Which company estimates wellness programs have cumulatively saved the company $250 million on health care costs in the past decade?

111) Which company estimates wellness programs have cumulatively saved the company $250 million on health care costs in the past decade?

A) Ford Motor Company

B) Johnson & Johnson

C) Coca-Cola

D) TJX

E) Boeing

Answer:  B

Diff: 1    Page Ref: 242

AACSB:  Multicultural and Diversity Understanding

Objective:  7.08 Describe how to modify an organizational culture to support new strategies.

Learning Outcome:  Discuss best practices for strategy implementation

112) What are five differences between strategy formulation and strategy implementation?

Answer:  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 motivational and leadership skills. Strategy formulation requires coordination among a few individuals, whereas strategy implementation requires coordination among many individuals.

Diff: 2    Page Ref: 213

Objective:  7.01 Explain why strategy implementation is more difficult than strategy formulation.

Learning Outcome:  Discuss best practices for strategy implementation

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

Answer:  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.

Diff: 2    Page Ref: 215

Objective:  7.02 Discuss the importance of annual objectives and policies in achieving organizational commitment for strategies to be implemented.

Learning Outcome:  Discuss best practices for strategy implementation

114) Name at least ten issues that may require a management policy.

Answer:  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. 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.

Diff: 3    Page Ref: 218

Objective:  7.02 Discuss the importance of annual objectives and policies in achieving organizational commitment for strategies to be implemented.

Learning Outcome:  Discuss best practices for strategy implementation

115) There are three major approaches for managing and resolving conflict in an organization. Define these three approaches and give an example of each.

Answer:  Various approaches for managing and resolving conflict can be classified into three categories: avoidance, defusion, and confrontation. Avoidance includes such actions as ignoring the problem in hopes the conflict will resolve itself, or physically separating the conflicting individuals. Defusion 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.

Diff: 2    Page Ref: 219-220

AACSB:  Communication Abilities

Objective:  7.02 Discuss the importance of annual objectives and policies in achieving organizational commitment for strategies to be implemented.

Learning Outcome:  Discuss best practices for strategy implementation

116) What are the advantages and disadvantages of a divisional organizational structure?

Answer:  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.

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, competition between divisions may become so intense that it is dysfunctional and leads to limited sharing of ideas and resources for the common good of the firm.

Diff: 2    Page Ref: 222-223

Objective:  7.03 Explain why organizational structure is so important in strategy implementation.

Learning Outcome:  Compare and contrast approaches to organizational structure

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

Answer:  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, like Hershey; 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 such 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.

Diff: 2    Page Ref: 224-225

Objective:  7.03 Explain why organizational structure is so important in strategy implementation.

Learning Outcome:  Compare and contrast approaches to organizational structure

118) Compare and contrast restructuring and reengineering.

Answer:  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.

Diff: 2    Page Ref: 230

Objective:  7.04 Compare and contrast restructuring and reengineering.

Learning Outcome:  Compare and contrast approaches to organizational structure

119) Discuss the do's and don'ts in developing organizational charts.

Answer:  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 dos 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. 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, an Investment Relations Officer, Maintenance Superintendent, etc. Note in Figure 7-8 that these positions are labeled and placed appropriately. Note that a controller and/or treasurer would normally report to the CFO.

Diff: 2    Page Ref: 227-228

Objective:  7.03 Explain why organizational structure is so important in strategy implementation.

Learning Outcome:  Compare and contrast approaches to organizational structure

120) 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.

Answer:  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.

Diff: 2    Page Ref: 234

Objective:  7.08 Describe how to modify an organizational culture to support new strategies.

Learning Outcome:  Explain how to manage resistance to change

121) Explain the nature and role of ESOPs in strategic management.

Answer:  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.

Diff: 2    Page Ref: 239

Objective:  7.07 Discuss employee stock ownership plans (ESOPs) as a strategic-management concept.

Learning Outcome:  Describe how organizational performance is measured

122) Discuss how work life/home life balance is being addressed by organizations.

Answer:  Work/family strategies have become so popular among companies today that the strategies now represent a competitive advantage for those firms that offer such benefits as elder care assistance, flexible scheduling, job sharing, adoption benefits, an on-site summer camp, employee help lines, pet care, and even lawn service referrals. New corporate titles such as work/life coordinator and director of diversity are becoming common. Human resource managers need to foster a more effective balancing of professional and private lives because nearly 60 million people in the United States are now part of two-career families. The work/family issue is no longer just a women's issue. Some organizations offer family days, when family members are invited to the workplace and given a chance to see what other family members do each day. Flexible working hours are another human resource response to the need for individuals to balance work life and home life.

Diff: 2    Page Ref: 240-241

AACSB:  Multicultural and Diversity Understanding

Objective:  7.08 Describe how to modify an organizational culture to support new strategies.

Learning Outcome:  Discuss best practices for strategy implementation