BUAD479 Exam #1
Which statement below is false? A. In a QSPM, the range for Total Attractiveness Scores is 1 = not attractive,2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive. B.The QSPM weights are identical to those in the EFE Matrix and IFE Matrix. C.Work row by row in developing a QSPM. D.The magnitude of the difference between the STAS in a given set of QSPM strategic alternatives indicates the relative desirability of one strategy over another. E.There is no limit to the number of strategies that can be evaluated or the number of sets of strategies that can be examined at once using the QSPM.
A. In a QSPM, the range for Total Attractiveness Scores is 1 = not attractive,2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive.
What would an appropriate SP axis number for Apple Inc.? A.- 6 B.+ 6 C.- 1 D.+ or - 7 E.+ 1
A.- 6
Fill in the two blanks. An industry can be stable or unstable on SP, yet high or low on IP. The smartphone industry, for instance, would be unstable (_____) on SP yet high-growth on IP, whereas the canned food industry would be stable (_____) on SP yet low-growth on IP. A.-6; -2 B.-2; -6 C.-3; -3 D.-6; -6 E.-2; -2
A.-6; -2
Women make up only ______ percent of board members at companies in the S&P 500, but in 2014, ______ percent of new board members appointed were women. A.19; 29 B.49; 59 C.29; 39 D.9; 19 E.39; 49
A.19; 29
The strategy-formulation analytical framework consists of how many stages and how many matrices? A.3 and 9 B.3 and 8 C.3 and 10 D.2 and 8 E.4 and 10
A.3 and 9
__________ is the unique way an organization does business. It is the human dimension that creates solidarity and meaning, and it inspires commitment and productivity in an organization when strategy changes are made. A.Culture B.Synergy C.Humanity D.Accountability E.Management
A.Culture
According to Michael Porter, the nature of competitiveness in a given industry can be viewed as a composite of the five forces. Which force is usually the most powerful? A.Rivalry among competing firms B.Potential development of substitute products C.Bargaining power of suppliers D.Potential entry of new competitors E.Bargaining power of consumers
A.Rivalry among competing firms
Which of the following statements is false? A.You may assign the same rating to firms included in a CPM analysis if the firms are similar on the respective factor. B.Critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. C.Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 33 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors. D.The ratings in a CPM refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. E.The weights and total weighted scores in both a CPM and an EFE have the same meaning.
A.You may assign the same rating to firms included in a CPM analysis if the firms are similar on the respective factor.
In a BCG Matrix, ____________ is defined as the ratio of a division's own market share (or revenues) in a particular industry to the market share (or revenues) held by the largest rival firm in that industry. A.relative market share position B.market share position C.rival market share D.rival market share position E.market share
A.relative market share position
Going clockwise beginning with the top axis, what are the four axes of a SPACE Matrix? A.FP, IP, SP, and CP B.AP, BP, CP, and DP C.IP, SP, CP, and FP D.SP, CP, FP, and IP E.CP, FP, IP, and SP
A.FP, IP, SP, and CP
Four companies—A, B, C, and D have revenues of 1, 2, 3, and 4, respectively. Company C develops a BCG Matrix. What would the RMSP be for company C if all four firms have the same net income? A. 0.40 B. 0.30 C. 0.25 D. 0.50 E. 0.20
B. 0.30
What strategy may be best under the following conditions? a. The organization competes in a highly competitive or a no-growth industry, as indicated by low industry profit margins and returns. b. The organization's present channels of distribution can be used to market new products to current customers. c. New products have countercyclical sales patterns compared with an organization's present products. d. The organization's basic industry is experiencing declining annual sales and profits. A. Retrenchment B. Unrelated diversification C. Divestiture D. Vertical integration E. Related diversification
B. Unrelated diversification
The range of total weighted scores in a CPM Matrix is: A. 0.0 to 5.0. B.1.0 to 4.0. C.1.0 to 5.0. D.0.0 to 4.0. E.1.0 to 6.0.
B.1.0 to 4.0.
In an EFE Matrix, how much more important is a rating of 4 than a rating of 3? A.25% B.33% C.50% D.66% E.20%
B.33%
The _________ Matrix determines the relative attractiveness of various strategies based on the extent that key external and internal factors are capitalized on or improved. A.SPACE B.QSPM C.SWOT D.Internal-External (IE) E.BCG
B.QSPM
An excellent source of industry information, including Industry Profiles and trade statistics for many industries, is provided at what website? A.www.hoovers.industries.com B.http://globaledge.msu.edu/industries/ C.www.finance.aol.com D.www.google.industries.com E.www.finance.yahoo.com
B.http://globaledge.msu.edu/industries/
What are the four types of strategies generated by a SWOT analysis? A.SO, ST, SW, and SS B.SO, WO, ST, and WT C.SW, ST, WO, and WT D.WO, WT, WS, and SS E.SO, SW, ST, and WW
B.SO, WO, ST, and WT
If a company has high customer loyalty, such as Harley-Davidson's, what rating would be appropriate for that factor in a SPACE Matrix? A.-1 on SP axis B +7 on CP axis C.-1 on CP axis D.-7 on SP axis E.+1 on CP axis
C.-1 on CP axis
The weight column in an EFE Matrix must sum to what number? A.3.0 B.The sum may vary between 1.0 and 5.0. C.1.0 D.2.0 E.4.0
C.1.0
If a corporation's profits are $120, and its three divisions have $30, $80, and $10 of profits respectively, and equal revenues, what percent is the pie slice in Division 3? A.12.5 B.25.0 C.8.33 D.33.3 E.None of the above
C.8.33
Which of the following statements is true? A.Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 14.3 percent better than the second, but it does suggest that the first firm is much better in many areas. B.Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it follows that the first firm is precisely 12.5 percent better than the second, and that the first firm is better in some areas. C.Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 14.3 percent better than the second, but it does suggest that the first firm is better in some areas. D.When one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it follows that the first firm is precisely 14.3 percent better than the second. E.Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 12.5 percent better than the second, but it does suggest that the first firm is better in some areas.
C.Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 14.3 percent better than the second, but it does suggest that the first firm is better in some areas.
Which of the following statements is false? A.Critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. B.The weights and total weighted scores in both a CPM and an EFE have the same meaning. C.Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 25 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors. D.Avoid assigning the same rating to firms included in a CPM analysis. E.The ratings in a CPM refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness.
C.Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 25 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors.
What is Rudin's Law? A.When a crisis forces choosing among alternatives, most people choose a bad option. B.When a crisis forces choosing among alternatives, most people guess at the best option. C.When a crisis forces choosing among alternatives, most people choose the worst possible one. D.When a crisis forces choosing among alternatives, most people do not choose the best option. E.When a crisis forces choosing among alternatives, most people panic.
C.When a crisis forces choosing among alternatives, most people choose the worst possible one.
In an EFE Matrix, the average total weighted score is: A.4.0. B.3.0. C.3.5. D.2.5. E.2.0.
D.2.5.
Any industry whose annual growth in sales exceeds ______ percent could be considered to have rapid growth. A.15 B.25 C.10 D.5 E.20
D.5
According to Michael Porter, the nature of competitiveness in a given industry can be viewed as a composite of the following forces: A.Rivalry among competing firms and potential entry of new competitors. B.Potential development of substitute products and bargaining power of consumers. C.Bargaining power of suppliers and bargaining power of distributors. D.A and B E.A, B, and C
D.A and B
In a QSPM analysis, would it ever be appropriate or useful for a company to not include a weight column at all, but rather just sum the AS columns to determine the relative attractiveness of six strategies? A.Yes but only for nonprofit organizations B.Yes but only for multi-divisional companies C.Yes but only for small firms D.No E.Yes
D.No
Which of the following statements is true? A.Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 8.0 and the lowest possible total weighted score is 1.0. B.Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 10.0 and the lowest possible total weighted score is 0.0. C.Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 0.0. D.Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. E.Statements A through D are false.
D.Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0.
There are four important differences between the BCG Matrix and the IE Matrix. Which statement below is not a difference between the two matrices? A.The strategic implications of each matrix are different. B.The IE Matrix has nine quadrants versus four in a BCG Matrix. C.The IE Matrix requires more information about the divisions than does the BCG Matrix. D.The sizes of the circles and pie slices can vary. E.The x and y axes are different.
D.The sizes of the circles and pie slices can vary.
Which of the following statements is true? A.Wild guesses should sometimes be made in formulating strategies, and reasonable assumptions based on available information must sometimes be made. B.Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must oftentimes be made. C.Wild guesses oftentimes must be made in formulating strategies, but reasonable assumptions based on available information must always be made. D.Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must always be made. E.Wild guesses should rarely be made in formulating strategies, but reasonable assumptions based on available information must usually be made.
D.Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must always be made.
Are the interpretations of the weights in a CPM and EFE Matrix the same? A.Sometimes B. Usually C.No D.Yes E.Never
D.Yes
In a BCG Matrix, divisions in Quadrant III (lower left) have a high relative market share position but compete in a low-growth industry. They are called _______________. A.dogs B.question marks C.stars D.cash cows E.laggards
D.cash cows
In an EFE Matrix, how much more important is a weight of 0.20 than a weight of 0.15? A.50% B.5.0% C..05% D.33% E.25%
D.33%
In both the BCG and IE Matrices, the size of each circle represents the percentage of _______ contribution of each division, and pie slices reveal the percentage of _____ contribution of each division to the company. A.sales; net income B.revenues; earnings C sales; profits D.A, B, and C E.revenues; retained earnings
D.A, B, and C
An example of an economic variable is "value of the dollar" that recently hit a 7-year high compared with the yen, a 9-year high compared with the euro, a 5-year high compared with the Australian dollar, and an 11-year high compared with some other currencies. The high dollar results in what economic factor(s)? A. The high dollar makes it cheap for Americans to travel abroad. B. The high dollar worsens the U.S. trade deficit. C. The high dollar makes U.S. goods more expensive in overseas markets. D. The high dollar makes it expensive for foreigners to travel to the United States. E. All of the above
E. All of the above
An advantage of the strong dollar includes which of the following? A. Companies with substantial outside U.S. operations see their overseas expenses, such as salaries paid in euros, become cheaper. B. It gives U.S. companies greater firepower for international acquisitions. C. Companies importing goods have greater buying power because their dollars now go further overseas. D. A & B above E. A, B, and C above
E. A, B, and C above
How many key external factors should be included in an EFE Matrix? A.15 B.25 C.30 D.10 E.20
E.20
For maximum effectiveness, how many board of director members should there be for a company, according to Lublin and Yermack? A.11 B.15 C.13 D.17 E.9
E.9
What is a major limitation of the BCG Matrix? A. Many businesses fall right in the middle of the BCG Matrix and thus are not easily classified. B The BCG Matrix does not reflect whether various divisions or their industries are growing over time. C.Other variables besides the two used -- such as size of the market and competitive advantages —are important in making strategic decisions about various divisions. D A and B E.A, B, and C
E.A, B, and C
An MIS technique that involves using software to mine huge volumes of data to help executives make decisions is called: A.business analytics. B.predictive analytics. C.data mining. D.machine learning. E.All of the above
E.All of the above
The bargaining power of consumers can be the most important force affecting competitive advantage. Consumers gain increasing bargaining power under the following circumstance(s): A.If they are informed about sellers' products, prices, and costs B.If they can inexpensively switch to competing brands or substitutes C.If sellers are struggling in the face of falling consumer demand D.If they are particularly important to the seller E.All of the above
E.All of the above
Which statement is a limitation of the SWOT? A.SWOT is a static assessment (or snapshot) in time. B.SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. C.SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself. D.There are no weights, ratings, or numbers in a SWOT analysis. E.All of the above.
E.All of the above.
Which statement below is false? A.In a QSPM, if you assign an AS score to one strategy, then assign an AS score(s) to the other—in other words, if one strategy receives a dash, then all others must receive a dash in a given row. B.If you have more than one strategy in the QSPM, then let the AS scores range from 1 to "the number of strategies being evaluated." C.In a QSPM, never rate one strategy and not the other. D.In a QSPM, an AS value of 4 is 33 percent more important than a 3. E.All statements are true.
E.All statements are true.
The state in the United States with highest state taxes is ___________ and the state with the lowest state taxes is ______________. A.California; Alaska B.New York; Alaska C.California; Mississippi D.California; South Dakota E.New York; Wyoming
E.New York; Wyoming
Which statement below is false? A.Successful strategists do a lot of chatting and informal questioning to stay abreast of how things are progressing and to know when to intervene. B.Successful strategists lead strategy but do not dictate it. They give few orders, announce few decisions, depend heavily on informal questioning, and probe and clarify until a consensus emerges. C.Successful strategists ensure that all major power bases within an organization are represented in, or have access to, top management. D.A & C E.None of the above
E.None of the above
Which statement below is false? A.Successful strategists let weakly supported ideas and proposals die through inaction. B.Successful strategists establish additional hurdles or tests for strongly supported ideas considered unacceptable but not openly opposed. C.Successful strategists keep a low political profile on unacceptable proposals and strive to let most negative decisions come from subordinates or a group consensus. D.A & B E.None of the above.
E.None of the above.
What source provides excellent online information and advice on approximately 1,700 stocks, more than 90 industries, the stock market, and the economy, including company income statements and balance sheets? A.Lexis-Nexis Academic B.Mergent Online C.Standard & Poor's NetAdvantage D.IBISWorld E.Value Line Investment Survey
E.Value Line Investment Survey
Which states have zero state income tax? A.Texas and Florida B.Nevada, Alaska, and Wyoming C.South Dakota and Washington D.A and B E.A, B, and C
E.A, B, and C
By 2018, revenues from global data analytics software are expected to reach ________ billion, a ________ percent increase from 2012. Leading firms providing the software include IBM, SAP, Oracle, Microsoft, Qlik Technologies, Tibco Software, and Tableau Software. a. $21.7; 64 b. 50; 50 c. 2.17; 6.4 d. 217; 640 e. .217; .64
a. $21.7; 64
In an IFE Matrix, how much more important is a weight of .016 than a weight of .07? a. 129 percent b. 5.6 percent c. 12.9 percent d. 56 percent e. 90 percent
a. 129 percent
When should a vision statement reveal the type of business in which the firm engages? a. Always b. Sometimes, depending on the firm top strategist's preferences c. When the firm is a monopoly or oligopoly d. When the firm has diverse businesses e. When the firm has a mission statement as well
a. Always
To survive and prosper, a business must gain and sustain ___________ major competitive advantages over rival firms. a. At least several b. at least fifteen c. one d. two e. as many as one hundred
a. At least several
___________________ is the act of strengthening employees' sense of effectiveness by encouraging them to participate in decision making and to exercise initiative and imagination, and rewarding them for doing so. a. Empowerment b. Encouragement c. Leadership d. Involvement e. Motivation
a. Empowerment
In writing a mission statement, and trying to include the customer component, is it sufficient to simply include the word "customer" in the statement? a. No b. Sometimes c. Yes d. Occasionally e. Oftentimes
a. No
Guidelines, rules, and procedures established to support implementation efforts are called what? a. Policies b. Strategies c. Objectives d. Opportunities e. Strengths
a. Policies
______________ is "the science of planning and directing large-scale military operations, of maneuvering forces into the most advantageous position prior to actual engagement with the enemy." a. Strategy b. Formulating objectives c. Coordination d. Leadership e. Mission development
a. Strategy
Which statement below is false? a. The average IFE Matrix score is 2.0. b. When a key internal factor is both a strength and a weakness, the factor may be included twice in the IFE Matrix, and a weight and rating assigned to each statement. c. In an IFE Matrix, the number of factors has no effect on the range of total weighted scores because the weights always sum to 1.0. d. Always sequence factors in an IFE Matrix from highest to lowest weight. e. All statements are true.
a. The average IFE Matrix score is 2.0.
Which of the following statements is true? a. There is no one best mission statement for a particular organization. b. An effective mission statement paves the way for an effective vision statement. c. First and foremost, mission statements should be employee-oriented, and then shareholder-oriented. d. Mission statements should not be published for competitors to see. e. A single-division organization could have several mission statements for different purposes.
a. There is no one best mission statement for a particular organization.
Unskilled leaders work out their conflicts in courtrooms and battlefields. Brilliant strategists rarely go to battle or to court; they generally achieve their objectives how? a. Through tactical positioning well in advance of any confrontation b. Through communication with the rival's leaders c. Through an all-out assault on the rival d. Through negotiation and compromise e. Through amassing superior forces against a rival's weak areas
a. Through tactical positioning well in advance of any confrontation
A benefit of outsourcing is cost restructuring. Is the following statement true? Outsourcing changes the balance of fixed costs to variable costs by moving the firm more to variable costs; outsourcing also makes variable costs more predictable. a. Yes b. No c. Possibly d. Sometimes e. Usually
a. Yes
Spending on online advertisements globally is increasing about _____ percent annually, according to edMarketer, and represents about _____ percent of total advertising spending in the United States. a. 25; 39 b. 50; 50 c. 40; 25 d. 39; 25 e. 25; 40
a. 25; 39
Which of the following statements is false? a. A mission statement needs to be broad to reconcile differences effectively among, and appeal to, an organization's diverse stakeholders. b. Apple Computer's mission statement should not open the possibility for diversification by Apple into pesticides. c. An overly general mission statement that does not exclude any strategy alternatives could be dysfunctional. d. Excess specificity in a mission statement would limit the potential of creative growth for the organization. e. A good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity.
b. Apple Computer's mission statement should not open the possibility for diversification by Apple into pesticides.
According to Porter, strategies allow organizations to gain competitive advantage from three different bases. What are the three bases? a. Cost leadership, differentiation, and initiator b. Cost leadership, differentiation, and focus c. Being a first-mover, being a late-follower, and differentiation d. Initiator, differentiation, and focus e. Differentiation, focus, and being a first-mover
b. Cost leadership, differentiation, and focus
The largest consumer-products company in the world, Procter & Gamble (P&G), is in the process of selling more than half of its brands (nearly 100) in order to focus on its core brands (about 80). What is this strategy called? a. Restructuring b. Divestiture c. Vertical integration d. Reengineering e. Retrenchment
b. Divestiture
Which statement(s) below is false? a. All firms in a given industry have a similar value chain, which includes activities such as obtaining raw materials, designing products, building manufacturing facilities, developing cooperative agreements, and providing customer service. b. Firms should strive to understand their own value chain operations, not those of their competitors, suppliers, and distributors. c. According to Porter, the business of a firm can best be described as a value chain, in which total revenues minus total costs of all activities undertaken to develop and market a product or service yields value. d. Conducting a value chain analysis is supportive of the research-based view's examination of a firm's assets and capabilities as sources of distinctive competence. e. A firm will be profitable so long as total revenues exceed the total costs incurred in creating and delivering the product or service.
b. Firms should strive to understand their own value chain operations, not those of their competitors, suppliers, and distributors.
What strategy seeks to increase market share for present products or services in present markets through greater marketing efforts? a. Forward integration b. Market penetration c. Market development d. Market saturation e. Vertical integration
b. Market penetration
______________ involves companies hiring other companies to take over various parts of their functional operations, such as human resources, information systems, payroll, accounting, customer service, and even marketing. a. Procurement b. Outsourcing c. Backward integration d. Displacement e. Partnering
b. Outsourcing
Why are both profit and vision needed to motivate a workforce effectively? a. Top executive bonuses are oftentimes based on accomplishing a mission and vision. b. Profit is viewed negatively by some stakeholders of a firm. c. Profit and vision statements are usually found in an Annual Report. d. Manager and employee bonuses are usually based on profit. e. Vision is viewed negatively by some stakeholders of a firm.
b. Profit is viewed negatively by some stakeholders of a firm.
A fundamental strategy-evaluation activity includes what? a. Reviewing external and internal factors that are the bases for current strategies. b. Reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions. c. Taking corrective actions. d. Monitoring employees. e. Measuring performance.
b. Reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions.
According to James Van Horne, the functions of finance/accounting comprise three decisions. What are the three? a. The investment decision, the liquidity decision, and the dividend decision b. The investment decision, the financing decision, and the dividend decision c. The liquidity decision, the financing decision, and the dividend decision d. The investment decision, the financing decision, and the leverage decision e. The investment decision, the financing decision, and the treasury stock decision
b. The investment decision, the financing decision, and the dividend decision
According to the chapter, an important question to answer in developing a strategic plan is: a. Where do we want to go? b. Where are we now?, where do we want to go?, and how are we going to get there? c. Where are we now? d. Where is the captain? e. How are we going to get there?
b. Where are we now?, where do we want to go?, and how are we going to get there?
In multidivisional organizations, should divisional units perform strategic-management tasks, including the development of their own statement of vision and mission? a. No b. Yes c. Sometimes d. Under certain conditions or situations e. C and D above
b. Yes
Chapter 2 says "to have a vision that says 'to become the best retailing firm in the USA' " is _____________________. a. too short b. much too broad c. weak d. excellent e. Admirable
b. much too broad
To build four new manufacturing plants in Europe is an example of a(n) ____________. a. strength b. strategy c. weakness d. opportunity e. Threat
b. strategy
In an IFE Matrix, the weights of all factors included must sum to ___________. a. 2.0 b. 4.0 c. 1.0 d. 3.0 e. 5.0
c. 1.0
Most practitioners and academicians of strategic management feel that an effective statement should include ______ mission statement components. a. 3 b. 6 c. 9 d. 12 e. 15
c. 9
Secondary buyouts occur when what happens? a. A private equity firm buys a publically held firm. b. A company buys a firm and then sells the firm within a year. c. A private equity firm buys a firm from another private equity firm. d. A private equity firm buys a privately held firm. e. A company buys a firm and then itself is purchased by another company.
c. A private equity firm buys a firm from another private equity firm.
Which of the following statements is false? a. The proposed exemplary mission statement for Avon given near the end of the chapter consists of 3 sentences and 58 words total. b. Some organizations have no stated vision or mission statement. c. An excellent mission statement could be shorter than an excellent vision statement. d. An excellent mission statement could consist of two sentences and 30 words. e. All mission statements should include all nine components and all nine characteristics.
c. An excellent mission statement could be shorter than an excellent vision statement.
Which statement(s) given below is/are false? a. During the process of developing vision and mission statements, some organizations use discussion groups of managers to develop and modify existing statements. b. The process of developing a mission statement should create an "emotional bond" and "sense of mission" between the organization and its employees. c. An outside person with expertise in developing such statements, who has unbiased views, should not actually manage the mission statement-development process. d. A & B above e. B & C above
c. An outside person with expertise in developing such statements, who has unbiased views, should not actually manage the mission statement-development process.
Dale McConkey said, "Plans are less important than planning." What does this statement mean? a. Manager and employee involvement in decision making is important. b. Honesty, integrity, and humility are vitally important in strategic planning. c. Communication, understanding, and commitment are vitally important in strategic planning. d. The strategic planning narrative is not that important. e. The strategic planning matrices are not that important.
c. Communication, understanding, and commitment are vitally important in strategic planning.
Strengths that cannot be easily matched or imitated by competitors are called what? a. Synergies b. Distinctive advantages c. Distinctive competencies d. Competitive advantages e. Valuable resources
c. Distinctive competencies
The Industrial Organization view of strategic planning advocates that external (industry) factors are more important than internal ones for gaining and sustaining competitive advantage. Do the authors David and David agree? a. No. Internal factors are controllable and external factors are no. b. No. Internal factors (strengths and weaknesses) are more important. c. No. Matching key external opportunities and threats with key internal strengths and weaknesses provides the basic successful strategy information. d. Yes. Michael Porter is correct. e. Yes. It is like an ocean tide rising or falling. No one can stop that flow.
c. No. Matching key external opportunities and threats with key internal strengths and weaknesses provides the basic successful strategy information.
What are the five basic functions of management? .a. Planning, organizing, motivating, strategizing, and controlling b. Planning, organizing, motivating, strategizing, and leading c. Planning, organizing, motivating, staffing, and controlling d. Planning, organizing, leading, motivating, and controlling e. Planning, organizing, motivating, staffing, and leading
c. Planning, organizing, motivating, staffing, and controlling
According to the chapter, the worst thing strategists can do is develop strategic plans themselves and then do what? a. File the plans away in a file cabinet. b. Go on vacation. c. Present the plans to operating managers to execute. d. Begin changing the plans. e. Place the plans on the corporate website.
c. Present the plans to operating managers to execute.
What is the name of the strategy that involves selling off land and buildings to raise needed cash, pruning product lines, closing marginal businesses, closing obsolete factories, automating processes, reducing the number of employees, and instituting expense control systems? a. Liquidation b. Reengineering c. Retrenchment d. Bankruptcy e. Divestiture
c. Retrenchment
External forces can be divided into five broad categories, including the following category: a. Ethics b. Sustainability c. Technology d. A&C e. B&C
c. Technology
A meta-analysis of 20 years of empirical research on mission statements came to what conclusion? a. There is no relationship between mission statements and measures of financial organizational performance. b. There is a large negative relationship between mission statements and measures of financial organizational performance. c. There is a small positive relationship between mission statements and measures of financial organizational performance. d. There is a small negative relationship between mission statements and measures of financial organizational performance. e. None of the above
c. There is a small positive relationship between mission statements and measures of financial organizational performance.
According to Menz and Sheef, when are chief strategy officers (CSOs) most often hired? a. As top management team interdependence increases b. When there is no chief operating officer (COO). c. When there is an increase in management interdependence and growth in acquisition activity d. As the business portfolio increases (e.g., the firm becomes more diversified) e. All of the above
c. When there is an increase in management interdependence and growth in acquisition activity
The extent to which a manufacturing plant's output reaches its potential output is called ________________, a key strategic variable. a. maximum utilization b. min-to-max capacity c. capacity utilization d. capacity maximum e. maximum capacity
c. capacity utilization
Target recently joined Best Buy in offering to match online prices of rival retailers. Both companies are seeking to combat ________ by shoppers who check out products in their stores but buy them on rival's websites. a. price comparing b. price checking c. showrooming d. price shopping e. price hopping
c. showrooming
The "markets" component of mission statements refers to _____________. a. the sectors in which the company operates b. the segments in which the company operates c. the regions in which the company operates d. the industries in which the company operates e. the supplier and distributor network of the firm
c. the regions in which the company operates
The population of the world recently surpassed ___ billion; the United States has slightly more than ___ million people. a. 14;610 b. 1;110 c. 28;910 d. 7;310 e. 21;910
d. 7;310
Lorsch found that executives in successful companies are emotionally committed to the firm's culture, but he concluded that culture can inhibit strategic management in the following way: a. Managers frequently miss the significance of changing external conditions because they are blinded by strongly held beliefs. b. When a particular culture has been effective in the past, the natural response is to stick with it in the future, even during times of major strategic change. c. Employees can get so attached to cultural products that they ignore strategies and tactics. d. A and B e. A, B, and C
d. A and B
A mission statement should include the following components: a. customers, products/services, markets, and technology b. survival/growth/profitability, philosophy, self-concept, and public image c. enduring, inspiring, and reconciliatory d. A and B above e. A, B, and C above
d. A and B above
Why do many U.S. companies plan to reshore in 2016-2017? a. A desire to get products to market faster and respond rapidly to customer orders b. Higher transportation and warehousing costs c. Improved quality and protection of intellectual property d. A and C e. A, B, and C
d. A and C
First mover advantages refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms. An advantage of being a first mover is: a. Securing access to rare resources. b. Gaining new knowledge of key factors and issues. c. Carving out market share and a position that is easy to defend and costly for rival firms to overtake. d. A, B, and C e. A and B
d. A, B, and C
A pitfall(s) to watch for and avoid in strategic planning, as listed in the chapter, is: a. using strategic planning to gain control over decisions and resources. b. doing strategic planning only to satisfy accreditation or regulatory requirements. c. failing to communicate the plan to employees, who continue working in the dark. d. All of the above e. A & B above
d. All of the above
Cultural products include which of the following dimensions? a. Values, beliefs, rites, and rituals b. Ceremonies, myths, stories, and legends c. Sagas, heroes, heroines, and symbols d. All of the above e. A and B above
d. All of the above
Which statement below is true? a. In the United States, mergers and acquisitions totaled $1.52 trillion in 2014, comprising 45 percent of global deals, up from $998 billion, or 43 percent, the prior year. b. There were far more global mergers and acquisitions in 2014 than in any year since 2007, exceeding $3.5 billion. c. A leveraged buyout converts a public firm into a private company. d. All of the statements are true. e. More than 10,000 mergers transpire annually in the United States, with same-industry combinations predominating.
d. All of the statements are true.
Two exemplary, hypothetical mission statements are provided near the end of Chapter 2 for what two companies? a. Ford and General Motors b. Starbucks and Chipotle c. Kroger and Publix d. Avon and L'Oreal e. Apple and IBM
d. Avon and L'Oreal
In performing breakeven analysis, which of the following are considered variable costs? a. Advertising expenses b. Labor expenses c. Raw material expenses d. B and C e. A and B
d. B and C
________________ is an analytical tool used to determine whether a firm's value chain analysis is competitive compared with those of rivals and thus conducive to winning in the marketplace. a. Competitive Profile Analysis b. Perceptual mapping c. Competitive postering d. Benchmarking e. Breakeven analysis
d. Benchmarking
What are the five major types of bankruptcy? a. Chapters 1, 3, 5, 7, and 9 b. Chapters 5, 7, 11, 13, and 15 c. Chapters 3, 5, 7, 9, and 11 d. Chapters 7, 9, 11, 12, and 13 e. Chapters 2, 4, 6, 7, and 8
d. Chapters 7, 9, 11, 12, and 13
Strategic management is based on the idea that organizations should monitor internal and external trends how often? a. Annually b. Monthly c. Quarterly d. Continually e. Periodically
d. Continually
What is often considered to be the first step in strategic planning? a. Establishing objectives b. Securing capital to operate c. Obtaining shareholders or financial supporters d. Developing a vision statement e. Devising a mission
d. Developing a vision statement
In developing an IFE Matrix, what is an important guideline? a. Include at least 20 factors. b. Never assign a weight of more than 1.0 for a factor. c. Assign higher weights for factors that have higher ratings. d. Include factors that are both actionable and divisional to the extent possible. e. Never assign a rating of more than 4.0 for a factor.
d. Include factors that are both actionable and divisional to the extent possible.
Consistent business success rarely happens by chance. How does it happen? a. By forming effective alliances and coalitions b. By motivating managers and employees effectively c. By using analytical strategic management matrices in developing a strategic plan d. It most often results from careful planning followed by diligent, intelligent, hard work e. By effectively combining intuition with analytical thinking
d. It most often results from careful planning followed by diligent, intelligent, hard work
The old adage "If it ain't broke, don't fix it" pertains to which of the following? a. Managing by subjectives b. Managing by continuity c. Managing by hope d. Managing by extrapolation e. Managing by crisis
d. Managing by extrapolation
In developing an IFE Matrix, when can both internal and external factors be included? a. Whenever a firm does not develop or have an EFE Matrix b. Sometimes c. Anytime d. Never e. For firms in some industries, such as utility companies
d. Never
In writing a mission statement, if you say "We follow the golden rule in all that we do," as is stated in the L'Oreal statement, that sentence would satisfy what component? a. Self-concept b. Ethics c. Markets d. Philosophy e. Integrity
d. Philosophy
Good mission statements identify the utility of a firm's products to its customers. What is a synonym for utility? a. Usefulness b. Importance c. Value d. Value, importance, and usefulness e. Importance and usefulness
d. Value, importance, and usefulness
The two general types of diversification strategies are related diversification and unrelated diversification. When are businesses said to be related? a. When their objectives and strategies are about the same b. When they compete in about the same areas c. When they are about the same size d. When their value chains possess competitively valuable cross-business strategic fits e. When they compete in the same SIC code industry
d. When their value chains possess competitively valuable cross-business strategic fits
According to Chapter 1, ____________ may be the most important word in management. a. implementation b. strategy c. strategist d. communication e. Planning
d. communication
Finish this sentence: According to Drucker, the most important time to ask seriously "What do we want to become?" and "What is our business?" is ____________________. a. when a company buys another company b. when a company's long-term objectives have been established c. when the company's vision statement has been altered d. when a company has been successful e. when a company has been unsuccessful
d. when a company has been successful
A firm can achieve sustained competitive advantage by doing what? a. Continually adapting to changes in external trends and events and internal capabilities, competencies, and resources b. Effectively formulating, implementing, and evaluating strategies that capitalize on changes in trends and internal capabilities c. Monitoring employees continuously d. All of the above e. A and B
e. A and B
Objectives should include which of the following characteristics? a. Measurable, realistic, and understandable b. Measurable, challenging, and hierarchical c. Qualitative, obtainable, congruent among organizational units, and associated with a timeline d. A, B, and C e. A and B
e. A and B
The chapter lists nine reasons why many mergers and acquisitions fail, including the following reason: a. Inability to achieve synergy b. Too large an acquisition c. Improprieties on one or both sides d. A, B, and C e. A and B
e. A and B
Empirical indicators, characteristics of resources that enable a firm to implement strategies, include the following: a. Rare and hard to imitate b. Global and liquid c. Scarce and unique d. Not easily substitutable e. A and D
e. A and D
Regarding vision statements, which statement below is false? a. Vision statements should be two sentences or less in length. b. Vision statements should be written from a customer perspective. c. Vision statements should do more than identify the product/service a firm offers. d. Vision statements should answer the question "What is our mission?" e. A and D above
e. A and D above
Which of the following statements is false? a. The resource-based view approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage. b. In contrast to the Industrial Organization (I/O) theory presented in the previous chapter, proponents of the RBV view/theory contend that organizational performance is primarily determined by internal resources. c. Resource-based view theory asserts that resources are actually what helps a firm exploit opportunities and neutralize threats. As indicated in the Academic Research Capsule 4-1, RBV theory may be helpful in identifying diversification targets. d. Empirical research by Neffke reveals that it is the nature of a firm's human capital, more than any other variable in the firm's value chain, that impacts that firm's choice of diversification targets. Specifically, firms select acquisition targets that offer opportunities to leverage existing human resources. e. A through D are true statements.
e. A through D are true statements.
According to Vern McGinnis, a mission statement should do what? a. Distinguish a given organization from all others b. Serve as a framework for evaluating both current and prospective activities c. Be limited enough to exclude some ventures and broad enough to allow for creative growth d. Define what the organization is and what the organization aspires to be e. All of the above
e. All of the above
King and Cleland recommend that organizations carefully develop a written mission statement in order to reap the following benefit: a. to provide a basis for organizing work, departments, activities, and segments around a common purpose. b. to provide a basis for prioritization of key internal and external factors utilized to formulate feasible strategies. c. to make sure all employees/managers understand the firm's purpose or reason for being. d. to provide a basis for the allocation of resources. e. All of the above
e. All of the above
Recent research reveals that small- and medium-size firms expanding into other countries should form alliances with noncompetitors rather than with rival firms. Why? a. Competing firms oftentimes share less knowledge than they could or should. b. The benefits of allying with competitors are offset by higher monitoring and control costs. c. Alliances with noncompetitors are positively associated with international performance, whereas alliances with competitors are negatively related. d. Alliances with competitors are more costly, directly and indirectly, and provide redundant knowledge and resources. e. All of the above
e. All of the above
The management function of staffing, or human resource (HR) management, includes activities such as the following: a. Training, developing, caring for, evaluating, and rewarding b. Recruiting, interviewing, testing, selecting, and orienting c. Disciplining, promoting, transferring, and demoting d. Dismissing employees and managing union relations e. All of the above
e. All of the above
Which of the following activities are included in strategy implementation? a. Develop a strategy-supportive culture and create an effective organizational structure. b. Redirect marketing efforts and prepare budgets. c. Motivate employees and allocate resources. d. Establish annual objectives and devise policies. e. All of the above
e. All of the above
Which of the following is listed in the chapter as a reason often given for poor or no strategic planning in a firm? a. No monetary rewards for doing planning b. Overconfidence c. Laziness d. No formal training in strategic management e. All of the above
e. All of the above
Which of the following statements is false? a. Although evidence is mounting that firms should use partnering as a means for achieving strategies, most U.S. firms in many industrieslong dash—such as financial services, forest products, metals, and retailinglong dash—still operate in a merge or acquire mode to obtain growth. b. Partnering has become a core competency, a strategic issue of high importance. c. Partnering is not yet taught at most business schools and is often viewed within companies as a financial issue rather than a strategic issue. d. In a global market tied together by the Internet, joint ventures, and partnerships, alliances are proving to be a more effective way to enhance corporate growth than mergers and acquisitions. e. All of the above statements are true.
e. All of the above statements are true.
A limitation of financial ratio analysis includes the following statement: a. Seasonal factors can influence comparative financial ratios. b. Financial ratios are based on accounting data, and firms differ in their treatment of such items as depreciation, inventory valuation, R&D expenditures, pension plan costs, mergers, and taxes. c. Departures from industry average financial ratios do not always indicate that a firm is doing especially well or badly. d. Financial ratios are not very "actionable" in terms of revealing potential strategies needed (because they generally are based on performance of the overall firm). e. All the statements are limitations.
e. All the statements are limitations.
Which statement below is false? a. Dividends are sometimes paid out even when the firm has incurred a negative annual net income. b. Dividends are sometimes paid out even if the funds could be better reinvested in the business, and/or even if the firm has to obtain outside sources of capital to pay for the dividends. c. The benefits of paying dividends to investors must be balanced against the benefits of internally retaining funds, and there is no set formula on how to balance this trade-off. d. In 2014-2016, companies are aggressively boosting their dividends paid to shareholders. e. All the statements are true.
e. All the statements are true.
Official business failure calculations include what events? a. Bankruptcies and foreclosures b. Liquidations and court-mandated receiverships c. Reverse mortgages and buyouts d. All of the above e. A & B
e. A & B
Strengths and weaknesses can be determined by elements of being rather than performance. For example, ______________. a. a strength may involve ownership of natural resources b. a strength may be a historic reputation for quality c. a weakness may be a current ratio below 1.0 d. All of the above e. A & B above
e. A & B above
Nonprofit organizations are basically just like for-profit companies except for two major differences. What are the differences? a. Nonprofits do not have competitors. b. Nonprofits do not pay taxes. c. Nonprofits do not have shareholders to provide capital. d. A and B e. B and C
e. B and C
When an organization has pursued both a retrenchment strategy and a divestiture strategy, and neither has been successful, then perhaps the best strategy would be ____. a. restructuring b. Chapter 7 bankruptcy c. Chapter 11 bankruptcy d. liquidation e. B and D
e. B and D
If an organization's present suppliers are especially expensive, unreliable, or incapable of meeting the firm's needs for parts, components, assemblies, or raw materials, what strategy is likely best? a. Forward integration b. Market development c. Vertical integration d. Horizontal diversification e. Backward integration
e. Backward integration
The recommended length of a mission statement is how many words? a. Fewer than 500 b. Fewer than 25 c. Fewer than 75 d. Fewer than 300 e. Fewer than 150
e. Fewer than 150
Which of Porter's generic strategies means producing products and services that fulfill the needs of small groups of consumers? a. Being a first-mover b. Initiator c. Differentiation d. Cost leadership e. Focus
e. Focus
Gaining ownership or increased control over distributors or retailers is called what? a. Backward integration b. Market penetration c. Vertical integration d. Market development e. Forward integration
e. Forward integration
________________ is a popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity. a. Coordinating b. Combining c. Joint alliance d. Alliancing e. Joint venture
e. Joint venture
Which statement given below is false? a. Some companies develop mission statements simply because owners or top management believe it is fashionable, rather than out of any real commitment. b. Some strategists spend almost every moment of every day on administrative and tactical concerns, ignoring the importance of a clear mission. c. Managers at Johnson & Johnson (J&J) meet regularly with employees to review, reword, and reaffirm the firm's vision and mission. d. A and C above e. None of the above
e. None of the above
________________ is the process by which a person (1) determines whether to attempt a task, (2) works out the most effective way of reaching desired objectives, and (3) prepares to overcome unexpected difficulties with adequate resources. a. Strategizing b. Controlling c. Organizing d. Leading e. Planning
e. Planning
In developing an IFE Matrix, do not allow more than 30 percent of the key factors to be financial ratios. Why? a. Because financial ratios can be misleading b. Because financial ratios have limitations such as firms using different accounting methods c. Because financial ratios can vary from industry to industry d. Because finance is only one part of an organization's business operations e. Since financial ratios are generally the result of many factors, it is difficult to know what particular strategies should be considered based on financial ratios.
e. Since financial ratios are generally the result of many factors, it is difficult to know what particular strategies should be considered based on financial ratios.
The term strategic planning is used synonymously in this text with what other term? a. Scenario planning b. Strategy implementation c. Strategy formulation d. Long-range planning e. Strategic management
e. Strategic management
Recent research by Rose and Cray examined the strategic-management process and concluded that perhaps the most important "activity" is what? a. Developing vision and mission statements b. Deciding upon long-term and annual objectives c. Deciding upon external opportunities and threats d. Deciding upon internal strengths and weaknesses e. The feedback loop
e. The feedback loop
Generally, in war, the best policy is to take a state intact; to ruin it is inferior to this. To capture the enemy's entire army is better than to destroy it; to take intact a regiment, a company, or a squad is better than to destroy it. For to win 100 victories in 100 battles is not the epitome of skill. What is the epitome of skill? a. To win all battles regardless of the number b. To win nearly all battles regardless of the number c. To form alliances and coalitions to fight all your battles d. To use shock and awe as rapid victory strategies e. To subdue the enemy without fighting
e. To subdue the enemy without fighting
Who said: "Perfection is not attainable. But if we chase perfection, we can catch excellence." a. Chuck Noll, Head Coach Pittsburgh Steelers b. President Barack Obama (2015) c. George S. Halas, Head Coach Chicago Bears d. Tom Landry, Head Coach Dallas Cowboys e. Vince Lombardi, Head Coach Green Bay Packers
e. Vince Lombardi, Head Coach Green Bay Packers
Asking the question ________________ is synonymous with asking "What is our mission?" a. What are we doing? b. Where are we going? c. What is our objective? d. Why are we here? e. What is our business?
e. What is our business?
Is the following statement true? A benefit of developing a comprehensive mission statement is that divergent views among managers can be revealed and resolved through the process. a. Sometimes b. Never c. No d. Yes, when diversity among top managers is high e. Yes
e. Yes
The time frame for long-term objectives and strategies should be consistent, usually from _____ to _____ years. a. 2; 10 b. 2; 5 c. 1; 10 d. 1; 15 e. 1; 5
b. 2; 5
The basic functions of marketing include the following: a. Customer analysis, selling products and services, and product and service planning b. Pricing, distribution, and marketing research c. Cost/benefit analysis d. A and B e. A, B, and C
e. A, B, and C
When comparing mission statements of rival firms, perhaps the most important component to examine is what? a. Concern for survival, growth, and profitability b. Employees c. Philosophy d. Customers e. Self-concept
e. Self-concept
