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Chapter 10 Building an Organization Capable of Good Strategy Execution: People, Capabilities, and Structure Answer Key

Multiple Choice Questions

1. Once company managers have decided on a strategy, the emphasis turns to

A. building the core competencies and competitive capabilities needed to execute the strategy.B. developing a detailed implementation plan that sets forth exactly what every department and every

manager needs to do to proficiently execute the company's strategy.C. establishing policies and procedures that instruct company personnel in the ways and means of

executing the strategy.D. converting the strategy into actions and good results.E. empowering employees to revise and reorganize value chain activities to match the

strategy.Once managers have decided on a strategy, the emphasis turns to converting it into actions and good results.

AACSB: Analytical Thinking

Accessibility: Keyboard NavigationBlooms: UnderstandDifficulty: 2 Medium

Learning Objective: 10-01 What managers must do to execute strategy successfully.Topic: Organizational change

2. Strategy execution

A. requires revamping the value chain in order to maximize operating efficiency.B. depends on management's ability to direct organizational change.C. involves selecting a capable management team.D. consists of choosing among broad or narrow low-cost and differentiation strategies to compete

against rivals.E. requires deciding which core competencies and value chain activities to leave as is and which ones

to overhaul and improve.Successful strategy execution depends on management's ability to direct organizational change and do a good job of allocating resources, building and strengthening competitive capabilities, instituting strategy-supportive policies, improving processes and systems, motivating and rewarding people, creating and nurturing a strategy-supportive culture, and consistently meeting or beating performance targets.



Learning Objective: 10-01 What managers must do to execute strategy successfully.Topic: Organizational change

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3. Which of the following is NOT among the types of actions and initiatives undertaken by management in the strategy execution process?

A. pushing for continuous improvement in how value chain activities are performedB. building an organization capable of executing the strategyC. deciding which core competencies and value chain activities to leave as is and which ones to

overhaul and improveD. tying rewards directly to the achievement of strategic and financial targets and to good strategy

executionE. instituting policies and procedures that facilitate rather than impede strategy executionTen managerial tasks crop up repeatedly in company efforts to execute strategy, not one of which includes decisions on core competencies and value chain activities. The correct answers include: (1) building an organization—consisting of the capabilities, people, and structure needed to execute the strategy successfully; (2) allocating ample resources to strategy-critical activities—budget reallocations and resource-shifting (growing or downsizing strategic business units); (3) ensuring that policies and procedures facilitate rather than impede effective strategy execution—enforcing consistency, supporting change, and promoting a can-do work climate; (4) adopting process management programs that drive continuous improvement in how strategy execution activities are performed—continuous improvement via business process reengineering, TQM, and Six Sigma; (5) installing information and operating systems that enable company personnel to perform essential activities—tracking real-time operating and performance data; (6) tying rewards directly to the achievement of performance objectives—both substantive (financial compensation) and symbolic (culture-affirming); (7) fostering a corporate culture that promotes good strategy execution—transforming an unhealthy culture into an adaptive or high performance culture; and (8) exerting the internal leadership needed to propel implementation forward—staying on top, setting the tone, leading by example, using constructive pressure, making corrective adjustments, and so on.



Learning Objective: 10-01 What managers must do to execute strategy successfully.Topic: Organizational development

4. The managerial approach to implementing and executing a strategy should always

A. be customized to fit the particulars of a company's situation.B. involve only minor changes to the existing strategy.C. require radical strategy changes for successful execution.D. rely on the active support of frontline employees.E. focus on market conditions and the company's resources and capabilities.The managerial approach to implementing and executing a strategy always has to be customized to fit the particulars of a company's situation.






5. The approach to identifying the items needed to be placed on management's action agenda of the strategy execution plan always involves

A. generalized activities that will underscore the particulars of the company's situation.B. some definitive managerial recipe for successful strategy execution that works for all company

situations and all types of strategies, or that works for all types of managers.C. a set of unimportant managerial tasks that must be covered no matter what the circumstances.D. senior management's judgment about how to proceed in light of prevailing circumstances.E. a high-end differentiation strategy for proficient implementation and

execution.There's no definitive managerial recipe for successful strategy execution that cuts across all company situations and all strategies or that works for all managers. Rather, the specific actions required to execute a strategy—the "to-do list" that constitutes management's action agenda—always represent management's judgment about how best to proceed in light of prevailing circumstances.




6. What does a good strategy execution require?

A. a team effort with all managers having strategy executing responsibility in their areas of authority, and making all employees active participants in the strategy execution process

B. incremental changes to current operating practices be implemented to ensure existing resource capabilities are not impacted too severely

C. little consensus building, despite the magnitude of the proposed changes, because employees know the benefits gained from the planning process

D. the strategy-critical value chain activities to be simplified so that all company personnel can be cognizant of the benefits of the execution parameters

E. additional investments in capital projects rather than adding to a company's talent base and building intellectual capital

Good strategy execution requires a team effort. All managers have strategy-executing responsibility in their areas of authority, and all employees are active participants in the strategy execution process.






7. The three components of building a capable organization are

A. optimizing the number of core competencies and competitive capabilities, making sure that all managers and employees are empowered, and maximizing internal operating efficiency.

B. putting a centralized decision-making structure in place, determining who should have responsibility for each value chain activity, and aligning the corporate culture with key policies, procedures, and operating practices.

C. staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort.

D. making periodic changes in the firm's internal organization to keep people from getting into a comfortable rut, instituting a decentralized approach to decision making, and developing the appropriate competencies and capabilities.

E. hiring a capable top management team, empowering employees, and establishing a strategy-supportive corporate culture.

Three types of organization building actions are paramount: (1) staffing the organization—putting together a strong management team and recruiting and retaining employees with the needed experience, technical skills, and intellectual capital; (2) acquiring, developing, and strengthening strategy-supportive resources and capabilities—accumulating the required resources, developing proficiencies in performing strategy-critical value chain activities, and updating them to match changing market conditions and customer expectations; and (3) structuring the organization and work effort—organizing value chain activities and business processes, establishing lines of authority and reporting relationships, and deciding how much decision-making authority to push down to lower-level managers and frontline employees.






8. Which of the following is NOT among the principal managerial components of the strategy execution process?

A. building an organization with the competencies, capabilities, and resource strengths needed to execute strategy successfully

B. instituting policies and procedures that facilitate rather than impede strategy executionC. deciding which core competencies and value chain activities to leave as is and which ones to

overhaul and improveD. adopting best practices and pushing for continuous improvement in how value chain activities are

performedE. tying rewards directly to the achievement of strategic and financial targets and to good strategy

executionDespite the need to tailor a company's strategy-executing approaches to the particulars of the situation at hand, certain managerial bases must be covered no matter what the circumstances. These include 10 basic managerial tasks:

1. Staffing the organization with managers and employees capable of executing the strategy well.2. Developing the resources and organizational capabilities required for successful strategy execution.3. Creating a strategy-supportive organizational structure.4. Allocating sufficient resources (budgetary and otherwise) to the strategy execution effort.5. Instituting policies and procedures that facilitate strategy execution.6. Adopting best practices and business processes to drive continuous improvement in strategy execution activities.7. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.8. Tying rewards and incentives directly to the achievement of strategic and financial targets.9. Instilling a corporate culture that promotes good strategy execution.10. Exercising the internal leadership needed to propel strategy implementation forward.


Accessibility: Keyboard NavigationBlooms: Remember

Difficulty: 2 MediumLearning Objective: 10-01 What managers must do to execute strategy successfully.

Topic: Organizational development



9. Building an organization capable of good strategy execution entails

A. investing heavily in employee training, using an empowered organization design and organization structure in order to maximize labor productivity, and employing effective incentive compensation systems.

B. staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort.

C. empowering employees, maximizing internal operating efficiency, and optimizing core competencies.

D. decentralizing authority for performing strategy-critical value chain activities, establishing at least two distinctive competencies, and hiring talented employees.

E. centralizing authority in the hands of a chief strategy implementer so as to create the leadership authority for driving implementation forward at a rapid pace.

Despite the need to tailor a company's strategy-executing approaches to the particulars of the situation at hand, certain managerial bases must be covered no matter what the circumstances. These include 10 basic managerial tasks:

1. Staffing the organization with managers and employees capable of executing the strategy well.2. Developing the resources and organizational capabilities required for successful strategy execution.3. Creating a strategy-supportive organizational structure.4. Allocating sufficient resources (budgetary and otherwise) to the strategy execution effort.5. Instituting policies and procedures that facilitate strategy execution.6. Adopting best practices and business processes to drive continuous improvement in strategy execution activities.7. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.8. Tying rewards and incentives directly to the achievement of strategic and financial targets.9. Instilling a corporate culture that promotes good strategy execution.10. Exercising the internal leadership needed to propel strategy implementation forward.



Difficulty: 1 EasyLearning Objective: 10-01 What managers must do to execute strategy successfully.




10. Which of the following does NOT exemplify a policy or procedure that facilitates strategy execution?

A. a nonprofit agency that addresses only specific societal problems through public services

B. a toy manufacturing company that plans on reaching three different segments of the market

C. a fast food joint that has an onsite kindergarten and provides afterschool programs for its employees' children

D. a sporting goods seller that monitors consumers' preferences for gear and accessories on its blogE. a bedding linen manufacturing company that recycles its water to cool the machines in the factoryHaving onsite kindergartens and providing afterschool programs are perks and/or incentives for employees that help a company retain its employees. Such practices do not necessarily form a part of the company's policies and procedures that facilitate strategy execution.


Accessibility: Keyboard NavigationBlooms: Apply

Difficulty: 3 HardLearning Objective: 10-01 What managers must do to execute strategy successfully.

Topic: Top-level management

11. In formulating an action agenda to implement and execute a new or different strategy, the place for managers to begin is with

A. the task of revising and enhancing the company's core competencies.B. choosing which leadership style to employ in trying to carry out the strategy successfully.C. evaluating whether existing policies and procedures are adequately strategy-supportive.D. allocating more resources to strategy-critical parts of the

business.E. a probing assessment of what the organization must do differently and better to carry out the

strategy successfully.In devising an action agenda for executing strategy, managers should start by conducting a probing assessment of what the organization must do differently to carry out the strategy successfully.

AACSB: Reflective Thinking






12. When strategies fail, it is often because of

A. poor execution of the strategy.B. shortfalls exposed with the strategic management design process.C. inadequate support for the management team responsible for the planning process.D. secondary operating practices that hinder the required

changes.E. lack of sufficient information about operating systems.When strategies fail, it is often because of poor execution. Strategy execution is therefore a critical managerial endeavor.


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13. The two best signs of good strategy execution are whether

A. the company is challenging its current performance targets and whether value chain activities are fully integrated within the strategic response criteria.

B. managers are personally leading the change process and whether they are meeting deadlines set for budgetary requirements.

C. the company is meeting or beating its performance targets and whether it is performing value chain activities in a manner that is conducive to companywide operating excellence.

D. managers are fully behind the changes and whether the company's value chain managers are executing them diligently.

E. the company identifies what the organization must do and how to make the necessary internal changes.

The two best signs of good strategy execution are whether a company is meeting or beating its performance targets and whether it is performing value chain activities in a manner that is conducive to companywide operating excellence.







14. The most important leadership trait in the strategy execution process is

A. a strong, confident sense of what to do and how to do it.B. strong communication skills (both written and verbal) covering motivating intent.C. strong management skills to ensure a systematic approach to administration.D. strong organizational skills so as to make actions structured toward results.E. strong empathy skills when employees run into challenging moments.In devising an action agenda for executing strategy, managers should start by conducting a probing assessment of what the organization must do differently to carry out the strategy successfully. Each manager needs to ask the question "What needs to be done in my area of responsibility to implement our part of the company's strategy, and what should I do to get these things accomplished?"





15. Executing strategy is a make-things-happen task that tests a manager's ability to perform all of the following EXCEPT

A. manage the people, talents, and business processes of an operations-driven activities company.

B. direct organizational change and achieve continuous improvement in operations and business processes.

C. create and nurture a strategy-supportive culture.

D. meet or beat performance targets consistently.E. focus on market conditions and the company's resources and capabilities.Executing strategy is an action-oriented, make-things-happen task that tests a manager's ability to direct organizational change, achieve continuous improvement in operations and business processes, create and nurture a strategy-supportive culture, and consistently meet or beat performance targets.







16. Which of the following statements falsely characterizes the managerial task of executing strategy?

A. Executing strategy is an action-oriented, make-things-happen task.B. Executing strategy tests a manager's ability to direct organizational change, achieve continuous

improvement in operations and business processes, create and nurture a strategy-supportive culture, and consistently meet or beat performance targets.

C. Implementing new strategic initiatives principally involves employing managerial techniques to overcome resistance to change.

D. Executing strategy requires a team effort which entails that every manager think through the answer to "What does my area have to do to implement its part of the strategic plan, and what should I do to get these things accomplished effectively and efficiently?"

E. Implementing and executing strategy is primarily an operations-driven activity revolving around the management of people and business processes.

The challenge of successfully implementing new strategic initiatives goes well beyond managerial adeptness in overcoming resistance to change. What really makes executing strategy a tougher, more time-consuming management challenge than crafting strategy are the wide array of managerial activities that must be attended to, the many ways to put new strategic initiatives in place and keep things moving, and the number of bedeviling issues that always crop up and have to be resolved.




17. What makes the managerial task of executing strategy so challenging and demanding is the

A. trial-and-error experimentation that is required to come up with a workable organizational structure.

B. people-management skills required, the resistance to change that has to be overcome, and the perseverance necessary to get a variety of initiatives launched and kept moving along.

C. time and effort it takes to build core competencies.D. time, training, and creative effort it takes to empower employees and teach them responsible

decision making.E. supervisory requirements associated with getting company personnel to do things the right way.It takes first-rate "managerial smarts" to zero in on what exactly needs to be done and how to get good results in a timely manner. Excellent people-management skills and perseverance are required to get a variety of initiatives launched and to integrate the efforts of many different work groups into a smoothly functioning whole.



Difficulty: 3 HardLearning Objective: 10-01 What managers must do to execute strategy successfully.




18. Which of the following statements about implementing and executing a new strategy is true?

A. Executing strategy calls for essentially the same kinds of creative management talent and innovative thinking as does crafting strategy.

B. Executing strategy is chiefly a financially driven process aimed at squeezing the most profit out of conducting daily operations.

C. Executing strategy is a job for a company's whole management team, not just a few senior managers.

D. Executing strategy depends heavily on the caliber of a CEO's business vision, industry and competitive analysis skills, and entrepreneurial creativity.

E. Executing strategy tends to be a simpler, quicker management task to perform as compared to crafting a winning strategy.

Like crafting strategy, executing strategy is a job for a company's whole management team—not just a few senior managers.




19. Which of the following is generally NOT among the practices that companies use to staff jobs with the best people they can find?

A. weeding out the 20% lowest-performing employees each yearB. coaching average performers to improve their skills and capabilitiesC. striving to retain talented, high-performing employees via promotions, salary increases, and other

perksD. rotating people through jobs that span functional and geographic boundariesE. careful screening and evaluation of job applicantsTactics common among companies dedicated to staffing jobs with the best people they can find include: (1) putting forth considerable effort in screening and evaluating job applicants—selecting only those with suitable skill sets, energy, initiative, judgment, aptitudes for learning, and adaptability to the company's culture; (2) investing in training programs that continue throughout employees' careers; (3) providing promising employees with challenging, interesting, and skill-stretching assignments; (4) rotating people through jobs that span functional and geographic boundaries; (5) striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks; and (6) coaching average performers to improve their skills and capabilities, while weeding out underperformers and benchwarmers. Thus, all of the above choices except weeding out the bottom 20 percent are logical and necessary ways of staffing the strategy execution effort with the best personnel.






20. While ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives

A. top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units.

B. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly.

C. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail.

D. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution.

E. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.

Top-level managers must rely on the active support of middle and lower managers to institute whatever new operating practices are needed in the various operating units to achieve proficient strategy execution. Middle and lower-level managers must ensure that frontline employees perform strategy-critical value chain activities well and produce operating results that allow companywide performance targets to be met.




21. Implementing and executing a company's strategy

A. is primarily the job of the company's board of directors since they direct the actions and policies of the top senior executives in executing the strategy.

B. is a task for every manager and the whole management team, but ultimate responsibility for success or failure falls upon the top senior executives, especially the chief executive officer of the company.

C. is primarily a responsibility of all company personnel because all personnel are active participants in the strategy execution process and their actions have a huge impact on the ultimate outcome.

D. should be delegated to a chief strategy implementer appointed by the chief executive officer.E. is primarily a task for middle and lower-level managers because it is they who have responsibility

for pushing the needed changes all the way down to the lowest levels of the organization.Like crafting strategy, executing strategy is a job for a company's whole management team—not just a few senior managers. While the chief executive officer and the heads of major units (business divisions, functional departments, and key operating units) are ultimately responsible for seeing that strategy is executed successfully, the process typically affects every part of the firm—all value chain activities and all work groups. Top-level managers must rely on the active support of middle and lower managers to institute whatever new operating practices are needed in the various operating units to achieve proficient strategy execution. Middle and lower-level managers must ensure that frontline employees perform strategy-critical value chain activities well and produce operating results that allow companywide performance targets to be met. Consequently, all company personnel are actively involved in the strategy execution process in one way or another.







22. Management's handling of the strategy implementation/execution process can be considered successful

A. when the internal organization develops two or more core competencies in performing value chain activities.

B. if and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company.

C. if the company's culture is strong and strategy-supportive.D. if management is able to marshal adequate resources to put the strategy in place within 6 to 12

months.E. if managers and employees express strong support for the company's strategy and long-term

direction.The two best signs of good strategy execution are whether a company is meeting or beating its performance targets and whether it is performing value chain activities in a manner that is conducive to companywide operating excellence.





23. The three components of building a capable organization are

A. making periodic changes in the firm's internal organization to keep people from getting into a comfortable rut, instituting a decentralized approach to decision making, and developing the appropriate competencies and capabilities.

B. hiring a capable top management team, empowering employees, and establishing a strategy-supportive corporate culture.

C. putting a centralized decision-making structure in place, determining who should have responsibility for each value chain activity, and aligning the corporate culture with key policies, procedures, and operating practices.

D. staffing the organization, acquiring, developing, and strengthening key resources and competitive capabilities, and structuring the organization and work effort.

E. optimizing the number of core competencies and competitive capabilities, making sure that all managers and employees are empowered, and maximizing internal operating efficiency.

Proficient strategy execution depends foremost on having in place an organization capable of the tasks demanded of it. Building an execution-capable organization is thus always a top priority. The following three types of organization-building actions are paramount:

1. staffing the organization2. acquiring, developing, and strengthening the resources and capabilities required for good strategy execution3. structuring the organization and work effort







24. If management is to match a company's organization structure to its strategy in an effective way, then it is essential

A. for strategy-critical value-chain activities to be the main building blocks on the organization chart.

B. that value chain activities be deliberately organized so as to produce maximum strategic fit.C. for the company to be organized around cross-functional teams rather than around functional

specialties and functional departments.D. to define the jobs of company personnel in terms of the functions to be performed rather than in

terms of the results to be achieved.E. that company personnel be empowered to make both strategic decisions and operating

decisions.Proficient strategy execution depends foremost on having in place an organization capable of the tasks demanded of it. Building an execution-capable organization is thus always a top priority. Three types of organization-building actions are paramount: (1) staffing the organization; (2) acquiring, developing, and strengthening the resources and capabilities required for good strategy execution; and (3) structuring the organization and work effort.It is important for management to build its organization structure around proficient performance of these three activities, making them the centerpieces or main building blocks on the organization chart.





25. The most common building blocks for a company's organizational structure

A. usually consist of two divisions—a division charged with performing primary value chain activities and a division charged with performing support activities.

B. involve a functional or departmental structure that includes process, geographic, product, or customer groups performing one or more major processing steps along the value chain.

C. typically consist of an un-empowered employee department, an empowered employee department, teams of front-line supervisors, teams of middle-level managers and administrators, and the group of top-level executives that comprise the company's "executive suite."

D. are almost always the departments performing such key administrative support functions as finance, accounting, information technology, human resource management, and R&D.

E. usually consist of supply chain management, components manufacture, assembly, distribution, and administration.

It is most common for companies engaged in a single line of business to utilize a functional (or departmental) organizational structure that organizes strategy-critical activities into distinct functional, product, geographic, process, or customer groups.



Learning Objective: 10-01 What managers must do to execute strategy successfully.




26. Building an organization capable of good strategy execution entails

A. staffing the organization, acquiring, developing, and strengthening key resources and competitive capabilities, and structuring the organization and work effort.

B. decentralizing authority for performing strategy-critical value chain activities, establishing at least two distinctive competencies, and hiring talented employees.

C. investing heavily in employee training, using an empowered organization design and organization structure in order to maximize labor productivity, and employing effective incentive compensation systems.

D. centralizing authority in the hands of a chief strategy implementer so as to create the leadership authority for driving implementation forward at a rapid pace.

E. empowering employees, maximizing internal operating efficiency, and optimizing core competencies.

Proficient strategy execution depends foremost on having in place an organization capable of the tasks demanded of it. Building an execution-capable organization is thus always a top priority. The following three types of organization-building actions are paramount:

1. staffing the organization2. acquiring, developing, and strengthening the resources and capabilities required for good strategy execution3. structuring the organization and work effort





27. Which of the following is NOT part of a senior executive's agenda in big organizations with geographically scattered operating units?

A. communicating the case for changeB. directing resources to the right placesC. building consensus for how to proceedD. establishing deadlines and measures of progressE. orchestrating the action steps and implementation sequenceIn big organizations with geographically scattered operating units, senior executives' action agenda mostly involves communicating the case for change, building consensus for how to proceed, installing strong managers to move the process forward in key organizational units, directing resources to the right places, establishing deadlines and measures of progress, rewarding those who achieve implementation milestones, and personally leading the strategic change process.






28. Which of the following is part of strategy-supportive resources and capabilities?

A. recruiting and retaining talented employeesB. instituting organizational arrangementsC. establishing lines of authorityD. creating reporting relationshipsE. deciding how much authority to delegateStrategy-Supportive Resources and Capabilities involves the following:

1. Staffing the Organization

• putting together a strong management team• recruiting and retaining talented employees

2. Acquiring, Developing, and Strengthening Key Resources and Capabilities

• developing a set of resources and capabilities suited to the current strategy• updating resources and capabilities as external conditions and the firm's strategy change• training and retaining company personnel to maintain knowledge-based and skills-based capabilities





29. In which of the following steps does updating the company's capabilities to match changing market conditions and customer expectations take place?

A. staffing the organizationB. recruiting and retaining talented employeesC. acquiring, developing, and strengthening key resources and capabilitiesD. organizing value chain activities and business processesE. structuring the organization and work effortAcquiring, developing, and strengthening the resources and capabilities required for good strategy execution includes accumulating the required resources, developing proficiencies in performing strategy-critical value chain activities, and updating the company's capabilities to match changing market conditions and customer expectations.




Topic: Strategic Planning



30. Which of the following is NOT true of implementing a strategy?

A. It is critical to ensure strategy-supportive resources and capabilities are in place.B. The level of personnel competence is irrelevant to proficient strategy execution.C. It is important to assemble a strong management team.D. Strengthening the firm's core competencies is a top priority.E. A poorly structured organization can lead to higher bureaucratic costs.Proficient strategy execution depends heavily on competent personnel of all types, but because of the many managerial tasks involved and the role of leadership in strategy execution, assembling a strong management team is especially important.



Learning Objective: 10-01 What managers must do to execute strategy successfully.Topic: Top-level management

31. General Electric has an up-or-out policy, where key personnel in underperforming units are pressured to boost performance to acceptable levels and keep it there or risk being replaced. What is this an example of?

A. staffing the organization with managers and employees capable of executing the strategy wellB. developing the resources and organizational capabilities required for successful strategy

executionC. tying rewards and incentives directly to the achievement of strategic and financial targetsD. adopting best practices and business processes to drive continuous improvement in strategy

execution activitiesE. exercising the internal leadership needed to propel strategy implementation forwardDespite the need to tailor a company's strategy-executing approaches to the particulars of the situation at hand, certain managerial bases must be covered no matter what the circumstances. This includes tying rewards and incentives directly to the achievement of strategic and financial targets.




Topic: Reward Power



32. Putting together a capable top management team with the right mix of experiences, skills, and abilities

A. should take top priority in building competitively valuable core competencies.B. is particularly important when the firm is pursuing unrelated diversification or making a number of

new acquisitions in related businesses.C. is important in building an organization capable of proficient strategy execution, but is nearly

always less crucial than doing a superior job of training and retraining employees.D. entails filling key managerial slots with smart people who are clear thinkers, good at figuring out

what needs to be done, and who are skilled in "making it happen" and delivering good results.E. is particularly essential for executing a strategy to keep a company's costs lower than rivals and

become the industry's low-cost leader.While different strategies and company circumstances sometimes call for different mixes of backgrounds, experiences, management styles, and know-how, the most important consideration is to fill key managerial slots with smart people who are clear thinkers, good at figuring out what needs to be done, skilled in managing people, and accomplished in delivering good results.



Learning Objective: 10-02 Why hiring, training, and retaining the right people constitute a key component of the strategy execution process.


33. Which of the following is one of the first steps to take in launching the strategy execution process?

A. Ensure all requirements of the value chain are fulfilled.B. Form a mission statement as a basis for managers to achieve organizational objectives.C. Go on the offensive by employing moves to make its product offering more distinctive and

appealing to buyers.D. Put together a talented management team with the right mix of experiences, skills, and abilities to

get things done.E. Strive to be more profitable than rivals and aim for a competitive edge based on bigger profit

margins.Putting together a talented management team with the right mix of experiences, skills, and abilities to get things done is one of the first steps to take in launching the strategy-executing process.







34. The overriding aim in building a management team should be to

A. ensure oversight of every step of the value chain.B. assemble a critical mass of talented managers who can function as agents of change, work well

together as a team, and produce organizational results that are dramatically better than what one or two star managers acting individually can achieve.

C. choose managers experienced in gathering competitive intelligence.D. select people who have similar management styles, leadership approaches, business philosophies,

and personalities.E. choose managers who are competent in executing a strategy to keep a company's costs lower than

rivals and become the industry's low-cost leader.The overriding aim in building a management team should be to assemble a critical mass of talented managers who can function as agents of change and oversee top-notch strategy execution.





35. The process of recruiting and retaining capable employees

A. is more important during periods of rapid growth than during periods of crisis and attempted turnarounds.

B. is always an essential ingredient of successful strategy execution.C. is an essential element of developing a distinctive competence.D. is closely tied to developing strong information capital capabilities.E. is more important than having a good situational fit between the company's strategy and its external

environment.The quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence.







36. Recruiting and retaining capable employees is

A. usually much more important to good strategy execution than is assembling a capable top-management team.

B. important because the quality of an organization's people is always an essential ingredient of successful strategy execution.

C. more important during periods of rapid growth than during periods of crisis and attempted turnarounds.

D. an important organization-building element, particularly when it comes to transforming a competence into a core competence or distinctive competence.

E. easily the most critical aspect in building competitively valuable core competencies and capabilities.The quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence.




Topic: Human resource planning

37. Which of the following statements about recruiting and retaining capable employees is FALSE?

A. The quality of an organization's people is always an essential ingredient if critical value chain activities are to be performed competently.

B. Recruiting and retaining capable employees is a particularly important organization-building tasks in enterprises where superior intellectual capital is a key resource and also a basis for competitive advantage.

C. Recruiting and retaining capable employees are usually much more important to good strategy execution and the achievement of true operating excellence than is assembling a capable top management team.

D. It is very difficult for a company to competently execute its strategy and achieve operating excellence without a large band of capable employees who are actively engaged in the process of making ongoing operating improvements.

E. In many industries, adding to a company's talent base and building intellectual capital are more important to good strategy execution than additional investments in plants, equipment, and capital projects.

In many industries, adding to a company's talent base and building intellectual capital are more important to good strategy execution than are additional investments in capital projects. The best companies make a point of recruiting and retaining talented employees—the objective is to make the company's entire workforce (managers and rank-and-file employees) a genuine competitive asset.







38. Which of the following is generally NOT among the common practices that companies use to staff jobs with talented people, particularly if intellectual capital greatly aids good strategy execution?

A. careful screening and evaluation of job applicants, along with continuous training and retraining programs for employees that continue throughout their careers

B. rotating people through jobs that not only have great content but also span functional and geographic boundaries

C. eliminating the bottom 10 percent of the lowest-performing employees each year to increase the overall quality performance metrics to above-average industry standards

D. encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses

E. fostering a stimulating and engaging work environment such that employees will consider the company a great place to work

In recognition of the importance of a talented and energetic workforce, companies have instituted a number of practices aimed at staffing jobs with the best people they can find:

1. Spending considerable effort on screening and evaluating job applicants—selecting only those with suitable skill sets, energy, initiative, judgment, aptitude for learning, and personality traits that mesh well with the company's work environment and culture.2. Providing employees with training programs that continue throughout their careers.3. Offering promising employees challenging, interesting, and skill-stretching assignments.4. Rotating people through jobs that span functional and geographic boundaries. Providing people with opportunities to gain experience in a variety of international settings is increasingly considered an essential part of career development in multinational companies.5. Making the work environment stimulating and engaging so that employees will consider the company a great place to work.6. Encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses. Progressive companies work hard at creating an environment in which employees are made to feel that their views and suggestions count.7. Striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, benefit packages including health insurance and retirement packages, and other perks, such as flexible work hours and onsite day care.8. Coaching average performers to improve their skills and capabilities, while weeding out underperformers.







39. In companies where intellectual capital is crucial to good strategy execution, which of the following is generally NOT among the practices companies use to establish a talented knowledge base?

A. providing promising employees with challenging, interesting, and skill-stretching assignments and also rotating them through jobs that not only have great content but also span functional and geographic boundaries

B. providing employees promotions, salary increases, performance bonuses, stock options, and other perks

C. coaching underperformers and benchwarmers to improve their skills and capabilitiesD. encouraging employees to challenge existing ways of doing things, to be creative and innovative in

proposing better ways of operating, and to push their ideas for new products or businessesE. fostering a stimulating and engaging work environment such that employees will consider the

company a great place to workIn recognition of the importance of a talented and energetic workforce, companies have instituted a number of practices aimed at staffing jobs with the best people they can find:








40. The implementation process is likely to be hampered by missed deadlines, misdirected efforts, and managerial ineptness if

A. a capable results-oriented management team is not in place.B. the personnel have different management styles.C. top managers start asking tough, incisive questions.D. important details require attention.E. an additional investment in capital projects is required.The task of implementing challenging strategic initiatives must be assigned to executives who have the skills and talents to handle them and who can be counted on to get the job done well. Without a capable, results-oriented management team, the implementation process is likely to be hampered by missed deadlines, misdirected or wasteful efforts, and managerial ineptness.





41. Who is most likely to have strong strategy implementation capabilities?

A. Valery typically probes with tough, incisive questions.B. Greg is often sympathetic to his team members' problems and shortcomings.C. Maria can complete a job in half the time as her colleagues.D. Jorge prefers to launch, manage, and complete projects by

himself.E. Chong advocates promoting qualified people from within the firm.Weak executives are serious impediments to getting optimal results because they are unable to differentiate between ideas that have merit and those that are misguided—the caliber of work done under their supervision suffers. In contrast, managers with strong strategy implementation capabilities have a talent for asking tough, incisive questions.



Difficulty: 2 MediumLearning Objective: 10-02 Why hiring, training, and retaining the right people constitute a key component of the strategy execution

process.Topic: Organizational development



42. It is ideal for key management slots to be filled from outside

A. in turnaround and rapid-growth situations.B. when problems with the old strategy are obvious.C. in a worst-case scenario.D. when the managerial whole is greater than the sum of individual efforts.E. in a centralized structure.In turnaround and rapid-growth situations, and in instances when a company doesn't have insiders with the requisite know-how, filling key management slots from the outside is a standard organization-building approach.





43. Good strategy execution requires which of the following?

A. putting those resources and capabilities into place, strengthening them as needed, and then modifying them as market conditions evolve

B. a universal business model to raise profits and lower costsC. strengthening the competitive environment arena outside the company's operating territoryD. a planned budget to protect the company's financial condition and eliminate wasteful use of cashE. passive pressures stemming from the dominance of outside market buyersGood strategy execution requires putting those resources and capabilities into place, strengthening them as needed, and then modifying them as market conditions evolve.



Difficulty: 1 EasyLearning Objective: 10-03 That good strategy execution requires continuously building and upgrading the organization's resources and

capabilities.Topic: Tactical planning

44. A dynamic capability is the

A. ongoing capacity to modify existing resources and capabilities to create new ones.B. improvement evaluation process for eliminating waste in the firm.C. functional and operating resources management process.D. ongoing capability to understand and establish a rival commitment to resource alignment.E. most compelling product or service a firm.By making capability-building activities a routine part of their strategy execution endeavors, some firms are able to develop dynamic capabilities that assist them in managing resource and capability change.





Difficulty: 2 MediumLearning Objective: 10-03 That good strategy execution requires continuously building and upgrading the organization's resources and


45. The most common approaches to capability building include all of the following, EXCEPT

A. developing capabilities internally.B. acquiring capabilities through mergers and acquisitions.C. accessing capabilities via collaborative partnerships.D. renewing capabilities to align with customer expectations.E. coaching average performers to improve their

skills.The most common approaches to capability building include (1) developing capabilities internally, (2) acquiring capabilities through mergers and acquisitions, and (3) accessing capabilities via collaborative partnerships.





46. Which one of the following is NOT a means of building and strengthening competitively valuable resources and capabilities?

A. engaging in experience-building activities such as collaborative efforts in R&D engineering and design

B. shifting from decentralized to centralized decision-making so as to give senior executives more authority and control in driving cultural change

C. acquiring capabilities through mergers and acquisitionsD. entering into collaborative partnerships with suppliers, competitors, or other companies that possess

needed expertiseE. selecting people with the requisite skills and experience, upgrading or expanding individual abilities

as needed, and then molding the efforts of individuals into a collaborative effort to create an organizational ability

Building and strengthening competitively valuable resources and capabilities can involve: (1) internal development such as R&D, (2) acquiring capabilities through mergers and acquisitions, and (3) accessing capabilities via collaborative partnerships. Since the process of building and strengthening competitively valuable resources and capabilities is incremental, the first step is to develop the ability to do something, however imperfectly or inefficiently. This entails selecting people with the requisite skills and experience, upgrading or expanding individual abilities as needed, and then molding the efforts of individuals into a collaborative effort to create an organizational ability.



Learning Objective: 10-03 That good strategy execution requires continuously building and upgrading the organization's resources and capabilities.

Topic: Tactical planning



47. Which of the following is TRUE of the capability building process?

A. It requires two things: (1) developing the ability to do something, however imperfectly or inefficiently, and (2) molding these efforts into an organizational ability and as experience grows and personnel perform the activity consistently well and at an acceptable cost, it is transformed into a tried-and-true competence and as they continue to polish and refine their know-how into further improvements, they then create a real competitive capability.

B. It entails (1) deciding which value chain activities to perform internally and which ones to outsource; and (2) deciding how much authority to centralize at the top and how much to delegate to down-the-line managers and employees.

C. It is essential (1) when the company does not have the ability to create the needed capability internally (perhaps because it is too far afield from its existing capabilities), and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence.

D. It involves (1) staffing the organization with people capable of executing the strategy well, (2) developing the resources and building the organizational capabilities needed for successful strategy execution, and (3) creating an organizational structure supportive of the strategy execution process.

E. It must (1) supplement the design with appropriate coordinating mechanisms, and (2) institute whatever networking and communications arrangements are necessary to support effective execution of the firm's strategy.

Because the process of developing capabilities internally is incremental, the first step is to develop the ability to do something, however imperfectly or inefficiently. As experience grows and company personnel learn how to perform the activities consistently well and at an acceptable cost, the ability evolves into a tried-and-true competence.





48. Core competencies and competitive capabilities are usually

A. lodged in the narrow skills and specialized work efforts of a single department, as opposed to the combined expertise and capabilities of specialists scattered across several departments.

B. observed to stem from collaborative efforts with strategic allies.C. bundles of skills and know-how that most often grow out of the collaborative efforts of cross-

functional work groups and departments performing complementary activities at different locations in a firm's value chain.

D. found to result in competitive advantage when they involve highly specific technologies and are grounded in a company's own deep technical expertise.

E. built rapidly, usually in conjunction with important product innovations.Capabilities develop incrementally along an evolutionary development path as organizations search for solutions to their problems. The process is a complex one, since capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, spanning a variety of departments and locations.


Accessibility: Keyboard Navigation



Blooms: UnderstandDifficulty: 2 Medium



49. The traits of the capability building process involve all of the following EXCEPT

A. evolving changes in customer needs and competitive conditions that often require tweaking and adjusting a company's portfolio of competencies and intellectual capital to keep its capabilities freshly honed and on the cutting edge.

B. a core competence or capability that emerges incrementally out of company efforts either to bolster skills that contributed to earlier successes or to respond to customer problems, new technological and market opportunities, and the competitive maneuverings of rivals.

C. core competencies or capabilities that are most often bundles of skills and know-how that grow out of the combined efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain.

D. the key to leveraging a core competence into a distinctive competence (or transforming a capability into a competitively superior capability), which concerns concentrating more effort and talent than rivals on deepening and strengthening a competence or capability so as to achieve the dominance needed for competitive advantage.

E. saving time by creating capabilities from scratch to remain aligned with external conditions and company strategy rather than updating and remodeling existing capabilities.

It is generally much easier and less time-consuming to update and remodel a company's existing capabilities as external conditions and company strategy change than it is to create them from scratch.



Difficulty: 3 HardLearning Objective: 10-03 That good strategy execution requires continuously building and upgrading the organization's resources and




50. Which of the following statements about developing organizational competencies and capabilities is FALSE?

A. Core competencies or capabilities are most often bundles of skills and know-how that grow out of the combined efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain.

B. Evolving changes in customer needs and competitive conditions often require tweaking and adjusting a company's portfolio of competencies and intellectual capital to keep its capabilities freshly honed and on the cutting edge.

C. Normally, core competencies and competitive capabilities emerge incrementally as a company (1) acts to bolster skills that contributed to earlier successes, or (2) acts to respond to customer problems, new technological or market opportunities, and the competitive maneuvers of rivals.

D. Building organizational capabilities is best and most cost-effectively accomplished by hiring a cadre of people with the right talent and expertise, putting them together in a single work group, and then teaming the work group with key strategic allies/partners to mesh the skills, expertise, and competencies needed to perform the desired capabilities with some proficiency.

E. The key to leveraging a core competence into a distinctive competence (or transforming a capability into a competitively superior capability) is concentrating more effort and talent than rivals on deepening and strengthening the competence or capability so as to achieve the dominance needed for competitive advantage.

Managerial actions to develop core competencies and competitive capabilities generally take one of two forms: either strengthening the company's base of skills, knowledge, and experience or coordinating and integrating the efforts of the various work groups and departments.







51. Which of the following is NOT one of the traits of core competencies and/or competitive capabilities?

A. The key to leveraging core competencies into competitive advantage is concentrating sufficient effort and talent on deepening and strengthening them so the firm achieves dominating depth and gains the capability to outperform rivals by a meaningful margin.

B. Core competencies have to be tweaked and adjusted to keep them fresh and responsive to changing customer needs and market conditions.

C. Core competencies typically are lodged in the combined efforts of different work groups and departments.

D. Core competencies generally grow out of company efforts to master a strategy-critical technology or to invent and patent a valuable technology.

E. Core competencies tend to emerge gradually rather than blossom quickly.If the strategy being implemented is new, company managers may have to acquire new resources, significantly broaden or deepen certain capabilities, or even add entirely new competencies in order to put the strategic initiatives in place and execute them proficiently. A company's capabilities must be continually refreshed and renewed to remain aligned with changing customer expectations, altered competitive conditions, and new strategic initiatives. Since capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, spanning a variety of departments and locations.





52. Firms generally leverage the expertise of their talent pool in building capabilities by

A. updating existing capabilities.B. establishing a new arsenal of resource capabilities by phasing out existing capabilities.C. refreshing existing capabilities.D. augmenting or recombining well-established capabilities with existing resources.E. building resource capabilities from scratch so it is easy and less time-consuming.The process of augmenting a capability may require less effort if it involves the recombination of well-established company capabilities and draws on existing company resources.







53. Managerial actions to develop core competencies and competitive capabilities internally generally take one of two forms. What are they?

A. either strengthening the company's base of skills, knowledge, and experience or coordinating and integrating the efforts of various work groups and departments

B. either putting in high incentive bonuses to reward individual employees who train hard to develop the desired capability or launching an extensive training effort to develop the capability quickly with newly hired employees

C. either using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed or empowering a team of employees to develop the capability however they best see fit

D. either using developed dynamic capabilities or acquiring the capability from outside sourcesE. either by enforcing close cross-business collaboration or by centralizing the performance of

functions requiring close coordination at the corporate levelManagerial actions to develop core competencies and competitive capabilities generally take one of two forms: either strengthening the company's base of skills, knowledge, and experience or coordinating and integrating the efforts of the various work groups and departments.





54. Which of the following statements is NOT accurate with respect to building a company's competencies and capabilities?

A. Building new competencies and capabilities is a multistage process that occurs over a period of months and years.

B. Core competencies have to be tweaked and adjusted to keep them fresh and responsive to changing customer needs and market conditions.

C. As experience grows and company personnel learn how to perform the activities consistently well and at an acceptable cost, the ability evolves into a tried-and-true competence.

D. It is generally much easier and less time-consuming to update and remodel a company's existing capabilities as external conditions and company strategy change than it is to create them from scratch.

E. When a company succeeds in hiring talented employees and training them properly, competencies and capabilities tend to develop quickly and, once put in place, can last for a decade or more.

A company's capabilities must be continually refreshed and renewed to remain aligned with changing customer expectations, altered competitive conditions, and new strategic initiatives. It is generally much easier and less time-consuming to update and remodel a company's existing capabilities as external conditions and company strategy change than it is to create them from scratch. Maintaining capabilities in top form may simply require exercising them continually and fine-tuning them as necessary.







55. Sometimes a company can short-circuit the task of building an organizational capability in-house by

A. putting in high-incentive bonuses to reward individual employees who train hard to develop the desired capability.

B. launching an extensive training effort to develop the capability quickly with newly hired employees.C. either acquiring a company that has already developed the capability or else acquiring the desired

capability through collaborative efforts with outsiders having the requisite skills, know-how, and expertise.

D. using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed.

E. empowering a team of employees to develop the capability however they best see fit.

The most common approaches to capability building include (1) developing capabilities internally, (2) acquiring capabilities through mergers and acquisitions, and (3) accessing capabilities via collaborative partnerships.





56. What is the advantage of acquiring capabilities through merger and acquisition?

A. Speed, because developing new capabilities internally can take many years of effort.

B. Empowerment, because you can capture the essence of the capability and refocus the firm.

C. Price, because it is always cheaper to buy a whole company and pull out the capabilities individually.

D. Assets, because they are the basis of the sale.E. Investment, because resources and capabilities are considerable stronger.The advantage of this mode of acquiring new capabilities is primarily one of speed, since developing new capabilities internally can take many years. Capabilities-motivated acquisitions are essential (1) when a market opportunity can slip by faster than a needed capability can be created internally and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence.







57. When are capabilities-motivated acquisitions essential?

A. when industry conditions, like technology advances, are central to growth and rivalry is intenseB. when first-mover advantages for products or services can be added to the portfolio lineupC. when the acquired firm can be purchased at a discount due to underperformanceD. when a market opportunity can slip by faster than a needed capability can be created internallyE. when the capabilities involve tacit knowledge and complex routinesCapabilities-motivated acquisitions are essential (1) when the company does not have the ability to create the needed capability internally (perhaps because it is too far afield from its existing capabilities) and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence.





58. In which one of the following instances is the training and retraining of employees likely to make the LEAST important contribution to good strategy execution?

A. when a company shifts to a strategy requiring different skills, competitive capabilities, managerial approaches, and operating methods

B. when an organization is striving to build skills-based competenciesC. when technical know-how is changing so rapidly that a company loses its ability to compete unless

its skilled people have cutting-edge knowledge and expertiseD. when the chosen strategy calls for a deeper technological capability or building and using new

capabilitiesE. when the strategy execution effort is based on tried-and-true operating practices that vary little from

year to yearAs experience grows and company personnel learn how to perform the activities consistently well and at an acceptable cost, the ability evolves into a tried-and-true competence.







59. The strategic importance of deliberately trying to develop organizational competencies and capabilities is

A. lower costs for employee training.B. improved strategy execution and a potential for competitive advantage.C. an increased ability to reduce total operating costs.D. the added ease with which strategic fit and resource fit benefits can be captured.E. the enhanced ability to avoid the perils of outsourcing.As firms get better at executing their strategies, they develop capabilities in the domain of strategy execution much as they build other organizational capabilities. Superior strategy execution capabilities allow companies to get the most from their other organizational resources and competitive capabilities.





60. Accessing capabilities through an external source can be accomplished through all of these EXCEPT

A. outsourcing, but depends on what can safely be delegated to outside suppliers.B. joint ventures, which depend on how well the partners will work together.C. strategic alliances, which should be selected as much for management style, culture, and goals as for

their resources and capabilities.D. learning-based collaborative partnerships for the purpose of learning how the partner does things,

internalizing its methods, and thereby acquiring its capabilities.E. promoting qualified people with the right know-how in a timely and cost-effective manner.The most common approaches to capability building include (1) developing capabilities internally, (2) acquiring capabilities through mergers and acquisitions, and (3) accessing capabilities via collaborative partnerships.







61. When it is difficult or impossible to out-strategize rivals (beat them with a superior strategy), the other main avenue to competitive advantage is to

A. do a better job of empowering employees and flattening the organization structure.B. outcompete rivals with a stronger corporate culture.C. out-execute them (beat them by performing certain value chain activities in superior fashion).D. beat them with a healthy corporate culture based on such core values as high ethical standards, a

strong sense of corporate social responsibility, and genuine concern for customer well-being.E. institute a more motivating and cost-efficient compensation and reward system.Strategy execution capabilities may be as important a source of sustained competitive advantage as the core competencies that drive a firm's strategy. Indeed, they may be a far more important avenue for securing a competitive edge over rivals in situations where it is relatively easy for rivals to copy promising strategies. In such cases, the only way for firms to achieve lasting competitive advantage is to out-execute their competitors.




Topic: Competitive Advantage

62. Superior strategy execution capabilities are

A. easy for rivals to copy.B. socially simple.C. develop quickly.D. easy to achieve.E. hard to imitate.Because strategy execution capabilities are socially complex capabilities that develop with experience over long periods of time, they are hard to imitate. And there is no substitute for good strategy execution.




capabilities.Topic: Competitive Advantage



63. What is the rule for organizing the work effort to support good strategy execution?

A. Match the firm's organizational structure to its unique strategy.B. Decide on how much to spend on training managers and employees.C. Choose an organization structure that is a tight fit with the corporate culture.D. Ensure the firm hires a capable management

team.E. Learn how the collaborative partner does things.While there are few hard-and-fast rules for organizing the work effort to support good strategy execution, there is one: A firm's organizational structure should be matched to the particular requirements of implementing the firm's strategy.



Difficulty: 1 EasyLearning Objective: 10-04 What issues to consider in establishing a strategy-supportive organizational structure and organizing the work

effort.Topic: Organizational development

64. Organizing a company's work effort to promote successful strategy execution involves

A. deciding how much to spend on training managers and employees.B. deciding which value chain activities to perform in-house and which to outsource, and making

internally performed strategy-critical value chain activities the main building blocks in the organization structure.

C. choosing an organization structure that is a tight fit with the corporate culture.D. hiring an inexpensive yet capable management team.E. instituting a compensation structure that reduces employee turnover and thus stabilizes the makeup

of work teams.Aside from the fact that an outsider, because of its expertise and specialized know-how, may be able to perform certain value chain activities better or cheaper than a company can perform them internally, outsourcing can also sometimes make a positive contribution to strategy execution.




effort.Topic: Organizational development



65. If management is to match a company's organization structure to its strategy in an effective way, then it is essential

A. that company personnel be empowered to make both strategic decisions and operating decisions.

B. for strategy-critical value-chain activities to be the main building blocks on the organization chart.

C. that value chain activities be deliberately organized so as to produce maximum strategic fit.D. to define the jobs of company personnel in terms of the functions to be performed rather than in

terms of the results to be achieved.E. for the company to be organized around cross-functional teams rather than around functional

specialties and functional departments.It is important for management to build its organization structure around proficient performance of these activities, making them the centerpieces or main building blocks on the organization chart.



Learning Objective: 10-04 What issues to consider in establishing a strategy-supportive organizational structure and organizing the work effort.


66. Which of the following is NOT part of organizing the work effort in ways that promote successful strategy execution?

A. facilitating collaboration with external partners and strategic alliesB. providing for cross-unit coordination and deciding which value chain activities to perform in-house

and which ones to outsourceC. determining how much authority to centralize at the top and how much to delegate to down-the-line

managers and employeesD. determining which functions and organizational units require superior intellectual capitalE. maintaining expertise and resource depth in performing those internally strategy-critical value chain

activities that underpin its long-term competitive success and provide for the main building blocks in the organization structure

An organizational structure matched to the requirements of successful strategy execution can (1) decide which value chain activities to perform internally and which ones to outsource, (2) align the organizational structure with the strategy, (3) decide how much authority to centralize at the top and how much to delegate to down-the-line managers and employees, (4) facilitate collaboration with external partners and strategic allies.







67. Outsourcing value chain activities has such strategy executing advantages as

A. less internal bureaucracy, speedier decision making, and quicker responses to changing market conditions.

B. facilitating the empowerment of employees (because there are fewer things to do internally).C. promoting a total quality management culture.D. reducing the need to establish a strongly implanted corporate culture.E. reducing the strategic importance of building valuable core competencies.Outsourcing has the advantage of conserving resources so the firm can focus its energies on those activities most central to its strategy. It may be a good choice for firms that are too small and resource-constrained to execute all the parts of their strategy internally. Wisely choosing which activities to perform internally and which to outsource can lead to several strategy-executing advantages—lower costs, heightened strategic focus, less internal bureaucracy, speedier decision making, and a better arsenal of organizational capabilities.




Topic: Value chain

68. When a company uses outsourcing to zero in on even better performance of those truly strategy-critical activities where its expertise is most needed, then it may also be able to

A. create a values-based corporate culture that excels in product innovation.

B. decrease internal bureaucracies, flatten its organizational structure, and shorten the time it takes to respond to changing market conditions.

C. devote more resources to its social responsibility strategy, better empower employees, and reduce employee turnover.

D. better police compliance with ethical standards, lower overall operating costs, and create two or more distinctive competencies.

E. reduce the potential for information overload and improve the quality of decision making in each domain.

The streamlining of internal operations that flows from outsourcing often acts to decrease internal bureaucracies, flatten the organizational structure, speed internal decision making, and shorten the time it takes to respond to changing market conditions.




Topic: Value chain



69. Which of the following is NOT a reason why companies might use outsourcing to improve performance of strategy-critical activities?

A. improving a company's chances for outclassing rivals in the performance of strategy-critical activities and turning a core competence into a distinctive competence

B. promoting quick establishment of a total quality cultureC. speeding internal decision making and shortening the time it takes to respond to changing market

conditionsD. capitalizing on the partnerships with outsiders to enhance its arsenal of capabilities and thus

contribute to better strategy executionE. helping decrease internal bureaucracies and flatten the organizational structureA heightened focus on performing strategy-critical activities can yield three important execution-related benefits:

• The company improves its chances for outclassing rivals in the performance of strategy-critical activities and turning a competence into a distinctive competence.• The streamlining of internal operations that flows from outsourcing often acts to decrease internal bureaucracies, flatten the organizational structure, speed internal decision making, and shorten the time it takes to respond to changing market conditions.• Partnerships can add to a company's arsenal of capabilities and contribute to better strategy execution.




Topic: Value chain

70. Critics of companies that use outsourcing contend that shifting responsibility for performing value chain activities to outside specialists

A. has the disadvantage of raising fixed costs and reducing variable costs and makes it harder to develop distinctive competencies.

B. can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outsider suppliers, and short of the resource strengths to be a master of its own destiny.

C. results in less organizational flexibility and leads to sometimes exorbitant costs in collaborating with outside suppliers and strategic partners.

D. slows down decision making on key strategic issues because outside suppliers have to be consulted first.

E. lowers the morale of company employees, dampens a company's ability to implement best practices, and results in greater bureaucracy and slower decision making.

A company cannot be the master of its own destiny unless it maintains expertise and resource depth in performing those value chain activities that underpin its long-term competitive success. As a general rule, therefore, it is the strategically less important activities for which outsourcing is likely to make the most strategic sense.






Topic: Value chain

71. Which of the following statements about outsourcing the performance of value chain activities to outside specialists is FALSE?

A. Outsourcing support services often has the disadvantage of raising fixed and variable costs.

B. Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outsider suppliers, and short of the resource strengths to be a master of its own destiny.

C. Outsourcing the performance of certain value chain activities to able supplier scan add to a company's arsenal of capabilities and contribute to better strategy execution.

D. The real debate surrounding outsourcing is not about whether too much outsourcing risks loss of control but about how to use outsourcing in a manner that produces greater competitiveness.

E. Outsourcing can enable a company to heighten its strategic focus and concentrate its full energies and resources on even more competently performing those value chain activities that are at the core of its strategy and for which it can create unique value.

Wisely choosing which activities to perform internally and which to outsource can lead to several strategy-executing advantages—lower costs, heightened strategic focus, less internal bureaucracy, speedier decision making, and a better arsenal of organizational capabilities.




Topic: Value chain

72. A firm's organizational structure is comprised of

A. resource strengths and competitive capabilities that allow it to incorporate attributes at lower costs than rivals whose products have similar attributes.

B. the formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered.

C. excellent marketing and sales skills to convince buyers to pay a premium price for the attributes/features incorporated in its product.

D. sustainable distinctive competencies to ensure cost reduction and competitiveness.E. a number of independent functional units involved in some common undertaking, with one unit

typically in a more central role.The organizational structure comprises the formal and informal arrangement of tasks, responsibilities, and lines of authority and communication by which the firm is administered.




effort.Topic: Simple structure



73. Companies engaged in a single line of business most commonly utilize an organizational structure that can be:

A. either independent, consolidated, or hybrid profit centers.B. a functional (departmental) organizational structure.C. either centralized, principal, or critical-path in nature.D. highly decentralized matrices.E. hybrid functional organizations with a combination of decentralized and centralized decision

making.It is common for companies engaged in a single line of business to utilize a functional (or departmental) organizational structure that organizes strategy-critical activities into distinct functional, product, geographic, process, or customer groups.





74. In order to coordinate and control the complex set of activities, managers must ensure

A. the organizational structure enables bureaucratic waste and strives for eliminating imposed capacity limitations of the strategy.

B. the various parts of the organizational structure are aligned with one another and also matched to the requirements of the strategy.

C. they have enough employees dedicated to the various functions to attain economies of scale benefits.

D. they can orchestrate the process with forceful administration and political maneuvering.E. they accommodate situational idiosyncrasies to build a competitively capable organization.A well-designed organizational structure is one in which the various parts (e.g., decision-making rights, communication patterns) are aligned with one another and also matched to the requirements of the strategy.







75. The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on the

A. much shorter time it takes to build core competencies and competitive capabilities.B. benefit such an organizational scheme has in reducing costs.C. benefit such an organizational scheme has in improving the productivity of geographically scattered

organizational units.D. thesis that if activities crucial to strategic success are to have the resources, decision-making

influence, and organizational impact, they have to be centerpieces in the organizational scheme.E. benefit such an organizational scheme has in making the empowerment of employees more

effective.With respect to such core value chain activities, it is important for management to build its organizational structure around proficient performance of these activities, making them the centerpieces or main building blocks in the enterprise's organizational structure.





76. Which of the following is unlikely to be a primary building block in a company's organizational structure

A. functional departmentsB. process and operations departmentsC. empowered employee

departmentsD. divisional units performing major processing stepsE. geographic organizational unitsWith respect to such core value chain activities, it is important for management to build its organizational structure around proficient performance of these activities, making them the centerpieces or main building blocks in the enterprise's organizational structure. The rationale is compelling: If activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact they need, they must be centerpieces in the enterprise's organizational scheme. Making them the focus of structuring efforts will also facilitate their coordination and promote good internal fit—an essential attribute of a winning strategy.







77. Which of the following does NOT describe the standard type of structural form of organization?

A. a functional structure where function is a major step in the firm's value chainB. a simple structure where all major decisions and oversight are a duty of the central

executiveC. a multidivisional structure where each division of the firm is an independent profit centerD. a matrix structure where there are two or more divisions organized to enhance cross-communicationE. a network structure where independent organizations are involved in a common

undertakingAs firms grow and their needs for structure evolve, their structural form is likely to evolve from one type to another. The four basic types are the simple structure, the functional structure, the multidivisional structure, and the matrix structure.





78. When an organization is referred to as a line and staff structure or a flat structure, it is normally considered a

A. simple structure.B. functional structure.C. matrix structure.D. multidivisional structure.E. departmental structure.Simple structures are also called line-and-staff structures or flat structures.







79. How is a functional structure or unitary structure organized?

A. with a central executive handling all major decisionsB. to lighten the load of senior executives so they can concentrate on value chain action

agendasC. specifically to manage unrelated diversification opportunitiesD. into functional departments, with departmental managers who report to the CEO and small

corporate staffE. with top-heavy management, and senior executives forming a central office of the chairmanA functional structure is one that is organized along functional lines, where a function represents a major component of the firm's value chain, such as R&D, engineering and design, manufacturing, sales and marketing, logistics, and customer service.





80. A multidivisional structure consists of a

A. centralized structure combining corporate overhead with support functions.B. decentralized structure with of a set of operating divisions organized along business, product,

customer groups or geographic lines, and a central corporate headquarters that allocates resources, provides support functions, and monitors divisional activities.

C. decentralized structure or divisional structure that monitors performance and allocates funding to those divisions wanting to grow.

D. decentralized format of senior executives with large overhead staff to manage and control all the business lines.

E. centralized structure that controls the coordination across the more diversified and complex functions within the organization.

A multidivisional structure is a decentralized structure consisting of a set of operating divisions organized along market, customer, product, or geographic lines, along with a central corporate headquarters, which monitors divisional activities, allocates resources, performs assorted support functions, and exercises overall control.







81. Which structure combines two or more organizational forms, with multiple reporting relationships, and is used to foster cross-unit collaboration?

A. matrix structureB. composite structureC. divisional structureD. network structureE. functional structureMatrix structures are also called composite structures or combination structures. They are often used for project-based, process-based, or team-based management. Such approaches are common in businesses involving projects of limited duration, such as consulting, architecture, and engineering services.





82. Larger firms with more complex organizational structures are

A. less decentralized in their decision making than smaller firms.B. more decentralized in their decision making than smaller firms.C. less decentralized in their decision making than larger firms with simpler structures.D. more centralized in their decision making than smaller firms.E. not decentralized due to their operating size.The type that is most suitable for a given firm will depend on the firm's size and complexity as well as its strategy. As firms grow and their needs for structure evolve, their structural form is likely to evolve from one type to another.




Topic: Simple structure



83. Which of the following is NOT a characteristic of a highly centralized organizational structure?

A. Top-level managers retain decision authority for most strategic and operating activities.B. Strict control and enforcement of detailed procedures backed by rigorous managerial accountability

is the most reliable way to keep the daily execution of strategy on track.C. Tight control from the top is a more effective means for coordinating company actions and makes it

easy to fix accountability when things do not go well.D. One of the basic tenets is that most company personnel have neither the time nor the inclination to

direct and properly control the work they are performing and, further, they lack the knowledge and judgment to make wise decisions about how best to do their work.

E. The decision about where to draw the divisional lines depends foremost on the nature of the relatedness and the strategy-critical building blocks, in terms of which businesses have key value chain activities in common.

In a decentralized structure, the decision about where to draw the divisional lines depends foremost on the nature of the relatedness and the strategy-critical building blocks, in terms of which businesses have key value chain activities in common.





84. A disadvantage of the centralized organization is that it

A. lengthens response times by those closest to the market conditions because they must seek approval for their actions.

B. does not encourage responsibility among lower-level managers and rank-and-file employees.C. discourages lower-level managers and rank-and-file employees from exercising any initiative.D. diverts authority away from those closest to, and most knowledgeable about, the situation for

actions.E. results in higher-level managers being unaware of actions taken by empowered personnel under

their supervision.A decentralized organizational structure may result in higher-level managers being unaware of actions taken by empowered personnel under their supervision.



Learning Objective: 10-05 The pros and cons of centralized and decentralized decision making in implementing the chosen strategy.Topic: Unity of command



85. A decentralized organizational structure is predicated on the belief that

A. top executives should establish a collegial, collaborative culture where decisions are made by general consensus on what to do and when.

B. strict enforcement of detailed procedures backed by rigorous managerial oversight is necessary because company personnel cannot be counted on to act wisely or keep costs to a bare bones level.

C. decision-making authority should be pushed down to the lowest organizational level capable of making timely, informed, and competent decisions.

D. most company personnel have neither the time nor the inclination to direct and properly control the work they are performing and that they lack the knowledge and judgment to make wise decisions about how best to do their work.

E. lower-level managers and employees should go up the ladder of command for approval on most all strategic and operating issues of much importance.

A basic tenet of a decentralized organizational structure is that decision-making authority should be put in the hands of the people closest to, and most familiar with, the situation.



Learning Objective: 10-05 The pros and cons of centralized and decentralized decision making in implementing the chosen strategy.Topic: Simple structure

86. Which of the following is a disadvantage of a centralized organizational structure?

A. lengthening response times and discouraging lower-level managers and rank-and-file employees from exercising initiative

B. losing top-level management controlC. putting too much decision-making authority in the hands of lower-level company personnelD. making it hard to fix accountability when things do not go well and putting the organization at risk

when bad decisions are madeE. impeding cross-unit coordination and the capture of strategic fitsPrimary disadvantages of centralized organizational structure include:

• Lengthens response times by those closest to the market conditions because they must seek approval for their actions.• Does not encourage responsibility among lower-level managers and rank-and-file employees.• Discourages lower-level managers and rank-and-file employees from exercising any initiative.






87. Which of the following is a disadvantage of a decentralized organizational structure?

A. increasing the size of the corporate bureaucracyB. reducing a company's response times to changing external eventsC. discouraging lower-level managers and rank-and-file employees from exercising initiativeD. putting the organization at risk if higher-level management is unaware of their actionsE. creating more layers of

managementPrimary disadvantages of decentralized organizational structures include:

• May result in higher-level managers being unaware of actions taken by empowered personnel under their supervision.• Can lead to inconsistent or conflicting approaches by different managers and employees.• Can impair cross-unit collaboration.




88. Which of the following is an advantage of a decentralized organizational structure?

A. reducing the layers of management and encouraging lower-level managers and rank-and-file employees to exercise initiative and act responsibly

B. making it easy to fix accountability when company performance targets are not metC. generating higher productivity on the part of the workforce and a greater ability to become an

industry low-cost leaderD. enhancing cross-unit coordination and the capture of strategic

fitsE. establishing the emergence of a collegial, collaborative culture where teamwork is a core value and

decisions are made on the basis of consensusChief advantages of decentralized structures include:

• Encourages company employees to exercise initiative and act responsibly.• Promotes greater motivation and involvement in the business on the part of more company personnel.• Spurs new ideas and creative thinking.• Allows for fast response to market change.• Entails fewer layers of management.






89. Delegating greater authority to subordinate managers and employees

A. creates a more horizontal or flatter organizational structure with fewer management layers and usually acts to shorten organizational response times.

B. usually slows down decision making because so many more people are involved and it takes longer to reach a consensus on what to do and when to do it.

C. can be a de-motivating factor because it requires people to take responsibility for their decisions and actions.

D. is very risky because it usually results in lots of "bad" decisions on the part of employees, as well as lower levels of financial performance.

E. enhances greater cross-unit coordination and aids the capture of strategic fit benefits across related businesses.

Decentralized organizational structures have much to recommend them. Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative. It shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel.



Difficulty: 1 EasyLearning Objective: 10-05 The pros and cons of centralized and decentralized decision making in implementing the chosen strategy.


90. The organizing challenge of a decentralized structure that stresses employee empowerment is

A. how to keep empowered employees from making lots of stupid decisions.B. establishing a collegial, collaborative culture so that decisions can be made by gaining a quick

consensus on what to do and when to do it.C. how to avoid de-motivating employees (because empowered employees are expected to take

responsibility for their actions and decisions).D. how to exercise control over the actions and decisions of empowered employees so that the business

is not put at risk while trying to capture the benefits of empowerment.E. how to convince lower-level managers and employees that they are empowered.The challenge in a decentralized system is maintaining adequate control. With decentralized decision making, top management maintains control by placing limits on the authority granted to company personnel, installing companywide strategic control systems, holding people accountable for their decisions, instituting compensation incentives that reward people for doing their jobs well, and creating a corporate culture where there's strong peer pressure on individuals to act responsibly.






91. Coordinating the work efforts of internal organization units is best accomplished by

A. establishing a corporate culture where teamwork is a core value and decisions are made by general consensus among team leaders in the affected work units.

B. having closely related activities report to a single executive who has the authority and organizational clout to coordinate, integrate, and arrange for the cooperation of units under their supervision.

C. having the heads of support activities report to the heads of primary, strategy-critical activities.

D. establishing monetary incentives that reward people for being cooperative team players.E. having frequent meetings among the heads of closely related activities and work units to establish

mutually agreeable deadlines.Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative. It shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel. In worker-empowered structures, jobs can be defined more broadly, several tasks can be integrated into a single job, and people can direct their own work.



Difficulty: 3 HardLearning Objective: 10-05 The pros and cons of centralized and decentralized decision making in implementing the chosen strategy.


92. One of the big weaknesses of organization structures that do not have cross-business collaboration is

A. making it hard to effectively empower employees.B. making it difficult to have closely related activities report to a single executive.C. that pieces of strategically relevant activities and capabilities often end up scattered across many

departments, with each pursuing its own priorities, projects, and agendas.D. impeding the use of outsourcing.E. making it hard to fix managerial accountability for poor results.Diversified companies striving to capture the benefits of synergy between separate businesses must beware of giving business unit heads full rein to operate independently. Cross-business strategic fit typically must be captured either by enforcing close cross-business collaboration or by centralizing the performance of functions requiring close coordination at the corporate level.






93. Diversified companies striving to capture the benefits of synergy between separate businesses have to be aware of all of the following challenges EXCEPT

A. giving business-unit heads full rein to operate independently.B. having pieces of strategically relevant activities and capabilities scattered across many departments,

with each pursuing its own priorities, projects, and agendas.C. centralizing performance of functions requiring close coordination at the functional level.D. serving the interests of individual businesses and not the company as a whole.E. forming cross-business strategic fit by enforcing close collaboration.Efforts to decentralize decision making and give company personnel some leeway in conducting operations must be tempered with the need to maintain adequate control and cross-unit coordination.




94. Building organizational bridges with external allies is aided by

A. appointing "relationship managers" and giving them responsibility for making particular strategic partnerships or alliances generate the intended benefits.

B. agreeing with allies to meet frequently and make all decisions pertaining to the alliance on the basis of mutual agreement and consensus.

C. getting each strategic ally to agree to appoint someone as head of the collaborative effort and to give that person the authority to enforce tight coordination of joint activities.

D. forming a 50-50 joint venture with each strategic partner, and then assigning people to the joint venture that has the authority and responsibility to enforce tight coordination.

E. entering into a written agreement detailing the roles and responsibilities of the company and the ally/partner, setting forth the results that are expected, establishing deadlines for achieving these results, and designating the people who are to be responsible for making the collaborative effort work successfully.

Building organizational bridges with external partners and strategic allies can be accomplished by appointing "relationship managers" with responsibility for making particular strategic partnerships generate the intended benefits.



Learning Objective: 10-05 The pros and cons of centralized and decentralized decision making in implementing the chosen strategy.Topic: Strategic alliances



95. Which of the following is NOT a characteristic of a network structure?

A. It ensures that the right partners are included and the activities are coordinated.B. It encourages a more effective collaboration and cooperation among partners.C. It includes a hand-picked, integrated network of

suppliers.D. It is an arrangement of independent organizations involved in a common undertaking.E. It established that no one firm has a central control over the others.Organizing and managing a network structure provides a mechanism for encouraging more effective collaboration and cooperation among external partners. A network structure is the arrangement linking a number of independent organizations involved in some common undertaking. A well-managed network structure typically includes one firm in a more central role, with the responsibility of ensuring that the right partners are included and the activities across the network are coordinated.)



Learning Objective: 10-05 The pros and cons of centralized and decentralized decision making in implementing the chosen strategy.Topic: Strategic alliances

96. A company must do all of the following to match structure to strategy EXCEPT

A. choose a basic organizational design and modify it to fit the company's particular business.B. supplement the design structure with coordinating mechanisms.C. institute networking and communication arrangements to support strategy execution.D. set up "ideal" organizational arrangements despite having to disturb existing relationships.E. knit the efforts of outsourced groups together.To do a good job of matching structure to strategy, strategy implementers first have to pick a basic organizational design and modify it as needed to fit the company's particular business lineup. They must then (1) supplement the design with appropriate coordinating mechanisms (cross-functional task forces, special project teams, self-contained work teams, etc.) and (2) institute whatever networking and communications arrangements are necessary to support effective execution of the firm's strategy. Some companies may avoid setting up "ideal" organizational arrangements because they do not want to disturb existing reporting relationships or because they need to accommodate other situational idiosyncrasies, yet they must still work toward the goal of building a competitively capable organization.




Essay Questions



97. Who has strategy execution responsibility and who is ultimately responsible for making sure that the task of implementing and executing the strategy goes well?

Like crafting strategy, executing strategy is a job for a company's whole management team—not just a few senior managers. While the chief executive officer and the heads of major units (business divisions, functional departments, and key operating units) are ultimately responsible for seeing that strategy is executed successfully, the process typically affects every part of the firm—all value chain activities and all work groups.


Blooms: RememberDifficulty: 1 Easy


98. List the 10 principal managerial components of the strategy-implementing/strategy-executing process.

Despite the need to tailor a company's strategy-executing approaches to the particulars of the situation at hand, certain managerial bases must be covered no matter what the circumstances. These include 10 basic managerial tasks:

1. Staffing the organization with managers and employees capable of executing the strategy well.2. Developing the resources and organizational capabilities required for successful strategy execution.3. Creating a strategy-supportive organizational structure.4. Allocating sufficient resources (budgetary and otherwise) to the strategy execution effort.5. Instituting policies and procedures that facilitate strategy execution.6. Adopting best practices and business processes to drive continuous improvement in strategy execution activities.7. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.8. Tying rewards and incentives directly to the achievement of strategic and financial targets.9. Instilling a corporate culture that promotes good strategy execution.


Blooms: RememberDifficulty: 2 Medium




99. Identify and briefly discuss the three facets of building an organization capable of proficient strategy execution.

The following three types of organization-building actions are paramount:

1. Staffing the organization—putting together a strong management team, and recruiting and retaining employees with the needed experience, technical skills, and intellectual capital.2. Acquiring, developing, and strengthening the resources and capabilities required for good strategy execution—accumulating the required resources, developing proficiencies in performing strategy-critical value chain activities, and updating the company's capabilities to match changing market conditions and customer expectations.3. Structuring the organization and work effort—organizing value chain activities and business processes, establishing lines of authority and reporting relationships, and deciding how much decision-making authority to delegate to lower-level managers and frontline employees.




100. Identify and briefly discuss/explain three components of structuring a company's work effort to promote successful strategy execution.

A firm's organizational structure should be matched to the particular requirements of implementing the firm's strategy.

• Decide which value chain activities to perform internally and which ones to outsource• Align the organizational structure with the strategy• Decide how much authority to centralize at the top and how much to delegate to down-the-line managers and employees• Facilitate collaboration with external partners and strategic allies




Topic: Strategic Leadership



101. Identify and briefly discuss four of the recommended practices companies have used to recruit and retain the best employees to make the rank-and-file employees a genuine competitive asset.

In recognition of the importance of a talented and energetic workforce, companies have instituted a number of practices aimed at staffing jobs with the best people they can find:



Blooms: RememberDifficulty: 3 Hard





102. Identify and briefly discuss the three common approaches to building core competencies and competitive capabilities.

The most common approaches to capability building include (1) developing capabilities internally, (2) acquiring capabilities through mergers and acquisitions, and (3) accessing capabilities via collaborative partnerships.Capabilities develop incrementally along an evolutionary development path as organizations search for solutions to their problems. The process is a complex one, since capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, spanning a variety of departments and locations.An acquisition aimed at building a stronger portfolio of resources and capabilities can be every bit as valuable as an acquisition aimed at adding new products or services to the company's lineup of offerings. The advantage of this mode of acquiring new capabilities is primarily one of speed, since developing new capabilities internally can, at best, take many years of effort and, at worst, come to naught. Capabilities-motivated acquisitions are essential (1) when the company does not have the ability to create the needed capability internally (perhaps because it is too far afield from its existing capabilities) and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence.A third way of obtaining valuable resources and capabilities is to form collaborative partnerships with suppliers, competitors, or other companies having the cutting-edge expertise. There are three basic ways to pursue this course of action:

1. Outsource the function in which the company's capabilities are deficient to a key supplier or another provider.2. Collaborate with a firm that has complementary resources and capabilities in a joint venture, strategic alliance, or other type of partnership established for the purpose of achieving a shared strategic objective.)3. Engage in a collaborative partnership for the purpose of learning how the partner does things, internalizing its methods and thereby acquiring its capabilities.







103. Explain what is involved in building capabilities internally. What steps are required? How much time does it take? How hard is it? Support your answer.

Capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, spanning a variety of departments and locations.Because the process is incremental, the first step is to develop the ability to do something, however imperfectly or inefficiently. This entails selecting people with the requisite skills and experience, upgrading or expanding individual abilities as needed, and then molding the efforts of individuals into a joint effort to create an organizational ability. At this stage, progress can be fitful since it depends on experimenting, actively searching for alternative solutions, and learning through trial and error.It is generally much easier and less time-consuming to update and remodel a company's existing capabilities as external conditions and company strategy change than it is to create them from scratch. Maintaining capabilities in top form may simply require exercising them continually and fine-tuning them as necessary. Refreshing and updating capabilities require only a limited set of modifications to a set of routines that is otherwise in place. Phasing out an existing capability takes significantly less effort than adding a brand new one. Replicating a company capability, while not an easy process, still begins with an established template. Even the process of augmenting a capability may require less effort if it involves the recombination of well-established company capabilities and draws on existing company resources.





104. What are the advantages of outsourcing non-critical and sometimes even critical value chain activities?

Aside from the fact that an outsider, because of its expertise and specialized know-how, may be able to perform certain value chain activities better or cheaper than a company can perform them internally, outsourcing can also sometimes make a positive contribution to strategy execution. Outsourcing the performance of selected activities to outside vendors enables a company to heighten its strategic focus and concentrate its full energies on performing those value chain activities that are at the core of its strategy, where it can create unique value. Wisely choosing which activities to perform internally and which to outsource can lead to several strategy-executing advantages—lower costs, heightened strategic focus, less internal bureaucracy, speedier decision making, and a better arsenal of organizational capabilities.




Topic: Value chain



105. Identify and briefly discuss the four types of organizational structures that can be aligned with strategy execution.

As firms grow and their needs for structure evolve, their structural form is likely to evolve from one type to another. The four basic types are the simple structure, the functional structure, the multidivisional structure, and the matrix structure.A simple structure consists of a central executive (often the owner-manager) who handles all major decisions and oversees all operations with the help of a small staff. Simple structures are also called line-and-staff structures or flat structures.A functional structure is organized into functional departments, with departmental managers who report to the CEO and small corporate staff. Functional structures are also called departmental structures and unitary structures or U-forms.A multidivisional structure is a decentralized structure consisting of a set of operating divisions organized along business, product, customer group, or geographic lines and a central corporate headquarters that allocates resources, provides support functions, and monitors divisional activities. Multidivisional structures are also called divisional structures or M-forms.A matrix structure is a combination structure that overlays one type of structure onto another type, with multiple reporting relationships. It is used to foster cross-unit collaboration. Matrix structures are also called composite structures or combination structures.





106. In choosing between a centralized and a decentralized organizational structure, which of the two is more likely to further the cause of good strategy execution? Why?

In executing strategy and conducting daily operations, companies must decide how much authority to delegate to the managers of each organizational unit—especially the heads of divisions, functional departments, plants, and other operating units—and how much decision-making latitude to give individual employees in performing their jobs. The two extremes are to centralize decision making at the top or to decentralize decision making by giving managers and employees at all levels considerable decision-making latitude in their areas of responsibility.One advantage of a centralized structure, with tight control by the manager in charge, is that it is easy to know who is accountable when things do not go well. This structure can also reduce the potential for conflicting decisions and actions among lower-level managers who may have differing perspectives and ideas about how to tackle certain tasks or resolve particular issues.Decentralized organizational structures likewise have much to commend them. Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative. Doing so shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel.






107. A decentralized organizational structure is more likely to further the cause of good strategy execution than is a centralized organization structure. True or false? Justify your answer.

Decentralized organizational structures have much to commend them. Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative. It shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel. In worker-empowered structures, jobs can be defined more broadly, several tasks can be integrated into a single job, and people can direct their own work. Fewer managers are needed because deciding how to do things becomes part of each person's or team's job. Further, today's online communication systems and smart-phones make it easy and relatively inexpensive for people at all organizational levels to have direct access to data, other employees, managers, suppliers, and customers. They can access information quickly (via the Internet or company network), readily check with superiors or whomever else as needed, and take responsible action. Typically, there are genuine gains in morale and productivity when people are provided with the tools and information they need to operate in a self-directed way.




108. Identify and discuss the basic tenets, the chief advantages, and the chief disadvantages of centralized organizational structures.

Basic tenets of centralized organizational structures include:

• Decisions on most matters of importance should be in the hands of top-level managers who have the experience, expertise, and judgment to decide what is the best course of action.• Lower-level personnel have neither the knowledge, time, nor inclination to properly manage the tasks they are performing.• Strong control from the top is a more effective means for coordinating company actions.

Chief advantages:

• Fixes accountability through tight control from the top.• Eliminates potential for conflicting goals and actions on the part of lower-level managers.• Facilitates quick decision making and strong leadership under crisis situations.

Primary disadvantages:

• Lengthens response times by those closest to the market conditions because they must seek approval for their actions.• Does not encourage responsibility among lower-level managers and rank-and-file employees.• Discourages lower-level managers and rank-and-file employees from exercising any initiative.






109. Identify and discuss the basic tenets, the chief advantages, and the chief disadvantages of decentralized organizational structures.

Basic tenets of decentralized organizational structures include:

• Decision-making authority should be put in the hands of the people closest to, and most familiar with, the situation.• Those with decision-making authority should be trained to exercise good judgment.• A company that draws on the combined intellectual capital of all its employees can outperform a command-and-control company.

Chief advantages:

• Encourages company employees to exercise initiative and act responsibly.• Promotes greater motivation and involvement in the business on the part of more company personnel.• Spurs new ideas and creative thinking.• Allows for fast response to market change.• Entails fewer layers of management.

Primary disadvantages:

• May result in higher-level managers being unaware of actions taken by empowered personnel under their supervision.• Can lead to inconsistent or conflicting approaches by different managers and employees.• Can impair cross-unit collaboration.




110. Encouraging employees to challenge existing ways of doing things, and to be creative and innovative in proposing better ways of operating, requires the company to create a supporting environment. In many firms, this means empowering their employees. What is meant by empowerment of employees? How does it differ from delegation of authority? In what ways can empowerment of employees aid the cause of good strategy execution?

The case for empowering down-the-line managers and employees to make decisions related to daily operations and strategy execution is based on the belief that a company that draws on the combined intellectual capital of all its employees can outperform a command-and-control company. The challenge in a decentralized system is maintaining adequate control. With decentralized decision making, top management maintains control by placing limits on the authority granted to company personnel, installing companywide strategic control systems, holding people accountable for their decisions, instituting compensation incentives that reward people for doing their jobs well, and creating a corporate culture where there's strong peer pressure on individuals to act responsibly.


Blooms: Apply



Difficulty: 3 HardLearning Objective: 10-02 Why hiring, training, and retaining the right people constitute a key component of the strategy execution

process.Topic: Human resource planning

111. Identify four tactics that are common among companies dedicated to staffing jobs with the best people they can find.

Tactics common among companies dedicated to staffing jobs with the best people they can find include: (1) putting forth considerable effort in screening and evaluating job applicants—selecting only those with suitable skill sets, energy, initiative, judgment, aptitudes for learning, and adaptability to the company's culture; (2) investing in training programs that continue throughout employees' careers; (3) providing promising employees with challenging, interesting, and skill-stretching assignments; (4) rotating people through jobs that span functional and geographic boundaries; (5) striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks; and (6) coaching average performers to improve their skills and capabilities, while weeding out underperformers and benchwarmers.


Blooms: ApplyDifficulty: 2 Medium



112. A centralized organization structure is more likely to further the cause of good strategy execution than is a decentralized organization structure. True or false? Explain.

It depends. Both structures have drawbacks. Pushing decision-making authority deep down into the organization structure and empowering employees in a decentralized organization presents its own organizing challenge: how to exercise adequate control over the actions of empowered employees so that the business is not put at risk at the same time that the benefits of empowerment are realized. In contrast, hierarchical command-and-control structures typical of centralized or authoritarian organizations may make an organization sluggish in responding to changing conditions because of the time it takes for the review/approval process to run up all the layers of the management bureaucracy. Also, centralized decision making is often impractical—the larger the company and the more scattered its operations, the more that decision-making authority has to be delegated to managers closer to the action.






113. What is meant by empowerment of employees? How does it differ from delegation of authority? In what ways can empowerment of employees aid the cause of good strategy execution?

The case for empowering down-the-line managers and employees to make decisions related to daily operations and executing the strategy—also known as decentralized decision-making—is based on the belief that a company that draws on the combined intellectual capital of all its employees can outperform a command-and-control (centralized or authoritarian) company. Decentralized decision-making means that the managers of each organizational unit are delegated lead responsibility for deciding how best to execute strategy. The ultimate goal of decentralized decision-making is to put decision-making authority in the hands of those persons or teams closest to and most knowledgeable about the situation. Decentralized decision making in strategy execution means, for example, that employees may be empowered to do what it takes to please suppliers and decrease defect rates or cycle time, or to please customers and increase volume purchases or repeat sales.


Blooms: UnderstandDifficulty: 3 Hard




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