Professional Documents
Culture Documents
19. A mission statement should be longer than 250 words describing the ten components.
• True
• False
20. The term social policy embraces managerial philosophy and thinking at the highest
levels of an organization.
• True
• False
Chapter No. 3: The External Assessment
11. Five major categories of external variables are: (1) economic forces, (2) social and
cultural forces, (3) political, governmental and legal forces, (4) technological forces and
(5) demographic forces.
• True
• False
12. Significant and unequal effects on companies in different industries and in different
locations come from trends in the dollar's value.
• True
• False
13. Competitive pressures arising from substitute products increase as the relative price of
substitute products declines and as consumers' switching costs decrease.
• True
• False
14. Research findings suggest that approximately 36 percent of a firm's profitability can be
explained by the industry, whereas 20 percent is attributed to the firm's internal
factors.
• True
• False
15. Nine out of 10 large companies have employees dedicated solely to gathering
competitive intelligence.
• True
• False
16. Suppliers can increase their bargaining power if they can inexpensively switch to
competing brands or substitutes.
• True
• False
17. Bargaining power of consumers is usually the most powerful of Porter's five
competitive forces.
• True
• False
18. Many large multinational firms are moving out of EU member-countries into
Switzerland and Ireland to avoid costs associated with tax harmonization.
• True
• False
19. Shifts in the nature and location of production systems, especially to China and India,
are reducing the response time to changing market conditions.
• True
• False
20. Based on the best information at the time, assumptions serve as checkpoints on the
validity of strategies.
• True
• False
Chapter No. 4: The Internal Assessment
1. A firm's strengths that cannot be easily matched or imitated by competitors are called:
a) External opportunities.
b) distinctive competencies.
c) special properties.
d) competitive ventures.
2. ___________ can inhibit strategic management, for example, by leading managers to
miss the significance of changing external conditions.
a) Rules and guidelines
b) Culture
c) Market segmentation
d) Competitive awareness
3. The five functions of management are planning, organizing, _________, staffing, and
controlling.
a) rewarding
b) communicating
c) implementing
d) motivating
4. A particular form or manner in which members of a group use sounds and written
signs to convey meanings to each other is the definition of
a) language.
b) saga.
c) metaphor.
d) rite.
5. __________ ratios measure management's overall effectiveness as shown by the returns
generated on sales and investment.
a) Liquidity
b) Profitability
c) Growth
d) Leverage
6. For a resource to be valuable, it must be either rare, hard to imitate, or:
a) viable.
b) natural.
c) difficult to construct.
d) not easily substituted.
7. Americans place a high priority on __________ whereas many foreigners do not.
a) material wealth
b) family
c) relationships
d) silence
8. Staffing involves all of these activities except:
a) recruiting.
b) managing union relations.
c) customer analysis.
d) training and developing.
9. Which of the following ties all business functions together and provides the basis for all
managerial decisions?
a) Management
b) Marketing
c) Information
d) Technology
10. A _____ purpose is to improve the performance of an enterprise by improving the
quality of managerial decisions.
a) management information system's
b) data transformer's
c) quality control mechanism's
d) dysfunctional system's
11. Many Europeans resent pay-for-performance, commission salaries, and objective
measurement and reward systems.
• True
• False
12. The process of performing an internal audit closely parallels the process of performing
an external one.
• True
• False
13. The basic premise of the RBV is that the mix, type, amount, and nature of a firm's
internal resources should be considered secondarily in devising strategies that can lead
to sustainable competitive advantage.
• True
• False
14. The only thing certain about the future of any organization is change, and planning is
the essential bridge between the present and the future that increases the likelihood of
achieving desired results.
• True
• False
15. Sometimes an organization will pursue a backward integration strategy primarily to
gain better control over prices charged to consumers.
• True
• False
16. An opportunity analysis is an appraisal of the costs, benefits and risks associated with
decisions.
• True
• False
17. An example of activity ratios is the times-interest-earned ratio.
• True
• False
18. Cross-training of employees can decrease efficiency, quality, productivity, and job
satisfaction.
• True
• False
19. In the value chain, total revenues minus total costs of all activities undertaken to
develop and market a product or service yields value.
• True
• False
20. Internal R&D and contract R&D are the two basic forms of R&D in organizations.
• True
• False
Chapter No. 5: Strategies in Action
1. __________ is based on the belief that the true measure of a really good strategist is the
ability to solve problems.
a) Managing by subjective
b) Managing by extrapolation
c) Managing by crisis
d) Managing by hope
2. Long-term objectives are needed at the ____________ of an organization.
a) Corporate and divisional levels
b) Corporate levels
c) corporate, divisional, and functional levels
d) Divisional and functional levels
3. __________ strategy is designed to fortify an organization's basic distinctive
competence.
a) Integrative
b) Retrenchment
c) Intensive
d) Diversification
4. Many, if not most, organizations pursue a:
a) Concentric diversification.
b) combination strategy.
c) Geographic strategy.
d) Product development strategy.
5. An example of _______ strategy is establishing Web sites to sell products directly to
consumers.
a) Backward integration
b) Conglomerate diversification
c) Horizontal integration
d) forward integration
6. Which of the following is not a guideline for pursuing liquidation?
a) When divestiture has not been successful.
b) When an organization's only alternative is bankruptcy.
c) When the stockholders of the firm can minimize their losses by selling the firm's
assets.
d) When the organization has successfully pursued retrenchment.
7. A popular strategy that occurs when two or more companies form a temporary
partnership for the purpose of capitalizing on some opportunity is called a(n):
a) Merger.
b) joint venture.
c) Acquisition.
d) Takeover.
8. ______ includes increasing the number of salespersons, increasing advertising
expenditures, offering extensive sales promotion items, or increasing publicity efforts.
a) Market development
b) Product development
c) Horizontal integration
d) market penetration
9. ______________ is selling a division of an organization.
a) Franchising
b) Divestiture
c) Liquidation
d) Horizontal integration
10. When employing a ______ strategy, a firm must be careful not to use such aggressive
price cuts that their own profits are low or nonexistent.
a) Differentiation
b) Focus
c) Cost leadership
d) Product development
11. Managing by Crisis is based on the belief that the true measure of a really good
strategist is the ability to solve problems.
• True
• False
12. To successfully employ a focus strategy, a firm must ensure that its total costs across its
overall value chain are lower than competitors' total costs.
• True
• False
13. The overall aim of the Balanced Scorecard is to balance financial objectives with
strategic objectives.
• True
• False
14. High-velocity change is becoming more the rule rather than the exception.
• True
• False
15. bankruptcy applies to farmers.
• True
• False
16. Joint ventures are being used increasingly because they allow companies to minimize
risk.
• True
• False
17. Diversification strategies are becoming more popular as organizations are finding it
easier to manage diverse business activities.
• True
• False
18. Pioneering new and better technologies is an action based on the strategic posture of
leading change.
• True
• False
19. An acquisition occurs when a large organization purchases a smaller firm, whereas a
merger occurs when two organizations of about equal size unite to form one enterprise.
• True
• False
20. Being a first mover can be effective when a firm can easily copy or imitate the lead
firm's products or services.
• True
• False
Chapter No. 6: Strategy Analysis and Choice
1. The __________ is based on 2 key dimensions: the IFE total weighted scores on x-axis
and the EFE total weighted scores on the y-axis.
a) IE Matrix
b) SPACE Matrix
c) BCG Matrix
d) Grand Strategy Matrix
2. _________ are defensive tactics directed at reducing internal weakness and avoiding
external threats.
a) SW Strategies
b) WO Strategies
c) WT Strategies
d) ST Strategies
3. Which stage in the strategy-formulation framework focuses on generating feasible
alternative strategies?
a) The input stage
b) The output stage
c) The matching stage
d) The decision stage
4. ______ have a low relative market share position and compete in a slow- or no-market-
growth industry.
a) Question marks
b) Cash cows
c) Stars
d) Dogs
5. Which of these is not a SPACE Matrix quadrant?
a) Defensive
b) Offensive
c) Aggressive
d) Competitive
6. ______ organizations compete in slow-growth industries and have weak competitive
positions.
a) Quadrant I
b) Quadrant III
c) Quadrant IV
d) Quadrant II
7. A division with a high relative market share position in a low-growth industry can be
described as a:
a) Star.
b) Dog.
c) Question mark.
d) Cash cow.
8. Slow market growth characterizes ______ and ______ of the Grand Strategy Matrix.
a) Quadrant II; Quadrant III
b) Quadrant I; Quadrant IV
c) Quadrant II; Quadrant I
d) Quadrant III; Quadrant IV
9. _____ is shifting focus from specific issues to more general ones may increase
strategists' options for gaining organizational commitment.
a) Generalization
b) Equifinality
c) Satisfying
d) Focusing on higher-order issues
10. Which of the following is not a tactic used by politicians for centuries that can aid
strategists?
a) Equifinality
b) Objectivity
c) Focus on higher-order issues
d) Generalization
11. Sustainability is the idea that a business can meet its financial goals without hurting
customers.
• True
• False
12. Organizations generally will pursue ST, SO, or WT strategies to get into a situation in
which they can apply WO strategies.
• True
• False
13. FA and CA are the 2 dimensions with negative ratings in SPACE Matrix.
• True
• False
14. The major benefit of the BCG Matrix is that it draws attention to the cash flow,
investment characteristics, and needs of an organization's various divisions.
• True
• False
15. 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.
• True
• False
16. Quadrant IV businesses compete in slow-growth industries and have weak competitive
positions.
• True
• False
17. The Grand Strategy Matrix is based on two evaluative dimensions: market share and
market growth.
• True
• False
18. If the directional vector appears in the lower-right or competitive quadrant of the
SPACE Matrix, it suggests competitive strategies such as backward, forward, and
horizontal integration.
• True
• False
19. The BCG Matrix graphically portrays differences among divisions in terms of relative
market share position and industry growth rate.
• True
• False
20. In the U.S. today, each board director attends at least 90 percent of all meetings.
• True
• False
Chapter No. 7: Implementing Strategies:
Management and Operations Issues
1. ______ can be defined as the subdividing of a market into distinct subsets of customers
according to needs and buying habits
a) Product positioning
b) Marketing mix
c) Market segmentation
d) Divisional structure
2. ______________ and ____________ rank as marketing's most important contributions
to strategic management.
a) Market penetration; market segmentation
b) Product diversification; market penetration
c) Market segmentation; product positioning
d) Product positioning; product diversification
3. An effective product positioning strategy leads customers to expect __________service
than a company can deliver.
a) much higher
b) slightly lower
c) the same
d) much lower
4. _______ entails developing schematic representations that reflect how your products or
services compare to competitors' on dimensions most important to success in the
industry
a) Promotion
b) Positioning
c) Placing
d) Pricing
5. What is the most widely used technique for determining the best combination of debt
and stock?
a) Earnings per share/earnings before interest and tax analysis
b) Debt-to-stock ratio
c) Present value analysis
d) Gross profit analysis
6. Nearly all financial institutions require at least __________ years of projected financial
statements whenever a business seeks capital
a) Five
b) Three
c) Four
d) Six
7. The first approach in evaluating the worth of a business is determining its __________
or __________.
a) net income; operating revenue
b) cash flow; net income
c) wealth; revenue
d) net worth; stockholders' equity
8. Which of the following can be forecasted using the percentage-of-sales method?
a) Cost of goods sold
b) Taxes
c) Interest
d) Dividends
9. In many firms, _________ is doing away with the workplace and allowing employees to
work at home or anywhere, anytime.
a) Management
b) The economy
c) Government
d) Information technology
10. The level of management support for R&D is often constrained by:
a) the limited performance of R&D.
b) difficult market penetration.
c) high levels of competition in R&D.
d) resource availability.
11. The most common bases for segmenting markets are geographic and demographic.
• True
• False
12. An EPS/EBIT analysis is the most widely used technique for determining whether debt,
stock, or a combination is the best alternative for raising capital to implement
strategies.
• True
• False
13. The balance sheet should be prepared before the income statement in performing
projected financial analyses.
• True
• False
14. Financial budgets can be viewed as the planned allocation of a firm's resources based
on past performance.
• True
• False
15. Strategies such as forward, backward, and horizontal integration require that new
products be successfully developed and that old products be significantly improved.
• True
• False
16. Using all debt or all stock to raise capital may impose fixed obligations, restrictive
covenants, or other constraints that could severely reduce a firm's ability to raise
additional capital in the future.
• True
• False.
17. Financial budgeting should not be thought of as a tool for limiting expenditures but
rather as a method for obtaining the most productive and profitable use of an
organization's resources.
• True
• False.
18. To use the price-earnings ratio method, divide annual earnings per share by the market
price of the firm's common stock and multiply by average net income for the past five
years.
• True
• False
19. A good information system can cause a firm to increase costs due to the expense of new
technology.
• True
• False.
20. A good information system can allow a firm to reduce costs by establishing direct
communications between elements of the value chain.
• True
• False
Chapter No. 9: Strategy Review, Evaluation, and Control
1. ________ refers to the need for strategists to examine sets of trends as well as
individual trends in evaluation strategies.
a) Consistency
b) Consonance
c) Feasibility
d) Advantage
2. Strategy evaluation includes all of the following basic activities, EXCEPT:
a) Examining the underlying bases of a firm's strategy.
b) Comparing expected results with actual results.
c) Comparing results of competitors' strategies.
d) Taking corrective actions to ensure that performance conforms to plans.
3. The purpose of strategy evaluation is to:
a) Improve R&D programs.
b) Evaluate employees' performance.
c) Make budget changes.
d) Alert management to problems or potential problems.
4. ______ require a more elaborate and detailed strategy evaluation system.
a) Small organizations
b) Functional structures
c) Large organizations
d) Divisional structures
5. A revised _________ matrix should indicate how effective a firm's strategies have
been in response to key opportunities and threats.
a) IFE
b) Grand strategy
c) SPACE
d) EFE
6. _______ should place an organization in a better position to capitalize upon internal
strengths; to take advantage of key external opportunities; to avoid, reduce, or
mitigate external threats; and to improve internal weaknesses.
a) Corrective actions
b) Strategy structure
c) Strategic circle
d) Layoffs
7. Which of these is not a key financial ratio?
a) Market share
b) Production quality
c) Earnings per share
d) Asset growth
8. Which of the following is not a qualitative question that is useful in strategy
evaluation?
a) How much has our market share grown?
b) Is the strategy internally consistent?
c) Is the strategy appropriate in view of available resources?
d) Is the strategy consistent with the environment?
9. The Balanced Scorecard approach to strategy evaluation aims to:
a) Emphasize long-term concerns.
b) Balance the financial concerns.
c) Emphasize nonfinancial concerns.
d) Balance internal with external concerns.
10. _______ can be defined as alternative plans that can be put into effect if certain key
events do not occur as expected.
a) Strategy formulation
b) Contingency plans
c) Long-term plans
d) Strategy implementation
11. Advantage, in Rumelt's criteria for evaluating strategies, means a strategy must
neither overtax available resources nor create unsolvable subproblems.
• True
• False
12. Alternative strategies not selected for implementation should be discarded, as they
have a tendency to contaminate the contingency plans.
• True
• False
13. And IFE Matrix should indicate how effective a firm's strategies have been in
response to key opportunities and threats.
• True
• False
14. The end of the fiscal year is the best time of the year to do strategy evaluation.
• True
• False
15. Criteria that predict results may be more important than those that reveal what
already has happened.
• True
• False
16. Strategy evaluation, to be effective, should be based on quantitative criteria only.
• True
• False
17. Instituting an environmental audit can include moving environmental affairs from
the staff side of the organization to the line side.
• True
• False
18. Auditor-employees within an organization are responsible for safeguarding
company assets, assessing the efficiency of company operations, and ensuring that
generally accepted business procedures are practiced.
• True
• False
19. Proponents of the top-down approach contend that top executives are the only
persons in the firm with the collective experience, acumen, and fiduciary
responsibility to make key strategy decisions.
• True
• False
20. Strategy evaluation is becoming easier with the passage of time.
• True
• False