Chapter 6-Strategic Management (CAP)
Stage 2 in the strategy-formulation framework involves the Quantitative Strategic Planning Matrix.
False
The trend in the U.S. is toward larger boards, with an average of 18 members being the norm.
False
Total attractiveness scores are defined as the sum of the attractiveness scores in a given column of the QSPM and are computed in the second step of the QSPM.
False
The SWOT matrix, if used appropriately, does not have any limitations.
False
The four strategies of the SPACE Matrix are aggressive, conservative, offensive and defensive.
False
The midpoint on the x-axis of a BCG Matrix is typically set at 0.05.
False
The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (-1, +4).
True
Which strategies aim at improving internal weaknesses by taking advantage of external opportunities? A) SO B) WO C) SW D) ST E) WT
B) WO
One of the steps of the SWOT Matrix is to list the firm's key external opportunities.
True
Relative market share position is given on the x-axis of the BCG Matrix.
True
Strengths-opportunities strategies are based on using a firm's internal strengths to take advantage of external opportunities.
True
Successful strategists minimize their own political exposure on issues that are highly controversial and in circumstances where opposition from major power centers is likely.
True
The first stage of the strategy-formulation framework is the input stage, and it is directly followed by the decision stage.
False
Conservative strategies in a SPACE Matrix most often include product development, market development, market penetration, and related diversification.
True
In the BCG Matrix, a division with a high relative market share position in a low-growth industry can be described as a A) Star. B) Cash Cow. C) Question Mark. D) Dog. E) Failure.
B) Cash Cow.
What type of strategies would you recommend when a firm's SPACE Matrix directional vector has the coordinates (-2, +3)? A) Aggressive B) Conservative C) Competitive D) Defensive E) Integrative
B) Conservative
According to the Grand Strategy Matrix, Quadrant III organizations compete in rapid-growth industries and have strong competitive positions.
False
Today, boards of directors are composed mostly of A) outsiders. B) management. C) union members. D) company employees. E) past executives.
A) outsiders.
The top row of a QSPM consists of alternative strategies derived from all of the following EXCEPT A) Grand Strategy Matrix. B) BCG Matrix. C) SPACE Matrix. D) CPM Matrix E) IE Matrix.
D) CPM Matrix
What analytical tool has four quadrants based on two dimensions: competitive position and market growth? A) Competitive Profile Matrix B) Internal-External Matrix C) SPACE Matrix D) Grand Strategy Matrix E) QSPM
D) Grand Strategy Matrix
According to the Grand Strategy Matrix, organizations in which quadrant have a strong competitive position but are in a slow-growth industry? A) I B) II C) III D) IV E) V
D) IV
According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily committed to a single product, then related diversification may reduce the risks associated with a narrow product line.
True
It is vital that strategists always consider all feasible alternatives that could benefit the firm.
False
On the x-axis of the IE Matrix, an IFE total weighted score of 2.5 represents a weak internal position.
False
One positive feature of QSPM is that it does not require intuitive judgments and educated assumptions.
False
Step 1 of a QSPM assigns weights to each key external and internal factor.
False
Strategy changes may be highly effective and productive if a supportive culture does not exist.
False
The BCG Matrix requires more information about the divisions than the IE Matrix.
False
The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth.
False
Trying to achieve optimal results with an unpopular strategy is always better than achieving satisfactory results with a popular strategy.
False
When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be completed before the SPACE Matrix.
False
Alternative strategies don't come out of the blue; they are derived from the firm's vision, mission, and objectives.
True
An organization's present strategies, objectives and mission, coupled with the external and internal audit information, provide a basis for generating and evaluating feasible alternative strategies.
True
Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm.
True
Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time.
True
The Sarbanes-Oxley Act put an end to the "country-club" atmosphere of most boards and has shifted power from CEOs to directors.
True
A positive feature of QSPM is that sets of strategies can be examined sequentially or simultaneously.
True
Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices.
True
In a BCG Matrix the pie slice indicates the proportion of corporate profits generated by that division.
True
Market penetration can be classified as either a conservative, aggressive, or competitive strategy.
True
Shifting focus from specific issues to more general ones may increase strategists' options for gaining organizational commitment.
True
Stars, Question Marks, Cash Cows, and Dogs are the four quadrants exhibited by the BCG Matrix.
True
The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time.
True
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
The SP and CP dimension variables in a SPACE Matrix are assigned a numerical value ranging from -1 (best) to -7 (worst).
True
The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are (+5, +4).
True
Both IE and BCG Matrices are called portfolio matrices.
True
The purpose of matching key factors is to generate feasible alternative strategies.
True
Viewing every business as either a Star, Cash Cow, Dog, or Question Mark is an oversimplification.
True
Cash Cows represent the organization's best long-run opportunities for growth and profitability.
False
In the SPACE analysis, what does a (+6, +3) strategy profile portray? A) A strong industry position B) An unstable environment C) A stable environment D) A weak industry position E) A weak financial position
A) A strong industry position
The BCG Matrix is designed specifically to enhance which type of firm's efforts to formulate strategies? A) Companies with more than one division B) Large companies C) Companies with annual sales greater than $1 million D) Companies with annual sales of less than $1 million E) All companies
A) Companies with more than one division
In the BCG Matrix, a division that has a low relative market share position and competes in a slow-growth industry is referred to as a A) Dog. B) Question Mark. C) Star. D) Cash Cow. E) Cowboy.
A) Dog.
Firms located in which quadrant of the Grand Strategy Matrix are in an excellent strategic position? A) I B) II C) III D) IV E) V
A) I
Which stage of the strategy-formulation framework includes an IFE Matrix and a Competitive Profile Matrix? A) Input B) Matching C) Decision D) Penetration E) Research
A) Input
Which stage of the strategy-formulation framework contains the IFE Matrix? A) Input stage B) Analysis stage C) Matching stage D) Decision stage E) Output stage
A) Input stage
According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market growth and a strong competitive position? A) Market penetration B) Unrelated diversification C) Joint venture D) Retrenchment E) Liquidation
A) Market penetration
In the BCG Matrix, how would a division with a low relative market share position in a high growth industry be described? A) Question Mark B) Cash Cow C) Star D) Stuck-in-the-middle E) Dog
A) Question Mark
What are the two external dimensions of the SPACE Matrix? A) Stability position and industry position B) Stability position and competitive position C) Industry position and competitive position D) Competitive position and financial position E) Financial position and industry position
A) Stability position and industry position
In the BCG Matrix, when a division of an organization has a high relative market share and is in a fast-growing industry, it is called a A) Star. B) Cash Cow. C) Cat. D) Question Mark. E) Dog.
A) Star.
What term is defined as the product of multiplying the weights by the Attractiveness Scores in each row of the QSPM? A) Total Attractiveness Scores B) Sum Total Scores C) Weighted Scores D) Total Weighted Scores E) Factors
A) Total Attractiveness Scores
For companies located in Quadrant III of the Grand Strategy Matrix, the first strategy recommended is A) extensive cost and asset reduction. B) asset expansion. C) employee expansion. D) immediate liquidation of assets. E) divestiture.
A) extensive cost and asset reduction.
________ includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm. A) Strategy B) Culture C) Mission D) Objectives E) QSPM
B) Culture
What type of strategy would divestiture be classified as? A) Aggressive B) Defensive C) Competitive D) Offensive E) Conservative
B) Defensive
Although Quadrant ________ companies are growing, according to the Grand Strategy Matrix they are unable to compete effectively, and they need to determine why the firm's current approach is ineffective and how the company can best change to improve its competitiveness. A) I B) II C) III D) IV E) V
B) II
Which matrix is included in the decision stage of the strategy formulation framework? A) Internal Factor Evaluation Matrix B) Quantitative Strategic Planning Matrix C) Boston Consulting Group Matrix D) Grand Strategy Matrix E) Strategic Position and Action Evaluation Matrix
B) Quantitative Strategic Planning Matrix
An effective way to gain commitment and achieve desired results is to A) emphasize that imposing a particular method is more important than achieving desired results. B) shift from specific to general issues and concerns. C) eliminate middle level managers from strategic decisions. D) switch from long-term to short-term issues and concerns. E) realize that it's better to achieve optimal results with an unpopular strategy than to achieve satisfactory results with a popular strategy.
B) shift from specific to general issues and concerns.
Strategy analysis and choice largely involves making ________ decisions based on ________ information. A) long-term; short-term B) subjective; objective C) short-term; long-term D) subjective; short-term E) objective; subjective
B) subjective; objective
All of the following are limitations of the BCG Matrix EXCEPT A) viewing every business as a star, cash cow, dog or question mark can be an oversimplification. B) the Matrix requires at least three years worth of data. C) the Matrix does not reflect divisional or industry growth over time. D) the Matrix does not allow a company to be classified as somewhere in between two categories. E) variables such as size of market and competitive advantages are not considered in the Matrix.
B) the Matrix requires at least three years worth of data.
In the BCG Matrix, which element represents the industry growth rate in sales, measured in percentage terms? A) x-axis B) y-axis C) first quadrant D) second quadrant E) third quadrant
B) y-axis
The two positive-rated dimensions on the SPACE Matrix are A) FP and CP. B) CP and SP. C) FP and IP. D) IP and SP. E) FP and SP.
C) FP and IP.
Which of the following is a limitation associated with a SWOT Matrix? A) Viewing every business as a Star, Cash Cow, Dog, or Question Mark is an oversimplification. B) Many businesses fall right in the middle of the matrix. C) It is a static assessment in time. D) Other variables besides relative market share position and industry growth rate in sales need to be considered. E) The matrix does not reflect whether or not various divisions or their industry are growing over time.
C) It is a static assessment in time.
Which of these is a limitation of QSPM? A) Only a few strategies can be evaluated at once. B) It is prohibitively expensive. C) It requires intuitive judgments and educated assumptions. D) Strategies cannot be examined sequentially. E) It makes it more likely that key factors will be overlooked or weighted inappropriately.
C) It requires intuitive judgments and educated assumptions.
Which strategy-formulation technique reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies? A) SWOT B) SPACE C) QSPM D) IFE E) CPM
C) QSPM
Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning Matrix? A) Stage 1 B) Stage 2 C) Stage 3 D) Stage 4 E) Stage 5
C) Stage 3
Which board of director's duty falls under the category of control and oversight over management? A) select new directors B) pass bylaws and related resolutions C) select the CEO D) maintain good public image E) ensure equitable stockholder representation
C) select the CEO
The match an organization makes between its internal resources and skills and the opportunities and risks created by its external factors can be defined as A) input. B) concept formulation. C) strategy. D) SWOT. E) weakness.
C) strategy.
Which of the following is NOT one of the steps involved in constructing a SWOT Matrix? A) List the firm's key external threats. B) Match internal strengths with external opportunities, and record the resultant SO strategies in the appropriate cell. C) Match internal weaknesses with external threats, and record the resultant WT strategies. D) List the firm's external weaknesses. E) List the firm's external opportunities.
D) List the firm's external weaknesses.
Which of these is NOT a SPACE Matrix quadrant? A) Aggressive B) Defensive C) Competitive D) Offensive E) Conservative
D) Offensive
In the BCG Matrix, which strategy would be most appropriate for a division classified as a Dog? A) Market penetration B) Market development C) Product development D) Retrenchment E) Forward integration
D) Retrenchment
Which strategies use a firm's strengths to avoid or reduce the impact of external threats? A) SO B) WO C) SW D) ST E) WT
D) ST
All of the following are principles of good organizational governance, as established by Businessweek, EXCEPT A) each director attends at least 75 percent of all meetings. B) the audit, compensation and nominating committees are made up solely of outside directors. C) each director owns a large equity stake in the company. D) at least three directors are current or former company executives. E) the CEO is not also the Chairperson of the Board.
D) at least three directors are current or former company executives.
The two internal dimensions represented on the axes of the SPACE Matrix are A) stability position and industry position. B) industry position and internationalization. C) internationalization and competitive position. D) competitive position and financial position. E) financial position and stability position.
D) competitive position and financial position.
Each of the nine techniques included in the strategy formulation framework rely on the use of A) strictly factual data. B) luck. C) financial formulas and statistics. D) intuition and analysis. E) synergy.
D) intuition and analysis.
Which of the following analytical tools consists of a nine-cell matrix? A) BCG Matrix B) Competitive Profile Matrix C) SPACE Matrix D) Grand Strategy Matrix E) Internal-External Matrix
E) Internal-External Matrix
Which of the following is the first step in developing a QSPM? A) Compute the Total Attractiveness Scores. B) Examine the Stage 2 matrices and identify alternative strategies the organization should consider implementing. C) Assign weights to each key external and internal factor. D) Determine the Attractiveness Scores. E) Make a list of the firm's key external opportunities and threats and internal strengths and weaknesses in the left column of the QSPM.
E) Make a list of the firm's key external opportunities and threats and internal strengths and weaknesses in the left column of the QSPM.
Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies? A) Input B) Output C) Decision D) Throughput E) Matching
E) Matching
How many cells are in a SWOT Matrix? A) Two B) Four C) Six D) Eight E) Nine
E) Nine
Which analytical tool determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized upon or improved? A) BCG Matrix B) SPACE Matrix C) SWOT Matrix D) IE Matrix E) QSPM
E) QSPM
Forward integration would be an appropriate strategy for which of the following types of divisions in the BCG Matrix? A) Dogs B) Failures C) Question Marks D) Cat E) Star
E) Star
Which section of the SWOT Matrix involves matching internal strengths with external opportunities? A) The WT cell B) The SW cell C) The WO cell D) The ST cell E) The SO cell
E) The SO cell
What is the highest number of strategies that can be examined at one time with the QSPM? A) 1 B) 2 C) 5 D) 10 E) There is no limit.
E) There is no limit.
Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats? A) SO B) WO C) SW D) ST E) WT
E) WT
The act of oversight and direction for an organization is referred to as A) corporate lawmaking. B) centralized control. C) organizational direction. D) establishing norms. E) governance.
E) governance.
A SWOT Matrix is composed of four cells for the four types of strategies it creates.
False
A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (+2, +3).
False
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.
True
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
The most important determinants of an organization's overall strategic position are considered to be the two internal dimensions, financial position (FP) and competitive position (CP), and the two external dimensions, industry position (IP) and stability position (SP).
True
The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.
True
To objectively evaluate feasible alternative strategies identified in Stage 2, the QSPM uses input information derived from Stage 1.
True
Today boards of directors are composed mostly of outsiders who are becoming more involved in an organization's strategic management.
True
Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages.
True
