Strategic Management Final Exam
Correct Quizzes & Solutions(RATED
A+)
Which of the following best exemplifies the use of input controls?
Zappos' use of monitoring-free customer service calls
GM's use of the multidivisional strategy
McDonald's use of standard operating procedures
Southwest Airlines' use of employee friendliness - ANSWERStandard operating procedures, or
policies and rules, are a frequently used mechanism when relying on input controls. McDonald's
relies on detailed operating procedures to ensure consistent quality and service worldwide.
Delos Inc. is an apparel manufacturer. The management at Delos Inc. prefers moderate control over
the operations of the different departments such as R&D, design, marketing, and sales. It allocates a
budget to each function at the beginning of each quarter. This is an example of implementing control
through
input controls.
multidivisional strategy.
centralization.
output controls. - ANSWERThis is an example of implementing control through input controls. Input
controls seek to define and direct employee behavior through a set of explicit, codified rules and
standard operating procedures. Firms use input controls when the goal is to define the ways and
means to reach a strategic goal and to ensure a predictable outcome. The use of budgets is a key to
input controls.
E Corp is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike
many other pharmaceutical companies, E Corp has a relaxed work environment where employees
are free to discuss projects with each other. Employees are encouraged to choose the projects that
interest them; communication between team members and their supervisors is open and easy.
Because of the company's work culture, its employees feel motivated to work harder and display
more entrepreneurial behaviors. In this scenario, E Corp Inc. is most likely an organization that is
,centralized.
organic.
formalized.
mechanistic. - ANSWERIn this scenario, E Corp is most likely an organic organization. Organic
structures tend to be correlated with the following: a fluid and flexible information flow among
employees in both horizontal and vertical directions; faster decision making; and higher employee
motivation, retention, satisfaction, and creativity. Organic organizations also typically exhibit a higher
rate of entrepreneurial behaviors and innovation.
In 2013, CEO Hsieh announced that Zappos would implement a reorganization in which, as Hsieh
said, "... employees ... act more like entrepreneurs and self-direct their work ..." Hsieh changed
Zappos from
a holacracy to a hierarchy.
a decentralized structure to a formalized structure.
a bottom-up to a top-down style.
a hierarchy to a holacracy. - ANSWERAs mentioned in Strategy Highlight 11.1, Zappos' CEO Hsieh
changed the organization to a holacracy in 2013 to combat a slow bureaucracy. As of now, however,
Zappos has experienced some challenges—employee morale has fallen and Zappos fell to 86 in the
"100 Best Companies to Work For" list.
Elvira is the CEO of All Things Inc. which employs a matrix structure which is the combination of the
________ and ________ structure.
functional; M-form
network; functional
M-form; simple
simple; functional - ANSWERA matrix structure is the combination of the functional and M-form
structure.
Successful ________ requires managers to design and shape structure, culture, and control
mechanisms.
strategy implementation
strategy innovation
,strategy diversification
strategy formulation - ANSWERSuccessful strategy implementation requires managers to design and
shape structure, culture, and control mechanisms. In doing so, they execute a firm's strategy as they
put its accompanying business model into action.
Which of the following statements is true of organizational culture?
Changes in culture are too frequent to have any impact on strategic implementation.
It is always better to focus on output control and performance than on organizational culture.
It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.
According to research, more than 50 percent of firms change culture successfully. - ANSWERIt is best
to develop a strong and strategically relevant culture in the first few years of a firm's existence. It has
been documented that the initial structure, culture, and control mechanisms established in a new
firm can be a significant predictor of later success
One of Black Mesa's core values is to provide unbeatable customer service, a commitment
introduced to the company by its founder more than 10 years ago. This value is expressed in the
company's "Always You" campaign, which promises a no-questions-asked returns policy and an offer
to stitch the customer's initials onto any item for free using a patented sewing technique, two
features that are not offered by any of Black Mesa's competitors. Although the campaign has
resulted in a 10 percent decline in profits, Black Mesa has decided to continue to pursue its founder's
vision to reward customers and maintain employees' sense of purpose. Why does Black Mesa's
culture, exemplified by the "Always You" campaign, fail to support a competitive advantage?
Always lacks founder imprinting.
The culture is not difficult to imitate.
It is not a rare resource.
It does not increase economic value creation for the firm. - ANSWERFor organizational culture to be
the basis of a firm's competitive advantage, the firm's unique culture must help it in some way to
increase its economic value creation (V - C). That is, it must either help in increasing the perceived
value of the product/service and/or lower its cost of production/delivery. Moreover, according to the
resource-based view of the firm, the resource—in this case, organizational culture—must be
valuable, rare, difficult to imitate, and the firm must be organized to capture the value created. Black
Mesa's culture fails to support a competitive advantage because it does not increase economic value
creation for the firm, as evidenced by the 10 percent decline in profits.
Los Pollos Hermanos is a nationwide fast-food chain. Decision power resides at the top of the
organization. Each job is documented in minute detail. The firm has many levels of supervision,
, including vice presidents and regional managers. The firm's headquarters provides detailed
instructions to each of its franchisees so that they provide comparable quality and service across the
board. Based on this scenario, which of the following is an accurate statement about Tony's?
Los Pollos Hermanos has a low degree of specialization, formalization, and centralization and relies
on a flat hierarchy.
Los Pollos Hermanos has a low degree of specialization and formalization, a high degree of
centralization, and relies on a flat hierarchy.
Los Pollos Hermanos has a high degree of specialization and formalization, a low degree of
centralization, and relies on a tall hierarchy.
Los Pollos Hermanos has a high degree of specializat - ANSWERLos Pollos Hermanos has a high
degree of specialization (employees are assigned specific tasks such as food prep, cook, cashier),
formalization (each job documented in minute detail; detailed instructions to each of its franchisees),
and centralization (decision power resides at the top) and relies on a tall hierarchy (many levels of
supervision).
Why is the optimal organizational structure a multidivisional structure?
Its focus is on retaining activities within a single geographic area.
Its focus is on establishing a flat hierarchy operated in a decentralized fashion.
Its focus is on driving down costs.
Its focus is on producing differentiated products. - ANSWERThe optimal organizational structure
match is a multidivisional structure. Rather than focusing on geographic differences as in the
multidomestic strategy, the focus is on driving down costs due to consolidation of activities across
different geographic areas.
AT&T, IBM, Siemens, and Pfizer, have been shifting their innovation strategy toward a model
designed to blend internal knowledge with external knowledge by sourcing strategic alliances. This
example best represents the
absorptive capacity model.
open innovation framework.
not-invented-here syndrome.
closed innovation framework. - ANSWEROpen innovation is a framework for R&D that proposes
permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but
also from ideas and innovation from external sources. Even the largest companies, such as
AT&T, IBM, Siemens, and Pfizer, are shifting their innovation strategy toward a model that
