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.
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.
57) When are capabilities-motivated acquisitions essential?
A) when industry conditions, like technology advances, are central to growth and rivalry is
intense
B) when first-mover advantages for products or services can be added to the portfolio lineup
C) when the acquired firm can be purchased at a discount due to underperformance
D) when a market opportunity can slip by faster than a needed capability can be created
internally
E) when the capabilities involve tacit knowledge and complex routines
58) Training and retraining of employees likely to make the LEAST important contribution to
good strategy execution is
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 competencies.
C) 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 expertise.
D) when the chosen strategy calls for a deeper technological capability or building and using
new capabilities.
E) when the strategy execution effort is based on tried-and-true operating practices that vary little
from year to year.
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.
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.
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.
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.
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 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.
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.
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.
66) Organizing the work effort in ways that promote successful strategy execution is NOT likely
to include
A) facilitating collaboration with external partners and strategic allies
B) providing for cross-unit coordination and deciding which value chain activities to perform in-
house and which ones to outsource
C) determining how much authority to centralize at the top and how much to delegate to down-
the-line managers and employees
D) determining which functions and organizational units require superior intellectual capital
E) 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
67) Outsourcing value chain activities has such strategy executing advantages as
A) shrinking internal bureaucracies, decreasing delays in decision-making, and accelerating
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.
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.
69) Companies are UNLIKELY to use outsourcing to improve performance of strategy-critical
activities when they are engaged in
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 culture.
C) speeding internal decision-making and shortening the time it takes to respond to changing
market conditions.
D) capitalizing on the partnerships with outsiders to enhance its arsenal of capabilities and thus
contribute to better strategy execution.
E) helping decrease internal bureaucracies and flatten the organizational structure.
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
outside 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.
71) What is NOT a rationale for a company to pursue outsourcing as a strategy execution step in
order to enhance the performance of value chain activities?
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 outside 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 suppliers can 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.
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) superior 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.
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.
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.
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.
76) Primary building blocks in a company’s organizational structure do NOT include
A) functional departments
B) process and operations departments
C) empowered employee departments
D) divisional units performing major processing steps
E) geographic organizational units
77) Among the known structural forms of organization, which is non-existent?
A) a functional structure where function is a major step in the firm’s value chain
B) a simple structure where all major decisions and oversight are a duty of the central executive
C) a multidivisional structure where each division of the firm is an independent profit center
D) a matrix structure where there are two or more divisions organized to enhance cross-
communication
E) a network structure where independent organizations are involved in a common undertaking
78) A simple organizational structure is also known as a ________ structure.
A) line-and-staff
B) functional
C) matrix
D) multidivisional
E) three-dimensional
79) How is a functional structure or unitary structure organized?
A) with a central executive handling all major decisions
B) to lighten the load of senior executives so they can concentrate on value chain action agendas
C) specifically to manage unrelated diversification opportunities
D) into functional departments, with departmental managers who report to the CEO and small
corporate staff
E) with top-heavy management, and senior executives forming a central office of the chairman
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.
81) Which structure combines two or more organizational forms, with multiple reporting
relationships, and is used to foster cross-unit collaboration?
A) matrix structure
B) composite structure
C) divisional structure
D) network structure
E) functional structure
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.
83) Imagine that you are proposing that your organization reconfigure itself into a highly
centralized organizational structure. What would NOT be one of your supporting rationales for
this change?
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.
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.
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.
86) A primary disadvantage of a centralized organizational structure is that it results in
A) lengthening response times and discouraging lower-level managers and rank-and-file
employees from exercising initiative.
B) losing top-level management control.
C) putting too much decision-making authority in the hands of lower-level company personnel.
D) making it hard to fix accountability when things do not go well and putting the organization
at risk when bad decisions are made.
E) impeding cross-unit coordination and the capture of strategic fits.
87) The major disadvantage of a decentralized organizational structure is that it can result in
A) increasing the size of the corporate bureaucracy.
B) reducing a company’s response times to changing external events.
C) discouraging lower-level managers and rank-and-file employees from exercising initiative.
D) putting the organization at risk if higher-level management is unaware of their actions.
E) creating more layers of management.