Why firms adhere to or deviate from their strategic plans is poorly

Question

Why firms adhere to or deviate from their strategic plans is poorly understood. However, theory and limited research suggest that the process through which such plans emerge may play a part. In particular, top management decision sharing—consensus-oriented, team-based decision-making—may increase the likelihood that firms will adhere to their plans, because those involved in the decision-making may be more committed to the chosen course of action, thereby increasing the likelihood that organizations will subsequently adhere to their plans.

However, the relationship between top management decision-sharing and adherence to plans may be affected by a firm’s strategic mission (its fundamental approach to increasing sales revenue and market share, and generating cash flow and short-term profits).  At one end of the strategic mission continuum, “build” strategies are pursued when a firm desires to increase its market share and is willing to sacrifice short-term profits to do so. At the other end, “harvest” strategies are used when a firm is willing to sacrifice marked share for short-term profitability and cash-flow maximization. Research and theory suggest that top management decision-sharing may have a more positive relationship with adherence to plans among firms with harvest strategies than among firms with build strategies. In a study of strategic practices in several large firms, managers in harvest strategy scenarios were more able to adhere to their business plans. As one of the managers in the study explained it, this is partly because  “Typically all a manager has to do   is that which was done last year.”  Additionally, managers under harvest strategies may have fewer strategic options than do those under build strategies; it may therefore be easier to reach agreement on a particular course of action through decision-sharing, which will in turn tend to promote adherence to plans. Conversely, in a “build” strategy scenario, individual leadership, rather than decision-sharing, may promote adherence to plans. Build strategies—which typically require leaders with strong personal visions for a firm’s future, rather than the negotiated compromise of the team-based decision—may be most closely adhered to when implemented in the context of a clear strategic vision of an individual leader, rather than through the practice of decision-sharing.   1 
VRC000400-01
 1. Which of the following best describes the function of the first sentence (lines 17-24) of the second paragraph of the passage?

(A) To answer a question posed in the first sentence of the passage about why firms adopt particular strategic missions
(B) To refute an argument made in the first paragraph about how top management decision-making affects whether firms will adhere to their strategic plans
(C) To provide evidence supporting a theory introduced in the first paragraph about what makes firms adhere to or deviate from their strategic plants
(D) To qualify an assertion made in the preceding sentence about how top management decision-making affects the likelihood that firms will adhere to their strategic plans
(E) To explain a distinction relied on in the second paragraph regarding two different kinds of strategic missions

2 
VRC000400-03
 2. It can be inferred from the passage that which of the following firms would be most likely to adhere to it strategic plans?

(A) One that is pursuing a build strategy and whose strategic plans were developed through the process of decision-sharing
(B) One that is pursuing a harvest strategy and whose strategic plans were developed through the process of decision-sharing
(C) One that is pursuing a harvest strategy and whose strategic-plans were developed by an individual leader with a strong personal vision for the firm's future
(D) One that does not fluctuate between build and harvest strategies
(E) One that has a long-established practice of top-management decision-sharing

3 
VRC000400-04
 3. The author includes the quotation in lines 44-47  “Typically all a manager has to do   is that which was done last year.” ] of the passage most probably in order to

(A) lend support to the claim that firms utilizing harvest strategies may be more likely to adhere to their strategic plans 
(B) suggest a reason that many managers of large firm prefer harvest strategies to build strategies 
(C) provide an example of a firm that adhered to its strategic plan because of the degree of its managers’ commitment 
(D) demonstrate that managers implementing harvest strategies generally have better strategic options than do managers implementing build strategies 
(E) give an example of a large firm that successfully implemented a harvest strategy

4 
VRC000400-06
 4. According to the theory and research discussed in the first paragraph of the passage, which of the following may be true of firms that use teams to develop their strategic plans?

(A) They are more to pursue build strategies rather than harvest strategies.
(B) They are less likely to have a well-defined strategic mission than are firms with individual leaders.
(C) They are less to deviate from their strategic plans because team members may be more committed to the plans.
(D) They generally follow a similar pattern in alternating efforts to increase revenues and market share with efforts to generate short-term profits.
(E) They are less likely to adhere to their strategic plans because they tend to lack a clear strategic vision.

5 
VRC000400-07
 5. The primary purpose of the passage is to

(A) identify some of the obstacles that make it difficult for firms to adhere to their strategic business plans
(B) compare two different theories concerning why firms adhere to or deviate from their strategic plans
(C) evaluate the utility of top management decision-sharing as a method of implementing the strategic mission of a business
(D) discuss the respective advantages and disadvantages of build and harvest strategies among several large firms
(E) examine some of the factors that may affect whether or not firms adhere to their strategic plans

ID 00400

GMATNinja · Accepted Answer

5. The primary purpose of the passage is to

(A) identify some of the obstacles that make it difficult for firms to adhere to their strategic business plans
(B) compare two different theories concerning why firms adhere to or deviate from their strategic plans
(C) evaluate the utility of top management decision-sharing as a method of implementing the strategic mission of a business
(D) discuss the respective advantages and disadvantages of build and harvest strategies among several large firms
(E) examine some of the factors that may affect whether or not firms adhere to their strategic plans

Choice (B) is tempting, but the passage does not only compare   two  different theories . Rather, the passage examines a few different factors that may affect whether or not firms adhere to their strategic plans: namely, "the process through which such plans emerge" (i.e. top management decision-sharing), a firm’s strategic mission (i.e. build vs harvest), and individual leadership (i.e. leaders with strong personal visions for a firm’s future).

These factors are shown to be inter-dependent. For example, decision-sharing might be beneficial in a harvest setting but detrimental in a build setting. The passage does not simply compare two distinct theories. Instead, the passage examines multiple factors and how they are connected. Choice (E) is the best answer.

GMATNinja · Answer

The first paragraph tell us that "top management decision sharing... may increase the likelihood that firms will adhere to their plans." Refuting that statement would involve arguing that decision sharing does NOT increase the likelihood or that decision sharing DECREASES the likelihood.

Looking at the second paragraph:

This does NOT say that decision-sharing among firms with build strategies does NOT increase the likelihood. Instead, it tells us that, among firms using decision sharing, firms with harvest are MORE likely to adhere to plans than firms with build.

There can still be a positive relationship among firms with build strategies.  However , the relationship is  more  positive among firms with harvest strategies. The author is not DISPUTING the idea that decision sharing increases the likelihood of adhering to plans. Instead, the author is limiting/modifying (i.e.  qualifying ) that idea.

It's like saying that people who play a lot of video games are, in general, more likely to develop good problem solving skills. But then you QUALIFY that statement by saying, "However, the  type  of video game is important... People who play strategy games are more likely to develop good problem solving skills than people who play mindless games on their phones."

Are you REFUTING the idea that playing video games leads to better problem solving skills? Nope -- you're simply limiting/modifying (i.e.  qualifying ) that statement.

I hope that helps!

AnkitJR · Answer

Hi GMATNinja,

For the below question can you please explain how option E is the correct choice. 
As per my understanding :
"Additionally, managers under harvest strategies may have fewer strategic options than do those under build strategies; it may therefore be easier to reach agreement on a particular course of action through decision-sharing, which will in turn tend to promote adherence to plans." this section from the passage clearly conveys what is mentioned in option E.

2. The passage cites all of the following as differences between firms using build strategies and firms using harvest strategies EXCEPT

their willingness to sacrifice short term profits in order to build market share
their willingness to sacrifice building market share in order to increase short-term profitability
the number of strategic options available to their managers
the relative importance they assign to maximizing cash-flow
how likely they are to employ decision-sharing in developing strategic plans

Thanks

GMATNinjaTwo · Answer

This does not appear to be one of the original questions. Please refer to the official questions in the  original post .

Furthermore, choice (E) talks about the LIKELIHOOD of  employing  decision-sharing. The passage says that "it may be  easier " for managers under harvest strategies to reach agreements using decision-sharing, but the passage does not compare the LIKELIHOOD that such firms would actually use decision-sharing. In other words, even though it might be easier, we don't know whether the managers actually take advantage of it.

mbaapplicant2019 · Answer

Hi all,

Please kindly explain why B is not the correct answer for question 3. Thanks a lot.

TaN1213 · Answer

(B) suggest a reason that many managers of large firm prefer harvest strategies to build strategies 
You're overlooking the word "prefer". The passage nowhere talks about the Preference of managers (what managers  favor )
A single word can make an answer choice wrong in RC.

. Great passage! 11 minutes, all correct.

GMATNinja · Answer

Thanks  TaN1213  for the explanation!

We are told that "managers in harvest strategy scenarios were more able to adhere to their business plans", but this does not necessary mean that managers  prefer  harvest strategies. Perhaps managers prefer build strategies even though it's harder to adhere to business plans under build strategies. In other words, we have no idea how the  ease  of adhering to business plans affects managers'  preferences .

For example, ordering fast food is much EASIER than preparing a home-cooked meal, but that does not necessarily mean that you PREFER fast food.

Choice (A) is the best answer.

Boomshockalocka · Answer

GMATNinja

Hi, in Q3, from my understanding of the passage, using decision-sharing, firms with harvest are more likely to adhere to their strategic plans than do firms with build, but the passage does not compare the adherence to strategic plans of firms with harvest using decision-sharing with adherence to strategic plans of firms with build using, right? But Option A means Firms with harvest are more likely to adhere to their strategics plans  . Should that be wrong? Thanks!

GMATNinja · Answer

I believe you made a typo in your question, but I think I know what you're asking...

The passage says that decision sharing increases odds of adhering to strategic plans. So, in terms of adhering to strategic plans, decision sharing is better than non-decision sharing.

We are then told that, within the category of decision sharing, harvest is better than build (in terms of adhering to strategic plans). But what if we compare two companies, one with decision sharing and build and another with non-decision sharing and harvest? Which is more likely to adhere to its strategic vision? I believe this is what you are asking about.

Sure, maybe it's possible that a non-decision sharing company with harvest has better odds of adhering than a decision-sharing company with build. But that's not what the passage is trying to tell us. The passage is trying to tell us that, in terms of adherence to strategic plans, decision sharing is better than non-decision sharing. Now, if we look only at companies with decision sharing, harvest is better than build.

Even if the scenario described above were  possible , question #3 asks us  why the author  included that quote. The quote was clearly  intended  to    support    the idea that harvest is better than build in terms of adherence to plans. Whether this is ALWAYS true is irrelevant. (A) is the best answer.

I hope this helps!

pikolo2510 · Answer

Hey  GMATNinja

Can you explain question #1?

I selected B. My reasoning is as follows: -

The last line of the first paragraph says that decision sharing by top management will eventually increase the likelihood of companies to adhere to their respective plans.

But, The first line of the second paragraph says that the "strategic mission",coupled with decision sharing, of the company is an important factor that may affect the adherence to their respective plans.

I eliminated D because I don't think it is "qualifying" an assertion made in the previous sentence. Rather it is refuting saying that decision making along with the strategic mission will affect the likelihood, and not only decision making alone will affect the likelihood. The usage of "however" as well is an indicator of change or shift or refute the previous line.

Hence I selected option B. Let me know your thoughts

dave13 · Answer

GMATNinja hello there, can you please give advise/some tips about how to approach the question type " primary purpose of the passage" i was between C and E and chose C

i mostly seem to answer incorectly this type of questions/. the rest questions i answered correctly. thank you and have a nice weekend

GMATNinja · Answer

If primary purpose questions are a persistent issue, that's generally a sign that you're not being completely effective in reading the passage itself.

You've probably already seen our  beginner's guide to RC , but if you're executing really, really well on the techniques in that article, then you should be fine on primary purpose questions. Basically, if you stop at the end of every paragraph and fully engage in understanding the author's purpose -- and how each paragraph connects to the previous paragraph -- then by the time you finish the passage, you should have a pretty solid understanding of what the author's overall purpose is with the passage. If you've done that, then the primary purpose questions should be straightforward.

Put another way: if you're missing primary purpose questions, it leads me to suspect that when you read a passage, you're letting it turn into a gigantic puddle of facts. And that's  exactly the opposite of what you want to do .

But beyond that, there's really no special technique for tackling primary purpose questions. You'll have success on those questions if you're reading the passages the right way.

This might not be the answer you had in mind, but I hope it helps a bit!

mrinalsharma1990 · Answer

Hi GMAT Ninja,

Can you explain why E is the incorrect choice in Q.1?

The second paragraph does talk about the difference in the two different kinds of strategic missions?

While I am also not completely convinced, would be helpful if you can provide an insight into this?

Thanks in advance!!

GMATNinja · Answer

Here's the question again:

In other words,  why  does the author say this?
 
There's one clue right off the bat: This sentence starts with the word "however." The author is immediately referring back to the a prior statement and adding some kind of qualification to what was said previously. In the first paragraph the author tells us that top management decision-sharing may increase the likelihood that firms will adhere to their plans. Then, with this sentence, the author tells us that top management decision sharing may not be the only factor when determining why a firm adheres to its plan. As I wrote earlier, the author uses this sentence to qualify the previous sentence, and this is why we keep choice (D) around.

Now let's take a look at choice (E):
 
Is the purpose of this sentence  to explain the distinction  between "build" and "harvest" strategies? Nope. Here the author names a possible second influence on a firm's adherence to strategy (the kind of strategic mission that firm is pursuing). The author uses this sentence to call into question the influence stated in paragraph 1 (top management decision sharing).

Choice (E) tells us about a thing that the author does eventually write about in paragraph 2, but it doesn't tell us  why  the author writes  the exact sentence  that is being highlighted. So it doesn't answer the question we were asked.

That's why eliminate (E) and keep (D). I hope this helps!

AdityaHongunti · Answer

GMATNinja  
for the primary purpose : i thot the passage is examining the scope or extent of relevance of the explanation for the adherance of firms !
the i1st para gives us an explanation , the second para qualifies and further explains the scope and where actually it is useful . 
so isnt the author evaluating the explanation?

why is choice C wrong? is it because of the last term "strategic mission"?  DmitryFarber   mikemcgarry   chetan2u   sayantanc2k   workout   GMATNinja Two

GMATNinja · Answer

You're right that the passage is primarily concerned with why and how firms adhere. But adhere to what? To their strategic plans. OK, so now we have a complete statement of what the author wants us to consider. But all we've done is identify the topic of the passage. In order to understand the purpose of this passage and eliminate answer choices, let's... ...ah, you're way ahead of me

But as with the statement of purpose, this breakdown of the paragraphs is a bit incomplete. An explanation of what? The scope of what? Where what is useful? This is a tough, wordy passage with a giant second paragraph, so if we're going to tackle this, then let's get more precise. In P1 the author sets up the question: Why do firms adhere to or deviate from their strategic plans? Then the author identifies one potential reason that firms adhere to strategic plans (decision-sharing). In P2 the author suggests that strategic mission is another input that could influence whether firms adhere to strategic plans. Then the author explains two types of strategic missions (harvest and build) and describes how each type of mission relates to each type of decision-making (decision-sharing or individual leadership). By the end of the passage, the author has presented four different factors and discussed how they all might interact to determine whether a firm adheres to its strategic plan. (E) is the best answer choice available because it reflects this precisely. (C), on the other hand, is very narrow. The purpose of the passage was not solely to evaluate the utility of a single factor. So once we see "evaluate the utility of top management decision-sharing" we can already be skeptical about this one. That said, you're right to question the use of "strategic mission." Adherence to a strategic plan is not at all the same as strategic mission . The former (adherence to strategic plan) is the outcome that this author is interested in explaining. The former (strategic mission) is an input, which can influence the outcome -- depending on what kind of mission the company pursues (harvest, build, or something in between). I hope this helps!

lakshya14 · Answer

Do we have to go outside the yellow text? Because the "qualifying" assertion came after the yellow text, and the highlighted text seems to refuse the sharing decision?

GMATNinja · Answer

Question 1 again 
 
Question 1 asks us about the  function  of the yellow text. In other words, WHY did the author write that sentence? How does it serve his/her argument as a whole?

To answer this question, you  must  go outside of the yellow text itself. It's impossible to determine the purpose of a particular sentence without seeing how it fits into the bigger picture.

Take this example:

"The Broncos will make it to the playoffs this year."

I can change the function of this sentence if I add different stuff into my argument as a whole:

"Because the team has a great new quarterback,  the Broncos will make it to the playoffs this year. "  Here, the highlighted text is my  conclusion .

" The Broncos will make it to the playoffs this year,  so I should buy a season pass to watch them play."  Now, the same exact piece of text is  supporting evidence  for my conclusion.

So, yes -- you have to go outside of the highlighted text to determine how that piece functions in context of the argument as a whole.

I hope that helps!

adityashikhar4 · Answer

Hi! Could you please provide the solution for question 5 because as per my logic the answer should be option c as the whole passage seems to be about the top management decision sharing and strategic mission & leadership vision as factors influencing it.

Why firms adhere to or deviate from their strategic plans is poorly

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GMAT Reading Comprehension (RC) Questions

Why firms adhere to or deviate from their strategic plans is poorly

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