Chapter 9 Flashcards
- What is the primary purpose of Strategic Control?
A) To monitor and correct the strategy and performance of a firm
B) To increase the number of employees in the firm
C) To create new products for the market
D) To focus on expanding the firm’s market share
A
Informational Control is defined as:
A) The ability to respond effectively to environmental changes
B) The process of aligning rewards with the firm’s objectives
C) The ability to diversify product lines
D) The process of monitoring employee behavior
A
What does Behavioral Control focus on within an organization?
A) Aligning the company’s culture, rewards, and boundaries with the firm’s strategy
B) Reducing production costs across all departments
C) Managing financial resources and maximizing profits
D) Expanding the firm’s market presence globally
A
How do Strategic Control Systems help a firm?
A) By focusing solely on increasing profits and ignoring strategic direction
B) By providing mechanisms to correct the firm’s performance and strategy
C) By expanding the firm’s operations without any adjustments
D) By focusing on creating new products without measuring their success
B
Informational Control allows a firm to:
A) Monitor and align its internal culture with the market’s demands
B) Respond to environmental changes effectively and adjust its strategy
C) Increase the number of employees to match growth targets
D) Set long-term goals without any need for adaptation
B
Why is Behavioral Control important for a firm’s success?
A) It helps align the firm’s internal culture with rewards and boundaries to support the overall strategy
B) It focuses on financial goals and ignores employee motivation
C) It sets performance goals without considering organizational culture
D) It helps to monitor environmental changes and adjust the strategy
A
Strategic control systems, both informational and behavioral, are used to correct the performance and
ultimate strategy of a firm.
T
Behavioral controls involve the ability to respond effectively to environmental change.
F. Informational controls
Informational controls involve the balance and alignment of the culture, rewards, and boundaries of a
firm.
F. Behavioral controls
What is the primary focus of Corporate Governance?
A) Ensuring that management can act without oversight
B) Ensuring that shareholders and their elected representatives (board of directors) hold management accountable
C) Maximizing short-term profits for shareholders
D) Allowing management to make decisions without shareholder input
B
What is Management’s fiduciary duty under corporate governance?
A) To prioritize the immediate financial needs of the company
B) To maximize long-term shareholder value
C) To increase the company’s market share at any cost
D) To reduce employee wages to increase profits
B
What is a potential consequence of poor corporate governance?
A) Increased accountability to shareholders
B) Enhanced long-term financial performance
C) Scandals or financial misreporting, leading to significant damage to the company’s reputation and value
D) Stronger alignment between management and shareholders
C
Behavioral controls are aspects of strategic change that involve finding the appropriate ______________
and ______________ among the culture, rewards, and boundaries of the firm.
A. balance; alignment
B. measure; balance
C. alignment; balance
D. measure; outcome
A
Tesco was forced to restate its earnings for the first half of 2014 to 431 million USD because senior
managers in the UK food business had booked income early and delayed the booking of costs in order to
improve appearances of financial performance. This scandal results from ____________ and
__________.
A. poor environment; management systems
B. poor governance; control
C. external environmental factors; internal environmental factors
D. leadership; financial systems
B
What was the key issue in the Tesco scandal related to poor governance?
A) Senior managers invested heavily in stock buybacks instead of reinvesting in the business
B) Senior managers in the UK food business booked income early and delayed costs to improve the appearance of financial performance
C) Senior managers did not meet their revenue targets for the year
D) Senior managers failed to expand into international markets, resulting in lost growth opportunities
B
How does poor governance affect a company’s financial reporting?
A) It leads to improved financial transparency
B) It can result in misreporting or manipulation of financial results, damaging the company’s reputation
C) It encourages stricter regulations and oversight
D) It ensures that all financial reports reflect actual earnings without manipulation
B
Which type of informational control system is best suited for stable and predictable environments?
A) Contemporary Control Systems
B) Traditional Control Systems
C) Informational Control Systems
D) Behavioral Control Systems
B
In what kind of environments are Contemporary Control Systems necessary?
A) Stable and predictable environments
B) Highly regulated environments
C) Unpredictable and complex environments
D) Environments with low competition
C
Why is there a growing need for Contemporary Control Systems in modern business?
A) Because traditional systems are too complex for simple business environments
B) Because both general and competitive environments are becoming more unpredictable and complex
C) Because contemporary systems are cheaper to implement than traditional ones
D) Because traditional systems can adapt better to changing markets
B
What is a key difference between Traditional and Contemporary Control Systems?
A) Traditional systems are more focused on external competition, while contemporary systems focus internally.
B) Traditional systems are better at handling volatility and uncertainty, while contemporary systems are more rigid.
C) Traditional systems work best in predictable environments, while contemporary systems are designed to handle uncertainty and complexity.
D) Contemporary systems are used only for financial control, while traditional systems handle broader management functions.
C
In the Traditional Approach to Strategic Control, what is the first step in the process?
A) Performance measurement
B) Strategy formulation
C) Strategy implementation
D) Feedback analysis
B. Top manager sets goals
What is a key characteristic of the Traditional Approach to Strategic Control in terms of time?
A) It operates in real-time with minimal time lag.
B) It typically involves long feedback loops, often tied to the annual planning cycle.
C) It focuses on short-term adjustments with quick feedback.
D) It is based on monthly reviews, allowing for rapid adjustments.
B
The traditional approach to strategic control is interactive, while the contemporary approach to strategic
control is sequential.
F
The traditional approach to strategic control relies on feedback from performance measurement to
formulate strategy.
T