1) the xerox near monopoly was first challenged by...

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Chapter 2: The Process of Strategic Leadership

1) The Xerox near monopoly was first challenged by Microsoft.A) TrueB) False

Answer: FalseDiff: 1 Type: TF Skill: Recall

2) The single most important component of Xerox’s turnaround strategy was communication.

A) TrueB) False

Answer: TrueDiff: 1 Type: TF Skill: Recall

3) Xerox management reduced costs by $600 million largely by reducing research and development costs.

A) TrueB) False


4) Because organizations are complex, management must rely on only one of the planned, visioned, and discovered approaches to strategic leadership.

A) TrueB) False


5) The decisions about strategic leadership are made at the very top of the organization. A) TrueB) False


6) Strategic leadership is exercised more by top individuals than teams of top executives.A) TrueB) False


Copyright © 2012 Pearson Canada Inc. 1


7) The concept of fit has also been called coherence.A) TrueB) False


8) When decisions are made that do not line up with the initial decisions, this is called “stretching the organization.”

A) TrueB) False


9) Matsushita is making changes in role, investment, and organization. These changes will “fit together” if the organization performs better.

A) TrueB) False

Answer: TrueDiff: 3 Type: TF Skill: Application

10) Misfits, as long as they are strategically important, will not cause poor performance now or in the future.

A) TrueB) False


11) A misfit is a resource decision that does not fit with the organization’s strategy. A) TrueB) False


12) If a company invests money to move into a new market but does nothing to differentiate itself from competitors, this is a misfit.

A) TrueB) False




13) According to the planned process, lower managers put a strategy in place to move the business where it needs to be.

A) TrueB) False


14) The planned process implies low certainty about what needs to be done. A) TrueB) False


15) The drawback of the planned process is that it cannot be applied at the functional and product levels.

A) TrueB) False


16) The appeal of the planned process is that it can be applied at all levels of strategy. A) TrueB) False


17) The planned process can use both quantitative and qualitative analysis. A) TrueB) False


18) The compatibility between relationships within strategy, resources and capabilities, and the environment is known as fit.

A) TrueB) False




19) The first step in any strategic analysis is always to describe the current strategy. A) TrueB) False


20) A mission is a description of what the business is doing. A) TrueB) False


21) The planned process is adept at dealing with uncertainty and complexity. A) TrueB) False


22) The planned process is attractive because it allows management to consider how to make the business both efficient and effective.

A) TrueB) False


23) Alternatives should not be mutually exclusive. A) TrueB) False


24) The implementation of a planned strategic solution has lower risk due to certainty. A) TrueB) False


25) A contingency plan helps to minimize risk by being an alternative if the plan is not being achieved.

A) True



B) False


26) The resources needed for implementation are analyzed before providing alternative strategic solutions.

A) TrueB) False


27) E.D. Smith and Sons Ltd. decided to buy a plant in the U.S. so that they could quickly manufacture products for Loblaw International Merchants.

A) TrueB) False


28) Thanks in part to E.D. Smith, the President’s Choice merchandising program was a success in the U.S.

A) TrueB) False


29) The expansion of Loblaw International Merchants into the U.S. gave E.D Smith an alliance opportunity that allowed for easier access into the American market.

A) TrueB) False


30) Vision is a simple statement or understanding of what the firm will be in the future.A) TrueB) False


31) Vision statements inform managers and employees of the firm's direction.



A) TrueB) False


32) Vision statements have little effect unless stakeholders are willing to participate in pursuing them.

A) TrueB) False


33) Vision statements enable organizations the flexibility to change strategy or implementation tactics since it does not impose conditions on how the business gets there.

A) TrueB) False


34) Clearly articulated vision statements may be used as substitutes for strategy.A) TrueB) False


35) The visioning process is less important than the vision statement. A) TrueB) False


36) Better vision statements are usually simple and brief.A) TrueB) False


37) The key steps of the visioning process are to establish the pre-conditions needed for visioning to be successful, create the vision, sell the vision and express the vision.



A) TrueB) False


38) Because they are general and ambiguous, vision statements serve little strategic purpose.

A) TrueB) False

Answer: FalseDiff: 3 Type: TF Skill: Application

39) Anne Mulcahy provided Xerox employees with a fictitious description of what the company had become in the future. This is an example of a vision.

A) TrueB) False


40) A visioning exercise cannot begin without all six pre-conditions being established. A) TrueB) False


41) Most often the vision is initiated by one person. A) TrueB) False


42) To behave in ways consistent with the vision is to sell the vision. A) TrueB) False


43) The ability to translate a vision into behaviours for workers at all levels is the biggest strength of the visioned process.

A) True



B) False


44) Tunnel vision trap occurs when the vision drives the actions of management even though it is no longer achievable.

A) TrueB) False


45) The discovered process includes people throughout the company generating strategy.A) TrueB) False


46) Strategic decision-makers may not appreciate the full implications of their decisions within the discovered process of strategic leadership.

A) TrueB) False


47) Strategic innovation is a key feature of the discovered process. A) TrueB) False


48) The discovered process focuses on the decision making as opposed to the results of the decisions.

A) TrueB) False


49) Honda’s decision to compete in smaller motorcycles in the U.S. market based on the initial reactions of consumers was a form of organizational learning.

A) True



B) False


50) A business strategy that evolves over time benefits those with the best information about the market opportunities.

A) TrueB) False


51) With innovation often coming from employees in the discovered process, top management plays little role in orchestrating the process.

A) TrueB) False


52) Continuous innovation requires structure and few mistakes. A) TrueB) False


53) Cross-fertilization is putting employees together with customers. A) TrueB) False


54) In a fragmented industry, conditions are less dynamic and require more of a planned approach.

A) TrueB) False


55) When management fails to impose rationale on the innovations the business accepts and builds, it is known as “fail early, fail often.”

A) True



B) False


56) Management can treat innovative solutions as tentative until they prove themselves. This will generate more ideas than sorting solutions based on the effort needed to install the solution.

A) TrueB) False


57) Innovation requires justifying mistakes. A) TrueB) False


58) Using the planned, visioned, and discovered processes at the same time is feasible. A) TrueB) False


59) The great catalyst within Dofasco to reinvent the company was technology. A) TrueB) False


60) The most effective strategic leadership uses a singular process to lead. A) TrueB) False


61) Human factors influence strategic leadership processes primarily at the start of the process.

A) TrueB) False




62) Cognition is a bias that impacts how humans reach decisions. A) TrueB) False


63) Cognition is the process of thought, including perception and reason but not memory. A) TrueB) False


64) Prior hypothesis bias allows decision makers to use information that is inconsistent with their beliefs.

A) TrueB) False


65) Traditional music companies using enforcement of their copyrights to bring customers back to them is an example of escalating commitment.

A) TrueB) False


66) If an executive assumes that the decision variables for diversifying into a new market will be the same as with previous successful diversifications, this is an example of prior hypothesis bias.

A) TrueB) False


67) Escalation of commitment is a person's belief that he or she is in greater control of a situation than rational analysis would support.

A) True



B) False


68) The phrase escalation of commitment indicates that committing more resources to a failing strategy is an irrational decision.

A) TrueB) False


69) Escalating commitment is based more on a rational commitment of resources than the feeling of personal responsibility for the strategy.

A) TrueB) False


70) When a decision maker thinks back to a previous decision to transfer lessons to the present situation, he or she is using the prior hypothesis bias.

A) TrueB) False


71) Reasoning by analogy is weakest when the two situations are similar in superficial ways.

A) TrueB) False


72) The supermarket is an example of a retail format that was used as an analogy by future retailers.

A) TrueB) False


73) The dot-com crash in 2000 was due in a large part to the illusion of control.



A) TrueB) False


74) The tendency of the decision maker to overestimate their ability to control events based on a strong prior belief about the relationship between the two decision variables is an example of the illusion of control.

A) TrueB) False


75) “Using power” and “playing politics” have no place in managing an organization. A) TrueB) False


76) If centralized decision making seems to be orderly and rational, politics must not be in play.

A) TrueB) False


77) An effective tactic is more morally correct than an ineffective tactic. A) TrueB) False


78) Escalation of commitment could be due to groupthink. A) TrueB) False


79) A Board of Directors may have a mandate top pursue newer technologies. This mandate is a form of organizational power and politics.



A) TrueB) False


80) The best strategic decisions are based in part on values. A) TrueB) False


81) A leader’s values will impact the choice of arenas or vehicles he or she tends to utilize in strategic decision making.

A) TrueB) False


82) If values are used as a benchmark for employee behaviour and company performance, they give management indirect control over people’s behaviour.

A) TrueB) False


83) The level of ethical behaviour in an organization is set by ethical codes and not the business leaders.

A) TrueB) False


84) The issue of what is “right” is becoming easier as businesses become global and populations more diverse.

A) TrueB) False




85) The challenge with ethics is not determining which set of values is “right,” but which corporations should develop codes of ethical behaviour.

A) TrueB) False


86) The Xerox turnaround plan featured all of the following actions except?A) aggressively reducing costsB) outsourcing research and developmentC) improving productivity in operationsD) reducing the amount of risk faced

Answer: BDiff: 1 Type: MC Skill: Recall

87) According to the text, Xerox mixed together which of the following three approaches to strategic leadership?

A) discovered, visioned, and plannedB) intended, discovered, and visionedC) realized, visioned, and plannedD) realized, intended, and visioned

Answer: ADiff: 1 Type: MC Skill: Recall

88) Strategic leadership is managing an overall enterprise and influencing key ________.A) organizational outcomesB) stakeholdersC) managersD) strategic initiatives


89) Strategic leadership is concerned with the following except:A) innovationB) certaintyC) strategic changeD) performance


90) “Fit” has also been called ______________.



A) coherenceB) intertwiningC) efficiencyD) effectiveness


91) Matsushita’s plan was to adapt to the business environment’s changing requirements in all of these areas except:

A) marketingB) R&DC) asset acquisitionD) IT

Answer: CDiff: 1 Type: MC Skill: Recall

92) Matsushita planned to become a super manufacturing company by doing all of the following except:

A) expansion of R&D and ITB) becoming interactive with customersC) providing solutions instead of goodsD) moving from a flat organization to a pyramid

Answer: DDiff: 1 Type: MC Skill: Recall

93) The planned process is also known as the ____________ approach. A) integratedB) emergentC) stakeholderD) designed


94) The planned approach implies relatively _____ certainty about what needs to be done and works well in ______ situations.

A) high, dynamicB) high, stableC) low, dynamicD) low, stable




95) Strategic leadership is typically overseen by the board of directors, and usually involves which of the following company employees?

A) manufacturingB) former CEOsC) top managementD) retail


96) The planned process involves analyzing the external environment, which is subject to driving forces. Which of the following is not a driving force of evolution?

A) economyB) societyC) technologyD) capabilities


97) Implementing a strategic solution requires identifying the necessary ______ changes to all of the following except:

A) resourceB) incremental C) organizationalD) strategic

Answer: BDiff: 2 Type: MC Skill: Recall98) As a part of implementation, _________________ are developed to overcome the

riskiest aspects of the choice. A) contingency plansB) resource inputsC) strategic leversD) alternatives

Answer: ADiff: 2 Type: MC Skill: Application 99) The weakness of the planned process is that the necessary ______ are not always

available to do complete analysis. A) toolsB) employeesC) conceptsD) information




100) Which of the following is not a question that Informix CEO Robert Finocchio could ask of his company to determine whether it was acting ethically?

A) Are our reward structures appropriate?B) Do we face new technological challenges?C) How will we measure our performance?D) Do we face new legal requirements?


101) Loblaw International Merchants intended to license its President’s Choice merchandising program in the U.S. Which of the following was not a factor of economic logic for E.D. Smith to consider an alliance with Loblaw’s?

A) E.D. Smith’s national licenses for half of the sauces it soldB) E.D. Smith’s declining volume in national brandsC) E.D. Smith’s national brand losing market position against larger US

competitorsD) E.D. Smith’s reliance on Loblaw’s for controlled labels


102) The U.S. market was most attractive to E.D. Smith and Loblaw’s due to which of the following factors?

A) U.S. food retailers were regional companiesB) U.S. customers were not familiar with the E.D. Smith brandC) the large U.S.-based competitors were driving down prices and profitabilityD) the U.S. market was 10 times larger


103) The three main alternatives the E.D. Smith had concerning a potential U.S. venture with Loblaw’s did not include:

A) declining the offer and continue growing the controlled label business in Canada

B) building a new plant in ChinaC) building a new plant in the U.S.D) buying an existing plan in the U.S.




104) Management’s intent is provided through a(n) __________________.A) policy and procedures manualB) statement of valuesC) annual reportD) vision statement


105) Longer vision statements are meant to be more ___________________. A) clearly understoodB) directiveC) rememberedD) communicated


106) The ultimate importance of the visioned process is the ___________________. A) end resultB) process itselfC) mission statementD) vision statement


107) Which of the following provides a common superior goal?A) principlesB) valuesC) missionD) vision


108) Without a vision of where the business is trying to go, a company loses ______________.

A) efficiencyB) conflict resolutionC) competitive advantageD) resource commitments




109) Which of the following is not a step in the visioned process?A) sell the visionB) create the visionC) alter the visionD) establish pre-conditions


110) Which of the following is the best description of a vision statement?A) a statement of the firm's values and purposesB) a declaration of what the firm stands forC) a statement of the firm's measurable outcomesD) a statement of what the firm will be in the future

Answer: DDiff: 2 Type: MC Skill: Application

111) The concept of “pre-conditions” can best be described by which of the following?A) the analysis of conditions which are present in successful competitorsB) the changing of current conditions to allow for the enacting of the visionC) the establishment of conditions to allow a visioning exercise to take placeD) the development of conditions which help a company exploit its competitive

advantage

Answer: CDiff: 2 Type: MC Skill: Recall112) An effective vision answers which of the following questions?

A) Who are our stakeholders?B) How do we get to the other side? C) Where will we be in 10 years?D) What is our competitive advantage?


113) Which of the following is not one of the conditions that need to be achieved before visioning can be conducted successfully?

A) an effective social networkB) open and clear communicationC) openness to changeD) identification of key stakeholders to consider

Answer: ADiff: 2 Type: MC Skill: Application



114) Which of the following is one of the conditions that need to be achieved before visioning can be conducted successfully?

A) management providing top-down communicationB) an understanding of why the vision is being createdC) a pool of reserve funds designated to support the visionD) temporary inactivity from competitors

Answer: BDiff: 2 Type: MC Skill: Application

115) The process of managing a well-planned and well-executed transition from one CEO to another is called ________.

A) succession planningB) leadership planningC) managerial developmentD) human resource planning


116) Effective strategic leaders craft vision statements because ________.A) they are the basis for a balanced scorecardB) they provide measurable outcomesC) they provide a rigid framework for strategic managementD) they influence strategy formulation and implementation


117) Once the vision has been created, the business’s present situation needs to be examined to ensure that the vision can be achieved given the company’s ______________.

A) suppliersB) CEOC) historyD) resources


118) Which of the following is not an important part of selling the vision?A) employees understanding where the company is headingB) open communication with employeesC) ensuring the vision is abstract enoughD) commitment from top management



Answer: CDiff: 2 Type: MC Skill: Application

119) Which of the following is not a weakness of the visioned process?A) translating it into action is hard workB) the vision may not be concrete enough to be useful by itselfC) the vision is initiated by one person and negotiated through with othersD) the vision encourages behaviours that are demotivating


120) The discovered process can be best described as: A) top management generating strategic ideas and selecting some to furtherB) people throughout the company generating strategic and executing ideas C) top management generating strategic ideas and people throughout the company

selecting some to furtherD) people throughout the company generating strategic ideas from which

management has selected some to further


121) According to the text, the discovered process assumes that the environment is ________.

A) stableB) predictableC) changing slowlyD) complex


122) With the discovered process, decisions that help craft strategy may be all of the following except:

A) plannedB) urgentC) piecemealD) interim


123) Anne Mulcahy of Xerox used the discovered process when she: A) engaged top management in planningB) empowered people to find new things to do



C) provided a visionD) selected a strategic solution after careful analysis


124) All of the following are part of innovation in the discovered process except ________.

A) service innovationB) process revolutionC) continuous process improvementD) long-term action horizons


125) Which of the following is a key characteristic of the discovered process?A) envisionment of a desired futureB) no distinguishing between formulation and implementationC) internal and external analysisD) focus on the decision making itself


126) The discovered process produces a business strategy that evolves over time as the business adapts to changes in all of the following except:

A) organizational cultureB) societyC) technologyD) politics


127) In the discovered process, innovation comes from which of the following sources?A) top managementB) employeesC) customersD) shareholders


128) For the discovered process to work, management has to create a culture with all of the following except:



A) inquisitivenessB) nonconformityC) perfectionismD) open-mindedness


129) The ability of individuals to generate ideas can be enhanced through various techniques except which of the following:

A) customer interviewingB) mining proprietary technologyC) cross-fertilizationD) groupthink


130) The best “pruning” of innovations occurs when management imposes some rationale on the innovations the business accepts and builds. This is due to which of the following factors?

A) clarity over growth projectionsB) breadth of compatible innovationsC) insufficient resources to support all innovationsD) depth of analysis of the external environment


131) What is the main challenge that management faces when pruning/fertilizing ideas?A) quashing compatible ideasB) quashing potentially beneficial ideasC) nurturing less desirable ideasD) nurturing potentially beneficial ideas


132) Management can select innovations using all of the following processes except:A) treating newly formed solutions as technically rational in conditions of

uncertaintyB) treating newly formed solutions as tentative until provenC) sort innovations based on the impact of the solutionD) sort innovations based on the effort needed to install the solution

Answer: A



Diff: 3 Type: MC Skill: Application

133) Innovations quickly installed are those that require little effort, have a big impact and are easily reversed if they prove wrong. This approach has been called:

A) fail early and fail oftenB) succeed early and fail laterC) fail early and succeed laterD) succeed early and fail often


134) Innovation can be stymied in all of the following ways except:A) a bureaucratic control systemB) an organizational culture favouring stabilityC) inspiring others to support new ideasD) employees unwilling to make mistakes


135) The total approach to strategic leadership is successful for which of the following reasons?

A) each process must work independentlyB) intended strategy is based on all three approachesC) a blended approach improves the quality of strategic decisionsD) a company is unable to take the best advantage of the overall situation


136) The three main aspects of human behaviour affecting the strategic leadership processes are:

A) cognition, power and politics, values and ethicsB) power and politics, values and ethics, collaborationC) cognition, power and politics, collaborationD) cognition, values and ethics, collaboration


137) Which of the following is not included as part of the process of thought known as cognition?

A) perceptionB) intellectC) reason



D) memory


138) Robert Campeau, a highly successful builder in Canada, had his decision making affected by cognitive biases, which led to his failed mergers. Which of the following is not an example of a cognitive bias that impacted Campeau?

A) He assumed his success in Canada would transfer to the U.S.B) He discovered information that confirmed his expectations about the success

of the mergers.C) He paid careful attention to any information that indicated he was

overestimating the potential of the mergers.D) He drew on his Wall Street experience to dominated negotiations.


139) Which of the following is not one of the five cognitive biases?A) recency effectB) prior hypothesisC) escalating commitmentD) illusion of control


140) Decision-making bias under which people are willing to commit additional resources to a failing course of action is called ________.

A) illusion of controlB) illusion of optimismC) escalation of commitmentD) self-serving fairness bias


141) A decision maker with a strong prior belief about the relationship between two variables makes decisions based on that belief even though evidence has been presented that is wrong. This is an example of which cognitive bias?

A) reasoning by analogyB) illusion of controlC) how representive D) prior hypothesis

Answer: D




142) During the dot-com boom of the late 1990s many young people and investors looked at the success of Amazon and Yahoo! and assumed they could achieve the same level of success. This produced a massive wave of start-ups working with the internet as individuals sought to capitalize on the perceived opportunities. The dot-com crash in 2000 showed that the market was able to sustain far fewer companies than founders and investors thought. This is an example of which cognitive bias?

A) reasoning by analogyB) illusion of controlC) how representiveD) prior hypothesis


143) Mental maps are used to produce more complex thought structures. This is an attempt to overcome the weaknesses of which cognitive bias?

A) reasoning by analogyB) illusion of controlC) how representiveD) prior hypothesis


144) The trait that can lead people to give themselves more credit for their successes and take less responsibility for their failures is ________.

A) compassionB) passivenessC) aggressivenessD) confidence


145) The desires and interests of the individuals involved in strategic leadership falls under which human influence?

A) economic powerB) values and ethicsC) cognitive biasesD) power and politics




146) Which of the following is not a tactic used in playing politics?A) driving a personal agendaB) taking personal credit for work done by othersC) withholding informationD) overemphasizing work done by others


147) Failures committed under groupthink include all of the following except:A) developing after-the-fact rationalizationsB) focusing only on objective analysisC) filtering out informationD) not questioning underlying assumptions


148) If the Board of Directors hires a new CEO on the basis that he or she will produce specific results, this is an example of ____________.

A) politicsB) groupthinkC) mandatesD) strategy


149) Decisions are affected by the judgments we all make about what is desirable and undesirable in a given situation. These judgments are based on _____________.

A) perceptionB) stereotypingC) memoryD) values


150) A leader whose values tend toward being market-driven will focus their actions on which of the following strategies?

A) serving customers in the selected arenaB) growing the business through alliancesC) choosing conservative strategies that minimize downside riskD) looking for ways for the business to be on the leading edge of technology

Answer: A




151) The values of an individual can contradict the conclusions of logical analysis, producing what seems to be _______________.

A) irrational behaviourB) centralized decision-makingC) management by objectivesD) playing politics


152) Leaders of most businesses have created statements of values that are called all of the following except:

A) corporate credoB) corporate objectivesC) corporate valuesD) corporate principles


153) Ethics do which of the following? A) drive decisions by what they say is rightB) shape the values of shareholdersC) constrain decisions by what they say is wrongD) shape the values of those working in the business


154) What are the three approaches for strategic leadership?

Answer:The three basic leadership processes are planned, visioned, and discovered.

Diff: 1 Type: SA Skill: Recall

155) What is the difference between leaders and strategic leaders?

Answer:While leaders influence other people’s pursuit of goals, strategic leaders influence others so that they produce organizational outcomes such as company-wide performance, competitive superiority, innovation, strategic change, and survival

Diff: 2 Type: SA Skill: Application



156) What is “fit”?

Answer:A condition in which all decisions made by management may support each other but at a minimum do not contradict each other. An implicit assumption of top management is that when various decisions “fit together,” the organization will perform better. The idea of fit has also been called alignment and coherence. Without fit, decisions contradict each other, causing confusion, ineffectiveness, and inefficiency.


157) How can a strategy that is clearly defined in terms of the arena, differentiators, economic logic, staging, and vehicles be a misfit?

Answer:The strategy might not be a good one because it does not fit with the environment or because decisions about the resources and organization of the business do not fit with the strategy. Misfits that are strategically important will either cause poor performance of the business now or in future. For example, management may be making investments that move the business into new markets, although the business has nothing that differentiates it from the competitors in those markets. As a consequence, the return on investment made is likely small and will lower performance for the business.


158) Give three examples of interrelationships among various decisions that are tested to determine fit, or whether they are mutually supporting.

Answer:This testing includes relationships within strategy, resources and capabilities, and the environment.


159) What is the weakness of the planned process?

Answer:The planned/designed process assumes that the information needed is available for analysis and can be used to produce a rational decision. But the necessary tools, concepts, and information are not always available to do complete analysis. And it gets worse when one recognizes that uncertainty, complexity, and ambiguity are common when dealing with strategic situations. Still, the design/planning process is attractive because it allows management to consider how it might make the business both effective and efficient.


160) What is the value of the visioned process to an organization?



Answer:The visioned process provides a strategic intent that calls for managers to set ambitious goals and then to develop the resources and capabilities needed to achieve those goals. The tension between where it wants to be and where the business is both energizes people and encourages their creativity. Having a vision also helps simplify conflict resolution because it provides a common superior goal. Without a vision of where the business is trying to go, managers are more concerned with today’s problems while focused competitors are building new resources and capabilities to pursue future opportunities. The result is that the company loses its competitive advantage to these competitors.


161) What are three conditions that need to be achieved before visioning can be conducted successfully?

Answer:Six conditions need to be achieved before visioning can be conducted successfully. First, the organization has to have top managers who feel responsible for the direction of the company. Second, those members engaged in visioning need the relevant information to construct the vision. Third, members need to understand why the vision is being created. Fourth, open and clear communication is needed so that creative ideas and individual differences can be discussed. Fifth, the key stakeholders in the business need to be identified so that their interests are considered when setting the vision. Sixth and finally, all members need to understand that the vision is a prediction and that conditions may require changes to the vision. Once these conditions have been established, it is possible to conduct a visioning exercise.

Diff:1 Type: SA Skill: Application

162) What is the purpose of the vision statement?

Answer:A statement of vision is forward looking and identifies the firm's desired long-term status. The vision statement clarifies what a firm will be in the future and provides direction in making strategic decisions.


163) Why are vision statements not a substitute for strategy?

Answer:Vision statements are powerful tools, but because they are general and ambiguous by design, they must be realized through carefully crafted and executed strategies.




164) What are the two key differences between the planned process and the discovered process?

Answer:The discovered process does not distinguish between formulation and implementation, unlike the planned process, which emphasizes the importance of formulation and sees implementation decisions that follow as instrumental because they “put” strategy in place. The discovered process also focuses on the results of innovative decisions rather than on decision making itself.

Diff:3 Type: SA Skill: Application

165) What are the four steps of the discovered process?

Answer:The fours steps are: 1. Establish preconditions, 2. Find ideas, 3. Develop ideas, and 4. Prune/fertilize innovations.

Diff: 2 Type: SA Skill: Recall

166) The discovered process produces a business strategy that evolves over time. What are the two key advantages of the discovered process?

Answer:The business that adapts quickly to changes in society, technology, and politics is able to “beat” other businesses to opportunities as they appear. Another advantage is that the discovered process allows those with the best information about the opportunities to make the decisions that are fundamental to the success of the business.


167) What culture needs to exist for the discovered process to work?

Answer:Top management needs to establish a culture that supports innovation. In such a culture, employees have to be open-minded to the irrational and offbeat, be nonconformist and flexible, be inquisitive and enterprising, be willing to think the unthinkable, be willing to take a chance on being wrong and failing, and shun perfectionism. Another responsibility of management is to support employees as they create and exercise options. This involves giving them the resources and freedom they need for continuous innovation and reality testing. Sometimes employees will make mistakes. Management has to accept these so that it does not stifle creativity and learning.


168) What are four techniques that can be used to enable individuals to generate ideas?

Answer:



There are five techniques in total: brainstorming, cross-fertilization (putting employees with very different perspectives together), encouraging the pursuit of curiosity, customer interviewing, and mining proprietary technology.


169) What is the role of the champion in the develop ideas step of the discovered process?

Answer:The lack of consensus over which ideas will be beneficial means that an idea will only survive if it has a champion. The champion supports the development of an idea and its installation as an innovation. The character of champions is that they identify with the idea as their own, and with its promotion as a cause, to a degree that goes far beyond the requirements of their job. They inspire others with their enthusiasm and persist in promoting their idea despite strong opposition.

Diff: Type: SA Skill: Application

170) What are the two processes that management can use to prune and/or fertilize ideas?

Answer:Management can select innovations using one of two different processes. It can treat newly formed solutions as tentative until they prove themselves. As they are developed, intentions are gradually made concrete and tied to particular details. Alternatively, it can sort solutions based on effort needed to install the solution, the impact of the solution, and the ease of undoing the solution.


171) How was Anne Mulcahy of Xerox able to blend all three processes for leading? Provide examples to support your answer.

Answer:She engaged the company in planning when the top management explored what was happening to the company and what needed to be done to turn it around. She provided the company with a vision that had a lasting impact. And she called on the people throughout the company to find innovative solutions to help improve performance of the business.


172) What are the four ways that innovation can be stymied in an organization?

Answer:First, a strong hierarchy working with an elaborate and bureaucratic (top-down) control system gives managers greater ability to block ideas and innovations that do not fit with their own views. Second, a strong organizational culture that prefers stability can limit innovation by challenging new ideas and demeaning



them based on previous experience. Third, individuals in the organization may not have the necessary mindset for innovation. Fourth, championing an idea requires individuals with certain talents. They have to overcome cultural inertia and political barriers by inspiring others to support their new ideas.


173) The total approach involves using all processes at the same time. How does that view of strategic leadership explain why intended strategy is not the same as realized strategy?

Answer:While an intended strategy can be planned, a dynamic environment in which conditions are forever changing means that pursuing the plan can produce disappointing performance. Better to deal with the dynamics by allowing people the flexibility to adjust actions according to the vision and even discover new actions so that the company takes the best advantage of the overall situation.

Diff: Type: SA Skill: Applicationer174) What are four of the five cognitive biases?

Answer:The five cognitive biases are: prior hypothesis, escalating commitment, reasoning by analogy, how representative, and illusion of control.


175) How can firms fall into the trap of escalating commitment?

Answer:Firm decision makers, having already committed significant resources to a strategy, will commit more resources to the project even after receiving feedback that it is failing. The feeling of personal responsibility for the strategy apparently induces the firm to continue with the strategy even when stopping it would improve performance.


176) What are three tactics that are used in playing politics?

Answer:These tactics include withholding information, providing erroneous information, taking personal credit for work done by others, and driving a personal agenda at the expense of the business.


177) How can firms use corporate values or principles to motivate employee behaviour?

Answer:



These serve as a framework that guides the conduct of all those in the business. They tell all employed there is a right way to do things and expect people “to do things right.” They are used as a benchmark for judging individual behaviour and company performance. In doing so, they give management indirect control over people’s behaviour. The individual can judge personal performance against the criteria provided by the statement. This comparison influences the individual’s self-esteem and motivation. When individuals identify with the organization’s values, they are induced to identify with the organization’s objectives. These objectives become part of their personal goals, and their behaviour is aimed at accomplishing them.


178) Explain the concept of “stretching the organization” and how it relates to fit.

Answer: Sometimes, initial decisions relating to strategy may not seem to fit but do so as further decisions are made that line up with the initial decisions. This is said to be “stretching the organization.” An example of stretch appears in Exhibit 2.1, which shows Matsushita Electric, the Japanese parent company of Panasonic, stretching the company to become a “Super Manufacturing Company.” Such a company, explains Matsushita CEO Kunio Nakamura, “must in essence be ‘light and speedy’ Now when the nature of business is changing, emphasis will be placed on the maintenance, broadening and strengthening of IT, on R&D, and marketing. Moreover, Matsushita at present is like a heavy lead ball loaded with assets. In the future we need to cast off superfluous assets and become a company that can move lightly like a soccer ball.”

Fit is the condition in which all decisions made by management may support each other but at a minimum do not contradict each other. An implicit assumption of top management is that when various decisions “fit together,” the organization will perform better. The idea of fit has also been called alignment and coherence. Without fit, decisions contradict each other, causing confusion, ineffectiveness, and inefficiency.

Diff: 3 Type: ES Skill: Application

179) Explain the eight steps of the planned process.

Answer: 1. Assess PerformanceThe first step in any strategic analysis is always to determine how well the business has been performing. If performance is satisfactory, then the strategic challenges the business faces are likely in the future and the business has time to adjust to them. If performance is unsatisfactory, then the business has a serious strategic problem that must be addressed in the near future. When performance is so weak that the survival of the business is in question, the strategic problem has to be addressed immediately.



2. Describe the Current StrategyThe essential decisions about strategy are described in terms of the business strategy diamond presented in Chapter 1: arenas, vehicles, differentiators, staging and pacing, and economic logic. A description of what the business is doing is frequently called the business’s mission.3. Analyze the Internal Environment Its resources and capabilities are what the business has to work with. These are combined in the functional activities of the value chain. The resources and capabilities are assessed to see whether they create a value curve of differentiators that provides a sustainable competitive advantage.4. Analyze the External EnvironmentThe business operates in an evolving industry that is subject to competitive forces. The driving forces of evolution include politics, the economy, society, and technology. Knowing where the industry is in its evolution and the dynamism of that evolution has implications for the nature of competition and the available opportunities. 5. Assess FitIn this step, the interrelationships among all the decisions management has made to satisfy a business strategy are tested to determine whether they are mutually supporting. This testing includes relationships within strategy, resources and capabilities, and the environment. When they are compatible, they are said to fit, and when they are not, they are said to misfit. Performance is usually inadequate when there are serious misfits. The fits and misfits are catalogued to provide input to the next step.6. Provide Alternative Strategic SolutionsWhen creating alternatives, each needs to be mutually exclusive so that the choice is either one alternative or another. If management chooses to accept all alternatives, the alternatives are not mutually exclusive. Rather they form the steps in a plan of action. The viability of each alternative is tested to ensure that it is feasible (that is, it can be accomplished or implemented) and that it is acceptable to those making the selection. 7. Select a Strategic Solution From an analytical perspective, the right answer is based on the strength of the argument given the underlying facts and analysis. From a real-world perspective, the alternative chosen must also have people within the company ready to support and execute it. Whatever the choice, risk is associated with it because the future is uncertain. 8. Implement the Strategic SolutionThe final step is putting the solution in place, which starts with the preparation of a plan of action. In this plan, the necessary strategic, organizational, and resource changes are identified. Individuals with the appropriate level of authority are assigned responsibility for putting the changes in place, given a time frame for accomplishing their responsibilities, and given the resources needed to perform their responsibilities.




180) The CEO of Informix recommends using an ethics checklist when doing planning. What are five of the questions from that checklist? How will this list prevent unethical behaviour?

Answer: Some of the questions include:

1. Is our purpose sufficiently well articulated?2. Do we face new legal requirements?3. Do we have new constituents?4. If we acquire another organization, how will it be ethically assimilated?5. Are our reward structures appropriate?6. Is there any need to change the mechanics?7. How will we measure our performance?8. Do we have new goals/objectives in the ethical domain?

The second part is dependent on student answer. Diff: 2 Type: ES Skill: Application

181) What should vision statements encompass and why should management use them?

Answer: The vision statement is a description of the desired future state of the company. It is the answer to the question, “What will this business be in 10 or 20 years?” The vision statement in practice ranges from a word, to a statement three pages long, or even a picture. Better statements are usually simple and brief, thus easily understood and remembered. Longer statements are more of a plan that, while rich in strategic content, is more directive and less likely to resonate with people and motivate their contributions. Grove said that the statement has to be clear enough for people to visualize but also crisp enough that it can be communicated simply to tired, demoralized, and confused staff.

While the statement is the immediately visible result of the visioning process, the process is more important than the statement itself. By using a vision statement, management allows flexibility since it does not impose conditions on how the business gets there.Diff: 1 Type: ES Skill: Application

182) Because people are involved in the strategic leadership process, their behaviour influences how the processes operate. What are three of the cognitive biases that lead to poor strategic decisions?

Answer: 1. 1. Prior hypothesis bias: A decision maker with a strong prior belief about the relationship between two variables makes decisions based on that belief even



though evidence has been presented that it is wrong. Moreover, the decision maker tends to seek and use information that is consistent with prior beliefs while ignoring information that contradicts those beliefs. This can lead one to believe in a strategy even though others see it as inappropriate.Presently, executives in the music industry are working hard to keep this industry operating largely according to the rules of the past: They will develop artists and then distribute the product of these artists. This worked well when technology was expensive and new music was promoted over the radio and sold on records and compact discs through retail stores. Musicians now have many alternative venues because of digital technology and the internet. They can sell their music directly to the public and provide private concerts over the internet. Yet the traditional music companies are stridently seeking enforcement of their copyrights with the apparent assumption that this will bring the customers back to them and their traditional way of doing business.

2. 2. Escalating commitment: A decision maker, having already committed significant resources to a strategy, will commit more resources to the project even after receiving feedback that it is failing. The feeling of personal responsibility for the strategy apparently induces the decision maker to continue with the strategy even when stopping it would improve performance. Executives at Motorola fell into this trap. Motorola offered the first commercial cellular phone system based on analog technology. By 1994, Motorola had 60 percent of the U.S. cellular market. At that time telephone carriers told Motorola that they wanted to shift to digital technology because it was superior. The first wave of digital systems was commercialized in 1996. Ironically, Motorola had clear evidence of the increasing popularity of digital because it had licensed out its patents for digital technology to competitors, including Nokia and Ericsson. Yet, even with customer requests and clear data on market trends, Motorola’s divisional managers of cell phones believed that customers really wanted better, sleeker analog phones and so presented a Star-TAC phone to the market—it was small but still an analog phone. Motorola finally launched its first digital phone in 1997 after competition was far ahead.

3. 3. Reasoning by analogy: When faced with a complex or novel situation, the decision maker thinks back to a similar situation and then transfers the lessons from that situation to the present one. Analogies are beneficial when the situations are similar and can spark creative thinking. A weakness of analogies is that the two situations may be similar in only superficial ways but different in causal traits. Hence, the analogy will misguide decision making. Mental maps are an attempt to deal with this by producing more complex thought structures behind an analogy.The supermarket, a retail format pioneered during the 1930s, has served as an analogy many times. Charles Lazarus was inspired by the supermarket when he founded Toys “R” Us in the 1950s. Thomas Stemberg, the founder of Staples and a former supermarket executive, reports in his autobiography that Staples began with an analogical question: “Could we be the Toys “R” Us of office supplies?”



Since then, other retailers known as “category-killers” have used Toys “R” Us as their own analogy: Staples, Office Max, Home Depot, and Lowes.

4. 4. How representive: The decision maker may generalize from a vivid example that a single number or a small sample is inappropriate. The statistical law of large numbers states that with repeated trials the sample mean will tend to approach the expected mean. In terms of business, what you might expect to happen is only clear when you have seen something happen many times. During the dot-com boom of the late 1990s many young people and investors looked at the success of Amazon and Yahoo! and assumed they could achieve the same level of success. This produced a massive wave of start-ups working with the internet as individuals sought to capitalize on the perceived opportunities. The dot-com crash in 2000 showed that the market was able to sustain far fewer companies than founders and investors thought.

5. 5. Illusion of control: This is the tendency of the decision makers to overestimate their ability to control events. People tend to attribute their success to good decision making and their failures to bad luck or what others have done to them. Continued success can lead to hubris—arrogance or overbearing pride. Top managers seem particularly prone to such overconfidence because they have been successful many times; otherwise they would not be at the top of the organization. In mergers and acquisitions, overconfidence leads to paying too much for an acquisition, as we saw with Campeau. Given that only one-third of mergers are successful according to movements in prices of shares, this appears to be a common problem. At Motorola, CEO Robert Galvin blamed the company’s failure to shift to digital technology on arrogance. Management thought it had the answer and the customer was wrong.



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