Strategic Management Final Exam
Questions & Answers(RATED A+)
Strategy has a more important influence on strategy, although once in place, structures influence
strategy. - ANSWERT
Over time, large and complex organizations must customize their structure to fit their unique
strategic needs. - ANSWERT
Organizational structures must be both stable and flexible. - ANSWERT
Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate
strategies for the conditions in the external environment and the company's competitive advantages.
- ANSWERT
Organizational controls guide the use of strategy, indicate how to compare actual results with
expected results, and suggest corrective actions to take when the difference is unacceptable. -
ANSWERT
To properly execute strategic controls in firms using related diversification, the executives must have
a deep understanding of each unit's business-level strategy. - ANSWERT
RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and
sharing of ideas among employees. In order to foster this behavior, RexMacDonald should emphasize
strategic controls over financial controls. - ANSWERT
Organizational inertia often prompts top management to initiate structural change when
organizational performance levels drop. - ANSWERF
With a related diversification corporate-level strategy, financial controls are used by corporate
leaders to verify the sharing of appropriate strategic factors such as knowledge, markets, and
technologies across businesses. - ANSWERF
,Companies and business units of large diversified firms using the cost leadership strategy should use
strategic controls. - ANSWERF
Companies and business units using the differentiation strategy should emphasize financial rather
than strategic controls. - ANSWERF
According to Michael Dell, an overemphasis on financial controls to produce attractive short-term
results contributed to performance difficulties at Dell, Inc. This point emphasizes the importance of
properly balancing the use of strategic and financial controls. - ANSWERT
Research shows that structure has a more important influence on strategy than the reverse and
hence the emphasis of the chapter on the subject of structure. - ANSWERF
Research has consistently shown that there is one best way to structure all organizations, regardless
of competitive strategy. - ANSWERF
The simple structure is used by owner-managed firms which are characterized by informal
relationships, few rules, limited task specialization, and unsophisticated information systems. -
ANSWERT
As a firm grows, it typically shifts from a simple structure to a functional structure. - ANSWERT
A simple structure is an organizational form in which the owner-manager makes all major decisions
directly and monitors all activities, while the staff merely serves as an extension of the manager's
supervisory authority. - ANSWERT
Specialization refers to the extent to which authority for decision-making is retained at higher
managerial levels. - ANSWERF
There are three variations of the multidivisional structure. - ANSWERT
High levels of formalization of rules and procedures which often emanate from the centralized staff
are a characteristic of the structure used to implement the cost leadership strategy. - ANSWERT
Centralized and formalized procedures allow for greater flexibility, an important factor for firms using
a cost leadership strategy. - ANSWERF
,The marketing and R&D functions are emphasized in the differentiation strategy's functional
structure. - ANSWERT
Firms using the differentiation strategy need to respond quickly to environmental opportunities and
threats. The structural features that are best for these requirements are centralization, specialization,
and many rules and procedures. - ANSWERF
The integrated cost-leadership/differentiation strategy needs structural features that are partially
centralized and partially decentralized, jobs that are semi-specialized, and rules and procedures that
call for some formal and some informal job behavior. - ANSWERT
The functional structure is most appropriate for large firms with very high levels of diversification. -
ANSWERF
Firms switch from a functional structure to a multidivisional structure because greater levels of
environmental complexity and uncertainty make it necessary for the firm to develop cooperative
relationships with its stakeholders. - ANSWERF
The three multidivisional structures that are used to implement a diversification strategy are the
competitive form, the strategic business unit form, and the integrated form. - ANSWERF
The cooperative form is an M-form structure in which horizontal integration is used to bring about
interdivisional cooperation. - ANSWERT
To implement a related constrained strategy, firms should use the cooperative form of the
multidivisional structure. - ANSWERT
The matrix organization has a dual structure combining functional specialization and business
product or project specialization. - ANSWERT
To implement a related-linked strategy, a firm usually needs an SBU structure. - ANSWERT
An SBU structure consists of at least three levels: the top level, the corporate headquarters; the next
level, the strategic business units (SBUs); and the final level, SBU divisions. - ANSWERT
, The divisions within each SBU are related in terms of shared products or markets, but the divisions of
one SBU have little in common with the divisions of the other SBUs. - ANSWERT
The competitive form of the M-form structure is characterized by complete independence among
the form's divisions. Unlike the divisions included in the cooperative structure, divisions that are part
of the competitive structure do not share common strengths. - ANSWERT
Internal competition for corporate resources is effective for companies with an unrelated
diversification strategy, but dysfunctional for companies with a related-constrained strategy. -
ANSWERT
The selection of an organizational structure for an internationally diversified firm should consider the
international corporate level strategy the firm is using. - ANSWERT
The organizational structure for an internationally diversified firm requires trade-offs between global
integration and local market responsiveness. - ANSWERT
Firms implementing the multidomestic strategy often attempt to isolate themselves from global
competitive forces by establishing protected market positions or by competing in industry segments
that are most affected by differences among local countries. - ANSWERT
The worldwide geographic area structure differs from the worldwide product divisional structure in
the level of centralization of decision-making. - ANSWERT
The worldwide product divisional structure has centralized decision-making authority in the
worldwide division headquarters to coordinate and integrate decisions and actions among business
units. - ANSWERT
In the hybrid form of the combination structure, some divisions are oriented toward products while
others are oriented toward market areas. - ANSWERT
A strategic network can be characterized as a loose federation of partners revolving around a
strategic center firm. - ANSWERT
Arnold Schwartz, CEO and founder of Schwartz Engineering, has repeatedly rebuffed efforts by other
firms to draw Schwartz Engineering into strategic alliances. Schwartz Engineering has built its highly-
successful business around proprietary processes invented by Mr. Schwartz in the 1980s. Mr.
Questions & Answers(RATED A+)
Strategy has a more important influence on strategy, although once in place, structures influence
strategy. - ANSWERT
Over time, large and complex organizations must customize their structure to fit their unique
strategic needs. - ANSWERT
Organizational structures must be both stable and flexible. - ANSWERT
Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate
strategies for the conditions in the external environment and the company's competitive advantages.
- ANSWERT
Organizational controls guide the use of strategy, indicate how to compare actual results with
expected results, and suggest corrective actions to take when the difference is unacceptable. -
ANSWERT
To properly execute strategic controls in firms using related diversification, the executives must have
a deep understanding of each unit's business-level strategy. - ANSWERT
RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and
sharing of ideas among employees. In order to foster this behavior, RexMacDonald should emphasize
strategic controls over financial controls. - ANSWERT
Organizational inertia often prompts top management to initiate structural change when
organizational performance levels drop. - ANSWERF
With a related diversification corporate-level strategy, financial controls are used by corporate
leaders to verify the sharing of appropriate strategic factors such as knowledge, markets, and
technologies across businesses. - ANSWERF
,Companies and business units of large diversified firms using the cost leadership strategy should use
strategic controls. - ANSWERF
Companies and business units using the differentiation strategy should emphasize financial rather
than strategic controls. - ANSWERF
According to Michael Dell, an overemphasis on financial controls to produce attractive short-term
results contributed to performance difficulties at Dell, Inc. This point emphasizes the importance of
properly balancing the use of strategic and financial controls. - ANSWERT
Research shows that structure has a more important influence on strategy than the reverse and
hence the emphasis of the chapter on the subject of structure. - ANSWERF
Research has consistently shown that there is one best way to structure all organizations, regardless
of competitive strategy. - ANSWERF
The simple structure is used by owner-managed firms which are characterized by informal
relationships, few rules, limited task specialization, and unsophisticated information systems. -
ANSWERT
As a firm grows, it typically shifts from a simple structure to a functional structure. - ANSWERT
A simple structure is an organizational form in which the owner-manager makes all major decisions
directly and monitors all activities, while the staff merely serves as an extension of the manager's
supervisory authority. - ANSWERT
Specialization refers to the extent to which authority for decision-making is retained at higher
managerial levels. - ANSWERF
There are three variations of the multidivisional structure. - ANSWERT
High levels of formalization of rules and procedures which often emanate from the centralized staff
are a characteristic of the structure used to implement the cost leadership strategy. - ANSWERT
Centralized and formalized procedures allow for greater flexibility, an important factor for firms using
a cost leadership strategy. - ANSWERF
,The marketing and R&D functions are emphasized in the differentiation strategy's functional
structure. - ANSWERT
Firms using the differentiation strategy need to respond quickly to environmental opportunities and
threats. The structural features that are best for these requirements are centralization, specialization,
and many rules and procedures. - ANSWERF
The integrated cost-leadership/differentiation strategy needs structural features that are partially
centralized and partially decentralized, jobs that are semi-specialized, and rules and procedures that
call for some formal and some informal job behavior. - ANSWERT
The functional structure is most appropriate for large firms with very high levels of diversification. -
ANSWERF
Firms switch from a functional structure to a multidivisional structure because greater levels of
environmental complexity and uncertainty make it necessary for the firm to develop cooperative
relationships with its stakeholders. - ANSWERF
The three multidivisional structures that are used to implement a diversification strategy are the
competitive form, the strategic business unit form, and the integrated form. - ANSWERF
The cooperative form is an M-form structure in which horizontal integration is used to bring about
interdivisional cooperation. - ANSWERT
To implement a related constrained strategy, firms should use the cooperative form of the
multidivisional structure. - ANSWERT
The matrix organization has a dual structure combining functional specialization and business
product or project specialization. - ANSWERT
To implement a related-linked strategy, a firm usually needs an SBU structure. - ANSWERT
An SBU structure consists of at least three levels: the top level, the corporate headquarters; the next
level, the strategic business units (SBUs); and the final level, SBU divisions. - ANSWERT
, The divisions within each SBU are related in terms of shared products or markets, but the divisions of
one SBU have little in common with the divisions of the other SBUs. - ANSWERT
The competitive form of the M-form structure is characterized by complete independence among
the form's divisions. Unlike the divisions included in the cooperative structure, divisions that are part
of the competitive structure do not share common strengths. - ANSWERT
Internal competition for corporate resources is effective for companies with an unrelated
diversification strategy, but dysfunctional for companies with a related-constrained strategy. -
ANSWERT
The selection of an organizational structure for an internationally diversified firm should consider the
international corporate level strategy the firm is using. - ANSWERT
The organizational structure for an internationally diversified firm requires trade-offs between global
integration and local market responsiveness. - ANSWERT
Firms implementing the multidomestic strategy often attempt to isolate themselves from global
competitive forces by establishing protected market positions or by competing in industry segments
that are most affected by differences among local countries. - ANSWERT
The worldwide geographic area structure differs from the worldwide product divisional structure in
the level of centralization of decision-making. - ANSWERT
The worldwide product divisional structure has centralized decision-making authority in the
worldwide division headquarters to coordinate and integrate decisions and actions among business
units. - ANSWERT
In the hybrid form of the combination structure, some divisions are oriented toward products while
others are oriented toward market areas. - ANSWERT
A strategic network can be characterized as a loose federation of partners revolving around a
strategic center firm. - ANSWERT
Arnold Schwartz, CEO and founder of Schwartz Engineering, has repeatedly rebuffed efforts by other
firms to draw Schwartz Engineering into strategic alliances. Schwartz Engineering has built its highly-
successful business around proprietary processes invented by Mr. Schwartz in the 1980s. Mr.
