Exam #4

A company's strategy needs to be ethical because A. of the dangers that top management will get embarrassed if the company's unethical behavior is publicly exposed. B. a strategy that is unethical not only damages the company's reputation but it can also have costly consequences. C. everyone is an ethics watchdog and somebody is sure to blow the whistle on the company's unethical behavior. D. of the risks of getting caught and prosecuted by governmental authorities if an unethical strategy is used. E. unethical strategies are inconsistent with or else weaken the corporate culture.

Unethical business behavior tends to be driven by such factors as A. a managerial mind-set that "the business of business is business, not ethics." B. overzealous pursuit of personal gain, wealth, and other selfish interests. C. a company culture that puts the profitability and good business performance ahead of ethical behavior. D. heavy pressures on company managers to meet or beat earnings targets. E. All of these.

The consequences of pursuing a strategy that has unethical or shady components include A. lower stock prices. B. customer defections and loss of reputation. C. incurring potentially large legal and investigative costs, government fines, and civil penalties. D. the costs of providing remedial education and ethics training to company personnel. E. All of these.

The essence of socially responsible business behavior is A. encouraging company personnel to run for political offices. B. balancing strategic actions to benefit shareholders against the duty to be a good corporate citizen. C. undertaking actions to balance the interests of all company stakeholders rather than just exclusively look out for the interests of shareholders. D. making sizable contributions to political action committees representing the interests of the industry. E. pursuing actions to keep prices low enough that the company's profits will not be viewed by the general public as obscenely high or exorbitant.

According to the school of ethical universalism, A. concepts of what constitutes ethical behavior and unethical behavior are dictated by subjectively provable moral principles but not by objectively provable moral principles. B. concepts of right and wrong are universal within countries/societies but not across countries or cultures. C. concepts of what is ethical and what is unethical are universal and absolute, leaving no room for deviation from country to country or circumstance to circumstance. D. to the extent there is common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, there exists a set of universal ethical standards to which all societies, all companies, and all individuals can be held accountable. E. all societies and countries are obligated to apply universally defined ethical principles of right and wrong as set forth in the Global Code of Ethical Behavior adopted by 150 nations of the world.

The contention that because different societies and cultures have divergent values and standards of right and wrong it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores rather than according to a single set of ethical standards A. defines what is meant by "ethical relativism." B. defines what is meant by "ethical universalism." C. is the foundation of integrated social contracts theory. D. is the basis for the theory of ethical variation. E. is the guiding principle of the Global Code of Ethical and Social Morality created by the United Nations.

Ethical principles in business A. deal chiefly with the actions and behaviors required to operate companies in a socially responsible manner. B. deal chiefly with the rules each company's top management and board of directors make about "what is right" and "what is wrong." C. are not materially different from ethical principles in general. D. are generally less stringent than the ethical principles for society at large. E. are generally more stringent than the ethical principles for society at large.

The business case for why companies should act in a socially responsible manner includes such reasons as A. it generates internal benefits (as concerns employee recruiting, workforce retention, training, and improved worker productivity). B. it reduces the risk of reputation-damaging incidents. C. it is in the best interest of shareholders. D. the potential for increased buyer patronage. E. All of these

Companies committed to environmental sustainability A. consider the commitment to shareholders as a "first-order" priority, commitment to employees as a "second-order" priority, and commitment to the environmental protection as a "third-order" commitment. B. consider the commitment to the environment as a "first-order" priority, commitment to employees as a "second-order" priority, and commitment to shareholders as a "third-order" commitment. C. consider the commitment to the environment as a "first-order" priority, commitment to shareholders as a "second-order" priority, and commitment to shareholders as a "third-order" commitment. D. undertake initiatives directed at improving the company's triple bottom line (TBL), which places importance on economic, environmental, and social metrics. E. believe that it is important to convince consumers to change buying habits that first consider meeting the consumer's needs to first considering whether the product is environmentally friendly.

The results of strategies that cannot pass the test of moral scrutiny often are manifested in A. sharp drops in stock prices. B. devastating public relations hits. C. sizable fines. D. criminal indictment and convictions of company executives. E. All of these.

Corporate social responsibility as it applies to businesses refers to A. a company's duty to put the public interest ahead of shareholder interests. B. societal expectations that all company stakeholders will be treated equally and fairly. C. a company's duty to establish socially acceptable core values and to have a strictly enforced code of ethical conduct. D. the responsibility that top management has for ensuring that the company's actions and decisions are in the best interest of society at large. E. a company's duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large.

The major drivers of unethical business behavior include A. greed, pervasive managerial immorality, and a general lack of scruples on the part of top executives regarding how customers and suppliers should be treated. B. corporate cultures that put the bottom line ahead of ethics, heavy pressures on company managers to meet or beat performance targets, and overzealous or obsessive pursuit of wealth accumulation, power, status, and other selfish interests. C. widespread managerial belief in the ethical relativism school of thinking. D. an aversion to ethical correctness on the part of top executives and a belief that unethical behavior is unimportant and probably won't be discovered. E. intense competitive pressures.

The contention that ethical standards should be governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not are the basic principles of A. the school of ethical relativism. B. the school of ethical universalism. C. integrative social contracts theory. D. the global corruption standards published by Transparency International. E. the Global Code of Ethical and Social Morality developed by the United Nations.

Business ethics concerns A. developing a consensus among companies worldwide as to what ethical principles that businesses should be expected to observe in the course of conducting their operations. B. what ethical behaviors should be expected of company personnel in the course of doing their jobs. C. the application of ethical principles and standards to business activities, behavior, and decisions. D. developing a special set of ethical standards for businesses to observe in conducting their affairs. E. picking and choosing among the consensus ethical standards of society to arrive at a set of ethical standards that apply directly to operating a business.

The contentions that (1) many of the same standards of what's ethical and what's unethical resonate with peoples of most cultures, societies, and religions and (2) to the extent there is common moral agreement about right and wrong actions, there exist a set of common ethical standards to which organizations and individuals can be held accountable are defining beliefs of A. the school of ethical relativism. B. the school of ethical universalism. C. integrated social contracts theory. D. the School of Morally Correct Thinking and Behavior in Paris, France. E. the Global Code of Ethical and Social Morality developed in 1925 at a worldwide convention of distinguished religious clerics.

Building an organization capable of good strategy execution entails A. staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort. B. decentralizing authority for performing strategy-critical value chain activities, establishing at least two distinctive competencies, and hiring talented employees. C. investing heavily in employee training, using an empowered organization design and organization structure in order to maximize labor productivity, and employing effective incentive compensation systems. D. centralizing authority in the hands of a chief strategy implementer so as to create the leadership authority for driving implementation forward at a rapid pace. E. empowering employees, maximizing internal operating efficiency, and optimizing core competencies.

Companies with insular, inwardly focused cultures usually A. tend to possess arrogant overconfident mind-sets, thereby tending to underestimate the competencies and accomplishments of rival companies and overestimate their own progress. B. tend to concentrate on benchmarking to find out the best methods of doing things. C. tend to concentrate greed and ego-gratification. D. tend to discount and doubt their own performance statistics. E. All of these

Recruiting and retaining capable employees A. is usually much more important to good strategy execution than is assembling a capable top management team. B. is important because the quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence. C. is more important during periods of rapid growth than during periods of crisis and attempted turnarounds. D. is an important organization-building element, particularly when it comes to transforming a competence into a core competence or distinctive competence. E. is easily the most critical aspect in building competitively valuable core competencies and capabilities.

Total quality management (TQM) programs A. deal exclusively with procedures to achieve defect-free manufacturing and assembly. B. nearly always contribute more to the achievement of operating excellence than either business process reengineering or Six Sigma quality control techniques. C. achieve the biggest success when extended to employee efforts in all departments—human resources, R&D, accounting and records, information systems, and so forth. D. are considerably more effective in improving manufacturing and assembly activities than they are in improving such value chain activities as R&D, human resources management, supply chain management, information technology, sales and marketing, and finance. E. are generally considered the best tool for reengineering strategy-critical business processes.

Six Sigma quality control A. is a strategy-implementer's best, most reliable tool for simultaneously achieving top-notch product quality and low manufacturing costs. B. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process. C. consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process. D. consists of a disciplined, statistics-based system aimed at fewer than 5.0 complaints per million customer transactions. E. is a powerful tool for companies whose customers are very picky about product quality and product performance and who can't afford for the product they use to break down and require repairs.

Executing strategy A. is primarily an operations-driven activity revolving around the management of people and business processes. B. tests a manager's ability to direct organizational change and achieve continuous improvement in operations and business processes. C. tests a manager's ability to create and nurture a strategy-supportive culture. D. tests a manager's ability to consistently meet or beat performance targets. E. All of these.

The principal managerial actions and initiatives undertaken in the strategy execution process include which of the following? A. Deciding how much to spend on employee training B. Instituting policies and procedures that facilitate rather than impede effective strategy execution C. Doing an effective job of empowering employees D. Revamping the value chain in a manner calculated to maximize operating efficiency E. Selecting a capable top management team

The principal managerial actions and initiatives undertaken in the strategy execution process include which of the following? A. Building an organization with the capabilities, people, and structure needed for execution B. Instituting policies and procedures that facilitate rather than impede effective strategy execution C. Allocating ample resources to required activities D. Tying rewards directly to achievement of performance objectives E. All of these

A change in strategy nearly always entails budget reallocations because A. revamping the performance of value chain activities can be costly. B. the accompanying policy revisions and compensation incentives tend to require different levels of funding than before. C. organizational units important in the prior strategy but having a lesser role in the new strategy may need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets. D. empowering employees to carry out the new strategy elements typically requires substantial new funding and budget revisions. E. adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements.

Which of the following is not an example of an unhealthy company culture? A. Insular inwardly focused cultures B. Change-resistant cultures C. Unethical and greed-driven cultures D. Politicized cultures E. Hyper-adaptive cultures

The single most visible factor that distinguishes successful culture-change efforts from failed attempts is A. forceful management actions to empower employees to adopt new operating practices. B. competent leadership at the top. C. de-layering the management hierarchy. D. developing a new values statement that inspires company personnel to put forth their best efforts to achieve performance targets. E. convincing employees that top management is genuinely committed to high ethical standards and the exercise of corporate social responsibility.

The disadvantages of a centralized organizational structure include A. making the organization sluggish in responding to changing conditions. B. a loss of top management control. C. putting too much decision-making authority in the hands of lower-level company personnel. D. making it hard to fix accountability when things do not go well and putting the organization at risk when bad decisions are made. E. impeding cross-unit coordination and capture of strategic fits.

The backbone of identifying, studying, and implementing best practices is A. business process reengineering. B. a corporate culture that has a core value of operating excellence. C. benchmarking. D. Six Sigma quality control techniques. E. innovative application of TQM techniques.

Which of the following is generally not among the practices that companies use to staff jobs with the best people they can find? A. Careful screening and evaluation of job applicants B. Rotating people through jobs that span functional and geographic boundaries C. Weeding out the 20% lowest-performing employees each year D. Striving to retain talented, high-performing employees via promotions, salary increases, and other perks E. Coaching average performers to improve their skills and capabilities

A well-designed reward system A. is focused on "what to achieve" to be rewarded as opposed to "what to do" and is management's most powerful tool for gaining employee commitment to superior strategy execution. B. should be free of elements that induce stress, anxiety, tension, pressure to perform, and job insecurity. C. puts the primary emphasis on denying rewards to those who fail to perform tasks in the prescribed fashion. D. emphasizes weeding out employees who are consistently low performers. E. strives for 50-50 balance between positive and negative rewards and 50-50 balance between monetary and nonmonetary rewards.

The primary building blocks within a company's organizational structure A. are almost always the departments performing such key administrative support functions as finance, accounting, information technology, human resource management, and R&D. B. can include a functional or departmental structure that includes process, geographic, product, or customer groups performing one or more major processing steps along the value chain. C. typically consist of an un-empowered employee department, an empowered employee department, teams of front-line supervisors, teams of middle-level managers and administrators, and the group of top-level executives that comprise the company's "executive suite." D. usually consist of supply chain management, components manufacture, assembly, distribution, and administration. E. usually consist of two divisions—a division charged with performing primary value chain activities and a division charged with performing support activities.

Leading the strategy execution process requires A. senior managers to be out in the field, seeing for themselves how well operations are going. B. company managers to be diligent and adept in ferreting out problems and issues. C. managers to push for better results when the strategy execution effort is not going well. D. managers to have good business judgment in deciding what actions to take when corrective actions are necessary. E. All of the above.

A company's corporate culture is best defined and identified by A. the strategy and business model that a company has adopted. B. the character of a company's internal work climate—as shaped by the company's core values, beliefs, and business principles. C. its statement of core values and its code of ethics. D. its internal politics. E. the traditions that company executives are committed to maintaining.

Good strategy execution A. requires a team effort with managers with strategy-executing responsibility and making all employees active participants in the execution process. B. requires getting things done effectively and efficiently. C. allows companywide performance measures to be met. D. requires middle and lower-level managers to ensure strategy-critical activities are successfully implemented. E. All of these.

Total quality management (TQM) A. 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. B. is a valuable tool for helping company managers identify what the best practice is for performing a particular activity. C. works best when used in conjunction with Six Sigma quality control techniques. D. is an excellent tool for reengineering business processes and making quantum gains in the efficiency and effectiveness with which the processes are performed. E. is a philosophy of doing things that aims at mistake-free management of a company's entire business.

Once company managers have decided on a strategy, the emphasis turns to A. converting the strategy into actions and good results. B. empowering employees to revise and reorganize value chain activities to match the strategy. C. establishing policies and procedures that instruct company personnel in the ways and means of executing the strategy. D. developing a detailed implementation plan that sets forth exactly what every department and every manager needs to do to proficiently execute the company's strategy. E. building the core competencies and competitive capabilities needed to execute the strategy.

The statistical thinking underlying Six Sigma is based on the following three principles: A. All activities can be controlled, employee empowerment is the best control tool, and 100% control is possible. B. All work is a process, all processes have variability, and all processes create data that explains variability. C. All work activities can be done accurately most of the time, empowered employees are necessary for effective control, and good statistical data is an empowered employee's best control tool. D. All work is a statistically controllable process, 100% control is possible, and every well-controlled process is defect-free. E. Most business processes are subject to control, Six Sigma can remove variability in how processes are performed, and most defects can be eliminated.

The three components of building a capable organization are A. making periodic changes in the firm's internal organization to keep people from getting into a comfortable rut, instituting a decentralized approach to decision making, and developing the appropriate competencies and capabilities. B. hiring a capable top management team, empowering employees, and establishing a strategy-supportive corporate culture. C. putting a centralized decision-making structure in place, determining who should have responsibility for each value chain activity, and aligning the corporate culture with key policies, procedures, and operating practices. D. staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort. E. optimizing the number of core competencies and competitive capabilities, making sure that all managers and employees are empowered, and maximizing internal operating efficiency.

Business process reengineering is a tool for A. expediting the redesign of existing products and shortening the design-to-market cycle. B. pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work. C. instituting total quality management. D. making the most effective use of Six Sigma techniques. E. rapid redesign of an organization's structure so as to rapidly create organizational competencies and capabilities.

A useful guideline in designing strategy-facilitating policies and operating procedures is A. to prescribe enough policies to give organizational members clear direction in implementing strategy and to place desirable boundaries on their actions, then empower them to act within these boundaries however they think makes sense. B. that strictly enforced policies work better than loosely enforced policies. C. that more policies/procedures work better than few policies/procedures and that strict enforcement always beats lax enforcement. D. to let individuals act in an empowered and self-directed way, subject only to the constraint that their actions and behavior be ethical and in step with the corporate culture. E. to prescribe enough policies and procedures that little is left to chance in performing value chain activities; employees should have no leeway to do things in a manner that deviates from the company's best practices standard.