Crafting and Executing Strategy, 22e (Thompson)
Chapter 11 Managing Internal Operations
1) A company’s ability to marshal adequate resources in support of new strategic initiatives and
steer them to the appropriate organizational units is important to the strategy execution process
because
A) changes in strategy often require resource reallocation, and organizational units need the
proper funding to carry out their part of the strategic plan effectively and efficiently.
B) accurate budgets are the key to exercising tight financial controls over what organization units
can and cannot do in carrying out management’s directives to execute the chosen strategy
proficiently.
C) tight budget control is management’s most powerful tool for first-rate strategy execution.
D) lean, carefully managed budgets protect the company’s financial condition and eliminate the
wasteful use of cash.
E) lean, strictly enforced budgets are management’s best and most used means of getting
organizational units to exercise the fiscal discipline needed to execute the chosen strategy in a
cost-efficient manner.
2) Managers charged with implementing and executing strategy need to be deeply involved in
the budgeting and resource allocation process because of all the following reasons EXCEPT
A) too little funding deprives organizational units of the necessary resources to execute their
piece of the strategic plan while too much funding wastes organizational resources and reduces
financial performance.
B) resource allocation involves screening of requests for people, facilities, and equipment, and
approving them whether they contribute to the strategy execution effort or not.
C) without major budget reallocations there is little chance that desired core competencies and
organizational capabilities will emerge.
D) lean, carefully managed budgets protect the company’s financial condition and eliminate the
wasteful use of cash.
E) a change in strategy nearly always calls for budget reallocations and resource shifting.
3) From a strategy-implementing/strategy-executing perspective, operating budget allocations
should
A) primarily be based on the number of new strategic initiatives being implemented in each
operating department.
B) be based on the number of people employed in each of the divisions.
C) be strategy-driven and based on how much each organizational unit needs to carry out its
piece of the strategic plan efficiently and effectively.
D) be linked to the costs of performing value chain activities as determined by benchmarking
against best-in-industry competitors.
E) depend on how much stretch there is in each department’s objectives and what additional
resources are needed to help reach these performance targets.
4) New strategies often entail budget reallocations because
A) revamping the performance of value chain activities can be costly.
B) the accompanying policy revisions and compensation incentives tend to require different
levels of funding than before.
C) business units important in the prior strategy but having a lesser role in the new strategy may
need downsizing, while units and activities that now have a bigger and more critical strategic
role may need more people, new equipment, additional facilities, and above-average increases in
their operating budgets.
D) empowering employees to carry out the new strategy elements and shifting to a total quality
management type of culture to build skills in competent strategy execution typically require
substantial new funding and budget revisions.
E) adopting best practices and pushing for continuous improvement tends to reduce costs and
reduce overall resource requirements.
5) Visible actions to reallocate operating funds and move people into different and new
organizational units
A) can be dysfunctional in trying to implement a new strategy because of the anxiety and
insecurity that big changes in budgets cause among company personnel.
B) signal a determined commitment to strategic change and can help catalyze and give credibility
to the implementation process.
C) run the risk of inadvertently creating barriers to building the needed competencies and
capabilities.
D) tend to impede the task of empowering employees and shifting to a new, more strategy-
supportive culture.
E) are rarely necessary in implementing a new strategy unless the new strategy entails a radically
different set of value chain activities.
6) A company’s operating budget must
A) be strategy-driven in order to amply fund the performance of key value chain activities.
B) be risk-averse, so as not to run the risk of inadvertently creating barriers to building the
needed competencies and capabilities.
C) be employee-driven to gain commitment to strengthening the company’s core competencies
and competitive capabilities.
D) trim costs of key value chain activities to achieve cost efficiency in new strategic initiatives.
E) follow traditional and time-tested methods of budgeting to support rapid adjustments in
strategy.
7) Merely fine-tuning the execution of a company’s existing strategy normally requires
A) big shifts of resources from one area to another.
B) a larger allocation of resources to the effort.
C) trimming costs and shifting resources to activities that have a higher priority.
D) creativity in finding ways for cost reductions, i.e. ways to do less with less.
E) cost-cutting in key value chain activities.
8) Apple decides to reallocate resources by curtailing online ad budgets and investing heavily in
scratch-resistant Sapphire, the material that differentiates the Apple Watch from rival wearable
computing device brands. What is MOST LIKELY the reason for Apple’s reallocation of
resources?
A) making critical value chain activities less effective
B) supporting the new strategic initiative of the brand
C) signaling commitment to online sales of the brand
D) signaling commitment to offline sales of the brand
E) impeding the efforts of rivals to hoard Sapphire
9) In 2013, Google decided to kill its 20 percent time policy, which allowed its staff to work on
side projects of their choice, one day per week. The decision to end the 20 percent time policy
was most likely made in order to
A) deter entry of rival companies into Google’s Internet advertising market space.
B) increase Google’s external debt and equity capital funding requirements.
C) lower Google’s cost of handling online transactions.
D) permit reallocation of resources to enhance Google’s strategy execution capabilities.
E) increase B2B demand for Google’s existing diversified Internet services businesses.
10) Cavco Construction divests funds from its commercial property ventures to invest in gated
community properties close to New York, signaling a change of strategy. Which of the following
statements about Cavco is most likely true?
A) Cavco is impeding the efforts to proficiently execute the strategy.
B) Cavco is merely fine-tuning its existing strategy to test efficiency.
C) Cavco is marshalling resources to support a new strategic initiative.
D) Cavco is hampering work climate conducive for good strategy execution.
E) Cavco is focusing on activities that are a low priority in the strategy execution effort.
11) Well-conceived policies and operating procedures facilitate good strategy execution by
A) leaving it up to employees regarding how things are to be done.
B) removing roadblocks to creativity and innovation.
C) fostering a work climate that preserves the status quo whenever possible.
D) enforcing consistency in how strategy-critical activities are performed.
E) channeling individual and group efforts along a strategy-supportive path.
12) Prescribing policies and operating procedures aids the task of implementing strategy by
A) helping ensure that worker eligibility for incentive bonuses is measured consistently and
awarded fairly.
B) fostering the use of best practices, TQM, Six Sigma, and continuous improvement efforts.
C) acting as a powerful lever for changing employee attitudes about the need for a different
incentive and reward system.
D) helping build employee commitment to strengthening the company’s core competencies and
competitive capabilities.
E) placing limits on ineffective independent action and channeling efforts of individuals along a
path more conducive to good strategy execution and operating excellence.
13) Providing top-down guidance can aid the task of implementing strategy
14) A useful guideline in designing strategy-facilitating policies and operating procedures is
A) to prescribe enough policies to give organizational members clear direction in implementing
strategy and to place reasonable boundaries on their actions. This then empowers them to act
within these boundaries in pursuit of company goals.
B) that strictly enforced policies work better than loosely enforced policies.
C) that more policies/procedures work better than fewer policies/procedures, and that strict
enforcement always beats lax enforcement.
D) to let individuals act in an empowered and self-directed way, subject only to the constraint
that their actions and behavior be ethical and in step with the corporate culture.
E) to prescribe enough policies and procedures that little is left to chance in performing value
chain activities, and employees should have no leeway to do things in a manner that deviates
from the company’s best-practices standard.
15) NOT among the reasons that Wegmans Food Markets delivers above-average profit margins
and has below-average employee turnover rates in comparison to its supermarket industry rivals
is
A) its recruitment and staffing policy of filling at least half of its open opportunities internally.
B) a regular series of programs designed to “hear,” capture, and implement employees’ ideas.
C) company events such as “open-door” days, team huddles, focus groups, and two-way Q&As
with senior management.
D) rewards and benefits substantially lower than supermarket industry averages in order to boost
profit margins.
E) multimillion dollar investments in the training and education of its employees.
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16) In prescribing policies and procedures that facilitate independent action on the part of
empowered employees for good strategy execution, companies need to do ALL of the following
EXCEPT
A) give organization members clear direction and place reasonable boundaries on their actions.
B) empower employees to act within the company’s set boundaries in pursuit of company goals.
C) allow company personnel to act with some defined degree of freedom, especially when
individual creativity and initiative are more essential to good strategy execution than
standardization and strict conformity.
D) institute policies that give employees substantial leeway to carry out activities in the way they
think is best.
E) produce policy manuals on strategy execution that prescribe exactly how daily operations are
to be conducted.
17) Good strategy execution can involve policies and procedures manuals in order to maintain
consistency in product quality and service behavior patterns to allow for
A) activities that need to be strictly prescribed and activities to allow room for independent
action on the part of company personnel.
B) differences in product range and quality across company outlets.
C) an extremely narrow scope of independent thinking and action of company staff.
D) a written strategy but not the routines for running the business.
E) ample leeway in how staff perform activities at different company outlets.
18) What is a good example of how NOT to facilitate strategy execution?
A) Kia’s service centers follow similar routines when receiving vehicles for servicing.
B) Ford encourages its staff to refrain from engaging in practices out of sync with the company’s
mission.
C) Honda’s personnel follow a 227 page manual to ensure that its showrooms have similar
operating practices across regions.
D) Chevrolet’s electric vehicle service center personnel receive the same specialized training and
replicate the caliber of customer service across locations.
E) Tesla resists standardization of the way activities are performed at its service centers because
its personnel have primarily been poached from BMW, Chevrolet, and VW’s electric vehicle
divisions.
19) Imagine you are a consultant to a local donut shop chain. You have been asked to design a
superior strategy execution effort for the owners of the company. What process management tool
would you most likely NOT provide to the owners?
A) best practices methods to drive continuous improvement in how internal operations are and
should be conducted at the donut chain.
B) benchmarking of the donut chain’s operating activities and business processes against “best-
in-industry” and “best-in-world” performers.
C) “best-in-company” operating activities and processes to standardize how the different
locations of the donut chain perform the same functions.
D) operating practices that generate economies of scale and scope without a reconfiguration of
the donut chain’s current value chain activities.
E) performance yardsticks for judging effectiveness and efficiency for particular value chain
activities and business processes that are deemed strategically critical for the donut chain.
20) A “best practice” refers to a
A) policy or procedure that is unusually effective.
B) method of performing an activity or business process that consistently delivers superior
results compared to other approaches and that at least one company has demonstrated works
particularly well in terms of delivering operating excellence.
C) strategy-critical activity that results in sustainable competitive advantage.
D) value chain activity that is a company’s distinctive competence.
E) particular value chain activity that management has given top priority to performing in world-
class fashion.
21) A “best practice” standard
A) helps a company move toward performing its value chain activities more effectively and
efficiently.
B) is the sole means of measuring whether or not a company performs a specific task or activity
so as to achieve the lowest possible costs.
C) conforms to established industry standards.
D) is a measure of a company’s core competence.
E) is often sufficient justification for maintaining the status quo.
22) The idea behind benchmarking and best practices is to
A) identify which companies are the best performers of a strategically relevant activity and then
copy their methods exactly.
B) search the world for a company that performs a strategically relevant task or value chain
activity at the lowest possible cost and then use business process reengineering techniques to try
to meet or beat the costs of the world’s low-cost performer of that activity.
C) perform each activity in the industry value chain according to standard industry practice and
then regularly benchmark the company’s performance to see if it is actually achieving the
industry standard.
D) identify companies that are the best performers of an activity and then adapt their practices to
fit the company’s own specific circumstances and operating requirements.
E) determine whether a company has a world-class value chain.
23) The backbone of the process of identifying, studying, and implementing best practices is
A) business process reengineering.
B) a corporate culture that has a core value of operating excellence.
C) benchmarking.
D) Six Sigma quality control techniques.
E) the innovative application of TQM techniques.
24) A local dairy that produces organic milk, yogurt, butter, and ice cream has asked you to
provide a tool for its managers to promote operating excellence in performing value chain
activities. Which tools and methods would you NOT recommend to the owners of the local
dairy?
A) Utilize benchmarking.
B) Adapt best practices.
C) Install TQM and/or Six Sigma quality control techniques.
D) Undertake business process reengineering.
E) Adopt standard industry techniques.
25) Natalie and Vinnie are co-owners of the Russian River Brewing Company, a craft brewer
and brewpub located in Northern California. Natalie is President and Vinnie is the brewmaster.
Which three techniques are the owners NOT likely to adopt to promote the brewery’s operating
excellence and further the cause of good strategy execution?
A) benchmarking, business process reengineering, and TQM techniques
B) business process reengineering, Six Sigma, and best practices techniques
C) strategic resource training, standard industry techniques, and competitor strength matrix
techniques
D) TQM, business process reengineering, and Six Sigma quality control techniques
E) best practices, TQM, and Six Sigma quality control techniques
26) Because functional organization structures often result in pieces of strategically relevant
activities and capabilities being scattered across many different functional departments,
companies have found that
A) it is necessary to give these functional departments the freedom to collaborate closely with
each other to achieve the desired degree of coordination.
B) it is necessary to outsource those activities that are fragmented to strategic partners in order to
achieve the needed coordination.
C) there is merit in using business process reengineering to radically redesign and streamline
strategy-critical processes and workflow from different departments and unifying their
performance into a single department or cross-functional work group that has charge over the
whole process.
D) TQM is a potent way to reengineer the work effort, avoid the shortcomings of a functional
organization structure, and achieve rapid-response capability.
E) it makes good organizational sense to combine those functional departments where
fragmentation is a problem into a single department.