Chapter 6: Strategy Analysis and Choice

CHAPTER 6
Strategy Analysis and Choice

True/False
The Nature of Strategy Analysis and Choice

1. An organization’s present strategies, objectives and mission provide a basis for

generating and evaluating feasible alternative strategies, coupled with the external
and internal audit information.

(t; easy; p. 188)

2. A sustainability report provides information on firm’s social-responsibility

practices.

(t; medium; p. 189; AACSB: Ethical understanding and reasoning ability)

3. Sustainability is the idea that a business can meet its financial goals without
hurting customers.

(f; medium; p. 189; AACSB: Ethical understanding and reasoning ability)

A Comprehensive Strategy-Formulation Framework

4. The first stage of the strategy-formulation framework is the input stage, followed by
the decision stage.

(f; easy; p. 190)

5. Stage 2 in the strategy-formulation framework involves the Quantitative Strategic

Planning Matrix.

(f; medium; p. 190)

6. The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic

Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group
(BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are
included in stage two of the strategy-formulation framework.

(t; difficult; p. 190); AACSB: Reflective thinking skills)

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 Chapter 6: Strategy Analysis and Choice

The Input Stage

7. Good intuitive judgment is always needed to determine appropriate weights and

ratings in the input stage matrices.

(t; medium; p. 191)

The Matching Stage

8. When completing the matching stage of the strategy-formulation framework, the

SWOT Matrix needs to be completed before the SPACE Matrix.

(f; difficult; p. 191)

9. The purpose of matching key factors is to generate feasible alternative strategies.

(t; easy; p. 191)

10. Strengths-opportunities strategies are based on using a firm’s internal strengths to

take advantage of external opportunities and threats.

(f; medium; p. 192)

11. A SWOT Matrix is composed of four cells for the four types of strategies it creates.

(f; easy; p. 192)

12. One of the steps of the SWOT Matrix is to list the firm’s key external opportunities.

(t; easy; p. 192)

13. The SWOT matrix is widely used as an organizational tool and, if used
appropriately, does not have any significant weaknesses.

(f; medium; p. 194; AACSB: Reflective thinking skills)

14. The most important determinants of an organization’s overall strategic position are
considered to be the two internal dimensions, financial strength (FS) and competitive
advantage (CA), and the two external dimensions, industry strength (IS) and
environmental stability (ES).

(t; difficult; p. 194; AACSB: Reflective thinking skills)

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Chapter 6: Strategy Analysis and Choice

15. The four strategies of the SPACE Matrix are aggressive, conservative, offensive and
defensive.

(f; medium; p. 194)

16. Market penetration can be classified as either a conservative, aggressive, or

competitive strategy.

(t; easy; p. 194)

17. The ES and CA dimension variables in a SPACE Matrix are assigned a numerical
value ranging from –1 (best) to –6 (worst).

(t; medium; p. 194; AACSB: Analytic skills)

18. Conservative strategies in a SPACE Matrix most often include product

development, market development, market penetration and concentric
diversification.

(t; medium; p. 195)

19. The firm should pursue conservative strategies if the coordinates of a SPACE
directional vector are (1,4).

(t; difficult; p. 195; AACSB: Reflective thinking skills)

20. A firm should pursue defensive strategies if the coordinates of a SPACE directional
vector are (2,3).

(f; medium; p. 195; AACSB: Reflective thinking skills)

21. The firm should pursue aggressive strategies if the coordinates of a SPACE
directional vector are (5,4).

(t; medium; p. 195; AACSB: Reflective thinking skills)

22. Relative market share position is given on the x-axis of the BCG Matrix.

(t; medium; p. 197; AACSB: Reflective thinking skills)

23. The midpoint on the x-axis of a BCG Matrix is typically set at 0.05.

(f; medium; p. 198)

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 Chapter 6: Strategy Analysis and Choice

24. The size of the circle in a BCG Matrix corresponds to the proportion of corporate
revenue generated by that business unit.

(t; medium; p. 198)

25. In a BCG Matrix the pie slice indicates the proportion of corporate profits generated
by that division.

(t; easy; p. 198)

26. Star, question mark, cash cow and dogs are the four quadrants exhibited by the
SPACE Matrix.

(f; easy; p. 199)

27. Cash cows represent the organization’s best long-run opportunities for growth and
profitability.

(f; medium; p. 200)

28. The major overall benefit of the BCG Matrix is that it draws attention to the cash
flow, investment characteristics and needs of an organization’s various divisions.

(t; medium; p. 200)

29. Viewing businesses as star, cash cow, dog or question mark is an oversimplification.

(t; easy; p. 200)

30. The BCG Matrix does not reflect whether or not various divisions or their industries
are growing over time.

(t; medium; p. 201)

31. Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a

given point in time.

(t; medium; p. 201)

32. Both IE and BCG Matrices are called portfolio matrices.

(t; medium; p. 201)

33. BCG Matrix requires more information about the divisions than the IE Matrix.

(f; medium; p. 203; AACSB: Reflective thinking skills)

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Chapter 6: Strategy Analysis and Choice

34. On the x-axis of the IE Matrix, an internal factor evaluation score of 2.5 represents a
weak internal position.

(f; difficult; p. 203; AACSB: Reflective thinking skills)

35. The IE Matrix can be divided into three major regions that have different strategy
implications: grow and build, hold and maintain and harvest or divest.

(t; medium; p. 203)

36. The Grand Strategy Matrix is based on two evaluative dimensions, market share and
market growth.

(f; medium; p. 204)

37. According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily
committed to a single product, then concentric diversification may reduce the risks
associated with a narrow product line.

(t; medium; p. 204; AACSB: Reflective thinking skills)

38. According to the Grand Strategy Matrix, Quadrant III organizations compete in
rapid-growth industries and have weak competitive positions.

(f; difficult; p. 205; AACSB: Reflective thinking skills)

The Decision Stage

39. To objectively evaluate feasible alternative strategies identified in Stage 2, the

QSPM uses input information derived from Stage 1.

(t; medium; p. 206)

40. Step 1 of a QSPM assigns weights to each key external and internal factor.

(f; easy; p. 206)

41. Total attractiveness scores are defined as the sum of the attractiveness scores in a
given column of the QSPM and are computed in the second step of the QSPM.

(f; difficult; p. 207; AACSB: Analytic skills)

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 Chapter 6: Strategy Analysis and Choice

42. A positive feature of QSPM is that sets of strategies can be examined sequentially or
simultaneously.

(t; easy; p. 209)

43. One positive feature of QSPM is that it does not require intuitive judgments and
educated assumptions.

(f; medium; p. 209)

Cultural Aspects of Strategy Choice

44. Culture includes the set of shared values, beliefs, attitudes, customs, norms,
personalities, heroes and heroines that describe a firm.

(t; medium; p. 210; AACSB: Multicultural and diversity understanding)

45. Strategy changes may be highly effective and productive if a supportive culture does
not exist.

(f; difficult; p. 210; AACSB: Multicultural and diversity understanding)

46. Whenever two firms merge, it becomes especially important to evaluate and
consider culture-strategies linkages.

(t; easy; p. 210; AACSB: Multicultural and diversity understanding)

The Politics of Strategy Choice

47. Successful strategists minimize their own political exposure on issues that are highly
controversial and in circumstances where opposition from major power centers was
likely.

(t; easy; p. 210)

48. Focusing on Higher-Order Issues means it is often possible to achieve similar results
using different means or paths.

(f; medium; p. 211)

49. Shifting focus from specific issues to more general ones may increase strategists’
options for gaining organizational commitment.

(t; easy; p. 211)

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Chapter 6: Strategy Analysis and Choice

Governance Issues

50. Now averaging 18 members the trend in America is toward larger boards of
directors.

(f; medium; p. 214)

51. Boards of directors are composed mostly of outsiders who are becoming more
involved in an organization’s strategic management.

(t; medium; p. 214)

52. The Sarbanes-Oxley Act put an end to the “country-club” atmosphere of most
boards and has shifted power from CEOs to directors.

(t; medium; p. 214; AACSB: Reflective thinking skills)

Multiple Choice
The Nature of Strategy Analysis and Choice

53. Strategy analysis and choice largely involves making __________ decisions
based on __________ information.
a. long-term; short-term
b. subjective; objective
c. short-term; long-term
d. subjective; short-term
e. objective; subjective

(b; easy; p. 190)

A Comprehensive Strategy-Formulation Framework

54. Which stage in the strategy-formulation framework focuses on generating feasible

alternative strategies?
a. Input
b. Output
c. Decision
d. Throughput
e. Matching

(e; medium; p. 191)

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 Chapter 6: Strategy Analysis and Choice

55. Which stage of the strategy-formulation framework involves the Quantitative

Strategic Planning Matrix?
a. Stage 1
b. Stage 2
c. Stage 3
d. Stage 4
e. Stage 5

(c; medium; p. 191)

56. Which strategy formulation technique reveals the relative attractiveness of

alternative strategies and thus provides an objective basis for selecting specific
strategies.
a. SWOT
b. SPACE
c. QSPM
d. IFE
e. CPM

(c; medium; p. 191; AACSB: Reflective thinking skills)

57. Each of the nine techniques included in the strategy formulation framework rely on
the use of
a. strictly factual data.
b. luck.
c. financial formulas and statistics.
d. intuition and analysis.
e. synergy.

(d; difficult; p. 191)

The Input Stage

58. Which stage of the strategy formulation framework includes an Internal Factor
Evaluation Matrix and a Competitive Profile Matrix?
a. input
b. matching
c. decision
d. penetration
e. research

(a; easy; p. 191)

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Chapter 6: Strategy Analysis and Choice

59. Which stage of the strategy formulation framework contains the Internal-Factor
Evaluation Matrix?
a. input stage
b. analysis stage
c. matching stage
d. decision stage
e. output stage

(a; easy; p. 191)

The Matching Stage

60. The match an organization makes between its internal resources and skills and the
opportunities and risks created by its external factors can be defined as:
a. Input
b. Concept formulation
c. Strategy
d. SWOT
e. An opportunity

(c; medium; p. 191)

61. Which section of the SWOT Matrix involves matching internal strengths with
external opportunities?
a. The WT cell
b. The SW cell
c. The WO cell
d. The ST cell
e. The SO cell

(e; difficult; p. 192; AACSB: Reflective thinking skills)

62. Which strategies aim at improving internal weaknesses by taking advantage of

external opportunities?
a. SO
b. WO
c. SW
d. ST
e. WT

(b; medium; p. 192)

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 Chapter 6: Strategy Analysis and Choice

63. Which strategies use a firm’s strengths to avoid or reduce the impact of external
threats?
a. SW
b. WO
c. SW
d. ST
e. WT

(d; medium; p. 192; AACSB: Reflective thinking skills)

64. Which strategies are defensive tactics directed at reducing internal weaknesses and
avoiding environmental threats.
a. SO
b. WO
c. SW
d. ST
e. WT

(e; medium; p. 192; AACSB: Reflective thinking skills)

65. How many cells are in a SWOT Matrix?

a. two
b. four
c. six
d. eight
e. nine
192
(e; easy; p. 221);

66. Which of the following is not a step of a SWOT Matrix?

a. List the firm’s key external threats.
b. Match strengths with external opportunities and record the resultant SO
strategies in the appropriate cell.
c. Match internal weaknesses with external threats and record the resultant WT
strategies.
d. List the firm’s external weaknesses.
e. List the firm’s external opportunities.

(d; medium; p. 192-193)

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Chapter 6: Strategy Analysis and Choice

67. What is a weakness associated with a SWOT Matrix?

a. Viewing every business as a Star, Cash Cow, Dog, or Question Mark is an
oversimplification
b. Many businesses fall right in the middle of the matrix
c. The matrix has no temporal qualities
d. Other variables besides relative market share position and industry growth
rate in sales need to be considered
e. The matrix does not reflect whether or not various divisions or their
industry are growing over time

(c; medium; p. 194; AACSB: Reflective thinking skills)

68. Which of these is not a SPACE Matrix quadrant?

a. Aggressive
b. Defensive
c. Competitive
d. Offensive
e. Conservative

(d; easy; p. 194)

69. What type of strategy would divestiture be classified as?

a. Aggressive
b. Defensive
c. Competitive
d. Offensive
e. Conservative

(b; medium; p. 194; AACSB: Reflective thinking skills)

70. The two internal dimensions represented on the axes of the SPACE Matrix are
a. environmental stability and industry strength.
b. industry strength and internationalization.
c. internationalization and competitive advantage.
d. competitive advantage and financial strength.
e. financial strength and environmental stability.

(d; medium; p. 195)

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 Chapter 6: Strategy Analysis and Choice

71. What are two external dimensions of the SPACE Matrix?

a. Environmental stability and industry strength
b. Environmental stability and competitive advantage
c. Industry strength and competitive advantage
d. Competitive advantage and financial strength
e. Financial strength and industry strength

(a; easy; p. 195)

72. The two positive-rated dimensions on SPACE Matrix are

a. FS and CA.
b. CA and ES.
c. FS and IS.
d. IS and ES.
e. FS and ES.

(c; easy; p. 195)

73. What type of strategies would you recommend when a firm’s SPACE Matrix
directional vector has the coordinates (-2, +3)?
a. Aggressive
b. Conservative
c. Competitive
d. Defensive
e. Integrative

(b; difficult; p. 196; AACSB: Reflective thinking skills)

74. In the SPACE analysis, what does a (+6, +3) strategy profile portray?
a. A strong industry
b. An unstable environment
c. A stable environment
d. A weak industry
e. A weak financial position

(a; difficult; p. 196)

75. For what type of company is the BCG Matrix ideal for analyzing?
a. Companies with more than one division
b. All companies
c. Companies with annual sales greater than $1 million
d. Companies with annual sales of less than $1 million
e. Large companies

(a; medium; p. 197; AACSB: Reflective thinking skills)

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Chapter 6: Strategy Analysis and Choice

76. In the BCG Matrix, which element represents the industry growth rate in sales,
measured in percentage terms?
a. x-axis
b. y-axis
c. first quadrant
d. second quadrant
e. third quadrant

(b; medium; p. 198)

77. How would a division with a low relative market share position in a high growth
industry be described?
a. question mark
b. cash cow
c. star
d. stuck-in-the-middle
e. dog

(a; easy; p. 199)

78. When a division of an organization has a high relative market share and is in a fast-
growing industry, it is called a
a. star
b. cash cow
c. cat
d. question mark
e. dog

(a; easy; p. 200)

79. A division with a high relative market share position in a low-growth industry can be
described as a
a. star
b. cash cow
c. question mark
d. dog
e. failure

(b; easy; p. 200)

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 Chapter 6: Strategy Analysis and Choice

80. Which strategy would be most appropriate for a company classified as a Dog?
a. market penetration
b. market development
c. product development
d. retrenchment
e. forward integration

(d; medium; p. 200; AACSB: Reflective thinking skills)

81. Most likely, what was a cash cow in the past?

a. dog
b. failure
c. question mark
d. cat
e. star

(e; easy; p. 200; AACSB: Reflective thinking skills)

82. An organization that has a low relative market share position and competes in a
slow-growth industry is referred to as a
a. dog.
b. question mark.
c. star.
d. cash cow.
e. cowboy.

(a; medium; p. 201)

83. The BCG Matrix limitations include all of these except:

a. viewing every business as a star, cash cow, dog or question mark can be an
oversimplification.
b. requiring at least three years’ worth of data.
c. not reflecting divisional or industry growth over time.
d. not allowing a company to be classified as somewhere in between two
categories.
e. other variables such as size of market and competitive advantages are not
considered.

(b; easy; p. 201)

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Chapter 6: Strategy Analysis and Choice

84. Which analytical tool consists of a nine-cell matrix?

a. Matching Matrix
b. Competitive Profile Matrix
c. SPACE Matrix
d. Grand Strategy Matrix
e. Internal-External Matrix

(e; medium; p. 201; AACSB: Reflective thinking skills)

85. What analytical tool has four quadrants based on two dimensions: competitive
position and market growth?
a. Competitive Profile Matrix
b. Internal-External Matrix
c. SPACE Matrix
d. Grand Strategy Matrix
e. QSPM

(d; medium; p. 204)

86. Firms located in which quadrant of the Grand Strategy Matrix are in an excellent
strategic position?
a. I
b. II
c. III
d. IV
e. V

(a; medium; p. 205)

87. According to the Grand Strategy Matrix, which strategy is recommended for a firm
with rapid market growth and a strong competitive position?
a. Market penetration
b. Conglomerate diversification
c. Joint venture
d. Retrenchment
e. Liquidation

(a; difficult; p. 205; AACSB: Reflective thinking skills)

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 Chapter 6: Strategy Analysis and Choice

88. For companies located in Quadrant III of the Grand Strategy Matrix, the first
strategy recommended is
a. extensive cost and asset reduction.
b. asset expansion.
c. employee expansion.
d. immediate liquidation of assets.
e. divestiture.

(a; medium; p. 205)

89. Although Quadrant _____ companies are growing, according to the Grand Strategy
Matrix, they are unable to compete effectively, and they need to determine why the
firm’s current approach is ineffective and how the company can best change to
improve its competitiveness.
a. I
b. II
c. III
d. IV
e. V

(b; easy; p. 205)

90. According to the Grand Strategy Matrix, organizations in which .quadrant have a
strong competitive position but are in a slow-growth industry,
a. I
b. II
c. III
d. IV
e. V

(d; easy; p. 206)

The Decision Stage

91. Which matrix is included in the decision stage of the strategy formulation
framework?
a. Internal Factor Evaluation Matrix
b. Quantitative Strategic Planning Matrix
c. BCG Business Portfolio Matrix
d. Grand Strategy Matrix
e. SPACE Matrix

(b; easy; p. 206)

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Chapter 6: Strategy Analysis and Choice

92. The top row of a QSPM consists of alternative strategies derived from all of these
except:
a. Grand Strategy Matrix.
b. BCG Matrix.
c. Space Matrix.
d. CPM Matrix.
e. IE Matrix.

(d; medium; p. 206)

93. Which analytical tool determines the relative attractiveness of various strategies
based on the extent to which key external and internal critical success factors are
capitalized?
a. BCG Matrix
b. SPACE Matrix
c. TOWS Matrix
d. IE Matrix
e. QSPM

(e; medium; p. 206)

94. Which of the following is the first step in developing QSPM?

a. Compute the Total Attractiveness Scores.
b. Examine the Stage 2 matrices and identify alternative strategies the
organization should consider implementing.
c. Assign weights to each key external and internal factor.
d. Determine the Attractiveness Scores.
e. Make a list of the firm’s key external opportunities/threats and internal
strengths/weaknesses in the left column of the QSPM.

(e; medium; p. 207)

95. What term is defined as the product of multiplying ratings by attractiveness scores in
each row of the QSPM?
a. Total attractiveness scores
b. Sum total attractiveness scores
c. Weighted scores
d. Total weighted scores
e. Factors

(a; difficult; p. 207; AACSB: Reflective thinking skills)

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 Chapter 6: Strategy Analysis and Choice

96. What is the highest number of strategies that can be examined at one time with the
QSPM?
a. 1
b. 2
c. 5
d. 10
e. There is no limit.

(e; easy; p. 209)

97. Which of these is a limitation of QSPM?

a. Only a few strategies can be evaluated simultaneously.
b. The cost of doing the analysis
c. Intuitive judgments and educated guesses are required.
d. Sets of strategies must be examined in reverse order.
e. It requires equal participation from everyone.

(c; medium; p. 209)

Cultural Aspects of Strategy Choice

98. What includes the set of shared values, beliefs, attitudes, customs, norms,
personalities, heroes and heroines that describe a firm?
a. Strategy
b. Culture
c. Mission
d. Objectives
e. QSPM

(b; medium; p. 201; AACSB: Multicultural and diversity understanding

The Politics of Strategy Choice

99. What tactic involves shifting focus from specific issues to more general ones?
a. Equifinality
b. Focus on higher-order issues
c. Generalization
d. Satisficing
e. none of the above

(c; medium; p. 211; AACSB: Reflective thinking skills)

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Chapter 6: Strategy Analysis and Choice

100. Through which tactic is it possible to achieve similar results using different means or
paths?
a. Generalization
b. Satisficing
c. Focus on higher-order issues
d. Equifinality
e. Specialization

(d; easy; p. 211)

Governance Issues

101. The act of oversight and direction for an organization is referred to as

a. corporate lawmaking.
b. centralized control.
c. organizational direction.
d. establishing norms.
e. governance.

(e; medium; p. 211-212)

102. Today, what are boards of directors composed mostly of?

a. outsiders
b. management
c. union
d. employees
e. stockholders

(a; medium; p. 214)

103. All of the following are principles of good organizational governance, as established
by Business Week, except:
a. No directors do business with the company or accept consulting or legal fees
from the firm.
b. The audit, compensation and nominating committees are made up solely
of outside directors.
c. Each director owns a large equity stake in the company, excluding stock
options.
d. At least two directors are current or former company executives.
e. The CEO is not also the Chairperson of the Board.

(d; difficult; p. 214)

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 Chapter 6: Strategy Analysis and Choice

Essay Questions
104. Explain the concept of matching in the strategy formulation framework. Give at least
three examples of matching.

a. Matching external and internal critical success factors is the key to

effectively generating feasible alternative strategies. See Table 6-1 for
examples of matching.

b. Page: 192

105. If you construct a SPACE Matrix and the directional vector points to the lower left
quadrant, what type of strategies would you recommend? Give several examples.

a. If the directional vector points to the lower-left quadrant of the SPACE

Matrix, students should suggest defensive strategies. Defensive strategies
include retrenchment, divestiture, liquidation and concentric diversification.

b. Page: 194-197

106. 106. Give five coordinates of a SPACE Matrix directional vector that would
suggest conservative strategies to be most appropriate.

Student answers will vary. However, five examples they may suggest are (-1,1),
(-2,2), (-3,3), (-4,4), and (-5,5).

Page: 195

107. In a BCG Matrix, all divisions are called question marks, stars, cash cows or dogs.
Define each of these terms.

Question Marks have a low relative market share position, yet they compete in a
high-growth industry.
Stars represent the organization’s best long-run opportunities for growth and
profitability.
Cash Cows have a high relative market share position but compete in a low-growth
industry.
Dogs have a low relative market share position and compete in a slow- or no-
market-growth industry.

Page: 1971

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Chapter 6: Strategy Analysis and Choice

108. Compare and contrast the IE Matrix with the BCG Matrix.

The IE Matrix is similar to the BCG Matrix in that both tools involve plotting
organizational divisions in a schematic diagram. Also, the size of each circle
represents the percentage sales contribution of each division, and pie slices reveal
the percentage profit contribution of each division in both the BCG and IE Matrix.

Some important differences between the IE Matrix and the BCG Matrix include: 1)
different axes; 2) the IE Matrix requires more information about the divisions than
the BCG Matrix; and 3) the strategic implications of each matrix are different.

Page: 203

109. Explain the benefits and limitations of developing a Boston Consulting Group
Matrix.

The BCG Matrix has one major benefit: draws attention to the cash flow, investment
characteristics and needs of an organization’s various divisions.

The BCG Matrix has some limitations: 1) Viewing every business as either a star,
cash cow, dog or question mark is an oversimplification; many businesses fall right
in the middle of the BCG Matrix and thus are not easily classified, 2) the BCG
Matrix does not reflect whether or not various divisions or their industries are
growing over time; that is, the matrix has no temporal qualities, but rather it is a
snapshot of an organization as any given point in time; and 3) other variables besides
relative market share position and industry growth rate in sales are important in
making strategic decisions about various divisions.

Page: 200

110. Using a Grand Strategy Matrix approach, what strategies are recommended for a
firm that is a weak competitor in a slow-growing market? Elaborate on what these
strategies could mean for a college or university.

A firm that is a weak competitor in a slow-growing market would be located in

Quadrant III. Quadrant III strategies include retrenchment, concentric
diversification, horizontal diversification, conglomerate diversification, divestiture
and liquidation.

Student answers will vary when elaborating on what these strategies could mean for
a college or university. However, students should mention that the college or
university could possibly have to be closed or facility and staff may have to be
drastically reduced which leads to unhappy students in very large classes.

Page: 204-206

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 Chapter 6: Strategy Analysis and Choice

111. Describe the positive features and limitations of QSPM.

There are three positive features of QSPM: 1) Sets of strategies can be examined
sequentially or simultaneously; 2) there is no limit to the number of strategies that
can be evaluated or the number of sets of strategies that can be examined at once
using the QSPM; and 3) the last positive feature is that it requires strategists to
integrate pertinent external and internal factors into the decision process.

The QSPM is not without some limitations: 1) It always requires intuitive judgments
and educated assumptions; 2) The ratings and attractiveness scores require
judgmental decisions, even though they should be based on objective information;
and 3) it can be only as good as the prerequisite information and matching analyses
upon which it is based.

Page: 206-207

112. Describe the tactics that have been used by politicians that can also aid strategists.

Equifinality—It is often possible to achieve similar results using different means

or paths. Strategists should recognize that achieving a successful outcome is more
important than imposing the method of achieving it. It may be possible to
generate new alternatives that give equal results but with far greater potential for
gaining commitment.
Satisfying—Achieving satisfactory results with an acceptable strategy is far better
than failing to achieve optimal results with an unpopular strategy.
Generalization—Shifting focus from specific issues to more general ones may
increase strategists’ options for gaining organizational commitment.
Focus on Higher-Order Issues—By raising an issue to a higher level, many
short-term interests can be postponed in favor of long-term interests. For instance,
by focusing on issues of survival, the auto and steel industries were able to
persuade unions to make concessions on wage increases.
Provide Political Access on Important Issues—Strategy and policy decisions
with significant negative consequences for middle managers will motivate
intervention behavior from them. If middle managers do not have an opportunity
to take a position on such decisions in appropriate political forums, they are
capable of successfully resisting the decisions after they are made. Providing such
political access provides strategists with information that otherwise might not be
available and that could be useful in managing intervention behavior.

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Chapter 6: Strategy Analysis and Choice

113. Discuss the appropriate role of a board of directors in an organization.

Some principles are: No more than two directors are current or former company
executives. No directors do business with the company or accept consulting or legal
fees from the firm. The audit, compensation and nominating committees are made
up solely of outside directors. Each director owns a large equity stake in the
company, excluding stock options. At least one outside director has extensive
experience in the company’s core business and at least one has been CEO of an
equivalent-sized company. Fully employed directors sit on no more than four boards
and retirees sit on no more than seven. Each director attends at least 75 percent of
all meetings. The board meets regularly without management present and evaluates
its own performance annually. The audit committee meets at least four times a year.
The board is frugal on executive pay, diligent in CEO succession oversight
responsibilities, and prompt to act when trouble arises. The CEO is not also the
Chairperson of the Board. Shareholders have considerable power and information to
choose and replace directors. Stock options are considered a corporate expense.
There are no interlocking directorships (where a director or CEO sits on another
director’s board).

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