L4- Strategic Leadership, Corp. Governance & Org. Structure

Question 1

strategic leadership is…

Answer 1

the ability to anticipate and envision while maintaining flexibility and empowering others to create strategic change

Question 2

transactional leadership

Answer 2

clarification and specificication of what’s expected from the followers.
e.g by setting objectives, reward and punishment, supervision

Question 3

transformational leadership

Answer 3

motivating and inspiring followers to achieve more than expected
choosing to influence rather than direct.

Question 4

lessons from steve jobs

Answer 4

1. focus and simplify
2. take responsibility
3. when behind, leapfrog
4. push for perfection
5. engage face to face
6. know the big picture + details
7. engage face to face
8. stay hungry and foolish
9. combine humanities with sciences
10. impute (attribute positive qualities to others)
11. bend reality (challenge status quo)
12. don’t be a slave to focus groups

Question 5

how does strategic leadership shape a company:?

Answer 5

Effective strategic leadership starts by defining a clear vision and mission. These, in turn, shape the formulation and implementation of strategies, leading to strategic competitiveness and above-average returns.

Question 6

leaders determine strategic direction in terms of (2)

Answer 6

1. core ideology
2. envisioned future

Question 7

how to establish balanced organizational controls?

Answer 7

balanced scorecard framework

Question 8

what does a balanced scorecard framework do?

Answer 8

tracks and evaluates an organizations performance using four key metrics.

Question 9

4 key metrics of a balanced scorecard framework

Answer 9

1. financial
2. customer
3. internal business process
4. learning and growth

Question 10

what does learning and growth under balanced scorecard include?

Answer 10

Improvements in innovation ability
Number of new products compared to competitors
Increases in employee’s skills

Question 11

what does customer under balanced scorecard framework include?

Answer 11

Assessment of ability to anticipate customer needs
Effectiveness of customer service practices
Percentage of repeat businesses
Quality of communications with customers

Question 12

top level managers are responsible for:

Answer 12

selecting and implementing strategies

Question 13

corporate governance is…

Answer 13

set of mechanisms used to manage the r.ship among stakeholders and determine the strategic direction and performance of org.s

Question 14

upper echelon perspective

Answer 14

explores how the characteristics and experiences of top executives shape decision making and governance structures.
bridges the gap between psychology, sociology, and the study of strategic orientation.

Question 15

explain how strategic choices are made acc to upper echeleon

Answer 15

there’s the situation at hand, decision makers bring their knowledge, and asssumptions (cognitive base and values). therefore, they can’t absorb or focus every aspect of the situation (limited field of vision). Even within this limited field, the decision-maker selectively perceives stimuli. the perceived information is then interpreted through their lense. the culmination of all of this forms managerial perceptions, and shapes strategic decisions

Question 16

list upper echelon order (7)

Answer 16

1. situation
2. cognitive base and values
3. limited field of vision
4. selective perception
5. interpretation
6. managerial perceptions
7. strategic choice

Question 17

define Principal Agent Problem

Answer 17

conflict of interest between the owner (principal) and the manager (agent) where the agent may not always act in the best interests of the owner. The principal bears the risk, and the manager is responsible for decision making.

Question 18

sub-elements of principal agent problem (3)

Answer 18

1. information asymmetry
2. moral hazard
3. managerial opportunism

Question 19

how can diversification be an agency problem?

Answer 19

When top-level executives diversify, they’re often doing it to protect their own jobs, not necessarily to make the company more successful.

1) risk reduction 2) empire building 3) compensation

Question 20

list all internal governance mechanism (3)

Answer 20

1. ownership concentration
2. board of directors
3. executive compensation

Question 21

list all external governance mechanisms (2)

Answer 21

1. market for corporate contorl
2. defensive tactics against hostile takeovers
   -> golden parachute: providing lucrative leaving packages
   -> poison pill: implementing measures to discourage acquisition

Question 22

define ownership concentration

Answer 22

significant stakeholders owning at least 5% of company shares

Question 23

define board of directors

Answer 23

Elected group overseeing top managers.
Safeguards owners’ interests, ensures managers act in the company’s best interest.
CEO duality may pose challenges.

Question 24

define executive compensation

Answer 24

Paying managers to align with owners’ interests.

Question 25

explain market for corporate control as an external corporate governance mechanism

Answer 25

external entites lieke firms and individuals take ownership perceived as undervalued, and they change management (as they’re seen as responsible)

Question 26

explain golden parachute as a defense mechanism

Answer 26

it’s like a “stay bonus” – they get paid to stay and resist the takeover, rather than leaving easily. The money is meant to discourage executives from supporting the change in ownership.

Question 27

define organizational structure

Answer 27

formal reporting relationships, procedures, controls, authority, and decision-making processes.

Question 28

traditional forms of organizational strucutre

Answer 28

1. simple
2. functional
3. multidivisional

Question 29

simple structure

Answer 29

Owner manager takes all important decisions and monitors activities.
Staff serve as an extension of managers authority
typically single product line in single geographic market

Question 30

functional structure

Answer 30

Consists of a CEO and limited corporate staff
Functional line managers are dominant in production, accounting, marketing, r&d, engineering, and human resources.
Active sharing of knowledge within a functional area

Question 31

define functional line manager

Answer 31

specialists running key areas like finance marketing etc.

Question 32

multi-divisional structure

Answer 32

Organized into operating divisions, each functioning as a distinct business or profit center.
Top corporate officers delegate responsibilities to division managers, allowing for decentralized decision-making.
Aims to minimize coordination and control issues, fostering effective comparison between divisions.

Question 33

three types of multidivisional structure

Answer 33

1. cooperative
2. competitive
3. strategic business unit

Question 34

matrix organizational structure

Answer 34

Combines both functional specialization and business product/ project specialization.

Question 35

what’s the purpose of matrix org. structure?

Answer 35

managing large and complex projects that require collaboration across different functional areas.

Question 36

potential challenge of matrix org.

Answer 36

employees reporting to two managers (functional and operational) may lead to confusion and conflict in decision-making.

Question 37

define organizational culture

Answer 37

complex set of ideologies, symbols, and core values that are shared throughout the firm, and how they conduct business. Involves: emphasizing ethical practices (1), establishing balanced organizational controls (2).

Question 38

define organizational controls

Answer 38

controls that guide the use of strategy by comparing actual and expected results.

Question 39

Financial controls ->

Answer 39

objective criteria that measures the firm’s performance against previously established financial standards like ROI/ ROA

Question 40

strategic controls ->

Answer 40

criteria that verifies that the firm is using appropriate strategies for the conditions in the external environment, and competitive advantage. E.g primary and support activities.

Question 41

strategic controls examine the fit btw:

Answer 41

Opportunities in the external environment -> what the firm MIGHT do
Competitive advantage -> what the firm CAN do

Question 42

In managerial terms, lower risk is associated with….

Answer 42

related and unrelated diversification, where skills transfer and independent unit operations simplify oversight.

Question 43

For shareholders, lower risk is tied to…

Answer 43

dominant business strategies and related constrained diversification, leveraging existing strengths and reducing uncertainty through synergies.

Question 44

Matches Between Business-Level Strategies & Functional Structure are based on: (3)

Answer 44

1. specialization -> type and number of jobs required
2. centralization -> how much dm authority is at higher managerial levels
3. formalization -> how important formal rules are

Question 45

cooperative multi divisional works best with ->

Answer 45

related constrained strategy

Cooperative structure promotes collaboration among divisions, crucial for executing a Related Constrained Strategy.

Encourages close working relationships, vital for strategies where divisions share products or markets.

Question 46

competitive multi-divisional structure works best with ->

Answer 46

unrelated diversification strategy

Competitive form is characterized by high decentralization and a lack of integrating mechanisms.

Aligns with an Unrelated Diversification Strategy, allowing divisions to operate independently in unrelated businesses.

Question 47

SBU multidivisional

Answer 47

SBU Multi-Divisional structure establishes separate profit centers within a diversified firm.

Aligns with a Diversified Strategy, offering flexibility for each profit center to independently pursue diverse activities, maintaining autonomy and contributing to diversification goals.