Answer & Question : Strategic control systems, both informational and behavioral, are used to correct the performance and ultimate strategy of a firm.

Strategic control systems, both informational and behavioral, are used to correct the performance and ultimate strategy of a firm.

TRUE

Strategic control is the process of monitoring and correcting the strategy and performance of a firm. Two central aspects of strategic control are informational control (the ability to respond effectively to environmental change) and behavioral control (the appropriate balance and alignment among the culture, rewards, and boundaries of a firm).

AACSB: Analytic
Blooms: Remember
Learning Objective: 09-01 The value of effective strategic control systems in strategy implementation.
Level of Difficulty: 1 Easy
Topic: Ensuring Informational Control: Responding Effectively to Environmental Change

Behavioral controls involve the ability to respond effectively to environmental change.

FALSE

Informational controls involve the balance and alignment of the culture, rewards, and boundaries of a firm.

FALSE

The traditional approach to strategic control is interactive, while the contemporary approach to strategic control is sequential.

FALSE

The traditional approach to strategic control is sequential while in the contemporary approach the relationships between strategy formulation, implementation, and control are highly interactive.

AACSB: Analytic
Blooms: Remember
Learning Objective: 09-02 The key difference between "traditional" and "contemporary" control systems.
Level of Difficulty: 1 Easy
Topic: Ensuring Informational Control: Responding Effectively to Environmental Change

The traditional approach to strategic control relies on feedback from performance measurement to formulate strategy.

TRUE

The traditional approach to strategic control is based on a feedback loop from performance measurement to strategy formulation. This process typically involves lengthy time lags, often tied to the annual planning cycle of a firm.

AACSB: Analytic
Blooms: Understand
Learning Objective: 09-02 The key difference between "traditional" and "contemporary" control systems.
Level of Difficulty: 2 Medium
Topic: Ensuring Informational Control: Responding Effectively to Environmental Change

For firms competing in highly unstable and turbulent industries, traditional strategic controls are most appropriate.

FALSE

Traditional control systems are most appropriate when the environment is stable and relatively simple, goals and objectives can be measured with a high level of certainty, and there is little need for complex measures of performance.

7.	Sales quotas, operating budgets, and production schedules are examples of traditional controls. TRUE Traditional control systems include sales quotas, operating budgets, production schedules, and similar quantitative control mechanisms.

In single loop learning, the assumptions, premises, goals, and strategies of the organization are continuously monitored, tested, and reviewed.

FALSE

The traditional approach to strategic control is based on a feedback loop from performance measurement to strategy formulation. Such traditional control systems, termed single-loop learning by Chris Argyris of Harvard University, simply compare actual performance to a predetermined goal.

9.	Contemporary strategic controls involve comparing actual performance to predetermined goals. FALSE Traditional control systems, termed single-loop learning by Chris Argyris of Harvard University, simply compare actual performance to a predetermined goal.

AACSB: Analytic
Blooms: Understand
Learning Objective: 09-03 The imperative for "contemporary" control systems in today's complex and rapidly changing competitive and general environments.
Level of Difficulty: 2 Medium
Topic: Ensuring Informational Control: Responding Effectively to Environmental Change

10.

Informational control is primarily concerned with whether or not the organization is doing the right things.

TRUE

There are two different types of strategic control in the contemporary approach: informational control and behavioral control. Informational control is primarily concerned with whether or not the organization is doing the right things.

11.

Continuous monitoring enhances the ability of the organization to respond with speed and flexibility.

TRUE

In the contemporary approach to strategic control, there is double-loop learning in which the assumptions, premises, goals, and strategies of the firm are continuously monitored, tested, and reviewed. Time lags are dramatically shortened, changes in the competitive environment are detected earlier, and the ability of the organization to respond with speed and flexibility is enhanced.

12.

As firms downsize, a control system based on rewards and culture becomes dysfunctional.

FALSE

As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on rigid strategies, rules, and regulations is dysfunctional. The use of rewards and culture to align individual and organizational goals becomes increasingly important.

AACSB: Analytic
Blooms: Understand
Learning Objective: 09-04 The benefits of having the proper balance among the three levers of behavioral control: culture; rewards and incentives; and boundaries.
Level of Difficulty: 2 Medium
Topic: Attaining Behavioral Control: Balancing Culture, Rewards, and Boundaries

13.

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty.

TRUE

Younger managers today have been conditioned to see themselves as free agents and view a career as a series of opportunistic challenges. As managers are advised to specialize, market yourself, and have work, if not a job, the importance of culture and rewards in building organizational loyalty claims greater importance.

14.

Once a strong and healthy organizational culture has been established, it becomes self-sustaining.

FALSE

Powerful organizational cultures just do not happen overnight, and they do not remain in place without a strong commitment, both in terms of words and deeds, by leaders throughout the organization.

15.

The collective sum of individual behaviors of the employees of an organization generally results in what is best for the organization; thus, individual rationality assures organizational rationality.

FALSE

Generally speaking, people in organizations act rationally, each motivated by their personal best interest. However, the collective sum of individual behaviors of employees of an organization does not always result in what is best for the organization; individual rationality is no guarantee of organizational rationality.

16.	The organizational reward system is typically a weak method for motivating employees. FALSE Reward and incentive systems represent a powerful means of influencing organizational culture, focusing efforts on high-priority tasks, and motivating individual and collective task performance.

17.

Different functional areas within an organization often have different reward systems.

TRUE

As corporations grow and evolve, they often develop different business units with multiple reward systems. They may differ based on industry contexts, business situations, stage of product life cycles, and so on. Subcultures within organizations may reflect differences among functional areas, products, services, and divisions.

18.

Rewards systems that reinforce the core values of the organization and contribute to organizational cohesiveness are the least effective type.

FALSE

To be effective, incentive and reward systems need to reinforce basic core values, enhance cohesion and commitment to goals and objectives, and meet with the overall mission and purpose of the organization.

19.	For a reward system to be effective, it must be perceived as fair and equitable. TRUE Effective reward and incentive systems share a number of common characteristics. The perception that a plan is fair and equitable is critically important.

20.

Boundaries and constraints are just used to maintain order in an organization and have little effect on the strategic priorities of the organization.

FALSE

Boundaries and constraints play a valuable role in focusing company strategic priorities. For example, several years ago, IBM sold off its PC business as part of its desire to focus its business on computing services. Similarly, Pfizer sold its infant formula business as it refocused its attention on core pharmaceutical products.

Answer & Question

Tuesday 4 June 2019

Strategic control systems, both informational and behavioral, are used to correct the performance and ultimate strategy of a firm.

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