182 test bank for strategic management a dynamic perspective concepts first 1st

Test Bank for Strategic Management A Dynamic Perspective Concepts First 1st 85 Test Bank True – False Questions 29 Test Bank for Free Text Questions 68 Test Bank Multiple Choice Questions Multiple Choice Questions - Page 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 sold B) E.D Smith’s declining volume in national brands C) E.D Smith’s national brand losing market position against larger US competitors D) E.D Smith’s reliance on Loblaw’s for controlled labels 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) suppliers B) CEO C) history D) resources The planned process is also known as the approach A) integrated B) emergent C) stakeholder D) designed Which of the following is not a step in the visioned process? A) sell the vision B) create the vision C) alter the vision D) establish pre-conditions The planned approach implies relatively _ certainty about what needs to be done and works well in situations A) high, dynamic B) high, stable C) low, dynamic D) low, stable Matsushita planned to become a super manufacturing company by doing all of the following except: A) expansion of R&D and IT B) becoming interactive with customers C) providing solutions instead of goods D) moving from a flat organization to a pyramid 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) economy B) society C) technology D) capabilities Which of the following is not an important part of selling the vision? A) employees understanding where the company is heading B) open communication with employees C) ensuring the vision is abstract enough D) commitment from top management The Xerox turnaround plan featured all of the following actions except? A) aggressively reducing costs B) outsourcing research and development C) improving productivity in operations D) reducing the amount of risk faced 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 communication B) an understanding of why the vision is being created C) a pool of reserve funds designated to support the vision D) temporary inactivity from competitors The concept of “pre-conditions” can best be described by which of the following? A) the analysis of conditions which are present in successful competitors B) the changing of current conditions to allow for the enacting of the vision C) the establishment of conditions to allow a visioning exercise to take place D) the development of conditions which help a company exploit its competitive advantage Management’s intent is provided through a(n) A) policy and procedures manual B) statement of values C) annual report D) vision statement Which of the following is the best description of a vision statement? A) a statement of the firm's values and purposes B) a declaration of what the firm stands for C) a statement of the firm's measurable outcomes D) a statement of what the firm will be in the future “Fit” has also been called A) coherence B) intertwining C) efficiency D) effectiveness The weakness of the planned process is that the necessary are not always available to complete analysis A) tools B) employees C) concepts D) information Which of the following provides a common superior goal? A) principles B) values C) mission D) vision As a part of implementation, _ are developed to overcome the riskiest aspects of the choice A) contingency plans B) resource inputs C) strategic levers D) alternatives An effective vision answers which of the following questions? A) Who are our stakeholders? B) How we get to the other side? C) Where will we be in 10 years? D) What is our competitive advantage? Strategic leadership is concerned with the following except: A) innovation B) certainty C) strategic change D) performance 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 network B) open and clear communication C) openness to change D) identification of key stakeholders to consider Effective strategic leaders craft vision statements because A) they are the basis for a balanced scorecard B) they provide measurable outcomes C) they provide a rigid framework for strategic management D) they influence strategy formulation and implementation Longer vision statements are meant to be more _ A) clearly understood B) directive C) remembered D) communicated Strategic leadership is typically overseen by the board of directors, and usually involves which of the following company employees? A) manufacturing B) former CEOs C) top management D) retail Implementing a strategic solution requires identifying the necessary changes to all of the following except: A) resource B) incremental C) organizational D) strategic Matsushita’s plan was to adapt to the business environment’s changing requirements in all of these areas except: A) marketing B) R&D C) asset acquisition D) IT According to the text, Xerox mixed together which of the following three approaches to strategic leadership? A) discovered, visioned, and planned B) intended, discovered, and visioned C) realized, visioned, and planned D) realized, intended, and visioned Strategic leadership is managing an overall enterprise and influencing key A) organizational outcomes B) stakeholders C) managers D) strategic initiatives 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 China C) building a new plant in the U.S D) buying an existing plan in the U.S 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 companies B) U.S customers were not familiar with the E.D Smith brand C) the large U.S.-based competitors were driving down prices and profitability D) the U.S market was 10 times larger The ultimate importance of the visioned process is the _ A) end result B) process itself C) mission statement D) vision statement Which of the following is not a weakness of the visioned process? A) translating it into action is hard work B) the vision may not be concrete enough to be useful by itself C) the vision is initiated by one person and negotiated through with others D) the vision encourages behaviours that are demotivating 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? The process of managing a well-planned and well-executed transition from one CEO to another is called A) succession planning B) leadership planning C) managerial development D) human resource planning Without a vision of where the business is trying to go, a company loses A) efficiency B) conflict resolution C) competitive advantage D) resource commitments 68 Free Test Bank for Strategic Management A Dynamic Perspective Concepts First Canadian Edition 1st Edition Carpenter Multiple Choice Questions - Page Which of the following is not one of the five cognitive biases? A) recency effect B) prior hypothesis C) escalating commitment D) illusion of control 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 culture B) society C) technology D) politics For the discovered process to work, management has to create a culture with all of the following except: A) inquisitiveness B) nonconformity C) perfectionism D) open-mindedness The total approach to strategic leadership is successful for which of the following reasons? A) each process must work independently B) intended strategy is based on all three approaches C) a blended approach improves the quality of strategic decisions D) a company is unable to take the best advantage of the overall situation 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 The ability of individuals to generate ideas can be enhanced through various techniques except which of the following: A) customer interviewing B) mining proprietary technology C) cross-fertilization D) groupthink Leaders of most businesses have created statements of values that are called all of the following except: A) corporate credo B) corporate objectives C) corporate values D) corporate principles 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 analogy B) illusion of control C) how representive D) prior hypothesis 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 analogy B) illusion of control C) how representive D) prior hypothesis In the discovered process, innovation comes from which of the following sources? A) top management B) employees C) customers D) shareholders Decision-making bias under which people are willing to commit additional resources to a failing course of action is called A) illusion of control B) illusion of optimism C) escalation of commitment D) self-serving fairness bias Which of the following is not a tactic used in playing politics? A) driving a personal agenda B) taking personal credit for work done by others C) withholding information D) overemphasizing work done by others Anne Mulcahy of Xerox used the discovered process when she: A) engaged top management in planning B) empowered people to find new things to C) provided a vision D) selected a strategic solution after careful analysis Innovation can be stymied in all of the following ways except: A) a bureaucratic control system B) an organizational culture favouring stability C) inspiring others to support new ideas D) employees unwilling to make mistakes What is the main challenge that management faces when pruning/fertilizing ideas? A) quashing compatible ideas B) quashing potentially beneficial ideas C) nurturing less desirable ideas D) nurturing potentially beneficial ideas 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 analogy B) illusion of control C) how representive D) prior hypothesis 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 projections B) breadth of compatible innovations C) insufficient resources to support all innovations D) depth of analysis of the external environment The discovered process can be best described as: A) top management generating strategic ideas and selecting some to further B) people throughout the company generating strategic and executing ideas C) top management generating strategic ideas and people throughout the company selecting some to further D) people throughout the company generating strategic ideas from which management has selected some to further The values of an individual can contradict the conclusions of logical analysis, producing what seems to be _ A) irrational behaviour B) centralized decision-making C) management by objectives D) playing politics Which of the following is not included as part of the process of thought known as cognition? A) perception B) intellect C) reason D) memory False The great catalyst within Dofasco to reinvent the company was technology True False Prior hypothesis bias allows decision makers to use information that is inconsistent with their beliefs True False 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 True False Strategic decision-makers may not appreciate the full implications of their decisions within the discovered process of strategic leadership True False A leader’s values will impact the choice of arenas or vehicles he or she tends to utilize in strategic decision making True False 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 True False Using the planned, visioned, and discovered processes at the same time is feasible True False The issue of what is “right” is becoming easier as businesses become global and populations more diverse True False If values are used as a benchmark for employee behaviour and company performance, they give management indirect control over people’s behaviour True False When management fails to impose rationale on the innovations the business accepts and builds, it is known as “fail early, fail often.” True False Strategic innovation is a key feature of the discovered process True False A business strategy that evolves over time benefits those with the best information about the market opportunities True False If centralized decision making seems to be orderly and rational, politics must not be in play True False The dot-com crash in 2000 was due in a large part to the illusion of control True False The ability to translate a vision into behaviours for workers at all levels is the biggest strength of the visioned process True False Escalation of commitment could be due to groupthink True False Tunnel vision trap occurs when the vision drives the actions of management even though it is no longer achievable True False Innovation requires justifying mistakes True False The challenge with ethics is not determining which set of values is “right,” but which corporations should develop codes of ethical behaviour True False Traditional music companies using enforcement of their copyrights to bring customers back to them is an example of escalating commitment True False In a fragmented industry, conditions are less dynamic and require more of a planned approach True False Cognition is the process of thought, including perception and reason but not memory True False An effective tactic is more morally correct than an ineffective tactic True False With innovation often coming from employees in the discovered process, top management plays little role in orchestrating the process True False A Board of Directors may have a mandate top pursue newer technologies This mandate is a form of organizational power and politics True False Reasoning by analogy is weakest when the two situations are similar in superficial ways True False The best strategic decisions are based in part on values True False The supermarket is an example of a retail format that was used as an analogy by future retailers True False Continuous innovation requires structure and few mistakes True False Escalation of commitment is a person's belief that he or she is in greater control of a situation than rational analysis would support True False Cross-fertilization is putting employees together with customers True False Escalating commitment is based more on a rational commitment of resources than the feeling of personal responsibility for the strategy True False 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 True False 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 True False Cognition is a bias that impacts how humans reach decisions True False “Using power” and “playing politics” have no place in managing an organization True False Human factors influence strategic leadership processes primarily at the start of the process True False 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 True False The discovered process includes people throughout the company generating strategy True False The phrase escalation of commitment indicates that committing more resources to a failing strategy is an irrational decision True False Free Text Questions Discover 29 Free Test Bank for Strategic Management A Dynamic Perspective Concepts First Canadian Edition 1st Edition Carpenter free text questions to develop your critical thinking and improve your knowledge revision Actually, test bank is a place where you will be provided the variety of text samples of strategic management test bank and lots other areas that you maybe care about Enjoy test bank to improve your knowledge and prepare well for your next examination by testing these quiz questions below right now! Exam Finished 29 Free Test Bank for Strategic Management A Dynamic Perspective Concepts First Canadian Edition 1st Edition Carpenter Free Text Questions Explain the concept of “stretching the organization” and how it relates to fit Answer Given Sometimes, initial decisions relating to strategy may not seem to fit but 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 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 How can firms use corporate values or principles to motivate employee behaviour? Answer Given 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 things and expect people “to 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 selfesteem 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 What are the four ways that innovation can be stymied in an organization? Answer Given First, a strong hierarchy working with an elaborate and bureaucratic (top-down) control system gives managers greater ability to block ideas and innovations that 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 What should vision statements encompass and why should management use them? Answer Given 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 What are three tactics that are used in playing politics? Answer Given 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 What are the two key differences between the planned process and the discovered process? Answer Given 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 How can firms fall into the trap of escalating commitment? Answer Given 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 What are three conditions that need to be achieved before visioning can be conducted successfully? Answer Given 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 What is the role of the champion in the develop ideas step of the discovered process? Answer Given 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 Give three examples of interrelationships among various decisions that are tested to determine fit, or whether they are mutually supporting Answer Given This testing includes relationships within strategy, resources and capabilities, and the environment What is the weakness of the planned process? Answer Given 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 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 How can a strategy that is clearly defined in terms of the arena, differentiators, economic logic, staging, and vehicles be a misfit? Answer Given 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 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 Why are vision statements not a substitute for strategy? Answer Given Vision statements are powerful tools, but because they are general and ambiguous by design, they must be realized through carefully crafted and executed strategies The discovered process produces a business strategy that evolves over time What are the two key advantages of the discovered process? Answer Given 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 What are the four steps of the discovered process? Answer Given The fours steps are: Establish preconditions, Find ideas, Develop ideas, and Prune/fertilize innovations 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 Given Some of the questions include: Is our purpose sufficiently well articulated?; Do we face new legal requirements?; Do we have new constituents?; If we acquire another organization, how will it be ethically assimilated?; Are our reward structures appropriate?; Is there any need to change the mechanics?;7 How will we measure our performance?; Do we have new goals/objectives in the ethical domain? The second part is dependent on student answer What are the three approaches for strategic leadership? Answer Given The three basic leadership processes are planned, visioned, and discovered What is the purpose of the vision statement? Answer Given 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 What are four of the five cognitive biases? Answer Given The five cognitive biases are: prior hypothesis, escalating commitment, reasoning by analogy, how representative, and illusion of control What culture needs to exist for the discovered process to work? Answer Given 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 What are the two processes that management can use to prune and/or fertilize ideas? Answer Given 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 What is “fit”? Answer Given A condition in which all decisions made by management may support each other but at a minimum 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 What are four techniques that can be used to enable individuals to generate ideas? Answer Given 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 What is the value of the visioned process to an organization? Answer Given 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 How was Anne Mulcahy of Xerox able to blend all three processes for leading? Provide examples to support your answer Answer Given 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 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 Given 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; 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; 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; 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; 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 What is the difference between leaders and strategic leaders? Answer Given 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 Explain the eight steps of the planned process Answer Given Assess Performance The 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; Describe the Current Strategy: The 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; 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; Analyze the External Environment: The 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; Assess Fit: In 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; Provide Alternative Strategic Solutions: When 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; 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; Implement the Strategic Solution: The 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 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 Given 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 ... resources to a failing strategy is an irrational decision True False Free Text Questions Discover 29 Free Test Bank for Strategic Management A Dynamic Perspective Concepts First Canadian Edition 1st Edition... superficial ways True False The best strategic decisions are based in part on values True False The supermarket is an example of a retail format that was used as an analogy by future retailers True False... True False A mission is a description of what the business is doing True False 85 Free Test Bank for Strategic Management A Dynamic Perspective Concepts First Canadian Edition 1st Edition Carpenter