CA Inter P6 · Chapter 14
Strategy Implementation and Evaluation MCQs with Answers
10 multiple-choice questions on Strategy Implementation and Evaluation for CA Inter P6 Financial Management and Strategic Management. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Which statement correctly distinguishes strategy formulation from strategy implementation?
- A) Formulation positions forces before action and needs good intuitive and analytical skills, while implementation manages forces during action and needs motivation and leadership skills
- B) Formulation requires coordination among many people, while implementation needs coordination among only a few
- C) Formulation is carried out mainly by front-line staff, while implementation is done only by the board
- D) Formulation focuses on efficiency, while implementation focuses on effectiveness
Show answer & explanation
Answer: A) Formulation positions forces before action and needs good intuitive and analytical skills, while implementation manages forces during action and needs motivation and leadership skills
Strategy formulation is mainly an intellectual, entrepreneurial process focused on effectiveness, and needs coordination among a few people at the top. Strategy implementation is an operational process focused on efficiency. It needs motivation and leadership skills and coordination among many people across the organisation.
Question 2
A large diversified group organises its many divisions into a few units, each with its own distinct products, competitors and markets, and each with a manager responsible for strategy and profit. This is called a:
- A) Hourglass structure
- B) Strategic Business Unit (SBU) structure
- C) Simple structure
- D) Functional structure
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Answer: B) Strategic Business Unit (SBU) structure
Under an SBU structure, related divisions are grouped into strategic business units, each run as a separate business with its own strategy and profit responsibility. This helps top management control a large, diverse portfolio and makes planning more focused. A functional structure groups activities by function such as production and marketing.
Question 3
The main feature of a matrix organisation structure is that:
- A) Every employee reports only to the chief executive
- B) Middle management layers are removed to bring top and bottom closer
- C) Employees report to two managers at the same time, typically a functional manager and a project or product manager
- D) Most activities are outsourced to external partners linked by contracts
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Answer: C) Employees report to two managers at the same time, typically a functional manager and a project or product manager
A matrix structure combines functional and project (or product/geographic) lines of authority, so there is dual reporting. It allows specialists to be shared across projects and supports complex, changing work, but it can cause conflict and confusion over authority. Outsourcing describes a network structure, and removing middle layers describes an hourglass structure.
Question 4
Lumina Apparel owns only its design team and brand. Manufacturing, logistics and online sales are carried out by independent partners linked through contracts and information systems. This is best described as a:
- A) Matrix structure
- B) Divisional structure
- C) Functional structure
- D) Network (virtual) structure
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Answer: D) Network (virtual) structure
A network or virtual structure is a small core organisation that outsources most business functions to independent partners and coordinates them through contracts and technology. It is flexible and lean, and lets the firm focus on core competencies such as design and branding, though it depends heavily on partners.
Question 5
An hourglass organisation structure is characterised by:
- A) Dual reporting to functional and project managers
- B) A shrunken middle management layer, as technology and information systems take over coordination, with broad top and operating levels
- C) Grouping of activities purely by geography
- D) A very large middle management layer with few top managers
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Answer: B) A shrunken middle management layer, as technology and information systems take over coordination, with broad top and operating levels
In an hourglass structure, information technology performs many of the coordinating and information-processing tasks traditionally done by middle managers. The middle layer shrinks, leaving a broad top and a broad operating base. Middle managers who remain tend to be generalists with wider responsibilities.
Question 6
A strategy was built on the assumption that a key raw material's import duty would stay low. Managers set up a system to check regularly whether this and other planning assumptions still hold. This type of strategic control is:
- A) Premise control
- B) Operational control
- C) Implementation control
- D) Special alert control
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Answer: A) Premise control
Premise control systematically and continuously checks whether the premises or assumptions on which a strategy rests remain valid. If an assumption changes, such as a sharp rise in import duty, the strategy may need revision. Implementation control assesses whether the strategy should be changed in light of the results of implementation steps.
Question 7
After a sudden fire destroys a major supplier's plant, a company immediately convenes a crisis team to rethink its sourcing strategy. This is an example of:
- A) Premise control
- B) Strategic surveillance
- C) Budgetary control
- D) Special alert control
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Answer: D) Special alert control
Special alert control is a rapid, thorough reconsideration of strategy triggered by a sudden, unexpected event, such as a natural disaster, a major supplier failure or a sudden change in government. It often involves crisis teams. Strategic surveillance is a broad, unfocused monitoring of the environment, and premise control checks specific planning assumptions.
Question 8
In the McKinsey 7S framework, which three elements are generally classed as the 'hard' S's?
- A) Skills, staff and style
- B) Shared values, style and staff
- C) Strategy, structure and systems
- D) Strategy, shared values and skills
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Answer: C) Strategy, structure and systems
The 7S framework has three hard elements (strategy, structure and systems) that management can define and change relatively easily. The four soft elements are shared values, style, staff and skills, which are shaped by culture and are harder to change. Effective implementation needs all seven to be aligned.
Question 9
In Kurt Lewin's model of change, the stage at which new behaviours, systems and processes are reinforced so that they become the normal way of working is called:
- A) Refreezing
- B) Benchmarking
- C) Changing (moving)
- D) Unfreezing
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Answer: A) Refreezing
Lewin's three-stage model consists of unfreezing (making people see the need for change and reducing resistance), changing or moving (introducing new behaviours and processes) and refreezing (stabilising the new ways through reinforcement, policies and rewards so that people do not slip back).
Question 10
A CEO inspires employees with a compelling vision, encourages them to challenge old ways of working and motivates them to go beyond their own interests for the organisation's transformation. This is best described as:
- A) Laissez-faire leadership
- B) Transactional leadership
- C) Transformational leadership
- D) Autocratic leadership
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Answer: C) Transformational leadership
Transformational leaders use charisma, vision and intellectual stimulation to motivate people to commit to change and perform beyond expectations. This suits organisations going through major strategic change. Transactional leaders rely on rewards, penalties and existing structures to achieve set goals, which suits stable conditions.