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Sample Questions
 

Chapter 4: Culture and Strategy

TRUE/FALSE

1. To a great extent the culture of an organization is dictated by its strategic leader.

ANS:  T                    PTS:   1

2. An organizational culture can be quite easily changed to reflect a strategic change.

ANS:  F                    PTS:   1

 
3. Organizational culture refers to the core values shared by the firm’s top-level managers, but
not necessarily accepted by lower-level employees who are often transitory and not committed to
the organization.

ANS:  F                    PTS:   1

4. The culture of an organization is related to its people, their behavior and the operation of the
structure.

ANS:  T                    PTS:   1

5. A culture of internal co-operation and customer orientation, together with a willingness to

learn, adapt and change is ideal for an organization to experience strategic success.

ANS:  T                    PTS:   1

6. Although organizational cultures vary considerably, one cannot make an objective judgment
that some organizational cultures are more or less functional than others.

ANS:  F                    PTS:   1

7. Culture change requires all staff to change their fundamental beliefs, customs and values.

ANS:  F                    PTS:   1

8. Culture is closely associated with power and can be such a strong force that overlooked,
strategy implementation may not happen.

ANS:  T                    PTS:   1

 
9. An organization culture is constituted by a shared belief system that is emotionally charged
as it encompasses the values and norms of its members and offers them an interpretive filter
through which they make sense of what is around them.

ANS:  T                    PTS:   1

10. As organizational cultures become stronger and more ingrained they open out the possibility
for multiple interpretations to flourish.

ANS:  F                    PTS:   1

11. Culture can act as a strong integration mechanism, controlling and coordinating people’s
behaviour.

ANS:  T                    PTS:   1

12. Having an organizational culture means that sub-cultures do not arise.

ANS:  F                    PTS:   1

13. Hofstede’s studies were based on surveys from 1968-1972 and might not capture the
cultural changes that have occurred throughout the world in the past thirty years.

ANS:  T                    PTS:   1

14. The appropriate way of doing business varies across countries as some cultures prefer a
watertight contractual approach while others are more comfortable with trust and a handshake.

ANS:  T                    PTS:   1

 
15. In all countries managers prefers to negotiate in teams not on a one-to-one basis.

ANS:  F                    PTS:   1

16. Some managerial cultures support a competitive outlook at an organizational level, while
others encourage competition at an individual manager vs. manager level.

ANS:  T                    PTS:   1

17. Female managers can be found in all cultures.

ANS:  F                    PTS:   1

18. In some cultures it is considered acceptable and normal to conduct business discussions
during leisure activities, while in others this would not be accepted.

ANS:  T                    PTS:   1

19. Senses of humour vary and do not always travel well into different cultures, this can affect
how creativity and innovation are practised.

ANS:  T                    PTS:   1

20. However strong an organization’s culture, it can never be considered a strategic asset.

ANS:  F                    PTS:   1

21. Most successful companies have multiple cultures with none particularly dominant.
  

ANS:  F                    PTS:   1

22. One challenge facing large multinational companies is to manage the cultural differences
that inevitably exist through the promotion of strong values they feel are universal.

ANS:  T                    PTS:   1

23. What an organization states as its values are always the values that underpin its activities.

ANS:  F                    PTS:   1

24. The potential for culture change is unaffected by the strength and history of the existing
culture.

ANS:  F                    PTS:   1

25. National cultures are acquired during childhood and reinforced simply by living one’s life in a
particular society.

ANS:  T                    PTS:   1

MULTIPLE CHOICE

1. The firm’s system of shared values that guides employees is called:

a. Organizational energy c. Organizational synergy

b. Organizational culture d. Organizational power

  

ANS:  B                    PTS:   1

2. Changing an organizational culture is more difficult when:

a. The existing culture is fully understood.

b. The personality and beliefs of the strategic leader support change.

c. The extent of the strategic need is not understood.

d. The history of the is one of continual change and adaptation.

ANS:  C                    PTS:   1

3. National cultures can be classified on their levels of Confucian dynamics. This means:

a. The degree to which decisions are focused on the long term or short term

b. The degree to which society draws strong distinctions between gender roles

c. The degree to which members of society accept uneven power distribution

d. The degree to which the focus of society is on the individual or the group

 
 ANS:  A                    PTS:   1

4. Which of the following is not a dimension used to describe national cultures?

a. The degree to which members of the society accept or expect uneven power distributions in society

b. The degree to which the focus of society is on individuals or the group

c. The degree to which members of the society reflect established ethical norms

d. The degree to which members of society are tolerant of uncertainty and ambiguity

ANS:  C                    PTS:   1

5. Organizational culture is:

a. Amorphous and changeable

b. Not easily imitable

c. So difficult to analyze that most firms should choose to ignore it

d. Typically fragile in the face of changes in the external environment

ANS:  B                    PTS:   1

 
6. Power distance is best defined as:

a. The degree of social inequality

b. The identity of an individual is not based on the identity of his or her collective group

c. Sex role differentiation

d. The extent to which people accept ambiguous situations

ANS:  A                    PTS:   1

7. Individualism is best defined as:

a. The degree of social inequality.

b. The identity of an individual is not based on the identity of his or her collective group.

c. Sex role differentiation.

d. The extent to which people accept ambiguous situations.

ANS:  B                    PTS:   1

8. Long-term orientation is best defined as:

a. The degree of social inequality

 b. Sex role differentiation

c. The extent to which people accept ambiguous situations

d. Emphasis on perseverance and savings

ANS:  D                    PTS:   1

9. Which of the following is/are true regarding cultures and strategic choices?

a. Managers in high power distance countries have a greater penchant for centralized authority

b. Solicitation of subordinate feedback and participation is a sign of weak leadership in high power distance cou

c. Managers in low uncertainty avoidance countries rely more on experience and training

d. All of the above

ANS:  D                    PTS:   1

10. Which tends to be true of masculine cultures?

a. May have a relative advantage in small-scale, customized manufacturing.

 b. May be at a disadvantage in making products efficiently, well and fast.

c. Stereotypical manager is decisive.

d. Stereotypical manager is accustomed to seeking consensus.

ANS:  C                    PTS:   1

11. The norms, principles and standards of conduct that govern behaviour:

a. Are an important part of national culture but not organizational culture.

b. Are private matters and not issues for formal institutions.

c. Have a substantial overlap with what is illegal.

d. Are sometimes ignored in the case of downsizing.

ANS:  D                    PTS:   1

12. In regards to individualism vs. collectivism:

a. Collectivists never discriminate against out-group members and may be more opportunistic when dealing wit
 group members

b. Individualists make more distinction between in-group and out-group membership

c. Individualists are more opportunistic when dealing with in-group members

d. Collectivists may view social interactions/activities as unessential and wasteful of resources

ANS:  C                    PTS:   1

13. Culture is so fundamental to strategy because it:

a. Affects behaviour unconsciously

b. Is a capability that can influence competitive advantage

c. Is integral to market analyses

d. Identifies how barriers to entry will be assessed

ANS:  A                    PTS:   1

14. Culture and power:

a. Do not affect long-term competitive advantage

 b. Affect the choice, incidence and application of the modes of strategy creation

c. Do not influence how relationships with customers and suppliers are maintained

d. Affect key performance indicators

ANS:  B                    PTS:   1

15. Strong cultures:

a. Are an important strategic asset

b. Protect an organization from long-term human resource management problems

c. Are always associated with creative and innovative capability

d. Enforce good manager/staff relations

ANS:  A                    PTS:   1

16. Culture is often transmitted through:

a. Newsletters and communiqués c. Stories of past events, glories and heroes

b. Annual reports d. Company websites

  

ANS:  C                    PTS:   1

17. Rites and rituals are:

a. Formalized in procedures and policies

b. Important in determining how the organization will compete

c. The behaviour patterns in which culture is manifest

d. Prevalent in entrepreneurial organizations

ANS:  C                    PTS:   1

18. A market-driven organization is likely to be:

a. Resourceful and entrepreneurial c. Pragmatic in terms of getting things done

b. Risk oriented d. All of the above

ANS:  D                    PTS:   1

19. A market-driven organization is likely not to be:

 a. Consistent and disciplined in what it does

b. Adhere to systems and procedures

c. Strong on teamworking

d. All of the above

ANS:  D                    PTS:   1

20. A growth-orientated organization is likely to be:

a. Strong on teamworking c. Efficient

b. Competitive d. Good at executing plans

ANS:  B                    PTS:   1

21. A growth-orientated organization is likely not to:

a. Take a long-term perspective c. Be resourceful

b. Be risk averse d. Be good and dealing with rapid change

 
  

ANS:  A                    PTS:   1

22. Defender type organizations:

a. Prefer high-risk strategies

b. Amend strategies as promising ideas emerge

c. Are creative and innovative

d. Prefer low-risk strategies

ANS:  D                    PTS:   1

23. Prospector type organizations:

a. Look to break new ground

b. Prefer high-risk strategies

c. Are externally rather than internally focused

d. All of the above

ANS:  D                    PTS:   1

  

24. Analyser type organizations:

a. Have explorative beliefs c. Seek to combine stability and change

b. Search for new opportunities d. All of the above

ANS:  C                    PTS:   1

25. Reactor type organizations:

a. Are positive organizations

b. Must ultimately adopt a defender, prospector or analyser approach

c. Have strong reward-based internal HRM processes

d. Change easily and willingly

ANS:  B                    PTS:   1

SHORT ANSWER

1. What are the four most important manifestations of culture?

ANS:
 Artefacts are often the most visible manifestation of a culture and include the physical and
social environment, and the outputs of the organization seen in its written communications,
advertisements and the reception that visitors receive.
 Values represent a sense of ‘what ought to be’ based on the convictions held by certain key
people.
 Underlying assumptions represent the taken-for-granted ways of doing things and of seeking
solutions to problems.
 Behaviours are the actual behaviours of an organization and its staff. These include the day-
to-day interactions both internally and externally, and include the organization’s activity as a
corporate entity.

PTS:   1

2. What are the three people aspects of culture that shape how it materializes in organizations?

ANS:

 Stories of past events, glories and heroes represent the organization’s ‘history’ and stand as
markers for what is talked about and for what is believed to be important and enduring.
 Leadership and management style demonstrates in practical terms chains of command,
reporting lines and how decisions are made. A strong leadership can balance sensitivity to
decentralization with a need to guard against the culture fragmenting.
 Communication is essential for creating effective internal and external architecture that
operates as open or closed, formal or informal. Good communications can stop nasty surprises as
people feel free and are encouraged to communicate bad news as well as good.

PTS:   1

3. What are the three power aspects of organizational culture?

ANS:

 Ownership and structure reflect how power is formally wielded within the organization. For
example, power can be concentrated within a small group of institutional shareholders which will
then have an effect on what is considered important and urgent by senior managers.
 Personal power refers to the relative influence certain individuals exert on the strategies
within an organization. Power is required for strategic change to take hold, so should not always
be seen negative or coercive terms. The implementation of strategies can only be achieved
through the effective use of power bases.
 Politics is often linked with power and refers to the ways in which managers use power and
influence to affect decisions and actions. Political activity within organizations is as likely to be
informal as it is to be formal.

PTS:   1

4. An organization with a fragmented culture could suggest what?

ANS:

 It could suggest that the needs of certain stakeholders were not being satisfied adequately.
 It could suggest that strategies and changes were not being co-ordinated.
 It could suggest that managers or possibly business units were in conflict and working
against each other.
 It could suggest that the most deserving people in the organization were not being
appropriately rewarded or recognized.

PTS:   1

5. Deal and Kennedy (1982) have isolated five key elements of culture, what are they?

ANS:

 The environment and key success factors: what the organization must do well if it is to be an
effective competitor.
 The values that the strategic leader considers important and wishes to see adopted and
followed in the organization. These should relate to the key success factors, and to employee
reward systems.
 Heroes: the visionaries who create the culture. They can come from any background and
could be, for example, product or service innovators, engineers who build the appropriate quality
into the product, or creative marketing people who provide the slogans which make the product or
brand name a household name a household word.
 Rites and rituals: the behaviour patterns in which the culture is manifest. Again there are any
number of ways in which this can happen, including employees helping each other out when there
are difficulties, the way in which sales people deal with customers, and the care and attention that
go into production.
 The cultural network: the communications system around which the culture revolves and
which determines just how aware employees are about the essential issues.

 
 PTS:   1

6. What are the potential strengths and weaknesses of an efficient operations-driven business?

ANS:

 Businesses of this type are likely to be strong in terms of their internal efficiency and a focus
on operations would also suggest that its members will be good at teamworking.
 They are likely to be good at executing plans once they have been formulated.
 Internally, such organizations are liable to have sophisticated internal systems and
procedures.
 However, the potential limitations of such businesses is that they may be unresponsive to the
needs of customers, not good at managing change, and its staff may be unable to see “the big
picture”

PTS:   1

7. When managing multi-cultural MNCs, managers are said to follow four options for
engendering cultural fit, or not, within their organizations, what are they?

ANS:

 Geocentric – a policy aimed at cultural integration of both or all headquarter/subsidiary

cultures.
 Ethnocentric – a policy aimed at cultural integration on the basis of dominance by the
headquarters’ culture.
 Polycentric – a policy aimed at an acceptable balance between the influence within the MNC
of various subsidiary/divisional cultures, but not striving for integration between them.
 Culture clash – which may occur when headquarters seeks domination but fails to secure
integration or acceptance.

PTS:   1

8. Explain the characteristics of the role culture.

ANS:
 The role culture is built around defined jobs, rules and procedures, but not personalities.
People fit into jobs, and are recruited for this purpose.
 Rationality and logic are said to be at the heart of this culture, which is designed to be stable
and predictable.
 The design of an organization with this culture is said to resemble a Greek temple as the
strengths of the organization are deemed to lie in the pillars, which are joined managerially at the
top. Top management’s role is to co-ordinate activity, and consequently it will be seen that both
planning systems and incremental changes can be a feature of this culture.
 The structure is designed for stability, and can mean the structure is slow to change and
therefore is less suitable for dynamic situations.

PTS:   1

9. How might MNCs benefit from cultural differences within their organizations?

ANS:

 They create opportunities to use the competences and knowledge contained in different
cultures for the benefit of the MNC as a whole.
 Some western organizations have modified their human resource management policies in
recognition of collectivist cultures in the east.
 Cultural diversity should provide a stimulus to learning and sensitivity to local markets.
However, this will not just happen and organizational cultures need to be managed so that they
become forces for integration rather than division.

PTS:   1

10. Identify the characteristics associated with organizations with multiple cultures.

ANS:

 Although talk often revolves around the culture in an organization, in reality organizations

may typically contain more than one culture.
 The dominant organizational culture may act as an integrating mechanism, but this is likely to
operate alongside smaller subcultures.
 Subcultures represent different groupings of staff within an organization. For example,
‘techies’ may develop an entirely different subculture to that found within the accountants.
 Most common in strategy are the differing organizational subcultures of groups from different
geographic locations.
  

PTS:   1

PROBLEM

1. Miles and Snow (1978) produced a typology of organizations which can be looked at in
relation to culture and strategy formation.  Identify these and discuss their characteristics.

ANS:

 Miles and Snow (1978) identify four types of organization: defenders, prospectors and
analysers, which they regard as positive organizations, and reactors which they suggests must
ultimately adopt one of the other three approaches, or suffer long-term decline.
 Defenders have conservative beliefs, tend to adopt low-risk strategies, focus on secure
markets and concentrate on narrow segments within those markets. They tend to have
considerable expertise in narrow areas of specialism, have a preference for well-tried resolutions
to problems and tend not to search for anything really “new”. Such organizations predominantly
give attention to improving efficiency of current operations.
 Defenders’ strategy formation tends to emphasize planning.
 Prospectors tend to be innovative, look for new ideas, adopt high-risk strategies, search for
new opportunities, and through such activities can create change and uncertainty, which in turn
forces competitors to respond. They are characterized as externally focused as they often give
more attention to market changes then to improving internal efficiency.
 Prospectors’ strategy formation is likely to be visionary.
 Analysers balance two aspects: stability and change. In terms of stability, analyser
organizations like formal structures and search for efficiencies within these. They acknowledge
change through continual monitoring of competitors and then amend their own strategies as
promising ideas are uncovered.
 Analysers’ strategy formation reflects their stability and change tension; they favour planning
and adaptive incremental activities.
 Reactors are characterized by an inability to respond effectively to pressures for change.
Adjustments are therefore forced on the organization in order to avert crises.
 Reactors’ strategy formation tends to be adaptive.

PTS:   1

2. Culture and power are important interrelated elements.  Power is related to the potential or
ability to do something.  How power is used reflects the dominant culture of the organization. 
Define the seven levers of power.

 
 ANS:

 Reward power is the ability to influence the rewards given to others. These can be tangible
(money) or intangible (status). For reward power to be useful, the rewards being offered must be
important to the potential recipient.
 Coercive power is power based on the threat of punishment for non-compliance, and the
ability to impose the punishment. The source can be the person’s role or position in the
organization, or physical attributes and personality.
 Legitimate power is synonymous with authority, and relates to an individual manager’s
position within the structure of the organization. It is an entitlement from the role a person
occupies. It is dependent on three things: access to relevant information; access to other people
and communication networks inside the organization; and approaches to setting priorities – this
determines what is asked of others.
 Personal power depends on individual characteristics (personality) and physical
characteristics.
 Expert power is held by a person with specialist knowledge or skills in a particular field. It is
particularly useful for tackling complex problem areas. It is possible for people to be attributed
expert power through reputation rather than proven ability.
 Information power is the ability to access and use information to defend a stance or
viewpoint – or to question an alternative view held by someone else – and is important as it can
affect strategic choices.
 Connection power results from personal and professional access to key people inside and
outside the organization, who themselves can influence what happens. This relates particularly to
information power.

PTS:   1

Chapter 7: Business-Level Strategy

TRUE/FALSE

1. A business-level strategy consists of the competitive approach of a single line-of-business

instead of the entire corporation.

ANS:  T                    PTS:   1

2. Only one firm at a time can pursue a particular business-level strategy.

ANS:  F                    PTS:   1

 
3. In differentiation strategies, the emphasis is on creating value through uniqueness.

ANS:  T                    PTS:   1

4. A best cost strategy combines the elements of low-cost leadership and differentiation.

ANS:  T                    PTS:   1

5. The industry life cycle portrays how sales volume for a class of products changes over its
lifetime.

ANS:  T                    PTS:   1

6. A competitive shakeout usually occurs at the beginning of the growth stage of the product life
cycle.

ANS:  F                    PTS:   1

7. At the maturity stage of the life cycle, revenue growth accelerates rapidly.

ANS:  F                    PTS:   1