MNG302B – Exam Prep
Section A Questions – Compulsory
**Explain why corporate governance is important in strategy implementation (5)
It is the responsibility of the board of directors of an organisation to define the purpose of the
organisation and identify the stakeholders relevant to the business of the organisation.
The board has to formulate a strategy based on these factors.
The King Report states that it is the board of director’s responsibility to ensure that managers
implement the formulated strategy and monitor the implementation.
Top management must ensure that strategy implementation activities support the drive
towards social and environmental responsibility.
Stakeholder engagement should be encouraged.
Strategy implementation should take issues as social responsibility, environmental
responsibility, stakeholder engagement and sustainability into consideration at all times.
**Describe the major types of executive bonus compensation plans (5)
Share options
o It link individual rewards to organisational performance.
o Top managers will be motivated to pursue long-term goals in line with stakeholder
expectations.
o Executives only receive a bonus if the organisations share price appreciated.
Restricted share plan
o Uses company’s shares as an incentive for executives.
o Executives are given a certain number of shares but may not sell it for a specified
period.
o The rational is to promote longer executive tenure.
Golden Handcuffs
o Cash bonuses are deferred in a series of annual instalments.
o Should the executive leave the company before a certain time, compensations is
forfeited.
Golden Parachutes
An executive retains a substantial cash bonus regardless of whether he or she quits,
resigns or is fired.
Executive is rewarded regardless of success or failure.
Cash bonuses
Cash bonuses are more widespread in organisations (not only executives)
Bonuses are calculated using accounting measures such as ROE, EPS and growth
rates.
,**Discuss the ‘warm square’ in the modified McKinsey 7-S framework (5)/
Discuss the component of the McKinsey 7S framework
This model links the organisations strategy to the various factors that need to be addressed to
ensure successful implementation and consequently strategic success. The 7 –s are:
The framework distinguishes between a cold triangle and a warm square.
The warm square are style, skills, staff and shared values
o It refers to the people in the organisation.
o Strategy
The organisations chosen strategy and the way it intends to achieve its
strategic goals and vision.
o Structure
The way in which an organisation is structured.
o Systems
Including systems such as reward systems, strategic control systems and
operational control systems.
o Style
the leader and management style of the organisation
o Staff
the people in the organisation
o Skills
the organisations core competencies and source of competitive advantage
o Shared values
the values the organisation believes in
The cold triangle refers to structure, strategy and systems of the organisation.
These issues cannot be isolated from one another.
, *Explain any five of the strategic change issues (5)
Time
o how quickly is change needed
Scope
o is dramatic revolutionary change needed or only a moderate change
Diversity
o the level of homogeneity in the organisation
Capacity
o does have the resources to change
Readiness
o employees ready for change
Capability
o does employees and managers have the capabilities to implement change
*Provide guidelines for overcoming resistance to change (5)
Education and communication
o Help people to understand the need for change.
o Must be communicated so that it is clearly understood by all.
Participation and Involvement
o If people are part of the strategy formulation process, they will be more supportive of
changes necessary to implement new strategy.
Facilitation and support
o Building support networks helps to overcome resistance to change.
Negotiation and agreement
o Linked to incentives and rewards.
Manipulation and co-optation
o Influencing people to accept change and "buying-off" people to accept and promote
change.
Giving clear direction
o May use authority to set direction and impose means to implement change.
Explicit and implicit coercion
o this may work in the short-term - unlikely that this will result in long term commitment from
employees
Section A Questions – Compulsory
**Explain why corporate governance is important in strategy implementation (5)
It is the responsibility of the board of directors of an organisation to define the purpose of the
organisation and identify the stakeholders relevant to the business of the organisation.
The board has to formulate a strategy based on these factors.
The King Report states that it is the board of director’s responsibility to ensure that managers
implement the formulated strategy and monitor the implementation.
Top management must ensure that strategy implementation activities support the drive
towards social and environmental responsibility.
Stakeholder engagement should be encouraged.
Strategy implementation should take issues as social responsibility, environmental
responsibility, stakeholder engagement and sustainability into consideration at all times.
**Describe the major types of executive bonus compensation plans (5)
Share options
o It link individual rewards to organisational performance.
o Top managers will be motivated to pursue long-term goals in line with stakeholder
expectations.
o Executives only receive a bonus if the organisations share price appreciated.
Restricted share plan
o Uses company’s shares as an incentive for executives.
o Executives are given a certain number of shares but may not sell it for a specified
period.
o The rational is to promote longer executive tenure.
Golden Handcuffs
o Cash bonuses are deferred in a series of annual instalments.
o Should the executive leave the company before a certain time, compensations is
forfeited.
Golden Parachutes
An executive retains a substantial cash bonus regardless of whether he or she quits,
resigns or is fired.
Executive is rewarded regardless of success or failure.
Cash bonuses
Cash bonuses are more widespread in organisations (not only executives)
Bonuses are calculated using accounting measures such as ROE, EPS and growth
rates.
,**Discuss the ‘warm square’ in the modified McKinsey 7-S framework (5)/
Discuss the component of the McKinsey 7S framework
This model links the organisations strategy to the various factors that need to be addressed to
ensure successful implementation and consequently strategic success. The 7 –s are:
The framework distinguishes between a cold triangle and a warm square.
The warm square are style, skills, staff and shared values
o It refers to the people in the organisation.
o Strategy
The organisations chosen strategy and the way it intends to achieve its
strategic goals and vision.
o Structure
The way in which an organisation is structured.
o Systems
Including systems such as reward systems, strategic control systems and
operational control systems.
o Style
the leader and management style of the organisation
o Staff
the people in the organisation
o Skills
the organisations core competencies and source of competitive advantage
o Shared values
the values the organisation believes in
The cold triangle refers to structure, strategy and systems of the organisation.
These issues cannot be isolated from one another.
, *Explain any five of the strategic change issues (5)
Time
o how quickly is change needed
Scope
o is dramatic revolutionary change needed or only a moderate change
Diversity
o the level of homogeneity in the organisation
Capacity
o does have the resources to change
Readiness
o employees ready for change
Capability
o does employees and managers have the capabilities to implement change
*Provide guidelines for overcoming resistance to change (5)
Education and communication
o Help people to understand the need for change.
o Must be communicated so that it is clearly understood by all.
Participation and Involvement
o If people are part of the strategy formulation process, they will be more supportive of
changes necessary to implement new strategy.
Facilitation and support
o Building support networks helps to overcome resistance to change.
Negotiation and agreement
o Linked to incentives and rewards.
Manipulation and co-optation
o Influencing people to accept change and "buying-off" people to accept and promote
change.
Giving clear direction
o May use authority to set direction and impose means to implement change.
Explicit and implicit coercion
o this may work in the short-term - unlikely that this will result in long term commitment from
employees
