Chapter 11: Strategy and Performance Excellence

Chapter 11: Strategy and Performance Excellence
TRUE/FALSE
1. A strategy is a pattern or plan that integrates an organization’s major goals, policies, and action
sequences into a cohesive whole.
ANS: T DIF: Difficulty: Easy NAT: BUSPROG: Analytic

TOP: A-head: The Scope of Strategic Planning KEY: Bloom's: Knowledge
2. Mission is the pattern of decisions that determines and reveals an organization’s goals, policies, and
plans to meet the needs of its stakeholders.
ANS: F DIF: Difficulty: Easy NAT: BUSPROG: Analytic

3. Strategic planning is the process of envisioning the organization’s future and developing the necessary
goals, objectives, and action plans to achieve that future.

4. A key role of strategic planning is to align work processes and learning initiatives with an
organization’s strategic directions.

5. The Organizational Profile provides the “finer picture” of the various organizational parts and thus sets
the context for good strategic decisions.
ANS: F DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

6. The second group of questions in the Baldrige Organizational Profile is listed under the heading
“Organizational Environment.”

7. The term “management challenges” refers to those pressures that exert a decisive influence on an
organization’s likelihood of future success.

8. Strategic challenges frequently are driven by an organization’s future competitive position relative to
other providers of similar products or services.

9. Strategic objectives are what an organization must change or improve to remain or become
competitive.

10. Mission statements typically include details of resource commitments and time horizons for their
accomplishment.

11. An iterative process in which employees at the lower level in the organization ask what senior
management can do, what they need, and what conflicts may arise can avoid many of the
implementation problems that managers typically face.
ANS: F DIF: Difficulty: Easy

NAT: BUSPROG: Reflective Thinking TOP: A-head: The Scope of Strategic Planning
KEY: Bloom's: Knowledge
12. In the policy deployment process, employees negotiate with management the performance measures
that are used to indicate progress toward accomplishing the objectives.
ANS: F DIF: Difficulty: Moderate

13. Catchball is an up, down, and sideways communication process as opposed to an autocratic, top-down
management style.
ANS: T DIF: Difficulty: Easy

14. The Seven Management and Planning Tools had their roots in post—World War II operations research
developments in Japan, but were combined and refined by several U.S. companies over the past
several decades as part of their planning processes.

TOP: A-head: The Seven Management And Planning Tools KEY: Bloom's: Knowledge
15. An interrelationship digraph shows that every idea can be logically linked with more than one other
idea at a time, and allows for “linear thinking” rather than “lateral thinking.”

16. Matrix data analysis takes data and arranges them to display quantitative relationships among variables
to make them more easily understood and analyzed.

17. Process decision program charts are spreadsheets that graphically display relationships between ideas,
activities, or other dimensions in such a way as to provide logical connecting points between each
item.

18. The use of arrow diagramming has generally been confined to technical experts.

19. Effective strategy deployment is dependent upon, and tends to shape, organizational structure because
the organizational structure must be aligned with and support the accomplishment of strategic
initiatives.

TOP: A-head: Organizational Design for Performance Excellence
20. Traditional organizations tend to develop structures that help them to maintain flexibility.

21. In line and staff organizations, staff departments carry out the functions of marketing, finance, and
production for the organization.

22. In the line and staff form of organization structure, quality managers and inspectors may take on the
role of guardians of quality.

23. Core competencies may involve technology expertise, unique service offerings, a marketplace niche,
or a particular business acumen.

TOP: A-head: Core Competencies And Strategic Work System Design
24. Outsourcing refers to the practice of transferring the operations of a business function to an outside
supplier.

25. In many cases, the decision to vertically integrate is based solely on costs without considering the
impact on other business priorities.

MULTIPLE CHOICE
1. An organization must address certain key practices to achieve a strategic focus on performance
excellence. Which of the following is NOT one of them?
a. Gather and analyze relevant data and information pertaining to such factors as the
organizations strengths, weaknesses, opportunities, and threats
b. Develop and refine a systematic approach for conducting strategic planning and setting
strategic objectives
c. Understand the competitive environment, the principal factors that determine success, the
organization’s core competencies, and strategic challenges
d. Execute mergers and acquisitions, with an aim to expand business globally and to form
coalitions and cartels to achieve the same
ANS: D DIF: Difficulty: Moderate NAT: BUSPROG: Analytic
2. A _____ might include a definition of products and services an organization provides, technologies
used to provide these products and services, types of markets, important customer needs, and
distinctive competencies or the expertise that sets the firm apart from others.
a. mission statement
b. strategy roadmap
c. value statement
d. leadership statement
ANS: A DIF: Difficulty: Easy NAT: BUSPROG: Analytic
3. A _____ statement articulates the basic characteristics that shape an organization’s view of the future
and its strategy.
a. value
b. mission
c. vision
d. leadership
ANS: C DIF: Difficulty: Easy NAT: BUSPROG: Analytic
4. _____ set an organization’s longer-term directions and guide resource allocation decisions.
a. Management values
b. Strategic objectives
c. Core competencies
d. Workforce management principles
ANS: B DIF: Difficulty: Easy NAT: BUSPROG: Analytic
5. Effective implementation of a strategy is achieved through action plans. This is called _____.
a. proactive implementation
b. installation
c. deployment
d. strategic implementation
6. Essentially, strategy deployment links the _____, who focus on “doing the right thing,” with the
_____, whose focus is on “doing things right.”
a. management; employees
b. leaders; supervisors
c. innovators; coordinators
d. planners; doers
7. _____ represents the critical stage in planning when strategic objectives and goals are made specific so
that effective, organization-wide understanding and deployment are possible.
a. Mission statement development
b. Vision statement development
c. Action plan development
d. Operations planning and scheduling
ANS: C DIF: Difficulty: Moderate NAT: BUSPROG: Analytic
8. If everyone is able to answer the question, “What does strategy mean in terms that I can act on,” which
aspect of deployment will it address?
a. Improperly defined organizational objectives
b. Lack of alignment across the organization
c. Misallocation of resources
d. Insufficient operational measures
ANS: B DIF: Difficulty: Moderate
KEY: Bloom's: Comprehension
9. One of the reasons for poor deployment of action plans is insufficient operational measures. Which of
the following is a feature of this aspect?
a. New legislative mandates
b. Dedicating resources to make improvements or changes in those areas that are critical
c. Lack of changes resulting from new ventures
d. Insignificant innovations in products, services, and technology
ANS: A DIF: Difficulty: Moderate
10. Japanese firms introduced a newer deployment process adapted by Japanese and American companies
known as _____.
a. SWOT
b. hoshin planning
c. management by exception
d. management by objectives
11. _____ is essentially a quality-based approach to executing a strategy by ensuring that all employees
understand the business direction and are working according to a plan to make the vision a reality.
a. Mission deployment
b. Policy deployment
c. Value development
d. Quality orientation
12. With _____, top management is responsible for developing and communicating a vision, and then
building organization-wide commitment to its achievement.
a. policy deployment
b. value development
c. mission development
d. quality deployment
13. Which of the following is true of the policy deployment process?

a. The supervisory level has the primary responsibility of actively participating in generating
strategies and action plans to attain a vision.
b. At the top management level, progressively more detailed and concrete means to
accomplish the objectives are determined.
c. Employees negotiate the final short-term objectives with the implementation teams.
d. Middle management negotiates with senior management regarding the objectives that will
achieve the strategies.
ANS: D DIF: Difficulty: Moderate
14. According to the policy deployment process diagram, a catchball situation occurs between the _____
stage and the _____ stage.
a. corporate vision; long-term objectives
b. long-term objectives; midterm objectives
c. short-term objectives; policy deployment plan
d. policy deployment plan; plan approval
ANS: C DIF: Difficulty: Moderate
15. In policy deployment, the _____ process is called catchball.

a. negotiation
b. implementation
c. review
d. communication
16. Which of the following is NOT considered in strategic human resource plans?
a. Redesign of the work organization to increase empowerment and decision-making or
team-based participation
b. Initiatives to reduce collective bargaining through union involvement
c. Initiatives to foster knowledge sharing and organizational learning
d. Partnerships with educational institutions to help ensure the future supply of well-prepared
employees
17. In the policy deployment process, the _____ forms the basis for shorter-term planning.
a. operational plan
b. organizational objective
c. mission statement
d. long-term strategic plan
18. The goal of _____ is to envision the future for purposes of decision making and resource allocation.
a. environmental assessment
b. strategy development
c. work systems
d. core competencies
19. The term “_____” refers to those pressures that exert a decisive influence on an organization’s
likelihood of future success.
a. strategic challenges
b. core competencies
c. work systems
d. strategic inertia
20. All of the following are key factors included in an environmental assessment EXCEPT:
a. the organization’s SWOT profile.
b. the workforce profile and future requirements.
c. the regulatory environment.
d. the long-term organizational sustainability.
ANS: B DIF: Difficulty: Moderate NAT: BUSPROG: Analytic
TOP: A-head: The Scope of Strategic Planning KEY: Bloom's: Comprehension
21. Which of the following is a management and planning tool for organizing a large number of ideas,
opinions, and facts relating to a broad problem or subject area?
a. Affinity diagram
b. Interrelationship diagraph
c. Matrix diagram
d. Process decision program chart
22. Which of the following is a proper description of a tree diagram?

a. A tool for organizing a large number of ideas, opinions, and facts relating to a broad
problem or subject area
b. A method for mapping out every conceivable event and contingency that can occur when
moving from a problem statement to possible solutions
c. A tool to take data and arrange them to display quantitative relationships among variables
to make them more easily understood and analyzed
d. A tool to map out the paths and tasks necessary to complete a specific project or reach a
specified goal
ANS: D DIF: Difficulty: Moderate
NAT: BUSPROG: Reflective Thinking
TOP: A-head: The Seven Management And Planning Tools KEY: Bloom's: Comprehension
23. The clarification of authority, responsibility, reporting lines, and performance standards among
individuals at each level of the organization is referred to as _____.
a. hoshin kanri
b. the QID
c. the organizational structure
d. organizational governance
24. In the context of the organization, which of the following is a factor that affects how work is
organized?
a. Suppliers and partners
b. Competitiveness
c. Unionization of personnel
d. Customer influences
25. An organization chart shows the _____ of the formal organization.

a. business model
b. apparent structure
c. competitive position
d. workforce distribution
26. The _____ organization is the most prevalent type of structure for medium-sized to large firms.
a. line
b. line and staff
c. staff
d. matrix
27. The major drawback of the matrix-type organization is that it:

a. can be used only for project work.
b. requires split loyalty.
c. decreases the efficiency of personnel use.
d. decreases the coordination in a project work.
ANS: B DIF: Difficulty: Moderate NAT: BUSPROG: Analytic
28. Which of the following is an advantage of the matrix type of organizations?

a. It is a one-size-fits-all quality organization.
b. It improves the efficiency of personnel use.
c. The division of loyalty is especially advantageous in a quality assurance area.
d. It is especially suited for small and medium firms.
29. _____ coordinate the internal work processes and the external resources necessary to develop,
produce, and deliver products and services to customers and to succeed in the marketplace.
a. Work systems
b. Operations scheduling systems
c. Organizational charts
d. Personnel management systems
30. Decisions about work systems are _____.

a. operational
b. strategic
c. customer-focused
d. administrative
31. Gary Hamel and C.K. Prahalad suggested that a core competency meets three conditions. Which of the
following is NOT one of them?
a. It provides focus to the organizational objectives.
b. It contributes significantly to customer benefits.
c. It provides access to many products and markets.
d. It is difficult for competitors to imitate.
ANS: A DIF: Difficulty: Moderate NAT: BUSPROG: Analytic
32. _____ is the process by which certain business functions are acquired and consolidated within a firm.
a. Acquisition
b. Outsourcing
c. Collaboration
d. Vertical integration
ANS: D DIF: Difficulty: Easy NAT: BUSPROG: Analytic
33. A firm purchasing a key supplier to strengthen its value chain is an example of _____.
a. collaboration
b. outsourcing
c. vertical integration
d. unrelated diversification
ANS: C DIF: Difficulty: Moderate
KEY: Bloom's: Application
ESSAY
1. Describe the Baldrige Organizational Profile.
ANS:
The Baldrige Criteria provides a list of key questions called the Organizational Profile, which
addresses the basic characteristics of the organization, organizational relationships, the competitive
environment, the advantages an organization has and the challenges that it faces, and its approach to
performance improvement.
The first set of questions, under the heading “Organizational Description,” help to provide a clear
understanding of what the organization is all about. These include questions about the organization’s
product offerings, vision and mission, workforce profile, assets, regulatory requirements,
organizational structure, customers and stakeholders, and suppliers and partners. The second group of
questions, listed under “Organizational Situation,” address the competitive environment, strategic
context—specifically key strategic challenges and advantages—and the performance improvement
system.
DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

2. Why are action plans important in strategy deployment?
ANS:
Action plan development represents the critical stage in planning when strategic objectives and goals
are made specific so that effective, organization-wide understanding and deployment are possible.
Action plans typically include details of resource commitments and time horizons for their
accomplishment. Action plans could entail designing efficient processes and creating an accounting
system that tracks activity-level costs, aligned for the organization as a whole.
3. What are the Seven Management and Planning Tools?
ANS:
Managers may use a variety of tools and techniques, known as the Seven Management and Planning
Tools, to implement policy deployment. The Seven Management and Planning Tools had their roots in
post–World War II operations research developments in the United States, but were combined and
refined by several Japanese companies over the past several decades as part of their planning
processes. They were popularized in the United States by the consulting firm GOAL/QPC, and have
been used by a number of firms since 1984 to improve their quality planning and improvement efforts.
These tools are particularly useful in structuring unstructured ideas, making strategic plans, and
organizing and controlling large, complex projects. They are:
Affinity diagram
Interrelationship diagraph
Tree diagram
Matrix diagram
Matrix data analysis
Process decision program chart
Arrow diagrams
DIF: Difficulty: Moderate NAT: BUSPROG: Reflective Thinking

TOP: A-head: The Seven Management And Planning Tools KEY: Bloom's: Comprehension
4. What are the factors that affect how work is organized in the context of an organization?
ANS:
Several factors having to do with the context of the organization affect how work is organized. They
include the following:
Operational and organizational guidelines
Management style
Customer influences
Size
Diversity and complexity of product line
Stability of the product line
Financial stability
Availability of personnel

5. What are core competencies? Describe its characteristics.
ANS:
Core competencies refer to an organization’s areas of greatest expertise that provide a sustainable
competitive advantage in the marketplace or service environment. Gary Hamel and C.K. Prahalad
suggested that a core competency meets three conditions:
It contributes significantly to customer benefits.
It provides access to many products and markets.
It is difficult for competitors to imitate.
CASE
1. In Cigna’s Holistic Six Sigma Model, tactical execution through _____ refers to an accelerated process
streamlining event.
a. kaizen
b. hoshin kanri
c. DMAIC
d. DFSS
ANS:
A
DIF: Difficulty: Easy NAT: BUSPROG: Analytic

TOP: A-head: Summary of Key Points and Terminology KEY: Bloom's: Knowledge
2. Which of the following is a key challenge of the U.S. health care marketplace?
a. A shift away from value-based models of health care toward a performance-based system
b. Rising consumer expectations curtailed by greater transparency of quality
c. The decreasing number of Americans who use emergency rooms for primary care because they lack
health insurance
d. Demographic changes that necessitate the need for more care availability
ANS:
D
DIF: Difficulty: Challenging NAT: BUSPROG: Reflective Thinking

TOP: A-head: Summary of Key Points and Terminology KEY: Bloom's: Comprehension
3. When Six Sigma was launched at Cigna, leadership made it clear the approach would _____.
a. be holistic
b. focus on health insurance
c. be innovation
d. focus exclusively on productivity improvement
ANS:
A

4. In Cigna’s Holistic Six Sigma Model, _____ solves root cause problems to optimize existing
processes.
a. hoshin kanri
b. kaizen
c. DMAIC
d. DFSS
ANS:
C

5. What simple fact could help explain the rapid growth, holistic use, and impressive results of Six Sigma
at Cigna?
ANS:
At Cigna Corp., a 28,000-employee provider of employee health care and related insurance benefits,
the vice president of Six Sigma business excellence is just two levels below the CEO on the
organizational chart. The woman who holds this title, Leslie Behnke, reports directly to a member of
the corporation’s management team. This simple fact helps to explain the rapid growth, holistic use,
and impressive results of Six Sigma at Cigna.

6. What are the five strategic imperatives of Cigna?
ANS:
Cigna has five strategic imperatives:
1. Establish a meaningful cost advantage relative to the competition.
2. Help improve the health and well-being of members and the people Cigna insures.
3. Bring innovative products and services to market.
4. Become the partner of choice to its customers.
5. Create a winning environment in the organization.

7. Discuss the strategic planning process used by Cigna.
ANS:
Strategic planning is an absolute necessity in a company like Cigna that competes in a tough, volatile
marketplace. Six Sigma is viewed as a means to execute the strategic plan effectively and to do so in a
way that enhances quality, reduces costs, and makes the company a stronger competitor. Executives
and managers learn the basics of Six Sigma, lean tools, continuous improvement, and the basics of
design for Six Sigma.

8. As part of its strategic planning process, managers at Cigna learn what behaviors are required to ensure
effectiveness. Discuss.
ANS:
As part of its strategic planning process, managers at Cigna learn what behaviors are required to ensure
the following:
There is continuous improvement.
The right projects are selected with the right people to lead them.
There is ongoing assessment of projects.
People have time to serve on projects.
Managers ask the right questions during each phase of a project.
9. How does Six Sigma help Cigna improve quality and productivity?
ANS:
Cigna looks at the cost of doing nothing differently, figures how much improvement it can make, and
then comes up with a dollar differential. A 0.1 percent improvement can save millions. While initial
concentration was on efforts that would bring quick and significant results, Six Sigma at Cigna has
matured, and it has increasingly focused on impacting goals of the most strategic importance to the
organization.

10. The challenges of the huge cost of care and quality of care facing the U.S. health care industry have
led Cigna managers to wonder whether they could extend its improvement methodology to the
industry as a whole. What are some of the key challenges in the U.S. health care marketplace?
ANS:
The challenges of the huge cost of care and quality of care facing the U.S. health care industry have
led Cigna managers to wonder whether they could extend its improvement methodology to the
industry as a whole to address some of the key challenges in the U.S. health care marketplace,
including:
A shift away from cost based models of health care toward a value based system
Medical care cost inflation
Demographic changes that necessitate the need for more care availability
Inconsistent quality of care
The growing number of Americans who use emergency rooms for primary care because they lack
health insurance
Rising consumer expectations fueled by greater transparency of quality.

11. What is Branch-Smith Printing Division's vision statement?

a. The objective of the Branch-Smith Printing Division is to provide expert solutions for publishers.
b. Branch-Smith Printing will seek to continuously improve results for all stakeholders through the
application of its Innovating Excellence Process.
c. Our single focus will continue to be helping customers all over the world succeed in their
businesses.
d. Market leading business results through an expert team providing turnkey solutions to customer
partners.
ANS:
D

12. What is the mission statement of Branch-Smith Printing Division?

a. To provide expert solutions for publishers
b. To market leading business results through an expert team providing turnkey solutions to customer
partners
c. To continuously improve results for all stakeholders through the application of its Innovating
Excellence Process
d. To become the industry leader and achieve superior growth and market share
ANS:
A

13. What is the quality policy of Branch-Smith Printing Division?

a. Our single focus will continue to be helping customers all over the world succeed in their
businesses.
b. Market leading business results through an expert team providing turnkey solutions to customer
partners.
c. Branch-Smith Printing will seek to continuously improve results for all stakeholders through the
application of its Innovating Excellence Process.
d. The objective of the Branch-Smith Printing Division is to provide expert solutions for publishers.
ANS:
C

14. What is the strategic planning process of Branch-Smith Printing Division?
ANS:
The strategic planning process (SPP) is a key tool that Branch-Smith Printing Division uses to
visualize the ideal future and create strategies and plans to achieve it, and to incorporate improvement
opportunities into prioritized action plans. Strategic planning occurs formally each year with updates
and tracking conducted monthly during management reviews. Ongoing updates throughout the year
allow the company to correct direction or to proactively respond to risks and opportunities.

15. What are the steps in the Branch-Smith strategic planning process?
ANS:
The formal planning activity is conducted during the fall of each year by the Print Leadership Team
(PLT) through a series of meetings on and off site. The eight steps are:
Evaluate and improve prior year strategic plan process.
Focus the organization.
Prior year performance to plan.
Business analysis to evaluate the external environment to forecast changing trends and gain market
requirements.
Plan and update short- and longer-term strategies and actions to move the company toward its vision
and objectives.
Cascaded deployment; the company creates documents and methods to support deployment of the
plan.
Budget incorporation.
Ongoing review of action plans is conducted.


Chapter 11: Strategy and Performance Excellence

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Chapter 11: Strategy and Performance Excellence

ANS: T DIF: Difficulty: Easy NAT: BUSPROG: Analytic

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ANS: T DIF: Difficulty: Easy NAT: BUSPROG: Analytic

ANS: T DIF: Difficulty: Easy NAT: BUSPROG: Analytic

ANS: T DIF: Difficulty: Easy NAT: BUSPROG: Analytic

13. Which of the following is true of the policy deployment process?

15. In policy deployment, the _____ process is called catchball.

22. Which of the following is a proper description of a tree diagram?

25. An organization chart shows the _____ of the formal organization.

27. The major drawback of the matrix-type organization is that it:

28. Which of the following is an advantage of the matrix type of organizations?

30. Decisions about work systems are _____.

1. Describe the Baldrige Organizational Profile.

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

2. Why are action plans important in strategy deployment?

3. What are the Seven Management and Planning Tools?

DIF: Difficulty: Moderate NAT: BUSPROG: Reflective Thinking

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

5. What are core competencies? Describe its characteristics.

DIF: Difficulty: Easy NAT: BUSPROG: Analytic

DIF: Difficulty: Challenging NAT: BUSPROG: Reflective Thinking

DIF: Difficulty: Easy NAT: BUSPROG: Analytic

DIF: Difficulty: Easy NAT: BUSPROG: Analytic

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

6. What are the five strategic imperatives of Cigna?

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

7. Discuss the strategic planning process used by Cigna.

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

11. What is Branch-Smith Printing Division's vision statement?

DIF: Difficulty: Challenging NAT: BUSPROG: Reflective Thinking

12. What is the mission statement of Branch-Smith Printing Division?

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

13. What is the quality policy of Branch-Smith Printing Division?

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

14. What is the strategic planning process of Branch-Smith Printing Division?

DIF: Difficulty: Moderate NAT: BUSPROG: Analytic

DIF: Difficulty: Challenging NAT: BUSPROG: Reflective Thinking

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