ALL Chapters 1-5 Strategic Management Exam Practice
A firm motivated by cost leadership will usually spend relatively more on product related R&D than on process related R&D.
FALSE
A firm's intangible resources refer to its capability to deploy tangible resources over time and leverage the resources effectively.
FALSE
A mission statement, according to the text, is a long-term, overarching vision that is massively inspiring and only discusses the purpose of the company.
FALSE
A significant idea behind the "profit pool" concept is that there is always a sturdy relationship between the generation of revenues and the capturing of profits.
FALSE
Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry.
FALSE
An advantage of high differentiation is that even if many competitors follow the same strategy, differentiation is still present for all.
FALSE
By itself, focus often constitutes a competitive advantage.
FALSE
Customers are very likely to establish brand loyalty during the growth stage of the market life cycle.
FALSE
Developing social capital is risky for an organization due to the fact that social capital is specific to individuals and remains with the employee if he or she leaves the organization.
FALSE
Due to the necessity to integrate large amounts of feedback, 360-degree evaluation systems are not useful.
FALSE
Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions.
FALSE
Firms such as E-Bay, Oracle and Microsoft will tend to have a lower ratio of market value to book value than "industrial companies" such as General Motors and Nucor Steel.
FALSE
If a firm has a thriving differentiation strategy, it is not necessary to attain parity on cost.
FALSE
Intellectual capital is becoming less important in today's economy. It is not a concern of managers throughout organizations.
FALSE
Leverage ratios do not provide measures of a firm's ability to meet its long-term financial obligations.
FALSE
Since they are no longer profitable, businesses that compete in markets that are in decline should simply be harvested or divested.
FALSE
Support activities offer support for primary activities, but not other support activities.
FALSE
The following are excellent examples of mission statements: "Restoring patients to full life" (Medtronics) and "to be the happiest place on earth" (Disney).
FALSE
The following is an example of a symbiotic approach to strategic management: "We are here to serve the shareholder and create shareholder value. I insist the only person who owns the company is the person who paid good money for it." (Former Chrysler Vice Chairman Robert Lutz)
FALSE
The function of technology in the recruitment of human capital has lowered individuals' reliance on the use social networks.
FALSE
The only individuals concerned with the performance of a company are the stakeholders.
FALSE
Which of the following is an example of the interrelationship between the competitive and general environments?
Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic beverages industry.
XYZ Corp. is centering on the objective of low-cost, high quality, on-time production by curtailing idle productive facilities and workers. The XYZ Corp. is taking advantage of a ____________ system
Just-In-Time (JIT)
Which of the following is not a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis?
SWOT's focus on the external environment is too broad and integrative
A key benefit of the "balanced scorecard" is that it complements financial indicators with operational measures of internal processes, customer satisfaction, and the organization's innovation and improvement activities.
TRUE
Attitude is one of the most important elements in a good employee. Firms should follow the adage "hire for attitude, train for skill".
TRUE
Competition tends to be more intense among firms within a strategic group than between strategic groups.
TRUE
Competitors can be deterred entry into an industry through the advantages created by information systems.
TRUE
In some industries, high switching costs can act as an important barrier to entry
TRUE
Instead of focusing exclusively on financial considerations, many firms offer attractive benefits to entice employees to stay. These may include on-site daycare, on-site gyms, and on-site stores.
TRUE
Stockholder value does not mean the same thing as customer value.
TRUE
Strategic management acknowledges the trade-offs between efficiency and effectiveness.
TRUE
Technological innovations can create entirely new industries and alter the boundaries of industries.
TRUE
The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration.
TRUE
To allow for changes in strategy, Organizational goals and objectives should be clearly stated.
TRUE
Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should
adopt effective retention strategies.
Strategy implementation and formulation is a challenging, on-going process. To be effective, it should involve
all of the above
______________ rate a person's skill and performance in a 360-degree evaluation and feedback system.
all of the above
If a large segment of a firm's value is in intellectual and human assets, the difference between the company's market value and book value in the knowledge economy should ___________ a company with mostly physical and financial assets.
be larger than
A narrow market focus is to a differentiation-based strategy as a
broadly-defined target market is to a cost leadership strategy.
The most probable time to pursue a harvest strategy is in a situation of
decline in the market life cycle.
An organization's mission, in contrast to its vision, should
encompass both the purpose of the company as well as the basis of competition.
Developing forecasts, as discussed in the text, include two key inputs, which are
environmental scanning and competitor intelligence.
Vision statements are used to create a higher understanding of the organization's overall direction and purpose. Vision statements
evoke powerful and compelling mental images.
The "balanced scorecard" supplies top managers with a _____________ view of the business.
fast but comprehensive
The "triple bottom line" approach to corporate accounting, according to the text, includes which three components
financial, environmental, and social
An independent group of suppliers, such as farmers, gather to form a cooperative in order to sell their products to buyers directly, replacing their previous distributor. This is an example of
forward integration.
A company that is known for its inability to leverage human capital is Xerox. The relatively short tenure of Rich Thoman, CEO, is one example. One of the main reasons he was fired is that
he did not have inside connections like other board members and executives had.
Which of the following lists is comprised of support activities:
human resource management, information systems, procurement, and firm infrastructure
The use of information technology (e.g., email) in many organizations has increased in recent years. This has helped to
increase social capital.
Which of the following would be thought of as part of a firm's general environment?
increased trade deficit
A marketing department that promises delivery quicker than the production department's ability to produce is an example of a lack of understanding of the
interrelationships among functional areas and firm strategies
The emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low in the ______ stage of the industry life cycle.
introduction
A company's ability to meet its short-term financial obligations is measured by which of the following categories?
liquidity ratios
A risk of forecasting discussed in the text is that
managers may view uncertainty as black and white while ignoring important gray areas.
Although firm infrastructure is quite frequently viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following except:
marketing expertise increasing a firm's revenues and enabling it to enter new markets.
In the _______ stage of the industry life cycle, there are numerous segments, competition is very intense, and the emphasis on process design is high.
maturity
Interest rate increases have a ________ impact on the residential home construction industry and a ___ effect on industries that produce consumer necessities, such as prescription drugs or basic grocery items.
negative; negligible
The most extreme rivalry results from
numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
The competencies or skills that a firm employs to transform inputs into outputs are:
organizational capabilities.
Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?
overall cost leadership
The total profits in an industry at all points along the industry's value chain is called the
profit pool.
Businesses without a competitive advantage are not likely to earn more than "normal" profits in the long run. Normal profits are
profits one would expect to earn on investments that have a similar level of risk.
As seen in Porter's Five Forces model, conditions under which a supplier group can be powerful include all the following except
readily available substitute products.
Members of an organization's board of directors should, while working to prioritize and fulfill their responsibilities,
represent the interests of the shareholders.
The CEO of Lucent Technologies made a lot of mistakes, such as committing errors in assessing the market and competitive conditions, as well as improperly redesigning the organization into 11 business units. Such errors led to performance declines. According to the text, this example illustrates the _________________ perspective of leadership.
romantic
An array of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its customers and suppliers. Such competitive advantages are based upon
social complexity.
The "advance work" in the strategic management process is comprised of
strategy formulation
Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?
supplier power is increased because suppliers will be able to charge higher prices for their inputs
New knowledge includes the continual contact between ________________ and ___________ knowledge.
tacit; explicit
In an attempt to secure key employees from competitors, firms may attract the symbolic leader of a group within a competing firm, hoping others will follow. This has been termed
the "Pied Piper effect."
The bargaining power of the supplier is less than that of the buyer when
the buyer's profit margin is low
As our world increases in complexity, the global environment is increasingly challenging and competitive. The key to effective globalization is
the flow of capital, people, and information
As markets mature
there is increasing emphasis on efficiency.
An essential part of maintaining a competitive advantage in today's knowledge economy is developing human capital. Efforts and initiatives to develop human capital should be directed
throughout the firm at all levels.
There are elements of team building that have an impact on a team's success, according to the text. These include all of the following except
titles. Titles are important to a team's success.
Which of the following lists is the hierarchy of organizational goals in order from least specific to most specific?
vision statements, mission statements, strategic objectives.
