Chapter 8: Strategic Control and Restructuring
Chapter 8
Strategic Control and Restructuring
TRUE/FALSE QUESTIONS
1. A strategic control system helps top managers evaluate organizational progress.
2. Feedforward control provides managers with information concerning outcomes from
organizational processes.
3. Feedback control includes a timeframe for measuring performance.
4. Feedback control systems can motivate managers to pursue organizational interests as
opposed to purely personal interests.
5. Budgets are a common type of feedforward control.
6. The first step in a strategic control system is measuring actual firm performance.
7. No strategy or organizational design works indefinitely.
8. Restructuring typically involves a renewed emphasis on the things an organization
does well, combined with a variety of tactics to revitalize the organization and
strengthen its competitive position.
9. Restructuring can be defined as a detailed analysis of a firm’s competitors and other
external stakeholders and competitive forces.
10. Downscoping involves increasing an organization’s diversification while reducing its
size.
11. Most firms that file for Chapter XI protection are able to retain most of their assets
Chapter 8: Strategic Control and Restructuring
through the end of the reorganization process.
12. One example of a leveraged buyout is when a business unit is purchased by its
managers.
MULTIPLE CHOICE QUESTIONS
13. A strategic control system helps managers to assess the relevance of the
organization’s strategy:
A. To its profitability
B. To its progress in the accomplishment of its goals
C. To the needs of its employees
D. In order to specify product line extensions
E. To its competitors’ strategies
14. When managers are trying to anticipate changes in the internal and external
environments, they are using:
A. Feedforward control
B. Vertical control
C. Feedback control
D. Horizontal control
E. Integrative control
15. Which type of control provides managers with information concerning outcomes
from organizational activities?
A. Feedforward control
B. Vertical control
C. Feedback control
D. Horizontal control
E. Integrative control
16. Feedback control systems perform the following functions in organizations:
A. They help managers decide when and how to intervene in organizational
processes by identifying areas requiring further attention
B. They motivate managers to pursuer organizational interests
C. Creating specific objectives ensures that managers understand the plans and
strategies that guide organizational decisions
D. All of these are true
Chapter 8: Strategic Control and Restructuring
E. A and B are true, but not C
17. The elements in a feedback control system include all of the following except:
A. Establishment of targets and time frames in which they should be
accomplished
B. Assignment of responsibility for achieving specific targets to managers
C. Development of an action plan
D. Establishment of policies
E. Identification of key result areas
18. Feedforward control systems are especially important because of:
A. Rapid changes in the broad environment
B. Stability in the environment
C. High profits
D. The decreasing role of government regulation in the world economy
E. Social audits
19. A control system that consists of rules, policies and guidelines to guide the behavior
of organizational members is:
A. Bureaucratic control
B. Output control
C. Clan control
D. Process control
E. Human resources systems
20. A control system that is based on socialization of organizational members is:
A. Bureaucratic control
B. Output control
C. Clan control
D. Process control
E. Human resources systems
21. National cultures can be classified on their levels of Confucian dynamics. This
means:
A. The degree to which decisions are focused on the long term or short term
B. The degree to which society draws strong distinctions between gender roles
C. The degree to which members of society accept uneven power distribution
D. The degree to which the focus of society is on the individual or the group
Chapter 8: Strategic Control and Restructuring
E. The degree to which members of society are tolerant of uncertainty and
ambiguity
22. Which of the following is not a dimension used to describe national cultures?
A. The degree to which members of the society accept or expect uneven power
distributions in society
B. The degree to which the focus of society is on individuals or the group
C. The degree to which the society draws strong distinctions between gender
roles
D. The degree to which members of the society reflect established ethical norms
E. The degree to which members of society are tolerant of uncertainty and
ambiguity
23. Common restructuring techniques include all of the following except:
A. Chapter XI reorganization
B. Leveraged buyouts
C. Retrenchment
D. Refocusing corporate assets on distinctive competencies
E. These are all common restructuring techniques; there is no exception
24. If a firm sells units that are not consistent with the strategic direction of the
organization, it is involved in:
A. Low-cost leadership
B. Leveraged buyouts
C. Downscoping
D. Outsourcing
E. Downsizing
25. Which of the following restructuring actions is most likely to involve the divestiture
of a business unit?
A. Leveraged buyout
B. Joint venture
C. Downscoping
D. Acquisition
E. None of the above
26. Businesses that should be strongly considered for divestiture during restructuring
include those:
Chapter 8: Strategic Control and Restructuring
A. With high value in the financial markets
B. With high R&D expenses
C. With low operational relatedness
D. With low to moderate risk
E. With high capital intensity
27. Retrenchment:
A. Often involves work force reductions
B. Is a growth strategy
C. Involves an increase in the firm’s workforce
D. Involves a loosening of cost controls
E. Typically builds on the existing corporate culture
28. Which of the following provides an opportunity for an organization to work out a
plan for solving its financial problems under the supervision of a federal court?
A. Prepackaged reorganization strategy
B. Chapter XIII bankruptcy
C. Restructuring
D. Downscoping
E. Chapter XI reorganization
29. Chapter XI reorganization:
A. Means that an organization must liquidate its assets
B. Means that some management decisions must be approved by a court
C. Is intended for companies that have lots of liquid assets but are locked into an
unfair labor contract
D. Is most successful if an organization has very high debt levels
E. None of the above
30. Which of the following is a common outcome from leveraged buyouts?
A. Work force stabilization or increase
B. Opening of new plants
C. Increase in debt
D. Low financial returns for the executives who initiate the buyouts
E. Increased innovation and R&D
31. A firm’s business cycle orientation includes:
A. Forecasting resources
Chapter 8: Strategic Control and Restructuring
B. Business-cycle sensitive management principles
C. Business cycle literacy
D. Supportive organizational culture
E. All of the above
ESSAY QUESTIONS
32. What is a strategic control system? What is the difference between feedforward and
feedback controls?
33. What is restructuring? Why might a firm restructure? What are some of the common
restructuring techniques?
34. What is a divestiture? Describe the two common types of divestitures. What types of
businesses should be divested?
