Business Policy Ch. 9

Question 1

Strategy evaluation is becoming increasingly more difficult due to

Answer 1

A dramatic increase in the environment’s complexity.
The increasing difficulty of predicting the future with accuracy.
The increasing number of variables.
The rapid rate of obsolescence of even the best plans.
The increase in the number of both domestic and world events affecting organizations.
The decreasing time span for which planning can be done with any degree of certainty.

Question 2

Four Criteria (Richard Rummelt) of Strategy Evaluation

Answer 2

Consistency
Consonance
Feasibility
Advantage.

Question 3

Consistency

Answer 3

Strategy should not present inconsistent goals and policies.

Conflict and interdepartmental bickering may be symptomatic of managerial disorder and strategic inconsistency.

Question 4

Consonance

Answer 4

Need for strategists to examine sets of trends.
One difficulty in matching a firm’s key internal and external factors in the formulation of strategy is that most trends are the result of interactions among other trends.

Question 5

Feasibility

Answer 5

Neither overtax the firm’s resources or create unsolvable sub-problems. (But, strategy/objectives may “stretch” an organization.)
Organizations must demonstrate the abilities, competencies, skills, and talents to carry out a given strategy.

Question 6

Advantage

Answer 6

Creation or maintenance of competitive advantage.
Competitive advantage normally is the result of superiority in
resources
skills
or position.

Question 7

The Balanced Scorecard

Answer 7

The Balanced Scorecard analysis requires that firms seek answers to the following questions and utilize that information, in conjunction with financial measures, to adequately and more effectively evaluate strategies being implemented

Question 8

The Balanced Scorecard aims to balance

Answer 8

long-term with short-term concerns
financial with non-financial concerns
internal with external concerns.

Question 9

Evaluates strategies from four perspectives:

Answer 9

Financial performance
Customer knowledge
Internal business processes
Learning and growth

Question 10

Contingency planning

Answer 10

alternative plans that can be put into effect if certain key events do not occur as expected.

Question 11

Linneman’s and Chandran’s Seven-Step Process

Answer 11

1. ) Identify both beneficial and unfavorable events that could possibly derail the strategy or strategies.
2. ) Specify trigger points.
3. )Assess the impact of each contingent event.
4. ) Develop contingency plans.
5. ) Assess the counter impact of each contingency plan.
6. ) Determine early warning signals for key contingent events. Monitor the early warning signals.
7. ) For contingent events with reliable early warning signals, develop advance action plans to take advantage of the available lead time.

Question 12

Auditing

Answer 12

a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users.

Question 13

Two government agencies that serve as auditors

Answer 13

General Accounting Office (GAO)

Internal Revenue Service (IRS)