Chapter 11 Strategy 1/2/

Total quality management (TQM) a. is a valuable tool for helping company managers achieve Six Sigma accuracy in performing execution-critical value chain activities. b. is an excellent tool for reengineering business processes and making quantum gains in the efficiency and effectiveness with which these processes are performed. c. is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100% accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction. d. is a tool for pulling mistake-prone activities out of different departments and unifying their performance in a single work group that aims at mistake-free management of a company's entire business. e. works best when used in conjunction with best practice, benchmarking, and Six Sigma programs.

Instituting policies and procedures that facilitate good strategy implementation and execution is an important managerial task because: a. astutely crafted and effective policies and procedures for performing value chain activities are not easily duplicated by rival companies and can be a source of competitive advantage. b. they place limits on independent action, paint the white lines for channeling company personnel to adopt behaviors and work practices that are conducive to good strategy execution, help enforce consistency in how things are done in geographically scattered operating units, and promote the creation of a work climate that facilitates good strategy execution. c. astutely conceived policies and procedures can promote both faster adoption of best practices and faster development of the right kinds of core competencies and competitive capabilities. d. well-conceived policies and procedures specify exactly what company personnel need to do to effectively implement the use of best practices and to otherwise conduct daily operations competently and cost-efficiently. e. they promote cost-effective resource allocation, quicker and more effective adoption of best practices, and enhance the ability of individual employees to act in an empowered and self-directed way, subject only to the constraint that their actions and behavior be compliant with current policy and procedures.

Reengineering how a firm performs a business process: a. requires that a company have many strategic partnerships and alliances with outsiders. b. is a tool for pulling the pieces of strategy-critical processes out of different departments and unifying their performance in a single work group that has charge over the whole process and is accountable for performing the activity in a cheaper, better, and more strategy-supportive fashion. c. is usually a company's most important "best practice" for achieving lower operating costs. d. is the centerpiece of total quality management (TQM) programs. e. is the centerpiece of Six Sigma programs to perform particular value chain activities with the utmost accuracy.

From the standpoint of promoting successful strategy execution, it is important that the firm's motivation and reward system: a. put top priority on making employees happy and secure in their jobs. b. avoid the potential for negative consequences if performance is subpar. c. be based on accomplishing the right results, not on dutifully performing assigned tasks. d. aim at creating a no-pressure/no-adverse-consequences work environment. e. be tied first and foremost to whether employees satisfactorily perform their assigned duties in an ethical and honorable manner.

Which of the following statements about benchmarking and best practices is false? a. The telling part of any best-practice initiative is how well the company puts its own version of the best practice into place and achieves performance outcomes comparable to the best practice. outcomes elsewhere.. b. Wide-scale use of best practices across a company's entire value chain promotes operating excellence and good strategy execution. c. The role of benchmarking is to look outward to find the best practice for performing an activity and then to develop the data for measuring how well a company's own performance of that activity stacks up against the best-practice standard. d. A best practice remains little more than another organization's interesting success story unless a company's personnel are willing to learn from outsiders, embrace new ways of doing things, and take pride in doing things in the best possible ways. e. The role of benchmarking is to identify which enterprise is employing the best practice or best technique for performing a particular value chain activity in the most cost-efficient manner.

Which one of the following is not a tool that company managers can use to promote operating excellence in performing value chain activities? a. Six Sigma quality programs b. Operating systems optimization c. Benchmarking and the adoption of best practices d. Business process reengineering e. TQM prgrams

Which of the following is not a sound guideline for designing a reward and incentive system that helps promote good strategy execution? a. Make the payoff for meeting or beating performance targets a major, not minor, piece of the total compensation package. b. Administer the reward system with scrupulous objectivity and fairness. c. Have incentives that extend to all managers and all workers, not just top management. d. Base rewards and incentives on group performance rather than individual performance. e. Absolutely avoid skirting the system to find ways to reward effort rather than results.

Which of the following statements about total quality management TQM is false? a. TQM doctrine preaches that there's no such thing as "good enough". b. Management's job in implementing TQM is to kindle an organization-wide search for ways to improve that involves all company personnel exercising initiative and using their ingenuity. c. Total quality management (TQM) is a race without a finish--success comes from making little steps forward each day. d. TQM produces significant results very quickly--very little benefit emerges after the first six months. e. While TQM concentrates on the production of quality goods and fully satisfying customer expectations, it achieves its biggest successes when it is also extended to employee efforts in all departments.

The statistical thinking underlying six sigma is based on the following three principles: a. All work is a statistically controllable process; a well-controlled process reduces variability in performance outcomes; and every well-controlled process can achieve fewer than 5 errors or defects per million iterations. b. All work is subject to varying performance outcomes; the amount of variability can be limited with proper application of statistical methods; and the tighter the use of statistical controls the lower the degree of variability. c. All work is subject to varying performance outcomes; these performance variations are chiefly due to a lack of proper focus and attention to detail on the part of workers; and insufficient worker focus and attention to detail can be controlled by proper application of statistical controls. d. All work is a process, all processes have variability, and all processes create data that explains variability. e. All work is subject to varying performance outcomes; control of the accuracy with which work is performed is statistically controllable; and every well-controlled work activity can achieve fewer than 5 errors or defects per million iterations.

Which one of the following is not a solid reason why good strategy execution requires that company managers be deeply involved in steering the proper kinds and amounts of resources to the enterprise's various organization units and value chain activities? a. Overfunding particular organizational units and value chain activities wastes organizational resources and reduces financial performance b. Tight control over each organizational unit's operating budget and capital allocations is management's most powerful tool for promoting first-rate strategy execution and operating excellence c. The resources allocated to each organizational unit need to be both strategy-driven (in order to amply fund competent performance of key value chain activities) and lean (in order to operate as cost-efficiently as possible) d. Underfunding organizational units and activities pivotal to strategic success impedes the efforts of organizational units to execute their pieces of the strategic plan proficiently e.Both changes in strategy and efforts to improve execution of an existing strategy typically entail budget reallocation and resource shifting.

Well conceived, state of the art information and operating systems: a. are valuable tools for remodeling a company's value chain, providing important data and information to empowered employees, and simplifying the task of adopting best practices. b. not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals). c. are among a company's most important means for controlling costs and executing strategy in a profitable manner. d. are management's single most powerful tool for determining whether the strategy execution process is on track to be successful. e. are essential because all key strategic performance indicators must be tracked and reported in real time.

Which one of the following is likely to be the least effective way of gaining employees' wholehearted commitment to good strategy execution and operating excellence? a. Liberal use of non-monetary carrot-and-stick incentives b. Regular across-the-board pay increases for all employees and a no-layoff policy for all hourly employees c. Such monetary rewards as base pay increases, performance bonuses, profit sharing plans, stock awards, and company contributions to employee 401(k) or retirement plans d. Attractive perks and fringe benefits e.Having knock-out facilities

Which one of the following statements about the process of identifying and incorporating best practices is false? a. Because using best practice methodology to perform an activity produces superior outcomes, those outcomes serve as a benchmark or standard for determining how well a particular organization performs that activity. b. A company can make giant strides toward good or even excellent strategy execution by adopting a best-practices mindset and successfully implementing the use of best practices across more and more of its value chain activities. c. Benchmarking involves identifying which company or organization is the best performer of an activity and then trying to imitate its approach. d. A best practice can evolve over time as improvements are discovered. e. To the extent that a company is able to successfully adapt a best practice methodology pioneered elsewhere to fit its circumstances, it is likely to improve its performance of the activity, perhaps dramatically--an outcome that promotes better strategy execution.

The six sigma process of define, measure, analyze, improve and control (dmaic) is a. a system of statistical procedures for achieving 95% accuracy in the performance of a task. b. a system of statistical procedures for eliminating 99% of the variability in how a task is performed. c. an improvement system for existing processes falling below specification and needing incremental improvement—the DMAIC process is a particularly good vehicle for improving performance when there are wide variations in how well existing activities are being performed. d. an improvement system used to develop new processes or products at Six Sigma levels. e. an improvement system used to develop new processes or products at 99% defect-free levels.

Which of the following statements about six sigma programs is true? a. There are two important types of Six Sigma programs: DSRVI and DMACV. b. Six Sigma programs utilize advanced statistical methods to enable an activity or process to be performed with 99% accuracy. c. Six Sigma programs need to be overseen by personnel who have completed Six Sigma "master red belt" training and executed by personnel who have earned Six Sigma "orange belts" and Six Sigma "blue belts." d. Six Sigma programs utilize advanced statistical methods to enable an activity or process to be performed with 99.9997 percent accuracy. e. When performance of an activity or process reaches "Six Sigma quality," there are not more than 5.3 defects per million iterations.

Six sigma programs a. are based on three principles: All work is a process, all processes have variability, and all processes create data that explains variability. b. consists of a disciplined, statistics-based system aimed at producing fewer than 10 errors or defects per million iterations. c. are based on three principles: (1) all work is subject to varying performance outcomes; (2) the amount of variability can be limited with proper application of statistical methods; and (3) the tighter the use of statistical controls the lower the degree of variability. d. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process allows variability; and (3) defect-free work requires tight statistical controls. e. can be used for improving products or business processes but not for developing new products or new processes.

Which of the following statements about six sigma programs is false? a. While many enterprises have used Six Sigma methods to improve operating efficiency and the quality with which activities are performed, there is evidence that Six Sigma techniques stifle innovation and creativity. b. When performance of an activity or process reaches "Six Sigma quality," there are not more than 6.2 defects per million iterations. c. Six Sigma programs utilize advanced statistical methods to enable an activity or process to be performed with 99.9997 percent accuracy. d. There are two important types of Six Sigma programs: DMAIC and DMADV. e. Six Sigma programs should be overseen by personnel who have completed Six Sigma "master black belt" training and executed by personnel who have earned Six Sigma "green belts" and Six Sigma "black belts."

Good strategy execution requires that top management be deeply involved in steering the proper kinds and amounts of resources to the enterprise's various organization units and value chain activities because: a. changes in strategy often require resource reallocation and because organizational units--most especially those performing execution-critical activities--need the proper funding to carry out their part of the strategic plan effectively and efficiently. b. lean, strictly-enforced budgets are management's best and most used means of getting organizational units to exercise fiscal discipline, to wisely use the resources they have been given, and to operate in a cost-efficient manner--too much funding of particular organizational units and value chain activities wastes organizational resources and reduces financial performance. c. tight budget control is management's most powerful tool for first-rate strategy execution. d. lean, carefully managed budgets protect the company's financial condition, eliminate wasteful use of cash, and maximize the benefits of shrewd resource allocation. e. the amount of resources allocated to various organizational units is the key to exercising tight financial controls over how organization units perform their assigned tasks.

Which one of the following is not a tool that company managers can use to promote operating excellence in performing value chain activities? a. Cost optimization programs b. TQM and/or Six Sigma programs c. Benchmarking d. Adoption of best practices e. Business process reengineering

A best practice refers to: a. performing a value chain activity with Six Sigma or better accuracy. b. performing a value chain activity in a manner that aids the development of a core competence or a competitively valuable capability. c. a procedure that is unusually effective in lowering costs and boosting profitability. d. a means of performing an activity or process that yields results yields superior results compared to other approaches. e. performing a value chain activity in a manner that helps produce sustainable competitive advantage.

A properly designed system of rewards and incentives is important to good strategy execution because: a. rewards and incentives boost labor productivity, help lower labor costs per unit sold, boost employee job security, and lower employee turnover. b. the use of incentives and rewards is the single most powerful tool management has for mobilizing employee commitment to good strategy execution and operating excellence. c. rewards and incentives help a company attract and retain talented employees. d. rewards and incentives boost employee morale, promote high levels of employee job satisfaction, and are essential to making the company a great place to work. e. employees should be fairly and equitably compensated for diligently performing their assigned duties.

which of the following is not a characteristic of a compensation and reward system designed to help drive successful strategy execution? a. Keeping the time between achieving the target performance outcome and the payment of the reward as short as possible b. Linking incentives and rewards directly to outcomes that contribute to good strategy execution and good financial performance--incentives should never be paid just because people are "doing a good job" or "work hard." c. A 50-50 balance between monetary and non-monetary rewards and a 50-50 balance between positive and negative incentives. d. Making sure that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect e. Making the payoff for high-performing individuals and teams meaningfully greater than the payoff for average performers, and the payoff for average performers meaningfully bigger than for below-average performers

Which one of the following statements about total quality management (Tqm) is false: a. Management's job in instituting a TQM program is to kindle an organizationwide search for ways to improve, a search that involves all company personnel exercising initiative and using their ingenuity. b. TQM takes a fairly long time to show significant results--very little benefit emerges within the first six months. c. The centerpiece of TQM programs is the use of sophisticated information systems to give employees all across the company quick, accurate access to the data and resources they need to achieve continuous improvement in how value chain activities are performed. d. TQM aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the organization. e. TQM doctrine preaches that everyone has a responsibility to participate in continuous improvement.

The idea behind benchmarking is to: a. identify companies that are able to perform a value chain activity with Six Sigma or better accuracy. b. identify which companies are able to perform a strategically-relevant activity with the greatest accuracy (fewest defects per million iterations) and then exactly copy their methods. c. learn if a company is performing its value chain activities in a manner that is superior to standard industry practice. d. determine whether a company is performing a specific task or activity in the lowest cost manner. e. identify companies that are the best performers of an activity and then modify and adapt their practices to fit the company's own specific circumstances and operating requirements.

Business process reengineering is a tool for: a. radically reducing the time it takes to perform a particular value chain activity accurately and reliably. b. adapting and improving upon the best practices identified by a company's benchmarking activities. c. using Six Sigma techniques to streamline the performance of a particlar value chain activity and thereby achieve either quantum improvements in the accuracy with which the activity is performed or quantum reductions in the cost of performing the activity. d. addressing the suboptimal performance problems that can arise when pieces of strategy-critical activities are scattered across different work groups; typically it involves pulling the scattered pieces out of different departments and creating a single work group to take charge of the whole process and perform it in a better, cheaper, and more strategy-supportive fashion. e. shortening the time it takes to perform a particular value chain activity in the most competent and cost-efficient manner.

motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution typically: a. strike a balance between rewards and punishment--entailing decidedly positive rewards for meeting or beating performance targets but also imposing sufficiently negative consequences (if only withholding rewards) when actual performance falls short of the target. b. put top priority on creating a work atmosphere in which there is genuine sincerity, caring, and mutual respect among workers and between management and employees. c. aim at creating a no-pressure/no-adverse-consequences work environment. d. use only positive rewards and never involve the use of tension, fear, job insecurity, stress, or anxiety. e. entail paying the highest wages and salaries in the industry and also stressing non-monetary rewards for high-performing employees.

Which of the following motivational practices is least likely to be effective in spurring stronger employee commitment to good strategy execution? a. Providing attractive financial compensation and relying on promotion from within whenever possible b. Stating the strategic vision in inspirational terms that make employees feel they are a part of doing something worthwhile in a larger social sense c. Providing attractive perks and fringe benefits and having knockout facilities d. Liberal use of such nonmonetary carrot-and-stick incentives as singling out high-performing employees for praise and special recognition and also for rapid promotion, giving top-performing employees stimulating assignments and opportunities to transfer to attractive locations, and assigning low-performing employees to routine or dead-end jobs e. Equal pay increases and high levels of job security for all employees

Which of the following statements about six sigma programs is false? a. There are two important types of Six Sigma programs: DSAMR and DMACB. b. Six Sigma's DMAIC process is a particularly good vehicle for improving performance when there are wide variations in how well an activity is performed. c. An enterprise that systematically applies Six Sigma methods to its value chain, activity by activity, can make major strides in improving the proficiency with which its strategy is executed. d. When performance of an activity or process reaches "Six Sigma quality," there are not more than 3.4 defects per million iterations. e. Six Sigma programs utilize advanced statistical methods to enable an activity or process to be performed with 99.9997 percent accuracy.

Total quality management (TQM) emphasizes all but which one of the following: a. 100% accuracy in performing tasks b. Empowerment of employees and team-based work design c. Continuous improvement in all phases of operations d. Efficient, low-cost performance of all value chain activities e. Total customer satisfaction

The big difference between business process reengineering and continuous improvement programs like tqm or six sigma is that a. reengineering is a tool for achieving one-time quantum improvement whereas TQM and Six Sigma programs aim at ongoing incremental improvements. b. reengineering aims at remodeling and updating particular value chain activities whereas TQM and Six Sigma are best used for achieving small, but ongoing, reductions in operating costs. c. reengineering is a tool for revamping entire company value chains whereas TQM/Six Sigma concern instituting defect-free production methods and delivering world-class customer service. d. business process reengineering aims at creating altogether new best practices whereas TQM and Six Sigma are used to make gradual improvements in existing best practices. e. reengineering helps create core competencies whereas TQM/Six Sigma are tools for making a core competence stronger and more efficient.

Which of the following is not a sound guideline for designing a reward and incentive system that helps promote good strategy execution? a. Make sure that the performance targets each individual or team is expected to achieve involve outcomes that the individual or team can personally affect. b. Have incentives that extend to all managers and all workers, not just top management. c. Make the payoff for meeting or beating performance targets a major, not minor, piece of the total compensation package. d. Always include some kind of rewards and incentives for people who have tried hard, done their best, and yet fallen short of achieving their assigned performance targets. e.Administer the reward system with scrupulous objectivity and fairness.