CHAPTER 7Implementing Strategies: Management and Operations Issues

True/False

The Nature of Strategy Implementation

1. Effective strategy formulation can usually guarantee successful strategy implementation.

Ans: F Page 262

2. Strategy formulation is the managing of forces during the action, whereas strategy implementation is the positioning of forces before the action.

Ans: F Page: 262

3. Strategy formulation requires coordination among a few individuals, but strategy implementation requires coordination among many.

Ans: T Page: 262

4. It is always easier to say you are going to do something (strategy formulation) than to actually do it (strategy implementation).

Ans: T Page: 262

5. Unlike strategy formulation, strategy implementation varies considerably among different types and sizes of organizations.

Ans: T Page: 262

6. A bottom-up flow of communication is essential for developing top-down support.

Ans: F Page: 264

Annual Objectives

7. Annual objectives are key components in the strategic-management process because they dictate how resources will be allocated.

Ans: T Page: 264

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8. Horizontal consistency is more important than vertical consistency in developing annual objectives.

Ans: F Page: 266

9. Undesirable conduct such as distorting the record can be a result of overemphasis on achieving objectives.

Ans: T Page: 266

Policies

10. Policies refer to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals.

Ans: T Page 266

11. Strategies clarify what can and cannot be done in pursuit of an organization’s objectives.

Ans: F Page: 266

Resource Allocation

12. Not allocating resources according to the priorities indicated by approved objectives is detrimental to the strategic-management process.

Ans: T Page: 268

13. Four types of resources that can be used to achieve desired objectives are financial, physical, human and technological.

Ans: T Page: 269

Managing Conflict

14. Avoidance, infusion and confrontation are the classifications for the various approaches for minimizing and resolving conflict.

Ans: F Page: 269

15. Conflict of any kind is avoidable in organizations.

Ans: F Page: 269

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16. Concerning managing and resolving conflict, defusion includes such actions as ignoring the problem in hopes that the conflict will resolve itself.

Ans: F Page 269

17. Holding a meeting at which conflicting parties present their views and work through their differences is part of the diffusion strategy of managing conflict.

Ans: F Page: 270

18. Exchanging members of conflicting parties so each can gain an appreciation of the other’s point of view exemplifies a confrontation approach.

Ans: T Page: 270

Matching Structure with Strategy

19. Medium-sized firms tend to be divisionally structured, whereas large firms tend to use an SBU (strategic business unit) or matrix structure.

Ans: T Page: 271

20. Tasks and activities are grouped together by business function in a divisional organizational structure.

Ans: F Page: 271

21. A functional structure can be effective at limiting short-term and narrow thinking.

Ans: F Page: 271

22. Most large companies have abandoned the functional structure in favor of decentralization.

Ans: T Page: 272

23. With a divisional structure, it is possible that competition between divisions may become so intense that leads to improved sharing of ideas and resources for the common good of the firm.

Ans: F Page 272

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24. With a divisional structure by customer, an organization can effectively cater to the requirements of clearly defined customer groups.

Ans: T Page: 273

25. Because activities are organized according to the way work is actually performed, a divisional structure by process is similar to the matrix structure.

Ans: F Page: 274

26. The most complex of all designs is a matrix structure.

Ans: T Page: 275

27. With the matrix structure it is common for functional resources to be duplicated.

Ans F Page 275

Some Do’s and Don’ts in Developing Organizational Charts

28. When developing an organizational chart, the top executive of the firm should be reserved for the President.

Ans: F Page 277

29. When developing an organizational chart, it is not wise to recommend a dual title for just one executive.

Ans: T Page 277

30. In developing an organizational chart, avoid having a particular person reporting to more than one person above them in the chain of command.

Ans: T Page 278

Restructuring, Reengineering and E-Engineering

31. Restructuring is also called rightsizing.

Ans: T Page: 278

32. In terms of number of employees, restructuring usually involves increasing the size of the firm.

Ans: F Page: 278

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33. Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs.

Ans: T Page: 279

34. The focus of restructuring is changing the way work is actually carried out.

Ans: F Page: 279

35. Cornerstones of reengineering are decentralization, reciprocal interdependence and information sharing.

Ans: T Page: 280

Linking Performance and Pay to Strategies

36. An effective bonus system should be based on two key factors: annual objectives and long-term objectives.

Ans: T Page: 281

37. Gain sharing requires employees or departments to establish performance targets; if actual results exceed objectives, all members get bonuses.

Ans: T Page: 281-282

38. In 2004, salaries and bonuses of CEOs in the USA decreased by five percent.

Ans: F Page: 282

39. In 2004, the highest paid CEO was Steve Jobs from Apple Computer.

Ans: F Page 283

Managing Resistance to Change

40. People’s anxieties are raised with the thought of change because they fear economic loss, inconvenience, uncertainty and a break in normal social patterns.

Ans: T Page: 283

41. Resistance to change can be considered the single greatest threat to successful strategy implementation.

Ans: T Page: 283

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42. A rational change strategy means giving orders and enforcing those orders.

Ans: F Page: 283

43. Ideally, the rational type change strategy is the most desirable.

Ans: T Page: 284

44. The fastest of all approaches to implement change is the rational change strategy.

Ans: F Page: 284

45. The rational change strategy is one that presents information to convince people of the need for change.

Ans: F Page: 284

Managing the Natural Environment

46. Recently, an increasing number of companies have been implementing less rigorous environmental policies.

Ans: F Page 285

47. Managing as if the earth matters requires an understanding of how international trade, competitiveness and global resources are connected.

Ans: T Page: 285

48. Managing environmental affairs is primarily a technical function performed by specialists in a firm.

Ans: F Page: 285

Creating a Strategy-Supportive Culture

49. Changing a strategy to fit an existing culture is not as effective as changing a firm’s culture to fit a new strategy.

Ans: T Page: 287

50. An effective, multi-method technique for studying and altering a firm’s structure is known as triangulation.

Ans: F Page: 287

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51. Individualism, achievement, competition, informality and doing more than expected are all stressed by Mexican businesses.

Ans: F Page: 288

52. There is substantial social pressure against becoming a successful entrepreneur in Russia.

Ans: T Page: 289

53. An important business activity in Japan is entertaining because it strengthens Wa.

Ans: T Page: 290

Production/Operations Concerns When Implementing Strategies

54. Production processes typically constitute less than 50 percent of a firm’s total assets.

Ans: F Page: 291

55. JIT significantly increases the costs of implementing strategies.

Ans: F Page: 292

Human Resource Concerns When Implementing Strategies

56. Besides reducing worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial depreciation savings.

Ans: F Page: 293

57. ESOPs work well even in firms with fluctuating payrolls and profits.

Ans: F Page: 294

Balancing Work Life and Home Life

58. Work/family issues are typically focused on the benefit to working women.

Ans: F Page 295

59. The United States leads the world in promoting women and minorities into mid- and top-level managerial positions in business.

Ans: T Page 296

398

Multiple Choice

The Nature of Strategy Implementation

60. Strategy formulationa. is managing forces during the action.b. focuses on effectiveness.c. is primarily an operational process.d. requires coordination among many people.e. all of the above.

Ans: b Page: 262

61. Which of these is true about strategy implementation?a. It is positioning forces before the action.b. It focuses on effectiveness.c. It is primarily an operational process.d. It is primarily an intellectual process.e. It requires intuitive skills.

Ans: c Page: 262

Annual Objectives

62. How are objectives in the areas of profitability, growth and market share commonly established?a. Business segmentb. Geographic locationc. Customer groupsd. Producte. All of the above

Ans: e Page: 264

63. Establishing objectives is aa. top-level activity.b. centralized activity.c. decentralized activity.d. centralized-decentralized activity.e. command-and-control activity.

Ans: c Page: 264

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64. Considerable time and effort should be devoted to assuring objectives are well conceived because they represent the basis fora. monitoring processes.b. establishing divisional priorities.c. allocating resources.d. evaluating managers.e. all of the above.

Ans: e Page: 264

65. Which of the following is not true about objectives?a. They should be communicated throughout the organization.b. They should have an appropriate time dimension.c. They should incorporate policies.d. They should be measurable.e. They should be consistent.

Ans: c Page: 266

66. Which term would most likely be incorporated into written objective statements?a. Maximizeb. Minimizec. 10% increased. Adequatee. All of the above

Ans: c Page: 266

Policies

67. What are guidelines, methods, procedures, rules, forms and administrative practices known as?a. Long-term objectivesb. Policiesc. Annual objectivesd. Strategiese. Goals

Ans: b Page: 266

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68. Which of the following issues may not require a management policy?a. To establish a high- or low-safety stock of inventory b. To increase motivationc. To offer numerous or few employee benefitsd. To discourage insider tradinge. To promote from within to or to hire from the outside

Ans: b Page: 267

Resource Allocation

69. Which term is best defined as a central management activity that allows for strategy execution.a. Policy-makingb. Goal-settingc. Establishing annual objectivesd. Resource allocatione. Conflict

Ans: d Page: 268

70. _______ is not a major factor that commonly prohibits effective resource allocation.a. Underprotection of resourcesb. Organizational politicsc. Vague strategy targetsd. Reluctance to take riskse. Lack of sufficient knowledge

Ans: a Page: 269

Managing Conflict

71. A disagreement between two or more parties on one or more issues is called a(n)a. integrated solution.b. conflict.c. compromise.d. diffusion.e. avoidance.

Ans: b Page: 269

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72. Conflict in an organization isa. always bad.b. always good.c. sometimes good and sometimes bad.d. a sign of bankruptcy.e. avoidable.

Ans: c Page: 269

73. What are three categories of approaches for managing and resolving conflict?a. Avoidance, diffusion and confrontationb. Avoidance, payoff and diffusionc. Confrontation, ignorance and objectivityd. Buy, sell and holde. There are no good ways to manage conflict

Ans: a Page: 269 - 270

74. Which approach for managing and resolving conflict involves exchanging members of conflicting parties of that each can gain an appreciation of the others point of view?a. Avoidanceb. Resistancec. Complianced. Diffusione. Confrontation

Ans: e Page 269-270

75. Which approach for managing and resolving conflict involves ignoring the problem in hopes that the conflict will resolve itself? a. Avoidanceb. Resistancec. Complianced. Diffusione. Confrontation

Ans: a Page 269-270

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76. Which approach for managing and resolving conflict involves playing down differences between conflicting parties while accentuating similarities and common interests?a. Avoidanceb. Resistancec. Complianced. Diffusione. Confrontation

Ans: d Page 269-270

Matching Structure with Strategy

77. Why do changes in company strategy often require changes in the way an organization is structured?a. Structure dictates how goals and objectives will be established.b. Structure dictates authority over projects.c. Structure dictates how resources will be obtained.d. Structure dictates strategy.e. Structure dictates how money is spent.

Ans: a Page: 270

78. What type of organizational structure do most small businesses follow?a. Divisional structure by productb. Functional structurec. Divisional structure by customerd. Process type structuree. Matrix structure

Ans: b Page: 271

79. Which organizational structure is the most simple and inexpensive?a. departmentalb. strategic business unitc. functionald. decentralizede. process

Ans: c Page: 271

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80. Medium-sized firms are more likely to use which type of structure.a. divisionalb. matrixc. SBUd. functionale. process

Ans: a Page: 271

81. What is not one of the basic ways a divisional structure can be organized?a. By geographic areab. By product or servicec. By customerd. By processe. By cost

Ans: e Page: 272

82. A divisional structure by product is most effective whena. special emphasis needs to be placed on specific products.b. an organization offers few products.c. an organization’s products or services differ substantially.d. special emphasis needs to be placed on specific services.e. All of the above

Ans: e Page: 273

83. How would Hershey’s current divisional structure most likely be classified?a. By geographic areab. By productc. By serviced. By customere. By process

Ans: a Page 273

84. A divisional structure by geographic area is most appropriate whena. organizations have similar branch facilities located in widely dispersed areas.b. an organization offers only a limited number of products or services.c. strict control and attention to product lines are needed.d. an organization has many skilled managers.e. the firm serves one geographic area.

Ans: a Page: 273

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85. What is the best divisional structure when a few major customers are of paramount importance and many different services are provided to these customers?a. by geographic areab. by customerc. by productd. by processe. by cost

Ans: b Page: 273

86. What is the most complex form of organizational structure?a. Divisionalb. SBUc. Matrixd. Functionale. Geographic

Ans: c Page: 275

87. Which organizational structure has ambiguous roles for senior executives as a major disadvantage?a. functionalb. divisionalc. strategic business unit (SBU)d. matrixe. process

Ans: c Page: 276

88. When developing an organizational chart, you should:a. Recommend dual titles for executivesb. Use the title “president” for the top personc. Make sure that the chief financial officer is not at the same level as the chief

operating officerd. Have division presidents report to a chief operating officere. Have the controller or treasurer report directly to the president

Ans: d Page 277

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Restructuring, Reengineering and E-Engineering

89. Restructuring is also referred to as a. starting over.b. delayering.c. diversifying.d. job security.e. integrating.

Ans: b Page: 278

90. Which term is most often concerned primarily with shareholder well-being rather than employee well-being?a. Benchmarkingb. Reengineeringc. Product redesignd. Process managemente. Restructuring

Ans: e Page: 278

91. Which of these involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria?a. Restructuringb. Process redesignc. Reengineeringd. Delayeringe. Benchmarking

Ans: e Page: 279

92. The primary benefit sought from restructuring isa. employee involvement.b. cost reduction.c. increased morale.d. increased number of hierarchical levels in the organization.e. increased innovation.

Ans: b Page: 279

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93. What action involves reconfiguring or redesigning work, jobs and processes for the purpose of improving costs, quality, service and speed?a. Restructuringb. Downsizingc. Reengineeringd. Delayeringe. Benchmarking

Ans: c Page: 280

94. A firm uses information technology to break down functional barriers and create a work system based on business processes, products, or outputs rather than on functions or inputs ina. restructuring.b. benchmarking.c. reengineering.d. decentralization.e. delayering.

Ans: c Page: 280

Linking Performance and Pay to Strategies

95. Which pay strategy is not a form of incentive compensation?a. Bonus systemb. Hourly wagec. Gain sharingd. Profit sharinge. All of these are forms of incentive compensation.

Ans: b Page: 281-282

96. What pay strategy requires employees or departments to establish performance targets, such as “if actual results exceed objectives then all members get bonuses.”a. Profit sharingb. Bonus systemc. Salaryd. Gain sharinge. Hourly wage system

Ans: d Page: 281-282

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97. Which of these is not one of the tests used to determine whether a performance-pay plan will benefit an organization?a. Does the plan capture attention?b. Do employees understand the plan?c. Is the plan improving communications?d. Does the plan pay out when it should?e. Does the plan reduce management layers?

Ans: e Page: 282

98. Which Fortune 500 CEO had the greatest salary in 2004?a. Richard Kinder from Kinder Morgan Energyb. Bob Nardelli from Home Depotc. Steve Jobs from Apple Computerd. Jeff Bezos from Amazone. Warren Buffett from Berkshire Hathaway

Ans: b Page 283

Managing Resistance to Change

99. What change strategy involves giving orders and enforcing those orders?a. self-interestb. educativec. forced. rationale. diffusion

Ans: c Page: 283

100. Resistance to change can manifest itself througha. absenteeism.b. sabotaging production machines.c. filing unfounded grievances.d. unwillingness to cooperate.e. all of the above.

Ans: e Page: 283

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101. A change strategy that attempts to convince people the change is to their personal advantage isa. diffusion.b. force.c. educative.d. rational.e. compromise.

Ans: d Page: 283-284

Managing the Natural Environment

102. What challenge facing all organizations requires managers to formulate strategies that preserve and conserve natural resources and control pollution?a. economicb. ecologicalc. compensationald. benchmarkinge. global

Ans: b Page: 285

Creating a Strategy-Supportive Culture

103. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection and socialization help an organizationa. abide by SEC laws.b. link culture to strategy.c. set guidelines for firing.d. increase profits.e. manage conflicts between stakeholders.

Ans: b Page: 287

104. Which strategy could be best defined as an effective, multi-method technique of studying and altering a firm’s culture?a. Benchmarkingb. Deliveringc. Triangulationd. Process managemente. Educative change strategy

Ans: c Page: 287

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105. Desire for __________ is a part of the social fabric in worker-manager relations in Mexico.a. harmonyb. frictionc. conflictd. independencee. punctuality

Ans: a Page: 288

106. How is life in Mexico in comparison to life in the United States?a. Fasterb. More affluentc. Time-dictatedd. Slowere. Less harmonious

Ans: d Page: 289

107. The Russian people are known for theira. drive.b. desire to succeed.c. laziness.d. lack of motivation.e. lack of education.

Ans: a Page: 289

108. Which of the following does not describe most Japanese managers?a. Reservedb. Quietc. Distantd. Impulsivee. Introspective

Ans: d Page: 290

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Production/Operations Concerns When Implementing Strategies

109. Just in time describesa. implementing strategies just before bankruptcy.b. delivering materials just as they are needed.c. a scheduling method for meetings.d. a personnel planning method.e. a process for improving quality.

Ans: b Page: 292

Human Resource Concerns When Implementing Strategies

110. A concern in matching managers with strategy is that jobs have relatively __________ responsibilities, while people are __________ in their development.a. static; dynamicb. dynamic; staticc. quick; slowd. exciting; dulle. dull; exciting

Ans: a Page: 293

111. Approximately how many people in the United States are now part of two-career families?a. 2 millionb. 8 millionc. 21 milliond. 60 millione. 85 million

Ans: d Page: 295

112. Of the Fortune 500 firms, how many have a woman CEO?a. twob. fourc. fived. twelvee. twenty-four

Ans: c Page: 296

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113. What is the stated reason for Boeing’s recent firing of CEO Harry Stonecipher?a. Poor company performanceb. Enforcing discriminatory hiring practicesc. Having an extramarital affair with a coworkerd. Stealing from the companye. Exorbitant use of company planes

Ans: c Page 296

114. What is not a major benefit of having a diverse workforce?a. Improvement of the bottom lineb. An increase in training costsc. An increase in productivityd. A decrease in complaints and litigatione. Higher retention of employees

Ans: b Page: 297

Essay Questions

115. What are five differences between strategy formulation and strategy implementation?

Strategy formulation is positioning forces before the action, whereas strategy implementation is managing forces during the action. Strategy formulation focuses on effectiveness, whereas strategy implementation focuses on efficiency. Strategy formulation is primarily an intellectual process, whereas strategy implementation is primarily an operational process. Strategy formulation requires good intuitive and analytical skills, whereas strategy implementation requires special motivation and leadership skills. Strategy formulation requires coordination among a few individuals, whereas strategy implementation requires coordination among many individuals.

Page: 242

116. List four major reasons annual objectives are essential for strategy implementation.

Annual objectives are essential for strategy implementation because they (1) represent the basis for allocating resources, (2) are a primary mechanism for evaluating managers, (3) are the major instrument for monitoring progress toward achieving long-term objectives and (4) establish organizational, divisional and departmental priorities.

Page: 264

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117. Name at least ten examples that may require a management policy.

Possible answers include: 1) To offer extensive or limited management development workshops and seminars. 2) To centralize or decentralize employee-training activities. 3) To recruit through employment agencies, college campuses and/or newspapers. 4) To promote from within or to hire from the outside. 5) To promote on the basis of merit or on the basis of seniority. 6) To tie executive compensation to long-term and/or annual goals. 7) To offer numerous or few employee benefits. 8) To negotiate directly or indirectly with labor unions. 9) To delegate authority for large expenditures or to retain this authority centrally. 10) To allow much, some, or no overtime work. 11) To establish a high- or low-safety stock of inventory. 12) To use one or more suppliers. 13) To buy, lease, or rent new production equipment. 14) To stress quality control greatly or not. 15) To establish many or only a few production standards. 16) To operate one, two, or three shifts. 17) To discourage using insider information for personal gain. 18) To discourage sexual harassment. 19) To discourage smoking at work. 20) To discourage insider trading. 21) To discourage moonlighting.

Page: 267

118. There are three major approaches for minimizing and resolving conflict in an organization. Define these three approaches and give an example of each.

Various approaches for managing and resolving conflict can be classified into three categories: avoidance, diffusion and confrontation. Avoidance includes such actions as ignoring the problem in hopes the conflict will resolve itself, or physically separating the conflicting individuals. Diffusion can include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions. Confrontation is exemplified by exchanging members of conflicting parties so each can gain an appreciation of the other’s point of view, or holding a meeting at which conflicting parties present their views and work through their differences.

Student answers will vary on the examples given for each approach.

Page: 269-270

119. What are the advantages and disadvantages of a divisional organizational structure?

A divisional structure has some clear advantages. The first is that accountability is clear. Also, it creates career development opportunities for managers, allows local control of local situations, leads to a competitive climate within an organization and allows new businesses and products to be added easily.

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A divisional structure does have its limitations. A divisional structure is costly because each division requires functional specialists who must be paid, there exists some duplication of staff services, facilities and personnel, and better-qualified individuals require higher salaries. It is also costly because it requires an elaborate headquarters-driven control system. Finally, certain religions, products, or customers may sometimes receive special treatment, and it may be difficult to maintain consistent, company-wide practices.

Page: 272-274

120. There are four basic ways a divisionally structured firm could be organized. What are these four ways? Give an example of each.

The four basic ways a divisionally structured firm could be organized are 1) by geographic area. An example of this would be any organization with similar branch facilities located in widely dispersed areas; 2) by product or service. Huffy is an example of divisional structure by product; 3) by customer. Book publishing companies often organize their activities around customer groups as college, secondary schools and private commercial schools; and 4) by process. An example of this is a manufacturing business organized into six divisions: electrical work, glass cutting, welding, grinding, painting and foundry work. Each division would be responsible for generating revenues and profits.

Page: 273-274

121. Compare and contrast restructuring and reengineering.

Restructuring involves reducing the size of the firm in terms of number of employees, number of divisions or units and number of hierarchical levels in the firm’s organizational structure. Restructuring is concerned primarily with shareholder well-being rather than employee well-being.

In contrast, reengineering is concerned more with employee and customer well-being than shareholder well-being. Reengineering involves reconfiguring or redesigning work, jobs and processes for the purpose of improving cost, quality, service and speed. Whereas restructuring is concerned with eliminating or establishing, shrinking or enlarging, and moving organizational departments and divisions, the focus of reengineering is changing the way work is actually carried out. Reengineering is characterized by many tactical decisions, whereas restructuring is characterized by strategic decisions.

Page: 255-257

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122. Discuss the do’s and don’ts in developing organizational charts.

Students analyzing strategic management cases are often asked to revise and develop a firm’s organizational structure. This section provides some basic guidelines for this endeavor. There are some basic do’s and don’ts in regard to devising or constructing organizational charts, especially for midsize to large firms. First of all, reserve the title CEO for the top executive of the firm. Don’t use the title “president” for the top person; use it for the division top managers if there are divisions within the firm. Also, do not use the title “president” for functional business executives. They should have the title “chief”, or “vice president,” or “manager,” or “officer”, such as “Chief Information Officer”, or “VP of Human Resources”. Further, do not recommend a dual title (such as “CEO and President”) for just one executive. The Chairman of the Board and CEO of Bristol-Myers Squibb, Peter Dolan, gave up his title as chairman in 2005. Actually, “chairperson” is much better than “chairman” for this title. Directly below the CEO, it is best to have a COO (chief operating officer) with any division presidents reporting directly to the COO. On the same level as the COO and also reporting to the CEO, draw in your functional business executives, such as a CFO (chief financial officer), VP of Human Resources, a CSO (Chief Strategy Officer), a CIO (Chief Information Officer), a CMO (Chief Marketing Officer), a VP of R&D, a VP of Legal Affairs, a Investment Relations Officer, Maintenance Superintendent, etc. Note in Figure 7-6 that these positions are labeled and placed appropriately. Note that a controller and/or treasurer would normally report to the CFO.

Page 277

123. What are the three commonly used strategies or approaches for implementing changes in an organization? Give an advantage and/or disadvantage for each type of approach.

Although there are various approaches for implementing changes, three commonly used strategies are a force change strategy, an educative change strategy and a rational or self-interest change strategy. A force change strategy involves giving orders and enforcing those orders; this strategy has the advantage of being fast, but low commitment and high resistance plague it. An educative change strategy is one that presents information to convince people of the need for change; the disadvantage of an educative change strategy is that implementation becomes slow and difficult. However, this type of strategy evokes greater commitment and less resistance than does the force change strategy. Finally, a rational or self-interest change strategy is one that attempts to convince individuals the change is to their personal advantage. When this appeal is successful, strategy implementation can be relatively easy.

Page: 283-285

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124. List 10 special natural environment issues.

Students can choose any 10 from the following 12 special natural environment issues: (1) ozone depletion, (2) global warming, (3) depletion of rain forests, (4) destruction of animal habitats, (5) protecting endangered species, (6) developing biodegradable products and packages, (7) waste management, (8) clean air, (9) clean water, (10) erosion, (11) destruction of natural resources and (12) pollution control.

Page: 285-287

125. Explain the nature and role of ESOPs in strategic management.

An ESOP is a tax-qualified, defined-contribution employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions. ESOPs empower employees to work as owners. Besides reducing worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial tax savings. Principal, interest and dividend payments on ESOP-funded debt are tax-deductible. Banks lend money to ESOPs at interest rates below prime. This money can be repaid in pretax dollars, lowering the debt service as much as 30 percent in some cases. Research confirms ESOPs can have a dramatically positive effect on employee motivation and corporate performance, especially if ownership is coupled with expanded employee participation and involvement in decision-making. Market surveys indicate customers prefer to do business with firms that are employee-owned.

Page: 294-295

126. List eight benefits of a diverse workforce.

Students may choose any eight of the following 13 major benefits of having a diverse workforce: (1) improves corporate culture, (2) improves employee morale, (3) leads to a higher retention of employees, (4) leads to an easier recruitment of new employees, (5) decreases complaints and litigation, (6) increases creativity, (7) decreases interpersonal conflict between employees, (8) enables the organization to move into emerging markets, (9) improves client relations, (10) increases productivity, (11) improves the bottom line, (12) maximizes brand identity and (13) reduces training costs.

Page: 297

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