Ch.1 Multiple choice
There is a dramatic shift in mass retailing to
A) "trading up" and taking customers from more exclusive stores. B) selling only the most expensive merchandise. C) opening dramatically larger supercenters. D) operating stores with less square footage. E) cutting back on their online presence.
How do line managers become "owners" of the strategy?
A) By attending top manager meetings B) By executing plans formulated by other people C) By involvement in the strategic-management process D) By becoming a shareholder of the firm E) By buying off top managers Answer: C
What is NOT a guideline given for effective strategic planning?
A) Continually strengthen the "good ethics is good business" policy. B) It should not include jargon or arcane planning language. C) It should not be too formal, predictable, or rigid. D) It should welcome bad news. E) It should be controlled by "technicians." Answer: E
Which is generally considered to be the first step in strategic planning?
A) Developing a vision statement B) Establishing goals and objectives C) Making a profit D) Developing a mission statement E) Determining opportunities and threats
Which of the following is NOT a pitfall an organization should avoid in strategic planning?
A) Failing to communicate the plan to employees B) Involving all managers rather than delegating planning to a "planner" C) Top managers not actively supporting the strategic-planning process D) Doing strategic planning only to satisfy accreditation or regulatory requirements E) Failing to create a collaborative climate supportive of change Answer: B
In which phase of strategic management are long-term objectives especially important?
A) Formulation B) Control C) Evaluation D) Implementation E) Management Answer: A
During what stage of strategic management are a firm's specific internal strengths and weaknesses determined?
A) Formulation B) Implementation C) Evaluation D) Feedback E) Goal-setting
What types of skills are especially critical for successful strategy implementation?
A) Interpersonal B) Marketing C) Technical D) Conceptual E) Visionary
Which statement best describes intuition?
A) It alone should be used in decision-making. B) It represents a minor factor in decision-making integrated with analysis. C) It should be coupled with analysis in decision-making. D) It is better than analysis in decision-making. E) It is management by ignorance.
Which of the following is part of the strategic management model?
A) Measure and evaluate performance B) Develop mission and vision statements C) Establish long-term objectives D) Implement strategies E) All of the above Answer: E
Which of the following statements is FALSE?
A) No organization can pursue all the strategies that potentially could benefit the firm. B) Most organizations today recognize that strategic-management concepts and techniques can enhance the effectiveness of decisions. C) A key role of strategists is to facilitate continuous organizational learning and change. D) Effective strategic planning should accept the assumptions underlying the current corporate strategy. E) Even the most technically perfect strategic plan will serve little purpose if it is not implemented. Answer: D
Which of the following statements is NOT true?
A) Open-mindedness is an important guideline for effective strategic management. B) Strategic management must become a self-perpetuating bureaucratic mechanism. C) No organization has unlimited resources. D) Strategic decisions require trade-offs. E) Strategic management must be a self-reflective learning process. Answer: B
Which of the following is NOT a reason given for poor or no strategic planning in an organization?
A) Planning is viewed as a waste of time B) Content with current success C) Too busy "firefighting" to plan ahead D) No monetary rewards for planning E) Trust of management makes it unnecessary Answer: E
What are enduring declarations of purpose that distinguish one business from other similar firms?
A) Policies B) Mission statements C) Objectives D) Rules E) Employee conduct guidelines
________ allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, and eliminate paperwork.
A) Social networking B) E-commerce C) Blogging D) Viral video E) "Trading down"
What are guides to decision making called?
A) Strategies B) Rules C) Policies D) Objectives E) Goals Answer: C
What are the means by which long-term objectives will be achieved?
A) Strategies B) Strengths C) Weaknesses D) Policies E) Opportunities Answer: A
Which individuals are most responsible for the success and failure of an organization?
A) Strategists B) Financial planners C) Personnel directors D) Stakeholders E) Human resource managers
What step in the strategic development process involves mobilizing employees and managers to put strategies into action?
A) Strategy formulation B) Strategy evaluation C) Strategy implementation D) Strategic advantage E) Competitive advantage
What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives?
A) Strategy formulation B) Strategy evaluation C) Strategy implementation D) Strategic management E) Strategic leading
Which phase of strategic management is called the action phase?
A) Strategy formulation B) Strategy implementation C) Strategy evaluation D) Competing advantages E) Measuring performance
________ is NOT a strategy-implementation activity.
A) Taking corrective actions B) Establishing annual objectives C) Devising policies D) Allocating resources E) Motivating employees
The goal of strategic management is to
A) achieve competitive advantage. B) maintain competitive advantage. C) achieve and maintain competitive advantage. D) eliminate competitive advantage. E) eliminate and abolish competitive advantage.
Organizations should take a(n) ________ approach in their industry.
A) adversarial rather than a collegial B) collegial rather than an adversarial C) reactive rather than a proactive D) proactive rather than a reactive E) cooperative rather than a competitive Answer: D
Superior strategy formulation and implementation ________ an opponent's superiority in numbers and resources.
A) are irrelevant to B) are not enough to surmount C) can overcome D) can lead to E) unite Answer: C
The act of strengthening employees' sense of effectiveness by encouraging and rewarding them for participating in decision-making and exercising initiative and imagination is referred to as
A) authoritarianism. B) proaction. C) empowerment. D) transformation. E) delegation. Answer: C
Both business and military organizations must ________ and ________ to be successful.
A) be impervious to change; continually improve B) adapt to change; continually improve C) shun change; stay the course D) be impervious to change; stay the course E) none of the above Answer: B
Strategic management enables an organization to ________, instead of just responding to threats in its business environment.
A) be proactive B) be immune to threats C) avoid responsibility for shaping its future D) relinquish control over its destiny E) be reactive Answer: A
The Internet has transferred power from ________ to ________.
A) businesses, individuals B) governments, businesses C) individuals, businesses D) businesses, governments E) individuals, governments
According to Webster's New World Dictionary, ________ 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) competitive advantage B) war C) strategy D) formulation E) business Answer: C
Anything that a firm does especially well compared to rival firms is referred to as
A) competitive advantage. B) comparative disadvantage. C) opportunity cost. D) unsustainable advantage. E) an external opportunity.
Military strategy is based on an assumption of ________, whereas business strategy is based on an assumption of ________.
A) conflict; cooperation B) conflict; competition C) cooperation; conflict D) competition; conflict E) cooperation; competition Answer: B
Annually, ________ businesses in the U.S. fail.
A) exactly 100 B) less than 1,000 C) about 10,000 D) more than 100,000 E) almost 10 million Answer: D
In mass retailing, big-box companies like Walmart, Best Buy, and Sears are
A) gaining competitive advantage over smaller stores. B) participating in a dramatic shift to becoming bigger. C) increasing the square-footage of their retail locations. D) finding that less brick and mortar is better. E) noticing a sharp decline in online purchases.
Business or military success is
A) generally the happy result of accidental strategies. B) undermined by the element of surprise. C) the product of both attention to changing external and internal conditions and the insightful adaptations to those conditions. D) unrelated to external conditions. E) none of the above.
The fact that Apple has no manufacturing facilities of its own
A) has caused it to build up massive debt on its balance sheet. B) has enabled it to remain financially lean with virtually no long-term debt. C) has been problematic for Apple in terms of debt. D) illustrates that having more fixed assets than rival firms can provide major competitive advantages in a global recession. E) means that it is in the same position as Sony.
According to Greenley, strategic management offers all of the following benefits EXCEPT
A) increased discipline. B) enhanced communication. C) increased synergy. D) increased resistance to change. E) more effective allocation of time and resources. Answer: D
Strategy evaluation is necessary because
A) internal and external factors are constantly changing. B) the SEC requires strategy evaluation. C) success today is a guarantee of success tomorrow. D) the IRS requires strategy evaluation. E) firms have limited resources.
An organization's vision statement
A) is a constant reminder to its employees of why the organization exists. B) broadly charts the future direction of an organization. C) addresses the basic question: "What is our business?" D) answers the question: "What do we want to become?" E) none of the above Answer: D
All of the following are guidelines for effective strategic planning EXCEPT
A) it should be simple and nonroutine. B) it should be a learning process for all managers and employees. C) it should be a paper process more than a people process. D) it should not disregard qualitative information. E) it should not be a formal system for control. Answer: C
The strategic-management process represents a(n) ________, ________, and ________ approach for determining an enterprise's future direction.
A) logical; systematic; subjective B) intuitive; disorganized; subjective C) logical; systematic; objective D) intuitive; disorganized; objective E) inconsistent; systematic; subjective Answer: C
In recent years, the speedy flow of information through technology has
A) made it harder for people worldwide to see how others work and live. B) strengthened national boundaries and made countries more self-contained. C) created a borderless world with global competitors, customers, and citizens. D) ensured that the U.S. is unrivaled by other companies in all industries. E) made the real flow of financial activity align with political boundaries between countries.
Strategic management focuses on integrating management, ________, and information systems to achieve organizational success.
A) marketing B) finance and accounting C) production and operations D) research and development E) all of the above
Long-term objectives should be all of the following EXCEPT
A) measurable. B) continually changing. C) reasonable. D) challenging. E) consistent. Answer: B
A strong ________ heritage underlies the study of strategic management.
A) military B) government C) political D) social E) cultural Answer: A
According to research, organizations using strategic management are ________ than those that do not.
A) more profitable B) more complex C) less profitable D) less successful E) less complex Answer: A
The strategic-management process
A) occurs once a year. B) is a semiannual process. C) is a continuous process. D) applies mostly to companies with sales greater than $100 million. E) applies mostly to small businesses. Answer: C
Terms such as objectives, mission, strengths, and weaknesses were first formulated to address problems
A) on the battlefield. B) in the boardroom. C) on the trading floor. D) in the military hierarchy. E) in interpersonal relationships. Answer: A
Internal ________ are controllable activities in an organization that are performed especially well.
A) opportunities B) incompetencies C) strengths D) objectives E) factors Answer: C
Annual objectives are especially important in strategy
A) reduction. B) formulation. C) implementation. D) evaluation. E) policy. Answer: C
The strategic-management process is becoming more widely used by
A) small firms. B) nonprofit institutions. C) governmental organizations. D) multinational conglomerates. E) all of the above Answer: E
Sometimes ________ is used to refer to strategic formulation, implementation and evaluation, with ________ referring only to strategic formulation.
A) strategic planning; strategic management B) strategic planning; strategic processing C) strategic management; strategic planning D) strategic management; strategic processing E) strategic implementation; strategic focus
Specific results an organization seeks to achieve in pursuing its basic mission are
A) strategies. B) rules. C) objectives. D) policies. E) tenets. Answer: C
An important activity in ________ is taking corrective action.
A) strategy evaluation B) strategy implementation C) strategy formulation D) strategy leadership E) all of the above
The one factor that has most significantly impacted the nature and core of buying and selling in nearly all industries has been
A) the Internet. B) political borders. C) corporate greed. D) customer and employee focus. E) the government.
Generally, external opportunities and threats are
A) uncontrollable by a single organization. B) unable to have a significant impact on an organization. C) not worth monitoring and evaluating. D) key functions in strategy implementation. E) key functions in strategy exploitation. Answer: A
All of these are pitfalls an organization should avoid in strategic planning EXCEPT
A) using plans as a standard for measuring performance. B) using strategic planning to gain control over decisions and resources. C) failing to involve key employees in all phases of planning. D) too hastily moving from mission development to strategy formulation. E) being so formal in planning that flexibility and creativity are stifled. Answer: A
Compare and contrast strategic planning with strategic management.
Answer: The term "strategic planning" is more often used in the business world, whereas "strategic management" is often used in academia. Sometimes, strategic management is used to refer to strategy formulation, implementation and evaluation, with strategic planning referring only to strategy formulation. The purpose of strategic management is to exploit and create new and different opportunities for tomorrow; long-range planning, in contrast, tries to optimize for tomorrow the trends of today.
Discuss some forces that influence the formality of strategic-management systems.
Application of the strategic-management process is typically more formal in larger and well-established organizations. Formality refers to the extent that participants, responsibilities, authority, duties, and approach are specified. Smaller businesses tend to be less formal. Firms that compete in complex, rapidly changing environments, such as technology companies, tend to be more formal in strategic planning. Firms that have many divisions, products, markets and technologies also tend to be more formal in applying strategic-management concepts. Greater formality in applying the strategic-management process is usually positively related with the cost, comprehensiveness, accuracy and success of planning across all types and sizes of organizations.
Define and discuss the differences between vision and mission statements.
Many organizations today develop a vision statement that answers the question "What do we want to become?" Developing a vision statement is often considered the first step in strategic planning, preceding even development of a mission statement. Many vision statements are a single sentence. For example, the vision statement of Stokes Eye Clinic in Florence, South Carolina, is "Our vision is to take care of your vision." Mission statements are "enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of a firm's operations in product and market terms." It addresses the basic question that faces all strategists: "What is our business?" A clear mission statement describes the values and priorities of an organization. Developing a mission statement compels strategists to think about the nature and scope of present operations and to assess the potential attractiveness of future markets and activities. A mission statement broadly charts the future direction of an organization.
Discuss the value of integrating intuition and analysis.
Most organizations can benefit from strategic management, which is based on integrating intuition and analysis in decision making. Choosing an intuitive or analytic approach to decision making is not an either-or proposition. Managers at all levels in an organization inject their intuition and judgment into strategic-management analyses. Analytical thinking and intuitive thinking complement each other. Operating from the "I've-already-made-up-my-mind-don't-bother-me-with-the-facts" mode is not management by intuition; it is management by ignorance. Drucker says, "I believe in intuition only if you discipline it. 'Hunch' artists, who make a diagnosis but don't check it out with facts, are the ones in medicine who kill people, and in management kill businesses." In a sense, the strategic-management process is an attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business, and assimilates and integrates that knowledge using analysis to formulate effective strategies.
Discuss the importance of the implementation phase of strategic management.
Some organizations spend an inordinate amount of time developing a strategic plan, but then fail to follow through with the effective implementation. Change and results in a firm come through implementation, not through formulation, although effective formulation is critically important for successful implementation. Continual evaluation of strategies is also essential because the world changes so rapidly that existing strategies can need modifying often.
Explain the relationship between strategic management and competitive advantage for firms. How can a firm achieve sustained competitive advantage?
Strategic management is all about gaining and maintaining competitive advantage. Competitive advantage is anything a firm does especially well compared to rival firms. When a firm can do something that rival firms cannot do, or owns something that rival firms desire, that can represent a competitive advantage. Getting and keeping competitive advantage is essential for long-term success of an organization. A firm must strive to achieve sustained competitive advantage by 1: continually adapting to changes in external trends and events and internal capabilities, competencies and resources, and by 2: effectively formulating, implementing and evaluating strategies that capitalize upon those factors.
Define what strategists are. Describe what they do in an organization.
Strategists are individuals who are most responsible for the success or failure of an organization. They help an organization gather, analyze and organize information. They track industry and competitive trends, develop forecasting models and scenario analyses, identify business threats and develop creative action plans. Strategic planners usually serve in a support or staff role. Usually found in higher levels of management, they typically have considerable authority for decision making in the firm. In the last few years, the position of chief strategy officer (CSO) has emerged as a new addition to the top management ranks of many organizations. This corporate officer title represents recognition of the growing importance of strategic planning in business.
Which stage in the strategic-management process is most difficult? Explain why
Strategy implementation is the most difficult stage in the strategic-management process because it requires personal discipline, commitment and sacrifice. Successful strategy implementation hinges upon managers' ability to motivate employees, which is more of an art than a science. Interpersonal skills are especially critical for successful strategy implementation.
Give at least seven reasons given for why some firms do no strategic planning.
Ten reasons are stated; students should list any seven: 1. no formal training in strategic management; 2. no understanding of or appreciation for the benefits of planning; 3. no monetary rewards for doing planning; 4. no punishment for not planning; 5. too busy "firefighting" (resolving internal crises) to plan ahead; 6. to view planning as a waste of time, since no product/service is made; 7. laziness; effective planning takes time and effort; time is money; 8. content with current success; failure to realize that success today is not guarantee for success tomorrow; even Apple Inc. is an example; 9. overconfident; 10. prior bad experience with strategic planning done sometime/somewhere.
What are the pitfalls in strategic planning that management in an organization should watch out for or avoid? Identify any five pitfalls.
There are 13 pitfalls. Students should list any five of the following: 1. using strategic planning to gain control over decisions and resources; 2. doing strategic planning only to satisfy accreditation or regulatory requirements; 3. too hastily moving from mission development to strategy formulation; 4. failing to communicate the plan to employees, who continue to work in the dark; 5. top managers making many intuitive decisions that conflict with the formal plan; 6. top managers not actively supporting the strategic-planning process; 7. failing to use plans as a standard for measuring performance; 8. delegating planning to a "planner" rather than involving all managers; 9. failing to involve key employees in all phases of planning; 10. failing to create a collaborative climate supportive of change; 11. viewing planning to be unnecessary or unimportant; 12. becoming so engrossed in current problems that insufficient or no planning is done; and 13. being so formal in planning that flexibility and creativity are stifled.
List five nonfinancial benefits of a firm using strategic management, according to Greenley.
There are eight benefits stated by Greenley. Students are to list any five of the following: 1. increased discipline; 2. improved coordination; 3. enhanced communication; 4. reduced resistance to change; 5. increased forward thinking; 6. improved decision-making; 7. increased synergy; 8. more effective allocation of time and resources.
