TEST BANK FOR STRATEGIC MANAGEMENT 4TH EDITION BY FRANK ROTHAERMEL

This test bank for  STRATEGIC MANAGEMENT 4TH EDITION BY FRANK ROTHAERMELhas all the chapters for the book. Below are sample questions that you can find in the test bank. N/B Pasinggrades is the best test bank website.  In what ways is corporate governance related to strategy formulation and implementation? Corporate governance is related to strategy formulation and implementation in several ways. The most visible roles are in establishing controls and incentives. Boards should ensure that the firm's vision and mission are reflected in its strategy, monitor the way that strategy is executed, and ensure the top executives reap appropriate career and financial outcomes in cases of success or failure. The risk that managers will deviate from the organization's stated purpose and its guiding documents increases when managers are not sharing ownership of the firm. A number of corporate governance mechanisms help shareholders avoid losing control of the corporation to unscrupulous or incompetent management. Feedback: Corporate governance is important to both strategy formulation and execution, and students need to have a clear understanding of this fact. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 93. (p. 343- 344) What is agency theory? Agency theory suggests that the firm can be viewed as a nexus of contracts (loosely defined) between resource holders. An agency relationship arises whenever one or more individuals, called principals, hire one or more other individuals, called agents, to perform some service and then delegate decisionmaking authority to the agents. Feedback: Agency theory has emerged as a dominant model in the financial economics literature, and is widely discussed in business ethics texts. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 94. (p. 344- 345) What are the basic solutions to the "agency problem"? From shareholders' perspectives, the solution to the agency problem is to find ways to ensure that corporate resources and profits are not squandered, and that executives will not make choices that benefit themselves at shareholders' expense. Feedback: Shareholders should receive a positive return on their investment in the long run in terms of efforts and time. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 95. (p. 344- 345) What is the role of the board of directors in corporate governance? One of the major monitoring mechanisms available to shareholders is the board of directors. All publicly held companies are required to have a board of directors. A board of directors is charged with overseeing the work of top executives. The legal roles of the board include hiring and firing top management, monitoring management, ensuring that shareholders' interests are protected and addressed, and reviewing and approving a firm's strategy. Feedback: There are also informal roles played by boards, including acting as conduits of information from external sources, providing leads for acquisition and alliance partners, and providing advice and counsel for the CEO. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 96. (p. 345) What are the possible disadvantages of having outside directors? Although there is the presumption that outside directors make for a more vigilant board, this is not always the case. First, outside directors may not be independent; they may have business dealings with the firm or friendship ties to the CEO. Similarly, CEOs have considerable control over outside directors, which may make it difficult for them to be truly independent. These relationships can affect how they monitor and advise management. Feedback: The major problem related to outside directors is that they may not be as independent as expected. AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 97. (p. 344- 346) Briefly explain the role of monitoring, as used by the board of directors. Monitoring is the process of the board acting in its legal and ethical responsibilities to oversee CEO behavior and performance and to take action when necessary to replace management. Some of the most important decisions made by the board are hiring and firing the CEO and other senior executives. Effective boards make sure they have an executive succession plan that keeps the firm prepared in the event that a new CEO is needed. Feedback: One of the key roles of the board of directors is to monitor the performance of the CEO and potentially replace management when necessary. AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 98. (p. 347) What are some advantageous types of executive compensation? A major beneficial type of compensation is when the board ties it to multiple desired outcomes, including both financial performance and other important outcomes such as customer satisfaction and quality. The board can also revoke or withhold compensation or bonuses from senior executives. The effectiveness of the compensation really comes down to how well the board links it to the achievement of desired company objectives. Feedback: Executive compensation packages properly structured act as a means to motivate executives to put forth their very best to do what is good for the company. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 12-04 Describe the role of corporate governance and evaluate different governance mechanisms. Topic: Corporate Governance 99. (p. 351) Provide an example of a legal business action that is ethically questionable. Students might give a variety of answers but the text provides one related to the recent financial crisis. The mortgage industry created a variety of exotic mortgages that actually were bad for consumers and also helped get people into homes they really could not afford. Feedback: While these actions were legal (at the time) even when they were widely available, many in the lending community felt they were not ethical and refused to offer them. AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 12-05 Describe and evaluate the relationship between business strategy and ethics. Topic: Strategy and Business Ethics 100. (p. 354) Discuss the three informational roles of a leader. The three information roles are monitor, disseminator, and spokesperson. As a monitor, the CEO taps into a network of contacts to collect the information needed to understand the organization and its environment. As a disseminator, executives pass along necessary information to internal stakeholders. As a spokesperson, executives pass along necessary information to external stakeholders. Feedback: The three informational role components are monitor, disseminator, and spokesperson. AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 12-06 Describe the different roles that strategic leaders play and how to become a strategic leader. Topic: Strategic Leadership 101. (p. 355- 356) Which leadership skills are present in Level 1 of the Level-5 leadership pyramid? In Level 1, leaders must prove that they are highly competent in their work. On this first level of leadership, leaders must make productive contributions using their talent, knowledge, hard work, and skills. Feedback: The first level is to become a highly capable individual, so the leader must develop his/her own skills and competencies to move forward.