcuffs plan

B.Cash based plan

C.Restricted stock plan

D.Stock option grant

76.Golden handcuffs:

A.Have no downside risk to executives, who always profits unlike other shareholders

B.Have a weak correlation between earnings measures and shareholder wealth creation

C.Make it hard to explain the dimensions of managerial performance using the movement in share price

D.May promote risk-averse decision making due to the downside risk borne by the executive

77.________ provide incentive for the executive to create wealth for shareholders as measured by increases in the firm's share price.

A.Stock option grants

B.Golden handcuffs

C.Golden parachutes

D.Cash-based plans

78.__________ are much easier to value than options because they are equivalent to a stock transfer at the market price.

A.Restricted stock grants

B.Golden handcuffs

C.Golden parachutes

D.Cash plans

79.________ offers employees more certainty, even if there is less potential for a big win.

A.The use of stock options

B.A golden parachute

C.Stock grants

D.Restricted stock

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

A.restricted stock plan

B.cash based plan

C.golden parachute

D.golden handcuffs plan

81.Restricted stock plans offer:

A.Higher downside risk to executives

B.More limited downside risk to executives

C.No downside risk to executives

D.Limited upside risk to executives

82.__________ represent a form of executive compensation where compensation is deferred.

A.Golden handcuffs

B.Golden parachutes

C.Golden stock options

D.Unrestricted stock options

83.If the executive quits, is fired or simply retires, he would be best protected by a _________, which is designed to retain talented executives.

A.golden handcuff

B.golden parachute

C.cash based plan

D.stock option

84._______ are executive bonus compensation plans that focus on accounting measures of performance and are designed to offset the limitations of market-based measures of performance.

A.Cash restricted plans

B.Golden handcuffs

C.Restricted stock plans

D.Cash-based plans

85.A firm with a strategic goal of growing the share price incrementally should implement a:

A.Restricted stock plan

B.Stock option plan

C.Cash-based plan

D.Golden parachute

86.A firm with a strategic goal of reducing executive turnover would use _________ to provide an incentive for longer executive tenure.

A.cash

B.stock options

C.golden parachutes

D.golden handcuffs

87.A firm seeking to globalize operations would use ________ as its bonus compensation plan.

A.restricted stock plans

B.golden parachutes

C.golden handcuffs

D.stock options

88.A firm with a strategic goal of streamlining operations should use ________ to reward the long-term focus on efficiency and cost control.


B.stock options

C.cash

D.golden parachutes

Essay Questions89.How do short-term objectives help implement strategy?

90.What are three important qualities of effective short-term objectives? Briefly describe each of these in your answer.

91.What are functional tactics? Briefly describe them and provide one example of their use.

92.In what three fundamental ways do functional tactics differ from business or corporate strategies? Briefly describe each.

93.What is outsourcing? What are the benefits and risks of outsourcing?

94.What does it mean to empower employees? How are policies related to the idea of empowerment?

95.How can policies control decisions while defining allowable discretion in which operating personnel can execute business strategies? Describe several ways.

96.What are stock options? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

97.What are restricted stock options? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

98.What are golden handcuffs? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

99.What are golden parachutes? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

100.Briefly match the appropriate type of bonus compensation to the strategic goal being pursued. What is the rationale behind these match-ups?

Chapter 10 Implementation Answer Key

Multiple Choice Questions1.(p.288)Business strategies, grand strategies, and ______ are critically important in crafting a successful future.

A.long-term objectives

B.core rigidities

C.business units

D.functional hierarchies

Difficulty: 1 EasyLearning Objective: 10-01 Understand how short-term objectives are used in strategy implementation.

2.(p.288)To make business strategies, grand strategies and long-term objectives a reality, the people in an organization who ________ need guidance in exactly what they need to do.

A."do the work"

B.make corporate decisions

C.manage the business unit

D.compete


3.(p.288)___________ are measurable outcomes achievable or intended to be achieved in one year or less.

A.Targets

B.Goals


D.Long-term objectives


4.(p.288)Short-term objectives are usually:

A.Completed within two months

B.Quantitative

C.Qualitative

D.Set to be completed within five years

Difficulty: 2 MediumLearning Objective: 10-01 Understand how short-term objectives are used in strategy implementation.

5.(p.288)Short-term objectives __________ long-term objectives.

A.limit the effectiveness of

B.operationalize

C.decrease the need for

D.justify


6.(p.288)If X-Corp.'s car polish division has committed to a 30 percent gain in revenue over six years, they must consider the specific target in revenue during the current quarter to indicate they are making appropriate progress. This smaller objective for the fiscal quarter is called a:

A.Short-term objectives

B.Short-term technique

C.Long-term objective

D.Strategic goal


7.(p.288)Discussion about and agreement on short-term objectives help raise issues and potential conflicts within an organization that usually:

A.Need little coordination

B.Require additional personnel

C.Focus on public relations

D.Require organizational coordination


8.(p.288)Short-term objectives assist strategy implementation by identifying measurable outcomes of action plans or functional activities, which can make feedback, correction and evaluation:

A.More relevant and acceptable

B.More expensive

C.More difficult

D.More geared toward growth


9.(p.288)Short-term objectives are usually accompanied by subsequent:

A.Action ideas


C.Action plans

D.Policies

Difficulty: 3 HardLearning Objective: 10-01 Understand how short-term objectives are used in strategy implementation.

10.(p.288)_______ are usually accompanied by subsequent action plans.

A.Action ideas



D.Policies


11.(p.289)Which of the following items is NOT an example of how action plans enhance short-term objectives?

A.Specificity

B.Link to long-term strategy

C.Time frame for completion

D.Definition of who is responsible for what


12.(p.289)______ identify who is responsible for each action in the plan.

A.Action ideas


C.Action plans

D.Policies


13.(p.289)Which of the following is NOT an example of a quality of effective short-term objectives?

A.Measurability

B.Priorities

C.Definition of the market

D.Linked to long-term objectives

Difficulty: 2 MediumLearning Objective: 10-02 Identify and apply the qualities of good short-term objectives to your own experiences.

14.(p.289)Difficulties in quantifying objectives often can be overcome by initially focusing on measurable activity and then identifying measurable

A.resources

B.capabilities

C.outcomes

D.policies


15.(p.289)Short-term objectives are more consistent when they clearly state what is to be accomplished, when it will be accomplished and how its accomplishment will be:

A.Qualified

B.Benchmarked

C.Measured

D.Strategized


16.(p.289)________ can help avoid conflicting assumptions about the relative importance of annual objectives, which could otherwise inhibit progress toward strategic effectiveness.

A.Establishing priorities

B.Establishing action plans

C.Distinguishing the measurable objectives

D.Establishing measurable outcomes


17.(p.289)It is far easier to quantify the objectives of ______, like production, than of certain ______ areas like personnel.

A.line units; function

B.staff units; line

C.outcomes; staff

D.line units; staff

Difficulty: 3 HardLearning Objective: 10-02 Identify and apply the qualities of good short-term objectives to your own experiences.

18.(p.289)Difficulties in quantifying objectives can often be overcome by initially focusing on _________ and then identifying _________.

A.measurability; functions

B.measurable activity; measurable outcomes

C.measurable outcomes; measurable activity

D.line units; measurable activity


19.(p.290)A(n) _______ does not necessarily communicate the real difference in the importance of objectives.

A.simple flow

B.simple ranking

C.statistical measure

D.established priority


20.(p.289)Words like "primary," "top," and "secondary," may be used to indicate:

A.Long-term objectives

B.Measurability

C.Priority

D.Strategic objectives

Difficulty: 1 EasyLearning Objective: 10-02 Identify and apply the qualities of good short-term objectives to your own experiences.

21.(p.290)Some firms assign ____ to establish and communicate the relative priority of objectives.

A.rewards

B.objectives

C.weights

D.policies

Difficulty: 1 EasyLearning Objective: 10-02 Identify and apply the qualities of good short-term objectives to your own experiences.

22.(p.290)The link between short-term and long-term objectives should resemble ________ through the firm from basic long-term objectives to specific short-term objectives in key operation areas.

A.cascades

B.building blocks

C.small barriers

D.fences


23.(p.290)Short-term objectives and action plans give operating personnel a better understanding of their role in the firm's ______.

A.goals

B.financial performance

C.strategic management

D.mission


24.(p.291)A benefit of short-term objectives and action plans comes from the __________. If this is done and managers participate, short-term objectives and action plans provide valid bases for addressing and accommodating conflicting concerns that might interfere with strategic effectiveness.

A.process development

B.strategy development

C.strategic control

D.clarity of purpose


25.(p.291)Functional tactics translate thought (______) into action designed to accomplish specific short-term objectives.

A.policies

B.mission

C.vision

D.grand strategy


26.(p.291)One benefit of short-term objectives and action plans is that they provide a __________. They can provide clear, measurable mechanisms for developing budgets, schedules and trigger points, which help control the implementation of strategy.

A.basis for strategy evaluation

B.basis for motivation

C.basis for strategy implementation

D.basis for strategic control


27.(p.291)One benefit of short-term objectives and action plans is its _________, which clarifies personal and group roles in a firm's strategies and help realistically challenge managers to perform well. These objectives are particularly effective when linked to the firm's reward structure.

A.motivational payoff

B.structured clarity

C.compensation structure

D.complicated nature


28.(p.291)________ are key, routine activities that must be undertaken in each functional area.

A.Business tactics

B.Resource tactics


D.Corporate tactics

Difficulty: 1 EasyLearning Objective: 10-03 Illustrate what is meant by functional tactics and understand how they are used in strategy implementation.

29.(p.291)Functional tactics translate _______ into action designed to accomplish specific short-term objectives.

A.corporate strategy

B.grand strategy

C.competitive will

D.business strength

Difficulty: 2 MediumLearning Objective: 10-03 Illustrate what is meant by functional tactics and understand how they are used in strategy implementation.

30.(p.291)Every ________ in a company executes functional tactics that support the business' strategy and help accomplish strategic objectives.

A.competitive rivalry

B.supplier/customer

C.value chain activity

D.business unit manager


31.(p.291)Which is NOT one of the differences between business strategies and functional tactics?

A.Reinforcement of the strategy

B.Time horizon

C.Specificity

D.Participants who develop them

Difficulty: 3 HardLearning Objective: 10-03 Illustrate what is meant by functional tactics and understand how they are used in strategy implementation.

32.(p.291)__________ identify activities to be undertaken now or in the immediate future.

A.Long-term tactics

B.Business strategies

C.Corporate strategies

D.Functional tactics


33.(p.293)The ___________ of functional tactics allows functional managers to adjust to changing current conditions.

A.shorter time horizon

B.focus on growth

C.specificity

D.business focus


34.(p.291)Business strategies provide _______ direction.

A.general

B.focused

C.generic

D.narrow


35.(p.291)Functional tactics are more _________ than business strategies.

A.specific

B.focused on the general direction of the firm

C.focused on a commitment to corporate strategy

D.long-term


36.(p.291)Which of the following is NOT a way that specificity in functional tactics contributes to successful implementation?

A.Helping ensure that functional managers know what needs to be done and can focus on accomplishing results

B.Limiting the need for top management's confidence in and sense of control over the business strategy

C.Clarifying for top management how functional managers intend to accomplish the business strategy

D.Facilitating coordination among operating units within the firm by clarifying areas of interdependence and potential conflict


37.(p.294)Operating managers must establish short-term objectives and operating strategies that contribute to:

A.Business-level goals

B.Corporate-level goals

C.Goals toward diversification

D.Specialization


38.(p.294)Involving operating managers can increase the __________ of operating managers to the strategies developed.

A.resistance

B.limitations

C.commitment

D.evaluation


39.(p.294)Outsourcing starts for most firms with:

A.The outsourcing of production

B.The outsourcing of the marketing function

C.The outsourcing of payroll production

D.The outsourcing of corporate strategy decisions

Difficulty: 2 MediumLearning Objective: 10-04 Gain a general sense of what outsourcing is and how it becomes a choice of functional tactics decisions for strategy implementation.

40.(p.294)__________ is defined as obtaining work previously done by employees inside the companies from sources outside the company.

A.Specialization

B.Fragmentation

C.Outsourcing


Difficulty: 1 EasyLearning Objective: 10-04 Gain a general sense of what outsourcing is and how it becomes a choice of functional tactics decisions for strategy implementation.

41.(p.274)__________ is acquiring an activity, service or product necessary to provide a company's products or services from "outside" the people or operations controlled by that acquiring company.

A.Specialization

B.Fragmentation

C.Outsourcing



42.(p.294)Relentless cost cutting is the main force behind the trend of _____.

A.strategic planning

B.outsourcing

C.goal setting

D.globalization


43.(p.294)_________ is the main force behind the outsourcing trend.

A.Relentless cost cutting

B.Achieving internal synergies

C.Better capital budgeting

D.Keeping control internal


44.(p.295)___________ is the most frequently outsourced functional activity at 75 percent.

A.Marketing

B.Payroll

C.Travel

D.HR


45.(p.296)________ is the act of allowing an individual or team the right and flexibility to make decisions and initiate action.

A.Management

B.Micromanagement

C.Empowerment

D.Developing strategy

Difficulty: 1 EasyLearning Objective: 10-05 Understand what policies are and how to use policies to empower operating personnel in implementing business strategies and functional tactics.

46.(p.296)One way operating managers ensure decision making is consistent with the mission, strategy and tactics of the business while allowing considerable latitude to operating personnel is through the use of:

A.Empowerment

B.Policies

C.Strategic evaluation

D.Facilitating strategic design

Difficulty: 2 MediumLearning Objective: 10-05 Understand what policies are and how to use policies to empower operating personnel in implementing business strategies and functional tactics.

47.(p.296)__________ are directives designed to guide the thinking, decisions and actions of managers and their subordinates in implementing a firm's strategy.

A.Functional tactics

B.Action plans


D.Policies


48.(p.296)One way operating managers _____ is through the use of policies.

A.outsource

B.strategize

C.politicize

D.empower


49.(p.296)__________ increase managerial effectiveness by standardizing many routine decisions and clarifying the discretion managers and subordinates can exercise in implementing functional tactics.

A.Outsourcing

B.Standard operating procedures

C.Corporate cultures

D.Action plans


50.(p.296)_______ communicate guidelines to decisions.

A.Policies

B.Action plans


D.Business strategy objectives


51.(p.296)Policies are also sometimes called

A.standard operating procedures

B.action plans

C.functional tactics

D.business strategy objectives


52.(p.296)Policies establish __________ over _________ by clearly stating how things are to be done _________.

A.indirect control; dependent action; in the future

B.indirect control; independent action; now

C.direct control; independent action; in the future

D.direct control; dependent action; now

Difficulty: 3 HardLearning Objective: 10-05 Understand what policies are and how to use policies to empower operating personnel in implementing business strategies and functional tactics.

53.(p.296)Policies establish __________ over independent action.

A.strategic control

B.indirect control

C.direct control

D.visionary control


54.(p.297)Policies ________ basic aspects of organization behavior.

A.Negotiate

B.Institutionalize

C.Justify

D.Determine


55.(p.297)Policies ensure ______ action.

A.slower

B.quicker

C.indirect

D.loose


56.(p.297)Policies counteract resistance to or rejection of chosen _______.

A.vision statements

B.strategies

C.mission statements

D.capabilities


57.(p.297)Policies reduce _______ in day to day decision making.

A.The need for operating personnel

B.The number of routine problems

C.The speed with which decisions can be made

D.Uncertainty


58.(p.298)Policies may be ________ or _________.

A.written and informal; unwritten and formal

B.written and formal; unwritten and formal

C.written and formal; unwritten and informal

D.written and informal; unwritten and informal


59.(p.298)Policies offer predetermined answers to _____ problems.

A.unique

B.formal

C.routine

D.informal


60.(p.298)Which of the following is NOT a benefit of formal, written policies?

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

B.They reduce misunderstanding

C.They systematically enhance indirect control and organization-wide coordination of the key purposes of policies

D.They communicate the authorization or sanction of policies more clearly


61.(p.298)The strategic ________ of policies can vary.

A.direction

B.plan

C.significance

D.advantage


62.(p.298)Policies can be ________. One good example of this is the use of equal employment opportunity practices.

A.internally derived

B.negative

C.externally imposed

D.very simple in nature


63.(p.298)The ______ significance of policies can vary.

A.visionary

B.routine

C.strategic

D.important


64.(p.299)________ theoretically reward(s) the actions of people within an organization.

A.Development

B.Compensation

C.Policies

D.Action plans

Difficulty: 1 EasyLearning Objective: 10-06 Understand the use of financial reward in executive compensation.

65.(p.299)Policies can be externally imposed or ______.

A.stakeholder driven

B.mandated by stockholders

C.internally derived

D.mandated by the stock market


66.(p.299)The goal of an executive bonus compensation plan is to:

A.Motivate executives to achieve maximization of shareholder wealth

B.Motivate executives to achieve maximization of personal wealth

C.Differentiate executives from other managers

D.Ensure the success of the firm

Difficulty: 2 MediumLearning Objective: 10-06 Understand the use of financial reward in executive compensation.

67.(p.299)The goal of ______ is not the only goal that executives may pursue.

A.organizational policies

B.organizational rewards

C.managerial rewards

D.shareholder wealth maximization

Difficulty: 1 EasyLearning Objective: 10-06 Understand the use of financial reward in executive compensation.

68.(p.299)The success of bonus compensation as an incentive hinges on:

A.The executive in question

B.The success of the firm

C.The match between the plan and the firm's strategic objectives

D.The positive link between shareholder wealth and personal wealth maximization

Difficulty: 2 MediumLearning Objective: 10-06 Understand the use of financial reward in executive compensation.

69.(p.299)A common measure of shareholder wealth creation is appreciation of company

A.revenues

B.stock price

C.employees

D.stockholders

Difficulty: 2 MediumLearning Objective: 10-07 Identify different types of executive compensation and when to use each in strategy implementation.

70.(p.299)______ provide the executive with the right to purchase company stock at a fixed price in the future.

A.Golden handcuffs

B.Stock options

C.Golden parachutes



71.(p.299)A common measure of _______ creation is appreciation of company stock price.

A.shareholder wealth

B.revenue

C.sales

D.job

Difficulty: 3 HardLearning Objective: 10-07 Identify different types of executive compensation and when to use each in strategy implementation.

72.(p.299)Stock options have typically represented _______ of a CEO's average pay package.

A.less than 30 percent

B.less than 50 percent

C.more than 50 percent

D.more than 90 percent


73.(p.299)______ dilute shareholders' equity when they are exercised.

A.Golden handcuffs

B.Stock options

C.Golden parachutes



74.(p.300)The rationale behind golden handcuffs is that the plan:

A.Promotes longer executive tenure than other forms of compensation

B.Offsets the limitations of focusing on market-based measures of performance

C.Offers an incentive for executives to remain with the firm

D.Provides incentive for the executive to create wealth for shareholders as measured by increase in the firm's share price


75.(p.300)There is a weak correlation between earnings measures and shareholder wealth creation with the use of a:

A.Golden handcuffs plan

B.Cash based plan

C.Restricted stock plan

D.Stock option grant


76.(p.300)Golden handcuffs:

A.Have no downside risk to executives, who always profits unlike other shareholders

B.Have a weak correlation between earnings measures and shareholder wealth creation

C.Make it hard to explain the dimensions of managerial performance using the movement in share price

D.May promote risk-averse decision making due to the downside risk borne by the executive


77.(p.300)________ provide incentive for the executive to create wealth for shareholders as measured by increases in the firm's share price.

A.Stock option grants

B.Golden handcuffs

C.Golden parachutes

D.Cash-based plans


78.(p.300)__________ are much easier to value than options because they are equivalent to a stock transfer at the market price.

A.Restricted stock grants

B.Golden handcuffs

C.Golden parachutes

D.Cash plans


79.(p.300)________ offers employees more certainty, even if there is less potential for a big win.

A.The use of stock options

B.A golden parachute

C.Stock grants

D.Restricted stock


80.(p.300)A ________ is designed to provide benefits of direct executive stock ownership.

A.restricted stock plan

B.cash based plan

C.golden parachute

D.golden handcuffs plan

Difficulty: 1 EasyLearning Objective: 10-07 Identify different types of executive compensation and when to use each in strategy implementation.

81.(p.300)Restricted stock plans offer:

A.Higher downside risk to executives

B.More limited downside risk to executives

C.No downside risk to executives

D.Limited upside risk to executives


82.(p.300)__________ represent a form of executive compensation where compensation is deferred.

A.Golden handcuffs

B.Golden parachutes

C.Golden stock options

D.Unrestricted stock options


83.(p.300)If the executive quits, is fired or simply retires, he would be best protected by a _________, which is designed to retain talented executives.

A.golden handcuff

B.golden parachute

C.cash based plan

D.stock option


84.(p.305)_______ are executive bonus compensation plans that focus on accounting measures of performance and are designed to offset the limitations of market-based measures of performance.

A.Cash restricted plans

B.Golden handcuffs

C.Restricted stock plans

D.Cash-based plans


85.(p.305)A firm with a strategic goal of growing the share price incrementally should implement a:

A.Restricted stock plan

B.Stock option plan

C.Cash-based plan

D.Golden parachute


86.(p.306)A firm with a strategic goal of reducing executive turnover would use _________ to provide an incentive for longer executive tenure.

A.cash

B.stock options

C.golden parachutes

D.golden handcuffs


87.(p.306)A firm seeking to globalize operations would use ________ as its bonus compensation plan.


B.golden parachutes

C.golden handcuffs

D.stock options


88.(p.306)A firm with a strategic goal of streamlining operations should use ________ to reward the long-term focus on efficiency and cost control.


B.stock options

C.cash

D.golden parachutes


Essay Questions89.How do short-term objectives help implement strategy?

Please refer to the discussion titled "Short-Term Objectives," on pages 288-289.

Learning Objective: 10-01 Understand how short-term objectives are used in strategy implementation.

90.What are three important qualities of effective short-term objectives? Briefly describe each of these in your answer.

Please refer to the discussion titled "Qualities of Effective Short-Term Objectives" on pages 289-291.

Learning Objective: 10-02 Identify and apply the qualities of good short-term objectives to your own experiences.

91.What are functional tactics? Briefly describe them and provide one example of their use.

Please refer to the discussion titled "Functional Tactics That Implement Business Strategies," on page 291.

Learning Objective: 10-03 Illustrate what is meant by functional tactics and understand how they are used in strategy implementation.

92.In what three fundamental ways do functional tactics differ from business or corporate strategies? Briefly describe each.

Please refer to the discussion titled "Differences between Business Strategies and Functional Tactics," on pages 291-294.

Learning Objective: 10-03 Illustrate what is meant by functional tactics and understand how they are used in strategy implementation.

93.What is outsourcing? What are the benefits and risks of outsourcing?

Please refer to the discussion titled "Outsourcing Functional Activities" on pages 294-295.

Learning Objective: 10-04 Gain a general sense of what outsourcing is and how it becomes a choice of functional tactics decisions for strategy implementation.

94.What does it mean to empower employees? How are policies related to the idea of empowerment?

Please refer to the discussion titled "Empowering Operating Personnel: The Role of Policies," on page 296.

Learning Objective: 10-05 Understand what policies are and how to use policies to empower operating personnel in implementing business strategies and functional tactics.

95.How can policies control decisions while defining allowable discretion in which operating personnel can execute business strategies? Describe several ways.

Please refer to the discussion titled "Creating Policies That Empower," on pages 296-299.

Learning Objective: 10-05 Understand what policies are and how to use policies to empower operating personnel in implementing business strategies and functional tactics.

96.What are stock options? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

Please refer to the discussion titled "Stock options," on pages 299-302.

Learning Objective: 10-07 Identify different types of executive compensation and when to use each in strategy implementation.

97.What are restricted stock options? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

Please refer to the discussion titled "Restricted Stock" on pages 302-303.


98.What are golden handcuffs? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

Please refer to the discussion titled "Golden Handcuffs," on page 303.


99.What are golden parachutes? How do they motivate executives and key employees to achieve maximization of shareholder wealth?

Please refer to the discussion titled "Golden Parachutes," on pages 303-305.


100.Briefly match the appropriate type of bonus compensation to the strategic goal being pursued. What is the rationale behind these match-ups?

Please refer to the figure in the text titled "Exhibit 10.12, Compensation Plan Selection Matrix," on page 306.


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MGT 498 Chapter 10 Answers

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