HMGT MIDTERM 1

Which of the following is similar to the actuarial methods used by insurance companies to rate customers by the chance of positive or negative outcomes?

Business Analytics

Who is referred to as "the father of modern management?"

Drucker

A forward integration strategy is used by firms to gain control or ownership of suppliers.

False

A vision statement describes an organization's values and priorities.

False

Annual objectives are especially important in strategy formulation.

False

Assumptions have no place in planning.

False

By 2030, the Census Bureau projects that the number of Americans age 65 and older will dramatically decrease.

False

Consumers in the United States now desire sedans rather than automobiles with greater space and utility.

False

Customers and creditors are considered stockholders of an organization.

False

External audits attempt to identify key variables that offer highly intuitive responses.

False

Financial ratios are not applicable to nonprofit organizations.

False

Florida was the first state to legalize marijuana.

False

In most cases, at least 500 words are required to effectively state a mission statement.

False

In the U.S. food industry, demand for processed packaged foods is increasing.

False

It is predicted that, by 2050, over 25 percent of the population in the United States will be 65 years or older.

False

It is unusual for the claims and concerns of a company's stakeholders to vary or conflict.

False

Once an effective strategy is designed, modifications are rarely required.

False

What are educated assumptions about future trends and events called?

Forecasts

Which of the following is NOT a pitfall an organization should avoid in strategic planning?

Involving all managers rather than delegating planning to a "planner"

What step in the strategic management process involves mobilizing employees and managers to put strategies into action?

Strategy implementation

When using External Factor Evaluation (EFE) Matrix, what is done after multiplying each factor's weight by its rating to determine a weighted score?

Summing the weighted scores for each variable to determine the total weighted score for the organization

Which statement is TRUE?

The vision statement should be established before the mission statement.

The United States is getting older.

True

The shift to a service economy is an example of a(n) ________ force.

economic

The times-interest-earned ratio would be classified as a(n)

leverage ratio

The ideal length of a vision statement is

one sentence

The functions of management can be performed best when a firm's ________ and culture are integrated.

strategy

In general, what happens to American goods in overseas markets when there is a strong dollar?

they are more expensive

If suppliers are unreliable or too costly, which of these strategies may be appropriate?

Backward integration

What is NOT one of Michael Porter's five competitive forces?

Bargaining power of unions

A ________ strategy aims to target a new market where competition is not yet present.

Blue Ocean

Which strategy should be implemented when a division is responsible for an organization's overall poor performance?

Divestiture

Organizational culture is not enduring.

False

Retrenchment is a turnaround strategy.

True

The IFE Matrix should be ________ in multidivisional firms.

constructed for each autonomous division

A(n) ________ ideally supports the collective commitment of an organization's people to a common purpose.

culture

Selling includes all of these marketing activities EXCEPT

customer analysis

Successful strategists lead strategy, but do not ________ it.

dictate

The initial step to implementing value chain analysis is

dividing a firm's operations into specific activities or business processes.

The maximum weight for a factor in the IFE Matrix is

1.

What are the five steps needed to develop an EFE Matrix?

1. List the External Factors and Categorize them as Opportunities or Threats. 2. Assign a Weight to Each Factor. 3. Assign a Rating. 4. Determine the Weighted Scores. 5. Total Weighted Score.

Individuals age 65 and older in the United States as a percentage of the population will rise to ________ percent by 2030.

19

In the first six months of 2017, the United States had ________ data breaches.

791

In the BCG Matrix, a division with a high relative market share position in a low-growth industry can be described as a

Cash Cow

The Family Farmer Bankruptcy Act of 1986 created which of the major types of bankruptcy?

Chapter 12

The form of bankruptcy in which all the organization's assets are sold in parts for their tangible worth is

Chapter 7

Which term refers to selling a division or part of an organization?

Divestiture

Which of the following is NOT a key question that can reveal internal strengths and weaknesses regarding a firm's marketing function?

Does the firm have good liquidity?

A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (+2, +3).

False

A growing trend is for franchisers to buy out their part of the business from their franchisees.

False

Although bankruptcy can be an effective type of retrenchment strategy, it does not allow firms to avoid major debt obligations and to void union contracts.

False

Because a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously.

False

Culture is formed within an organization's strategy.

False

Divestiture is selling all of a company's assets, in parts, for their tangible worth.

False

Internal politics do not affect the choice of strategies in organizations.

False

Organizations never develop their own projections.

False

Organizing is the cornerstone of effective strategy formulation.

False

Political, governmental, and legal forces are always threats for both small and large organizations.

False

Proponents of the resource-based view argue that external factors are more important than internal factors for a firm in achieving and sustaining competitive advantage.

False

Remaining solely domestic is an increasingly safe strategy for U.S. companies.

False

Research has failed to find a positive relationship between mission statements and organizational performance.

False

Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, and improved cash flow.

False

Strategists in governmental organizations operate with far more strategic autonomy than their counterparts in private firms.

False

The SWOT matrix, if used appropriately, does not have any limitations.

False

The aim of an external audit is to develop an exhaustive list of every possible factor that could influence the business.

False

The critiqued mission statement of Hershey included the distinctive competence component.

False

The final stage in strategic management is strategy implementation.

False

The four strategies of the SPACE Matrix are aggressive, conservative, offensive, and defensive.

False

The management function of organizing is included in human resource management.

False

The trend toward an older society is a threat for restaurants, hotels, and airlines.

False

The utility statement, "Do not offer me attractive looks; offer me clothes," is relevant in developing a mission statement.

False

To succeed, a differentiation strategy depends on the existence of many different niches and segments within a market, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.

False

While interesting, organizational culture does not significantly affect business decisions.

False

________ exemplifies the complexity of relationships among the functional areas of business.

Financial ratio analysis

Company websites that sell products they produce directly to consumers are examples of which type of strategy?

Forward integration

According to the Grand Strategy Matrix, organizations in which quadrant have a strong competitive position, but are in a slow-growth industry?

IV

Which of these is a limitation of QSPM?

It requires intuitive informed judgments.

Which strategy would be most appropriate when the distinctive competencies of two or more firms complement each other especially well?

Joint Venture

If Gap opens five stores for the first time in China, this is an example of which type of strategy?

Market Development

Which strategy seeks to increase market share for present products or services in present markets through greater marketing efforts?

Market penetration

When two organizations of about equal size unite to form one enterprise, which of these occurs?

Merger

Which function of management includes areas such as job design, job specifications, job analysis, and unity of command?

Organizing

Which function of management is concerned with span of control and chain of command?

Organizing

Which management function includes breaking tasks into jobs, combining jobs to form departments, and delegating authority?

Organizng

According to King and Cleland, carefully developed written mission statements provide a basis for organizing work, departments, activities, and segments around a common purpose.

True

Achieving satisfactory results with a popular strategy is generally better than trying to achieve optimal results with an unpopular strategy.

True

Alternative strategies don't come out of the blue; they are derived from the firm's vision, mission, objectives, external audit, and internal audit.

True

An organization can develop synergy through planning.

True

Analytical and intuitive thinking complement each other.

True

As many managers and employees as possible should be involved in the process of performing an external audit.

True

Attracting customers is a major reason for developing a mission statement.

True

Carefully prepared statements of vision and mission are widely recognized as the first step in strategic management.

True

Collaborative machines are a new breed of robots.

True

Constructing an Internal Factor Evaluation Matrix is a summary step when conducting an internal strategic-management audit.

True

Digital advertising is expected to reach nearly $280 billion in 2020.

True

First mover advantages refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.

True

Forecasts are educated assumptions about future trends and events.

True

Franchising is an effective means of implementing forward integration.

True

In an EFE Matrix, opportunities often receive higher weights than threats, but threats too can receive high weights if they are especially severe or threatening.

True

In order for a firm to achieve sustained competitive advantage, a firm must continually adapt to changes in external trends and events and effectively formulate, implement, and evaluate strategies that capitalize upon those factors.

True

In order to exploit common use of a well-known brand name, most companies favor related diversification strategies.

True

In the IFE Matrix, a weight of 0.01 means the factor is not important.

True

In the IFE Matrix, the sum of all weights must equal 1.0.

True

Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.

True

Motivation can explain why some people work hard and others do not.

True

Objectives should be measurable, challenging, reasonable, consistent, and clear.

True

One of the characteristics of a mission statement is that it should be inspiring.

True

Organizational culture must foster competence and enthusiasm among managers and employees.

True

Political issues and stances impact strategic decisions.

True

Public enterprises generally cannot diversify into unrelated businesses or merge with other firms.

True

Strategists are usually found in higher levels of management and have considerable authority for decision making in the firm.

True

The Internal Factor Evaluation Matrix should use a total of 20 internal factors.

True

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 frequency of cooperative arrangements between rival firms has been increasing.

True

The idea that paying dividends results in a higher stock price is a myth.

True

The purpose of matching key factors is to generate feasible alternative strategies.

True

The relative attention an organization will devote to meeting the claims of various stakeholders is indicated in a good mission statement.

True

The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.

True

When an acquisition or merger is not desired by both parties, it is called a hostile takeover.

True

Which of the following is NOT a reason given for poor or no strategic planning in an organization?

Trust of management makes it unnecessary

Which of the following is NOT a reason joint ventures fail?

Venture risk was minimized.

Which of the following is NOT true of vision statements?

Vision statements should indicate the expected amounts of profits the firm wants to make.

Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats?

WT

Which of these basic questions should a vision statement answer?

What do we want to become?

External audits attempt to identify key variables that offer ________ responses.

actionable

The process of performing an external audit needs to include

as many managers and employees as possible.

Competition in virtually all industries is

intense

The investor relations pages of a company website ________ information about a firm.

is a good place to start to find

An effective mission statement does all of the following EXCEPT

it is static in orientation.

The recommended length of an effective mission statement is ________ words.

less than 100

Through involvement in the strategic-planning process, ________ must become "owners" of the strategy.

line managers

When a domestic company first begins to export to India, it is an example of

market development

All of the following are cooperative arrangements EXCEPT

marketing plans

Which of the following is the process of influencing people to accomplish specific objectives?

motivating

When firms build from within, it is sometimes called ________ growth.

organic

Availability of credit falls under the ________ forces category of external forces.

organizational

Which of the following is NOT an external force that must be examined in formulating strategies?

organizational

A pattern of behavior developed by an organization as it learns to cope with its problems of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel is called

organizational culture

Business analytics is used to make decisions based on ________ information.

qualitative

In performing strategic planning and case analysis, relevant SCDE factors for a particular firm must be ________ and actionable to be useful.

quantified

GoPro laid off one-fifth of its workforce and exited the drone market. This is an example of

retrenchment

Often, an effective way to gain commitment and achieve desired results is to shift from ________ to ________ issues and concerns.

short-term; long-term

Strategy changes may be highly ineffective, but not counterproductive, if a supportive culture does not exist.

False

Test marketing is used more frequently by industrial companies than consumer goods companies.

False

In determining the ________, marketers often make decisions related to areas such as warehousing, distribution channels, and retail site locations.

Place

Long-term objectives are needed at the corporate, divisional, functional, and operational levels of an organization.

True

Major competitors' strengths may represent key threats.

True

In the process of developing a mission statement, it is important to involve

as many managers as possible.

Superior strategy formulation and implementation ________ an opponent's superiority in numbers and resources.

can overcome

Anything that a firm does especially well compared to rival firms is referred to as

competitive advantage

A systematic and ethical process for gathering and analyzing information about the competition's activities and general trends to further a business' own goals is called

competitive intelligence

According to Peter Drucker "Imagination is more important than knowledge, because knowledge is limited, whereas imagination embraces the entire world."

false

The most effective strategic management is ritualistic, predictable, and formal.

false

An effective means of implementing forward integration is through

franchising

When the products being purchased are standard or undifferentiated, it results in ________ bargaining power of consumers.

higher

A weak dollar means

higher exports and lower imports.

Successful strategists minimize their own political exposure on issues that are ________ and in circumstances where opposition from major power centers is likely.

highly controversial

If a merger or acquisition is not desired by both parties, it is called a ________

hostile takeover

The general public is especially interested in ________, whereas stockholders are more interested in ________.

social responsibility; profitability

Generally, external opportunities and threats are

uncontrollable by a single organization.

All of these are pitfalls an organization should avoid in strategic planning EXCEPT

using plans as a standard for measuring performance.

Forward integration and backward integration are sometimes collectively referred to as

vertical integration

Backward integration is effective in all of these cases EXCEPT

when the advantages of stable prices are not particularly important.

What is the essential bridge between the present and the future that increases the likelihood of achieving desired results?

Planning

What category of ratios includes return on total assets and return on stockholders' equity?

Profitability

Which matrix is included in the decision stage of the strategy formulation framework?

Quantitative Strategic Planning Matrix (QSPM)

Which strategy should an organization use when its products are currently in the declining stage of the product's life cycle?

Related diversification

The strategic-management process is just as vital for small companies as for large companies.

True

The term "recommendation" is used to refer to any alternative strategy that is selected for implementation.

True

To objectively evaluate feasible alternative strategies identified in Stage 2, the Quantitative Strategic Planning Matrix (QSPM) uses input information derived from Stage 1.

True

The emergence of 3D printing is an example of a(n) ________ force that impacts organizations.

technological

Business or military success is

the product of both attention to changing external and internal conditions and the insightful adaptations to those conditions.

An important activity in ________ is taking corrective action.

strategy evaluation

Collecting and evaluating information on competitors is essential for successful

strategy formulation