STRAT.MAN. - CHAPTER 12 AND 13 Flashcards
1
Q
Roles and Responsibilities of Managers at various levels are broadly classified under the ff. functions:
A
- Planning
- Organizing
- Staffing
- Directing
- Controlling
2
Q
the managers set the goals and objectives of a company.
A
Planning
3
Q
mainly involves strategy formulation.
A
Planning
4
Q
formulate the corporate strategy.
A
Top-level Managers
5
Q
formulate the business strategy.
A
Middle-level Managers
6
Q
formulate the functional strategy.
A
Functional-level Managers
7
Q
involves the drafting of the organizational structure that fits a company best.
A
Organizing
8
Q
means hiring the right person for the right position.
A
Staffing
9
Q
connotes motivating people to complete a task in order to achieve organizational goals and objectives.
A
Directing
10
Q
the performance of the managers is evaluated with predetermined standards.
A
Controlling
11
Q
is the process of comparing a company’s actual performance with its expected target results, keeping in mind the idea of improving performance. The expected overall performance of a company is expressed in its general objective.
A
Strategy Evaluation
12
Q
is the process of measuring the performance of an entire company and its business and functional units.
A
Strategy Evaluation
13
Q
As a process, Strategy Evaluation involves the ff. steps:
A
- Determine what to evaluate.
- Establish predetermined standards of performance.
- Measure the actual performance.
- Compare the actual performance with the predetermined standards.
- Take corrective measures
14
Q
At the Corporate Level, the ff. Major Areas are to be measured:
A
- The role and responsibilities of a Chief Executive Officer (CEO).
- The organizational performance.
15
Q
CEO Major Roles and Responsibilities:
A
- Leading the development and implementation of long-term strategies and the vmgo.
- Evaluating other executives of the company.
- Ensuring corporate social responsibility practices.
- Communicating with the board of directors, shareholders, the government, and the public.
- Assessing the trends in the business environment.
- Evaluating business risks.
- Maintaining an ethical corporate governance.
16
Q
of a company is directly related to the implementation of the corporate level strategy.
A
Organizational Performance
17
Q
it involves the growth of a company in terms of resources, profitability, market share, customer value, and competitive advantage.
A
Organizational Performance
18
Q
The areas to be included in the evaluation are the ff.:
A
- Capital Adequacy
- Asset Quality Management
- Business Risks
- Earning Performance
19
Q
at this stage, a company has to define its predetermined standards that will serve as the benchmark when evaluating the performance of corporate level managers.
A
Establish Predetermined Standards of Performance
20
Q
companies, particularly the board of directors, differ in establishing predetermined standards based on their preferences and orientations.
A
Establish Predetermined Standards of Performance
21
Q
The Predetermined Standards may focus on the ff. areas:
A
- Overall Company Performance
- Leadership in a Company
- Risk Management
- Corporate Governance
- Corporate Social Responsibility
- Empowerment
- Management Functions
22
Q
- can come from the previous year’s performance, the company’s average performance, or the industry performance.
- they can assess qualitative or quantitative data.
A
Predetermined Standards
23
Q
the next stage is to measure the actual performance of top-level managers using a performance evaluation tool.
A
Measure the Actual Performance
24
Q
differs across businesses and industries. However, it is important to test a tool’s reliability and validity. A reliable and valid tools produces results that can be used as bases in making sound judgements.
A
performance evaluation tools
25
The tools are broadly classified as follows:
1. Traditional Approach
2. Total Perspective Approach
26
Another way of evaluating the performance of a CEO is to collect a feedback using a
questionnaire
27
The commonly used instrument is the
17-item questionnaire of Charan (1788)
28
Another way of evaluating the performance of a CEO is to collect a feedback using a questionnaire. The commonly used instrument is the 17-item questionnaire of Charan (1788), which covers the four major areas as follows:
1. Company Performance
2. Organizational Leadership
3. Team Building
4. External Constituencies Leadership
29
comparisons must be systematically and logically conducted.
Compare the Actual Performance with the Predetermined Standards
30
it is highly emphasized that the performance of managers is the final product of their activities. Hence, the performance evaluation of managers starts from their planning function vis-à-vis strategy formulation down to strategy implementation.
Compare the Actual Performance with the Predetermined Standards
31
managers are being evaluated to determine if the implemented strategies at different levels efficiently produced desired results. If the answer to this test is positive, then the company achieved growth, competitive advantage, and customer value and satisfaction.
Compare the Actual Performance with the Predetermined Standards
32
managers are being evaluated to determine if the implemented strategies at different levels efficiently produced desired results. If the answer to this test is positive, then the company achieved growth, competitive advantage, and customer value and satisfaction. However, if the answer is negative, the probable causes are as follows:
1. The strategies are poorly implemented.
2. There is poor communication of strategies at various levels.
3. The assumptions used in making projections do not have rational bases.
4. There is weak commitment from the management and employees.
5. The feedback and control mechanisms are poor.
6. The strategies formulated are not correct or applicable.
7. The resources have not been assessed properly.
8. There is poor coordination among functional units.
9. The strategies are not vertically and horizontally consistent.
10. There is poor evaluation and forecast of the business environment.
33
the last stage in the strategy evaluation.
Take Corrective Measures
34
this stage is only performed when a company fails to implement its strategy properly and can still improve its performance by taking corrective actions. In case, however, a company does not have the ability to take corrective action or the cost exceeds the expected benefit, the company may abandon the strategy.
Take Corrective Measures
35
is a remedial approach to address the root cause of the strategy’s failure.
Act of Taking Corrective Measures
36
Taking Corrective Actions may appear the ff. forms:
1. Revising the Objective
2. Revising the Standards
3. Revising the Procedures
4. Revising the Support Structures
5. Revising the Activity of a Program
37
a manager must assess if the objective or expected result is realistic and attainable. The changes in the business landscape may contribute to the non-achievement of the objective. It more logical to revise the expected target than to revise the actual performance.
Revising the Objective
38
the standards used at certain times can be very high and inappropriate for a company in relation to its competencies, strength, and resources. In such a case, it becomes logical to adjust the predetermined standards.
Revising the Standards
39
the procedures may appear outdated at times because of the rapid changes and development brought by advancements in technology and communication. The capabilities of a company must be assessed, including the knowledge, skills, and abilities of its employees who carry out the procedures.
Revising the Procedures
40
it is fitting that the architectural structure, including the support of the system and the technological structure, be assessed if they need revisions and upgrades. They have significant effects on the successful implementation of strategies.
Revising the Support Structures
41
the activities to achieve a program are sometimes insufficient. Examples of these are poor scheduling of activities, lack of trainings, poor compensation packages, less grating of incentives, and inadequate job designs.
Revising the Activity of a Program
42
involves the use of accounting data presented in the financial statements of a company.
Traditional Approach
43
it is also known as the financial ratio analysis because it involves ratio computation with the aid of a standard formula.
Traditional Approach
44
this approach is still being used widely today by different companies across several industries.
Traditional Approach
45
are the final product of the accounting process. It includes the statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows.
financial statements
46
Traditional Approach evaluates the overall performance of a company in the ff. areas:
1. Liquidity or Short-term Solvency
2. Stability or Long-term Solvency
3. Asset Utilization
4. Profitability
5. Growth or Market Value
47
refers to the ability of a company to settle its short-term financial obligations or obligations that mature within one year or one normal operating cycle of the company, whichever is shorter.
Liquidity or Short-term Solvency
48
the commonly used liquidity ratios are the current ratio, the quick ratio or acid test, and cash ratios.
Liquidity or Short-term Solvency
49
refers to the ability of a company to pay its long-term, maturing obligations and still remain liquid and stable.
Stability or Long-term Solvency
50
the commonly used stability ratios are total debt, debt-to-equity, time interest earned, and cash coverage ratios.
Stability or Long-term Solvency
51
refers to the ability of a management to effectively use the resources of a company to achieve its objectives.
Asset Utilization
52
the ratios included under this category are the inventory turnover, day’s sales in inventory, receivable turnover, number of days sales in receivable, total asset turnover, and capital intensity.
Asset Utilization
53
it is the ability of a company to realize revenues in its operations.
Profitability
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include profit margin, return of assets, and return on equity.
Profitability
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it is the ability of a company to improve its worth or value.
Growth or Market Value
56
it includes the price-earnings and the market-to-book value ratios.
Growth or Market Value
57
does not only evaluate the performance of a company in terms of its financial areas but also considers the non-financial areas.
Total Perspective Approach
58
the most popular approach that was introduce by Kaplan and Norton (1996).
Balance Scorecard
59
this measure is intended to align business activities with the vision, mission, goals, objectives, and strategies of a company; improve internal and external communications; and monitor business performance against strategic goals.
Balance Scorecard
60
The Four Major Perspectives Reflected in a Balance Scorecard are as follows:
1. Financial
2. Customer
3. Internal Business Practices
4. Learning and Growth
61
is evaluated based on how effective and efficient it is in implementing the two broad business level strategies-the competitive strategy and the cooperative strategy-and their alternate variations.
Business Unit
62
since the aim of a business level strategy is to maintain a competitive position in an industry, most companies adopt competitive strategies and their variations.
Business Unit
63
is about the health of a company in terms of the corporate, business, and functional levels and the way it can achieve success.
Strategy Evaluation
64
the business level strategy evaluation should focus on the different measures adopted by a company to become a cost leader or a cost focus.
Cost Leadership
65
the evaluation should focus on how a company differentiates itself from its competitors in terms of product, quality, functions, aesthetics, or features.
Differentiation
66
is conducted by the board of directors.
Business Level Strategy Evaluation
67
The business level strategy evaluation report must include the ff:
1. The present strategic position of a company in an industry.
2. The probable position of competitors in an industry.
3. A gap analysis between opportunities and a company's competencies.
4. The possible market needs served by a company and its competitors.
5. The possible actions needed to address any deficiency.
68
is to maximize resource productivity.
Objective of a Functional Level Strategy
69
the different functional units of a company align their objectives based on this context.
Objective of a Functional Level Strategy
70
aims to deliver customer value products or services.
Marketing Unit
71
is to maximize the financial value of a company.
Finance Unit
72
aims to guide the development and implementation of various programs.
Human Resource Unit
73
is to reconcile a company's resources and market requirements.
Production and Operation Unit
74
is conducted by the board of directors.
Functional Strategy Evaluation
75
There are diff. approaches to evaluate how a strategy is implemented at the functional level. Approaches include the ff.:
1. Responsibility Center Approach
2. Benchmarking Approach
3. Management Audit Approach
76
is a unit in a company that is controlled by a manager who is accountable based on an entrusted responsibility.
Responsibility Center
77
The Responsibility Centers are Classified as Follows:
1. Revenue Center
2. Profit Center
3. Cost Center
4. Investment Center
78
the actual performance of a revenue center is measured based on the amount of revenue it contributes to a company.
Revenue Center
79
it is the amount of gross sales or gross receipts that serves as the primary factor to judge whether a functional unit is favorably operating or not.
Revenue Center
80
the cost involved in the generation of revenue is disregarded. The actual revenue is simply compared against the targeted revenue, and the variation is, then, determined. The variation can either be favorable or unfavorable.
Revenue Center
81
realizes revenue through the sale of a product or delivery of a service but, at the same time, incurs costs and expenses.
Profit Center
82
it is evaluated based on the amount of profit (ex. revenue minus costs and expenses) it contributes to a company.
Profit Center
83
the actual profit is compared against the targeted profit. When the actual profit is higher than the targeted amount, the variation is considered favorable.
Profit Center
84
a functional unit classified as a cost center incurs only costs and expenses.
Cost Center
85
it does not realize revenue through the sale of a product or delivery of a service.
Cost Center
86
the actual costs and expenses are compared against the budgeted amount. Higher costs and expenses compared to the actual amount incurred give an unfavorable performance result.
Cost Center
87
is evaluated based on the amount of revenue, profit, costs, and expenses it contributes to a company, but more emphasis is given on how the unit efficiently utilizes the resources entrusted to it.
Investment Center
88
it is evaluated based on the amount of the return on investment (ROI) provided to a company.
Investment Center
89
refers to the process of comparing the current products, services, and processes against those considered the best.
Benchmarking
90
in strategic management, it is a tool for evaluating the performance of a company against its competitors that are regarded the best or the industry leaders.
Benchmarking
91
the concept does not encourage a company to imitate other products, services, and processes but to improve its current performance using the best practices, products, or performance among industry players as the minimum standards.
Benchmarking
92
The ff. procedures are to be followed when benchmarking:
1. Choose the area, activity, product, or process to be evaluated.
2. Determine the basis of measurement.
3. Select industry leaders.
4. Gather information from reliable sources.
5. Compare the performance of the company with its competitors.
6. Determine the gap.
7. Develop a program to close the performance gap.
8. Implement the program.
93
is a systematic process of evaluating the performance, competence, and capabilities of functional level managers.
Management Audit
94
this strategy evaluation approach is usually conducted by the internal audit staff of a company under the supervision of the audit committee of the board of directors.
Management Audit
95
The ff. are the different types of management audit:
1. Financial Audit
2. Operation Audit
3. Human Resources Audit
4. Marketing Audit
96
is conducted to evaluate if the financial statements of a company are fairly presented.
Financial Audit
97
this includes the evaluation of the appropriateness and reliability of the accounting procedures, recording system, and disclosure requirements and the company's compliance to accounting standards.
Financial Audit
98
it involves the examination of different supporting documents in recording business transactions.
Financial Audit
99
is a systematic and comprehensive evaluation of the effectiveness and efficiency of the different operational activities of a company.
Operation Audit
100
it is conducted to identify the areas that need improvement and institute control, including the possible risks in the structures and operations. Both the financial and non-financial information are needed in the evaluation.
Operation Audit
101
is a critical evaluation of the performance of the human resource unit and its various activities related to the implementation of policies, programs, and procedures.
Human Resources Audit
102
it is conducted primarily to determine the shortcomings and lapses in the implementation of human resource functions and to take remedial actions.
Human Resources Audit
103
is a comprehensive and systematic evaluation of the marketing activities, goals, and objectives of a company.
Marketing Audit
104
it reviews and evaluates the external and internal marketing environments and the appropriateness of the current marketing strategy and provides the necessary recommendations for improvement.
Marketing Audit
