Module 18 - Organising and Planning for Effective Implementation

Question 1

21 Company X is following a ‘prospector’ business strategy and is considering altering its evaluation system. What type of criteria for evaluation would probably be most appropriate?
A.ROI.
B.Unit profit.
C.Profit contribution to corporate headquarters.
D.Market share growth.
E.Profit potential.

Answer 1

D

Question 2

22 Demonstrated ability in which of the following areas is critical to companies attempting to differentiate their business on the basis of high-quality service?
A.Market opportunity identification.
B.Human resources development.
C.Raising long-term capital.
D.Raising short-term capital.
E.Operations.

Answer 2

B

Question 3

23 The EC Corporation, a differentiated defender, is most likely to have an organisational structure with what levels of formalisation, centralisation and specialisation?
A.Low; low; moderate.
B.Moderate; moderate; moderate.
C.Low; low; low.
D.Moderate; moderate; high.
E.High; high; low.

Answer 3

B

Question 4

24 The annual written marketing plan:
A.reflects agreements made among functional areas.
B.describes in detail the way each functional area must respond in the coming year.
C.presents an approximate overview of the market.
D.presents an outline for future thinking and investment opportunities.
E.offers ideas on how best to compete in current markets

Answer 4

A

Question 5

25 A functional organisational design would be characterised by what levels of centralisation, formalisation and specialisation?
A.Low; low; high.
B.Moderate; moderate; low.
C.High; high; high.
D.High; high; low.
E.Low; low; low.

Answer 5

D

Question 6

26 A product-management organisational design would most likely be appropriate when the firm sells:
A.a single product to a large number of different customers.
B.only a few products in a relatively stable competitive environment.
C.a large number of products to a few customers.
D.a moderate number of products to a wide range of different types of customers.
E.a large number of products in an unstable environment.

Answer 6

E

Question 7

27 Dogwood Corporation sells a specialised computer and software package that enables customers to perform state-of-the-art graphic art work. This computer has applications to many customers. What type of organisa-tional design would probably be most appropriate for Dogwood?
A.Product–management.
B.Functional.
C.Market–management.
D.Geographic.
E.Customer–management.

Answer 7

C

Question 8

28 Three of the broadest elements of a marketing plan include:
A.market situation, competitive situation and past performance.
B.threats, opportunity and strengths identification.
C.key issues, objectives and marketing strategy.
D.financial objectives and marketing objectives and marketing strategy.
E.situation analysis, opportunity analysis and action plans

Answer 8

C

Question 9

29 The type of statement one might expect to find in the ‘Analysis of the current situation’ section of the marketing plan is:
A.Alter the focus from the stimulation of primary demand to the stimulation of secondary demand.
B.Change the advertising message to highlight competitive features.
C.The relative share increased more than did sales value.
D.Research indicates that the sales volume can be increased 10 per cent via an emerging segment.
E.Maintain current sales at last year’s unit volume.

Answer 9

C

Question 10

30 The type of statement one might expect to find in the ‘Marketing strategy’ section of the marketing plan is:
A.Alter the focus from the stimulation of primary demand to the stimulation of secondary demand.
B.Change the advertising message to highlight competitive features.
C.The relative share increased more than did sales value.
D.Research indicates that the sales volume can be increased 10 per cent via an emerging segment.
E.Maintain current sales at last year’s unit volume.

Answer 10

A

Question 11

1 What type of product and service policies would a company adopt given that it follows a differentiated defender business strategy?
A.relatively narrow, technically sophisticated product lines; high quality service.
B.moderately broad, technically sophisticated product lines; varying levels of service quality.
C.broad, technically sophisticated product lines; moderate to high service quality.
D. narrow, less technically sophisticated product lines; relatively low service quality.
E.broad, less technically sophisticated product lines; moderate levels of service quality.

Answer 11

A

Question 12

2 The Rosie Corp. is following a differentiated defender business strategy. What type of distribution policy would probably be most appropriate in terms of forward vertical integration and trade-promotion expenses?
A.Moderate; low.
B.Relatively low; high.
C.Low; high.
D.High; high.
E.Relatively high; low

Answer 12

E

Question 13

3 A company following a prospector business strategy would have the following promotion policy: ____ expenditures for advertising; ____ expenditures for sales promotions and ____ expenditures for the salesforce.
A.low; low; low.
B.low; low; high.
C.moderate; moderate; variable.
D.high; high; high.
E.moderate; high; variable.

Answer 13

D

Question 14

4 Which type of SBU strategy is most consistent with a product policy which includes narrow and less technically sophisticated product lines?
A.Differentiated defender.
B.Prospector.
C.Analyser.
D.Low-cost defender.
E.Harvesting

Answer 14

D

Question 15

5 Which type of SBU strategy is most consistent with low advertising expenditures as a percentage of sales and low trade-promotion expenditures as a percentage of sales?
A.Prospector.
B.Analyser.
C.Differentiated defender.
D.Harvesting.
E.Low-cost defender.

Answer 15

E

Question 16

6 Which type of SBU strategy is most likely to include an evaluation and reward system which includes high incentives based on sales growth and market-share gain?
A.Differentiated defender.
B.Reactor.
C.Low-cost defender.
D.Analyser.
E.Prospector.

Answer 16

E

Question 17

7 The ____ a business unit’s degree of autonomy, the ____ respond to environmental opportunities.
A.smaller; quickly can it.
B.smaller; more completely can it.
C.greater; more completely can it.
D.greater; more quickly can it.
E.greater; more likely is it to.

Answer 17

D

Question 18

8 Which type of SBU strategy is most likely to grant a relatively low level of autonomy to the SBU?
A.Analyser.
B.Reactor.
C.Differentiated defender.
D.Low-cost defender.
E.Prospector.

Answer 18

D

Question 19

9 Company X is following a low-cost defender business strategy and is considering altering its evaluation system. What type of criteria for evaluation would probably be most appropriate?
A.Market share growth.
B.Sales growth.
C.Cash flow.
D.A and B.
E.A, B and C.

Answer 19

C

Question 20

10 The Acme Corporation has a number of SBUs that share manufacturing and financial programmes but operate their marketing and R&D programmes independently. Which type of business strategy is the Acme Corp. most likely to be following?
A.Differentiated defender.
B.Prospector.
C.Reactor.
D.Analyser.
E.Low-cost defender.

Answer 20

A

Question 21

What are the three aspects of the relationship between corporate headquarters and the business unit that determine the SBU’s success in implementing a particular competitive strategy?

Answer 21

three aspects of corporate business unit relationship that can effect an sbu’s success in implementing a particular competitive strategy

• the degree of autonomy provided each business unit manager
• the degree to which the business unit shares functional programmes and facilities with other units
• the manner in which the corporation evaluates and rewards performance of its sbu managers

Question 22

Successful implementation of a given strategy is more likely under what conditions?

Question 23

What additional functional-area competencies are needed for success for service organisations – especially those involving high customer contact?

Answer 23

• service firms often need additional functional competencies – especially for those with high customer contact
• because sales, production and delivery is simultaneous, close coordination between marketing, sales and operations is crucial
• production planning and standardization is required to reduce variations in quality from one transaction to the next
• also, standardize how you deal with customers – employee selection, training, motivating and evaluation
• human resource development is critical for prospector and even for defender which differentiates on service quality

Question 24

Organisational adaptiveness and innovativeness are enhanced under what conditions?

Answer 24

adaptiveness and innovativeness are enhanced by

• decision making authority is decentralized
• managerial discretion and informal co-ordination mechanisms replace rigid rules
• more specialists are present

Question 25

Under what conditions is a functional type of organisation best to use? And a product management type?

Answer 25

Functional Type

• good for companies operating in stable and slow growth industries i.e. low cost defender
• also used in startups, they remain nimble because
  
  • the company remains small enough that the entrepreneur can personally supervise and coordinate various activities
  • the firm is focused on a single product targeted at one customer segment
  • the entrepreneurs personal vision is an adequate source of innovation
• as start ups grow, its better to adopt a more decentralized and specialized org form

Product Management Type

• good for differentiated defender and analyzer strategies in complex and unstable environments
• with large number of brands or products, there’s often a group or category product manager

Question 26

Discuss briefly the recent organisational design developments.

Answer 26

• orgs increasingly emphasize the managing of business processes in contrast to functional areas e.g. Roche’s order to fulfillment workflows
• these make org essentially flat and lean versus vertical and hierarchical
• executives will no longer be defined in terms of managing a group of functionally oriented people but in terms of a process that strongly emphasizes the importance of customer satisfaction
• process management is different from function management because
  
  • its uses external objectives – customer satisfaction vs. simple revenues
  • work is done in parallel, not in sequence
  • information flows directly to where it is used, person to person rather than through bosses
• self managing teams – empowerment – power to do what it takes to please the customer – need to be selected and supported correctly
• collaborative networks and joint ventures

Question 27

What are the more common organisational designs for selling in global markets?

Answer 27

• need to decide what org structure is best for developing and implementing worldwide strategies while simultaneously maintaining flexibility with regard to individual markets
• innovation is key to success – cannot treat its foreign subsidiaries as dumb production colonies
• technology is making world smaller
• different org structures include
  
  • little or no formal org - early on may consist of an export dept attached to the marketing division
  • International division – mainly consists of marketing with all other functions in their previous form. good for basic commodities like chemicals
  • global structures – basic form replicates firms functional depts. – global vp’s of functional areas reporting to president. most common form is giving sbu’s worldwide control over their product lines, marketing being localized. also area structure when there is variance across market regarding product acceptance and marketing activities or hybrids of all of above
  • global orgs can be centralized (when there is strong global competition) or decentralized

Question 28

What are the major components of an annual marketing plan for a given product?

Answer 28

Exhibit 18.9

Question 29

What subject areas should be discussed under the analysis of the current situation section of the annual marketing plan?

Answer 29

• manager summarizes his analysis of
  
  • market situation – total size, growth, regional or segment variations, market research info concerning customer preceptaions of brand and buying behaviour trends
  • competitive environment – in terms of size, market share, product qualities, marketing approach, vision of future
  • macro economic situation – also technology, legal, regulatory
  • past product performance – sales volume, margins, marketing expenditures and profit contribution for past several years. measure costs using value chain looking at everything from raw materials to delivery costs that have to be performed for a product
  • sales forecast and other key assumptions – estimating future sales figures

Question 30

Describe what should be included in the discussion of a company’s action plan for a given product.

Answer 30

• most crucial part of plan
• specific actions necessary to implement strategy along with
  
  • who’s responsible
  • when will it be done
  • how much is spent on each action
  • actions requiring other functional depts. should be included, but only after the product manager had got their buy in
• gannt charts used to specify milestones and timelines

Question 31

Important issues regarding administrative relationships and strategy implementation include:
A. the degree of autonomy given to business unit managers.
B. the size of the product markets being pursued by a business unit.
C. the degree to which functional programmes or facilities are shared by different business units.
D. all of the above.
E. only A and C above.

Answer 31

E

Question 32

All of the following are activities important to the production and marketing efforts of high-contact service organisations, EXCEPT:
A. employee selection.
B. defining job descriptions.
C. training.
D. motivation.
E. evaluation

Answer 32

B

Question 33

When a firm has little forward vertical integration and has high trade promotion expenses as a per cent of sales, it has adopted a(n) ____ business strategy.
A. analyser.
B. differentiated defender.
C. reactor.
D. prospector.
E. low-cost defender

Answer 33

D

Question 34

A company following a differentiated defender business strategy would have the following promotion policy: ____ expenditures for advertising; ____ expenditures for sales promotions and ____ expenditures for the salesforce.
A. low; low; low.
B. low; low; high.
C. moderate; moderate; variable.
D. high; high; high.
E. moderate; high; variable.

Answer 34

B

Question 35

What organisational structure are entrepreneurial start-ups most likely to use?
A. Functional.
B. Product management.
C. Market management.
D. Matrix.
E. Unstructured

Answer 35

A

Question 36

Self-managing teams are based on the concept of:
A. little authority given from above.
B. individuals act on own then as a team.
C. empowerment.
D. personal management.
E. collaborative efforts.

Answer 36

C

Question 37

The ____ a business units degree of autonomy the ____ respond to environmental opportunities.
A. lesser; quicker it can
B. lesser; more completely it can
C. greater; more completely it can
D. greater; quicker it can
E. greater; more likely it will

Answer 37

D

Question 38

The only instance where shared resources has been shown to benefit a prospector business units is:
A. distribution channels.
B. pricing strategy.
C. product development.
D. production.
E. promotion.

Answer 38

A

Question 39

In terms of shared programmes and facilities, an SBU should be large enough to operate on a(n) ____ scale, but not so large that its market scope is too broad so that it is ____ and cannot respond ____ to new market opportunities.
A. efficient; inflexible; quickly
B. inefficient; inflexible; quickly
C. efficient; flexible; quickly
D. inefficient; flexible; slowly
E. efficient; flexible; slowly

Answer 39

A

Question 40

Evaluation and reward systems that place more emphasis on sales volume or market share objectives may be more appropriate for businesses pursuing:
A. analyser.
B. differentiated defender.
C. reactor.
D. prospector.
E. low-cost defender.

Answer 40

D

Question 41

Successful implementation of a strategy is more likely when the business has the ____ demanded by its strategy and uses its ____ to support the strategy.
A. resources; divisions.
B. resources; competitive advantage.
C. functional competencies; expertise.
D. functional competencies; resources.
E. functional competencies; competitive advantage

Answer 41

D

Question 42

A company operating within a low-cost defender business strategy would be most likely to encourage ____ levels of synergy among manufacturing facilities and ____ levels of shared programmes among marketing and R&D departments.
A. low; moderate.
B. low; low.
C. high; high.
D. moderate; high.
E. high; low.

Answer 42

C

Question 43

A(n) ____ SBU strategy will perform best on ____ dimension(s) when marketing and related expenses are low.
A. prospector; share growth.
B. differentiated defender; ROI.
C. prospector; ROI.
D. analyser; share growth.
E. low-cost defender; ROI.

Answer 43

E

Question 44

A(n) ____ SBU strategy will perform best on ____ dimension(s) when finance types have substantial influence in the marketing decision-making process.
A. prospector; share growth.
B. differentiated defender; ROI.
C. prospector; ROI.
D. analyser; share growth.
E. low-cost defender; ROI.

Answer 44

E

Question 45

A participative means to conflict resolution is best for ____ SBU strategies because the level of interfunctional conflict is likely to be ____.
A. prospector; moderate.
B. differentiated defender; low.
C. analyser; high.
D. prospector; high.
E. low-cost defender; low

Answer 45

D

Question 46

A company like Clorox, which seeks to maximise fixed assets per employee and percentage of capacity utilisation relative to its competitors, is more than likely following a(n) ____ business strategy.
A. analyser.
B. low-cost defender.
C. prospector.
D. reactor.
E. differentiated defender.

Answer 46

B

Question 47

A company following a ‘prospector’ business strategy would typically allocate a ____ percentage of its resources to____.
A. low; product R&D.
B. high; reducing overhead.
C. high; process engineering R&D.
D. high; marketing.
E. low; improving capacity utilisation.

Answer 47

D

Question 48

Formalisation reflects a manager’s ____ in responding to environmental threats and is generally higher in SBUs pursuing a(n) ____ strategy.
A. skill; low-cost defender.
B. skill; differentiated defender.
C. flexibility; low-cost defender.
D. flexibility; prospector.
E. flexibility; analyser.

Answer 48

C

Question 49

Centralisation reflects a manager’s ____ in responding to market opportunities and is generally lower in SBUs pursuing a(n) ____ strategy.
A. skill; low-cost defender.
B. skill; differentiated defender.
C. motivation; analyser.
D. motivation; prospector.
E. authority; prospector.

Answer 49

E

Question 50

Specialisation reflects the level of task ____ across managers and is generally lower in SBUs pursuing a(n) ____ strategy.
A. sharing; low-cost defender.
B. sharing; differentiated defender.
C. complexity; low-cost defender.
D. complexity; prospector.
E. complexity; analyser.

Answer 50

A

Question 51

In terms of an SBU’s organisational structure, the SBU using a prospector strategy will perform best in terms of sales-volume growth and market-share gains when its structure has ____ levels of centralisation and ____ levels of specialisation.
A. low; high.
B. low; low.
C. high; low.
D. high; high.
E. moderate; low

Answer 51

A

Question 52

____ levels of centralisation together with ____ levels of formalisation together with ____ levels of specialisation are most likely to promote operational efficiency within an SBU.
A. High; high; low.
B. High; low; low.
C. High; high; high.
D. Low; high; low.
E. Low; low; high.

Answer 52

A

Question 53

A key structural variable in determining organisational structure is ____, which can be defined as the division of tasks and activities across positions within the organisational unit.
A. specialisation.
B. formalisation.
C. centralisation.
D. bureaucratisation.
E. authorisation.

Answer 53

A

Question 54

The simplest as well as the most bureaucratic organisational design is the ____ design.
A. product-management.
B. functional.
C. market-management.
D. matrix.
E. customer-management.

Answer 54

B

Question 55

About what percentage of consumer goods manufacturers use some form of product management organisation structure?
A. 40 per cent.
B. 55 per cent.
C. 70 per cent.
D. 85 per cent.
E. 95 per cent.

Answer 55

D

Question 56

What type of organisation structure is PepsiCo using when it assigns one manager to institutional sales for its soft-drink syrup (KFC, Pizza Hut, Taco Bell) and another manager to sales to consumers of its soft drinks?
A. Product.
B. Functional.
C. Matrix.
D. Market-management.
E. Transactional.

Answer 56

D

Question 57

The matrix form of organisation structure is the ____ bureaucratic, ____ centralised and ____ specialised type of organisation structure.
A. least; most; most.
B. least; least; most.
C. least; most; least.
D. most; most; least.
E. most; least; most.

Answer 57

B

Question 58

The written marketing plan is extremely important to the execution of a given strategy because it:
A. provides valuable information on competitors’ recent actions.
B. makes the marketing manager think through her markets’ needs.
C. spells out what actions are to be taken, when and by whom.
D. calls attention to what has and has not worked in the past.
E. provides a ‘road map’ of a product’s recent history.

Answer 58

C

Question 59

The type of statement one might expect to find in the ‘Key issues’ section of the marketing plan is:
A. alter the focus from the stimulation of primary demand to the stimulation of secondary demand.
B. change the advertising message to highlight competitive features.
C. the relative share increased more than did sales value.
D. research indicates that the sales volume can be increased 10 per cent via an emerging segment.
E. maintain current sales at last year’s unit volume.

Answer 59

D

Question 60

Hewlett Packard’s policy of allowing divisions to compete with each other would be captured under which section of a divisions marketing plan?
A. Analysis of current situation
B. Objectives.
C. Marketing strategy.
D. Marketing action plans.
E. None of the above.

Answer 60

A

Question 61

The type of statement one might expect to find in the ‘Marketing action plans’ section of the marketing plan is:
A. alter the focus from the stimulation of primary demand to the stimulation of secondary demand.
B. change the advertising message to highlight competitive features.
C. the relative share increased more than did sales value.
D. research indicates that the sales volume can be increased 10 per cent via an emerging segment.
E. maintain current sales at last year’s unit volume.

Answer 61

B

Question 62

The type of statement one might expect to find in the ‘Objectives’ section of the marketing plan is:
A. alter the focus from the stimulation of primary demand to the stimulation of secondary demand.
B. change the advertising message to highlight competitive features.
C. the relative share increased more than did sales value.
D. research indicates that the sales volume can be increased 10 per cent via an emerging segment.
E. maintain current sales at last year’s unit volume.

Answer 62

E

Question 63

Suppose you have been offered the job of developing and managing a new medical products unit for a major electronics manufacturer. The purpose of the new SBU will be to adapt technology from other parts of the company for medical applications (diagnostic equipment such as CAT scanners, surgical lasers, etc.) and to identify and build markets for the new products the unit develops. The new unit’s performance over the next few years will be judged primarily on its success at developing a variety of new products and its rate of growth in sales volume and market share. Before accepting the job, what assurances would you seek from the company’s CEO concerning the administrative relationships to be established between the new SBU and corporate headquarters? Why?

Answer 63

Two key issues would need to be addressed, given the delineation of evaluation already identified. One involves the autonomy which the new unit will have relative to other units in the organisation. The manager should be promised a relatively high level of autonomy in order to make the decisions necessary to develop new prod- ucts. The second issue is the amount of shared programmes and synergy which will exist between the new unit and other SBUs in the company. The manager should insist on there being relatively little required synergy between units in order to have the ability to develop the SBU’s marketing and R&D programmes.

Question 64

Now that you have accepted the job described in Question 18.44, you have been given a $50 million operating budget for the first year. Your first task is to staff the new unit and to allocate your budget across its various functional departments. While you obviously want to hire good people for every position, which departments require the most competent and experienced personnel and which departments should receive relatively large shares of the available budget? Why?

Answer 64

The place to start would be with the R&D department. This must be good in order to generate product ideas using the technology within the other organisational SBUs. This would require the hiring of good medical technicians and perhaps a few doctors to help in the R&D process. In addition, the manager should hire some experienced salespeople to test the market for ideas.

Question 65

As general manager, what type of organisational design would you select for the new SBU described in Question 18.45? Justify your choice in terms of its ability to help the SBU implement its strategy and accomplish its primary objectives. What potential advantages – if any – might be associated with your chosen organisation structure?

Answer 65

Recent developments in types of organisational structures have generated a renewed interest in matrix organisations similar to the one used by Hewlett-Packard. This is the least bureaucratic or centralised and the most specialised type of organisation. Matrix organisations are making increased use of product teams which are given substantial empowerment to develop, for example, and make operational a business plan for a given product or product line. Companies are struggling to develop an entrepreneurial culture centred on custom- ers. Other important changes include managing business processes rather than functional areas and developing collaborative networks that include joint ventures.

Question 66

As the general manager of 3M’s industrial tape division you are responsible for a business where the basic technology and the majority of product-markets are relatively mature, but where new applications and product improvements are still possible. Consequently, you are pursuing a differentiated defender strategy. If you had the authority to design the structure for your SBU, what type of organisational design would you select? How would you characterise your choice in terms of the structural variables of centralisation, formalisation and specialisation? Why do you think this design most appropriate for your SBU?

Answer 66

Given the complexity of the products and the apparent scope of the SBU’s product offerings, a product management structure would probably be most appropriate. The reason for this is that it would allow managers to concentrate their efforts on developing a broad range of products at the same time as each manager is responsi- ble for his/her own product development and marketing approaches. A possible alternative would be a matrix or team structure for product development, switching to product managers as those products become established.

The structure should include moderate levels of formalisation, centralisation and specialisation. According to the text, the most appropriate organisational design would be one involving both product managers (to stay abreast of product im- provements), and/or market managers (to keep up with new market opportunities) or possibly both in a matrix structure.

Question 67

Given your answer to Question 18.47, how would potential conflicts between functional departments within the industrial tape SBU be resolved? Who would be responsible for coordinating the activities of the various functional departments for each of the SBU’s product-market entries?

Answer 67

A participative approach would be the best way to handle potential conflicts. A general manager would be given the responsibility of co-ordinating all the functional activities one level above each of the product groups.

Question 68

The president of a medium-sized pharmaceutical company that uses a product-manager organisation has asked the marketing vice president to discuss with all department heads the most important recent developments in organisational design – including the merits and limitations of each. As the company’s vice president, prepare an outline of your presentation.

Just as you complete your discussion outline, the manager of the company’s export department asks for your suggestions of organisational designs that should be considered to replace the present one. The manager asks that you indicate which type of design you think is most appropriate.

Answer 68

At this stage in the company’s development an international division would probably be best; thus, the company’s present organisation stays the same. As a medium-sized pharmaceutical company, it is not likely that it can afford a global structure of any significance. One of the major tasks of the new division should be to look into the possibility of alliances to help in the marketing of the company’s products in major countries.