CHAPTER 7
support and encourage work toward stated
Implementing Strategies: Management
and Operations Issues.
The Nature of Strategy Implementation
1. Effective strategy formulation can usually
guarantee successful strategy
implementation. Ans: F
2. Strategy formulation is the managing of
forces during the action, whereas strategy
implementation is the positioning of forces
before the action. Ans: F
3. Strategy formulation requires
coordination among a few individuals, but
strategy implementation requires
coordination among many. Ans: T
4. It is always easier to say you are going to
do something (strategy formulation) than to
actually do it (strategy implementation). Ans:
T approaches for minimizing and resolving
5. Unlike strategy formulation, strategy
implementation varies considerably among
different types and sizes of organizations.
Ans: T
6. A bottom-up flow of communication is
essential for developing top-down support.
Ans: F
Annual Objectives
7. Annual objectives are key components in
the strategic-management process because
they dictate how resources will be allocated.
Ans: T Page: 264
8. Horizontal consistency is more important
than vertical consistency in developing
annual objectives. Ans: F Page: 266
9. Undesirable conduct such as distorting
the record can be a result of overemphasis
on achieving objectives. Ans: T Page: 266
Policies
10. Policies refer to specific guidelines,
methods, procedures, rules, forms, and
administrative practices established to
goals. Ans: T Page 266
11. Strategies clarify what can and cannot
be done in pursuit of an organization’s
objectives. Ans: F Page: 266
Resource Allocation
12. Not allocating resources according to
the priorities indicated by approved
objectives is detrimental to the strategic-
management process. Ans: T Page: 268
13. Four types of resources that can be
used to achieve desired objectives are
financial, physical, human and technological
Ans: TPage: 269
Managing Conflict
14. Avoidance, infusion and confrontation
are the classifications for the various
conflict. Ans: F Page: 269
15. Conflict of any kind is avoidable in
organizations. Ans: F Page: 269
16. Concerning managing and resolving
conflict, defusion includes such actions as
ignoring the problem in hopes that the
conflict will resolve itself. Ans: F Page 269
17. Holding a meeting at which conflicting
parties present their views and work through
their differences is part of the diffusion
strategy of managing conflict. Ans: F Page:
270
18. Exchanging members of conflicting
parties so each can gain an appreciation of
the other’s point of view exemplifies a
confrontation approach. Ans: T Page: 270
Matching Structure with Strategy
19. Medium-sized firms tend to be
divisionally structured, whereas large firms
tend to use an SBU (strategic business unit)
or matrix structure. Ans: T Page: 271
20. Tasks and activities are grouped
together by business function in a divisional
organizational structure. Ans: F Page: 271
21. A functional structure can be effective at
limiting short-term and narrow thinking.Ans:
F Page: 271
22. Most large companies have abandoned
the functional structure in favor of
decentralization. Ans: T Page: 272
23. With a divisional structure, it is possible
that competition between divisions may
become so intense that leads to improved
sharing of ideas and resources for
the common good of the firm. Ans: F Page
272
24. With a divisional structure by customer,
an organization can effectively cater to
the requirements of clearly defined
customer groups. Ans: T Page: 273
25. Because activities are organized
according to the way work is actually
performed, a divisional structure by process
is similar to the matrix structure. Ans:
F Page: 274
26. The most complex of all designs is a
matrix structure. Ans: T Page: 275
27. With the matrix structure it is common
for functional resources to be duplicated.
Ans F Page 275
Some Do’s and Don’ts in Developing
Organizational Charts
28. When developing an organizational
chart, the top executive of the firm should
be reserved for the President. Ans: F Page
277
29. When developing an organizational
chart, it is not wise to recommend a dual
title for just one executive. Ans: T Page 277
30. In developing an organizational chart,
avoid having a particular person reporting to
more than one person above them in
the chain of command. Ans: T Page 278
Restructuring, Reengineering and E-
Engineering
31. Restructuring is also called rightsizing.
Ans: T Page: 278
32. In terms of number of employees,
restructuring usually involves increasing the
size of the firm. Ans: F Page: 278
33. Reengineering does not usually affect
the organizational structure or chart, nor
does it imply job loss or employee layoffs.
Ans: T Page: 279
34. The focus of restructuring is changing
the way work is actually carried out. Ans:
F Page: 279
35. Cornerstones of reengineering are
decentralization, reciprocal interdependence
and information sharing. Ans: T Page: 280
Linking Performance and Pay to
Strategies
36. An effective bonus system should be
based on two key factors: annual objectives
and long-term objectives. Ans: T Page: 281
37. Gain sharing requires employees or
departments to establish performance
targets; if actual results exceed objectives,
all members get bonuses. Ans: T Page:
281-282
38. In 2004, salaries and bonuses
of CEOs in the USA decreased by five
percent. Ans: FPage: 282
39. In 2004, the highest paid CEO was
Steve Jobs from Apple Computer. Ans: F
Page 283
Managing Resistance to Change
40. People’s anxieties are raised with the
thought of change because they fear
economic loss, inconvenience, uncertainty
and a break in normal social patterns.
Ans: T Page: 283
41. Resistance to change can be
considered the single greatest threat
to successful strategy implementation. Ans:
T Page: 283
42. A rational change strategy means giving
orders and enforcing those orders. Ans:
F Page: 283
43. Ideally, the rational type change strategy
is the most desirable. Ans: T Page: 284
44. The fastest of all approaches to
implement change is the rational change
strategy. Ans: F Page: 284
45. The rational change strategy is one that
presents information to convince people of
the need for change. Ans: F Page: 284
Managing the Natural Environment
46. Recently, an increasing number of
companies have been implementing less
rigorous environmental policies. Ans:
F Page 285
47. Managing as if the earth matters
requires an understanding of how
international trade, competitiveness and
global resources are connected. Ans:
T Page: 285
48. Managing environmental affairs is
primarily a technical function performed by
specialists in a firm. Ans: F Page: 285
Creating a Strategy-Supportive Culture
49. Changing a strategy to fit an existing
culture is not as effective as changing a
firm’s culture to fit a new strategy. Ans:
T Page: 287
50. An effective, multi-method technique for
studying and altering a firm’s structure is
known as triangulation. Ans: F Page: 287
51. Individualism, achievement,
competition, informality and doing more
than expected are all stressed by Mexican
businesses. Ans: F Page: 288
52. There is substantial social pressure
against becoming a successful entrepreneur
in Russia. Ans: T Page: 289
53. An important business activity in
Japan is entertaining because it strengthens
Wa. Ans: T Page: 290
Production/Operations Concerns When
Implementing Strategies
54. Production processes typically
constitute less than 50 percent of a firm’s
total assets. Ans: F Page: 291
55. JIT significantly increases the costs of
implementing strategies. Ans: F Page: 292
Human Resource Concerns When
Implementing Strategies
56. Besides reducing worker alienation and
stimulating productivity, ESOPs allow firms
other benefits, such as substantial
depreciation savings. Ans: F Page: 293
57. ESOPs work well even in firms with
fluctuating payrolls and profits. Ans: F Page:
294
Balancing Work Life and Home Life
58. Work/family issues are typically focused
on the benefit to working women. Ans:
F Page 295
59. The United States leads the world in
promoting women and minorities into mid-
and top-level managerial positions in
business. Ans: T Page 296
Multiple Choice
The Nature of Strategy Implementation
60. Strategy formulation
a. is managing forces during the action.
b. focuses on effectiveness.
c. is primarily an operational process.
d. requires coordination among many
people.
e. all of the above.
Ans: b Page: 262 b. Geographic location
c. Customer groups
61. Which of these is true about strategy
d. Product
implementation?
e. All of the above
a. It is positioning forces before the action. Ans: e
b. It focuses on effectiveness. Page: 264
c. It is primarily an operational process.
d. It is primarily an intellectual process. 63. Establishing objectives is a
e. It requires intuitive skills. a. top-level activity.
Ans: c Page: 262 b. centralized activity.
c. decentralized activity.
Annual Objectives d. centralized-decentralized activity.
e. command-and-control activity.
62. How are objectives in the areas of Ans: c
profitability, growth and market share Page: 264
commonly established?
a. Business segment
64. Considerable time and effort should be c. 10% increase
devoted to assuring objectives are well d. Adequate
conceived because they represent the basis e. All of the above
for
Ans: c
a. monitoring processes. Page: 266
b. establishing divisional priorities.
c. allocating resources.
d. evaluating managers.  Exam Results
e. all of the above.  Report
 New product ideas
Ans: e
Page: 264  Forms
 Actually

65. Which of the following is not true about  Alienation

objectives?  Avoidance
a. They should be communicated  B ed exam result
throughout the organization.  Bank
b. They should have an appropriate time  Business Activities
dimension.  Exam Results
c. They should incorporate policies.  Report
d. They should be measurable.  New product ideas
e. They should be consistent.
 Forms
Ans: c  Actually
Page: 266  Alienation
 Avoidance
 B ed exam result
66. Which term would most likely be
incorporated into written objective  Bank
statements?  Business Activities
Policies
a. Maximize
b. Minimize
67. What are guidelines, methods, Ans: a
procedures, rules, forms and administrative
practices known as?
Managing Conflict
a. Long-term objectives
b. Policies
c. Annual objectives 71. A disagreement between two or more
d. Strategies parties on one or more issues is called a(n)
e. Goals
a. integrated solution.
Ans: b b. conflict.
Page: 266 c. compromise.
d. diffusion.
e. avoidance.
68. Which of the following issues may not
require a management policy? Ans: b
a. To establish a high- or low-safety stock of 72. Conflict in an organization is
inventory
b. To increase motivation a. always bad.
c. To offer numerous or few employee b. always good.
benefits c. sometimes good and sometimes bad.
d. To discourage insider trading d. a sign of bankruptcy.
e. To promote from within to or to hire from e. avoidable.
the outside Ans: c
Ans: b 73. What are three categories of
Page: 267 approaches for managing and resolving
Resource Allocation conflict?

a. Avoidance, diffusion and confrontation

69. Which term is best defined as a central b. Avoidance, payoff and diffusion
management activity that allows for strategy c. Confrontation, ignorance and objectivity
execution. d. Buy, sell and hold
a. Policy-making e. There are no good ways to manage
b. Goal-setting conflict
c. Establishing annual objectives
d. Resource allocation Ans: a
e. Conflict Page: 269 - 270

Ans: d
Page: 268 74. Which approach for managing and
resolving conflict involves exchanging
members of conflicting parties of that each
70. _______ is not a major factor that can gain an appreciation of the others point
commonly prohibits effective resource of view?
allocation.
a. Avoidance
a. Underprotection of resources b. Resistance
b. Organizational politics c. Compliance
c. Vague strategy targets d. Diffusion
d. Reluctance to take risks e. Confrontation
e. Lack of sufficient knowledge
Ans: e
Page 269-270 d. Process type structure
e. Matrix structure
75. Which approach for managing and
resolving conflict involves ignoring the Ans: b
problem in hopes that the conflict will Page: 271
resolve itself?
a. Avoidance
b. Resistance 79. Which organizational structure is the
c. Compliance most simple and inexpensive?
d. Diffusion a. departmental
e. Confrontation b. strategic business unit
Ans: a c. functional
Page 269-270 d. decentralized
e. process
Ans: c
76. Which approach for managing and
Page: 271
resolving conflict involves playing down
differences between conflicting parties while
accentuating similarities and common 80. Medium-sized firms are more likely to
interests? use which type of structure.
a. Avoidance
b. Resistance a. divisional
c. Compliance b. matrix
d. Diffusion c. SBU
e. Confrontation d. functional
e. process
Ans: d
Page 269-270 Ans: a
Page: 271
Matching Structure with Strategy
77. Why do changes in company strategy
81. What is not one of the basic ways a
often require changes in the way an
divisional structure can be organized?
organization is structured?
a. By geographic area
a. Structure dictates how goals and
b. By product or service
objectives will be established.
c. By customer
b. Structure dictates authority over projects.
d. By process
c. Structure dictates how resources will be
e. By cost
obtained.
d. Structure dictates strategy. Ans: e
e. Structure dictates how money is spent. Page: 272
Ans: a
Page: 270 82. A divisional structure by product is most
effective when
78. What type of organizational structure do a. special emphasis needs to be placed on
most small businesses follow? specific products.
b. an organization offers few products.
a. Divisional structure by product c. an organization’s products or services
b. Functional structure differ substantially.
c. Divisional structure by customer
d. special emphasis needs to be placed on a. Divisional
specific services. b. SBU
e. All of the above c. Matrix
d. Functional
Ans: e
e. Geographic
Page: 273
Ans: c
Page: 275
83. How would Hershey’s current divisional
structure most likely be classified?
87. Which organizational structure has
a. By geographic area ambiguous roles for senior executives as a
b. By product major disadvantage?
c. By service a. functional
d. By customer b. divisional
e. By process c. strategic business unit (SBU)
d. matrix
Ans: a e. process
Page 273
Ans: c
Page: 276
84. A divisional structure by geographic
area is most appropriate when
88. When developing an organizational
a. organizations have similar branch chart, you should:
facilities located in widely dispersed areas.
b. an organization offers only a limited a. Recommend dual titles for executives
number of products or services. b. Use the title “president” for the top person
c. strict control and attention to product lines c. Make sure that the chief financial officer
are needed. is not at the same level as the chief
d. an organization has many skilled operating officer
managers. d. Have division presidents report to a chief
e. the firm serves one geographic area. operating officer
e. Have the controller or treasurer report
Ans: a directly to the president
Page: 273
Ans: d
85. What is the best divisional structure Page 277
when a few major customers are of
paramount importance and many different
Restructuring, Reengineering and E-
services are provided to these customers?
Engineering
a. by geographic area
b. by customer
c. by product 89. Restructuring is also referred to as
d. by process
e. by cost a. starting over.
b. delayering.
Ans: b c. diversifying.
Page: 273 d. job security.
e. integrating.
86. What is the most complex form of Ans: b
organizational structure? Page: 278
90. Which term is most often concerned Ans: c
primarily with shareholder well-being rather Page: 280
than employee well-being?
a. Benchmarking 94. A firm uses information technology to
b. Reengineering break down functional barriers and create a
c. Product redesign work system based on business processes,
d. Process management products, or outputs rather than on functions
e. Restructuring or inputs in
Ans: e a. restructuring.
Page: 278 b. benchmarking.
c. reengineering.
d. decentralization.
91. Which of these involves comparing a
e. delayering.
firm against the best firms in the industry on
a wide variety of performance-related Ans: c
criteria?
a. Restructuring Linking Performance and Pay to
b. Process redesign Strategies
c. Reengineering
d. Delayering 95. Which pay strategy is not a form of
e. Benchmarking incentive compensation?
Ans: e a. Bonus system
Page: 279 b. Hourly wage
c. Gain sharing
d. Profit sharing
92. The primary benefit sought from e. All of these are forms of incentive
restructuring is compensation.
a. employee involvement. Ans: b
b. cost reduction.
96. What pay strategy requires
c. increased morale.
employees or departments to establish
d. increased number of hierarchical levels in
performance targets, such as “if actual
the organization.
results exceed objectives then all
e. increased innovation.
members get bonuses.”
Ans: b
a. Profit sharing
Page: 279
b. Bonus system
c. Salary
93. What action involves reconfiguring or d. Gain sharing
redesigning work, jobs and processes for e. Hourly wage system
the purpose of improving costs, quality, Ans: d
service and speed?
97. Which of these is not one of the tests
a. Restructuring used to determine whether a
b. Downsizing performance-pay plan will benefit an
c. Reengineering organization?
d. Delayering
e. Benchmarking a. Does the plan capture attention?
b. Do employees understand the plan?
c. Is the plan improving communications? Managing the Natural Environment
d. Does the plan pay out when it should?
e. Does the plan reduce management 102. What challenge facing all
layers? organizations requires managers to
formulate strategies that preserve and
Ans: e conserve natural resources and control
98. Which Fortune 500 CEO had the pollution?
greatest salary in 2004? a. economic
b. ecological
a. Richard Kinder from Kinder Morgan c. compensational
Energy d. benchmarking
b. Bob Nardelli from Home Depot e. global
c. Steve Jobs from Apple Computer
Ans: b
d. Jeff Bezos from Amazon
e. Warren Buffett from Berkshire Hathaway
Creating a Strategy-Supportive Culture
Ans: b
Managing Resistance to Change 103. Formal statements of organizational
philosophy, charters, creeds, materials
99. What change strategy involves giving
used for recruitment and selection and
orders and enforcing those orders?
socialization help an organization
a. self-interest
a. abide by SEC laws.
b. educative
b. link culture to strategy.
c. force
c. set guidelines for firing.
d. rational
d. increase profits.
e. diffusion
e. manage conflicts between stakeholders.
Ans: c
Ans: b
100. Resistance to change can manifest
104. Which strategy could be best
itself through
defined as an effective, multi-method
a. absenteeism. technique of studying and altering a
b. sabotaging production machines. firm’s culture?
c. filing unfounded grievances.
d. unwillingness to cooperate. a. Benchmarking
e. all of the above. b. Delivering
c. Triangulation
Ans: e d. Process management
101. A change strategy that attempts to e. Educative change strategy
convince people the change is to their Ans: c
personal advantage is
105. Desire for __________ is a part of
a. diffusion. the social fabric in worker-manager
b. force. relations in
c. educative. Mexico.
d. rational. a. harmony
e. compromise. b. friction
c. conflict
Ans: d
d. independence
e. punctuality
Ans: a
106. How is life in Mexico in comparison
to life in the United States? Human Resource Concerns When
a. Faster Implementing Strategies
b. More affluent 110. A concern in matching managers with
c. Time-dictated strategy is that jobs have relatively
d. Slower __________ responsibilities, while people
e. Less harmonious are __________ in their development.
Ans: d a. static; dynamic
Page: 289 b. dynamic; static
c. quick; slow
d. exciting; dull
107. The Russian people are known for
e. dull; exciting
their
Ans: a
a. drive.
Page: 293
b. desire to succeed.
c. laziness.
d. lack of motivation. 111. Approximately how many people in the
e. lack of education. United States are now part of two-career
Ans: a families?
Page: 289 a. 2 million
b. 8 million
c. 21 million
108. Which of the following does not d. 60 million
describe most Japanese managers? e. 85 million

a. Reserved Ans: d
b. Quiet Page: 295
c. Distant
d. Impulsive
112. Of the Fortune 500 firms, how many
e. Introspective
have a woman CEO?
Ans: d
a. two
Page: 290
b. four
c. five
Production/Operations Concerns When d. twelve
Implementing Strategies e. twenty-four
Ans: c
Page: 296
109. Just in time describes
a. implementing strategies just before
bankruptcy. 113. What is the stated reason for Boeing’s
b. delivering materials just as they are recent firing of CEO Harry Stonecipher?
needed. a. Poor company performance
c. a scheduling method for meetings. b. Enforcing discriminatory hiring practices
d. a personnel planning method. c. Having an extramarital affair with a
e. a process for improving quality. coworker
Ans: b d. Stealing from the company
Page: 292 e. Exorbitant use of company planes
Ans: c
Page 296

114. What is not a major benefit of

having a diverse workforce?
a. Improvement of the bottom line
b. An increase in training costs
c. An increase in productivity
d. A decrease in complaints and litigation
e. Higher retention of employees
Ans: b