Geb4891 Chapter 9
International financial reporting standards (IFRS) comprise approximately ________ pages.
5,000
Which of the following is a corrective action a company might take to correct unfavorable variances?
All of the above
Which of these is a basic activity of strategy evaluation?
All of the above
What term is defined as "a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users?"
Auditing
Which of the following is NOT included in measuring organizational performance?
Comparing results to competitors' expectations
What term refers to the need for strategists to examine sets of trends, as well as individual trends, in evaluating strategies?
Consonance
What activity is defined as having alternative plans that can be put into effect if certain key events do not occur as expected?
Contingency planning
What has been shown to permit quick response to change, prevent panic in crisis situations, and make managers more adaptable?
Contingency planning
A revised ________ should indicate how effective a firm's strategies have been in response to key opportunities and threats.
EFE matrix
According to Richard Rumelt, consonance and consistency are mostly based on a firm's external assessment.
False
Alternative strategies not selected for implementation should be discarded, as they have a tendency to contaminate the contingency plans.
False
Changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and MIS strengths and weaknesses should all be the focus of a revised EFE matrix in strategy evaluation.
False
Consistency, distinctiveness, advantage, and feasibility are Richard Rumelt's four criteria for evaluating a strategy.
False
Financial ratios are rarely used as criteria to evaluate strategies.
False
IFRS standards comprise 25,000 pages, whereas GAAP standards comprise 5,000 pages.
False
In strategy evaluation, a revised IFE matrix should indicate how effective a firm's strategies have been in response to key opportunities and threats.
False
It is most effective to conduct strategy evaluation annually, at the end of the fiscal year.
False
Measuring organizational performance requires making changes to reposition a firm competitively for the future.
False
Organizations should prepare contingency plans just for unfavorable events.
False
Public accounting firms usually avoid strategy-evaluation services.
False
Small organizations require a more elaborate and detailed strategy-evaluation system because they are still evolving.
False
Strategists should try to cover all bases by planning for all possible contingencies.
False
Strategy evaluation should have a long-run focus and avoid a short-run focus.
False
The U.S. Chamber of Commerce is against the accounting switch from GAAP to IFRS, saying it will cause cross-border commerce to decline.
False
The most admired electronics company in 2011 was Tyco International.
False
The test of an effective evaluation system is its complexity.
False
Unless the timetable is changed, all companies will be required to use the IFRS procedures in 2011.
False
Which of the following is NOT a reason why some firms prefer to conduct strategic-planning in secret?
It enhances understanding, commitment and communication within the firm.
Which of the following is true regarding the design of a firm's strategy-evaluation system?
It should be determined based on the unique characteristics of a company.
________ organizations require more elaborate and detailed strategy-evaluation systems than ________ ones because it is more difficult to coordinate efforts among different divisions and functional areas.
Large; small
All of the following are reasons to be completely open with the strategy process EXCEPT:
Openness limits rival firms from imitating or duplicating the firm's strategies.
Which of the following is NOT a reason for the increasing difficulty of evaluating strategies?
Product life cycles are longer.
Which of these is NOT a key financial ratio?
Production quality
Which of the following is NOT one of the four perspectives from which the Balanced Scorecard allows firms to evaluate strategies?
Social responsibility
Which of the following statements about contingency plans is NOT true?
Strategists should plan for all possible contingencies.
What aims to balance long-term with short-term concerns, financial with nonfinancial concerns, and internal with external concerns?
The Balanced Scorecard approach
According to Rumelt, consistency and feasibility are largely based on a firm's internal assessment.
True
Alvin Toffler argues that environments are becoming so dynamic and complex that they threaten people and organizations with future shock, in his thought-provoking books entitled Future Shock and The Third Wave.
True
Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.
True
Contingency plans should be as simple as possible.
True
Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored.
True
Future shock occurs when the nature, type, and speed of changes overpower an individual's or organization's ability and capacity to adapt.
True
Identifying both beneficial and unfavorable events that could possibly derail the strategy or strategies is the first step of effective contingency planning.
True
Intuitive judgments are almost always involved in deriving quantitative criteria.
True
Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm's objectives.
True
Strengths, weaknesses, opportunities, cost and threats should continually be monitored for change because it is not really a question of whether these factors will change, but rather when they will change and in what ways.
True
The accounting switch from GAAP to IFRS in the U.S. is going to cost businesses millions of dollars in fees and upgraded software systems and training.
True
The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is more difficult today.
True
The strategic management process should be completely open because participation and openness enhance understanding, commitment, and communication within the firm.
True
Too much emphasis on evaluating strategies may be expensive and counterproductive.
True
When measuring organizational performance, you need to compare expected results to actual results.
True
Controls need to be ________ rather than ________.
action-oriented; information-oriented
A particularly important twenty-first-century challenge facing all strategists today is:
all of the above
Most quantitative criteria are geared to ________ objectives rather than ________ objectives.
annual; long-term
Corrective action should do all of the following EXCEPT:
avoid external opportunities
All of these are Richard Rumelt's criteria to evaluate a strategy EXCEPT:
distinctiveness
Competitive advantages normally are the result of superiority in one of three areas
feasibility, consistency, or consonance. : False
According to Rumelt, the final broad test of strategy is its:
feasibility.
Quantitative criteria commonly used to evaluate strategies are:
financial ratios.
The strategy-evaluation process should:
foster mutual understanding and trust.
If success for one organizational department means failure for another department, then strategies may be:
inconsistent.
With the passage of time strategy evaluation is becoming:
increasingly difficult.
Success today:
is no guarantee of success tomorrow.
Too much emphasis on evaluating strategies:
may be expensive and counterproductive.
The strategy-evaluation process should foster:
mutual understanding.
Competitive advantage normally is the result of superiority in resources, skills, and:
position.
Also important in evaluating strategies are ________ criteria, like high absenteeism and turnover rates, or low employee satisfaction.
qualitative
Rumelt's criteria of consonance refers to the need for strategists to examine:
sets of trends.
Corrective actions should always:
strengthen an organization's competitive position in its industry.
If you discover during the course of strategy evaluation that major changes have occurred in the firm's internal strategic position, you should:
take corrective actions.
Financial ratios are used to compare a firm's performance over different time periods, to compare the firm's performance to industry averages, and to compare a firm's performance with:
the performance of competitors.
Most strategy literature advocates that strategic management is:
more of a science than an art.
Which of the following is NOT a key attribute that serves as one of the evaluative criteria for Fortune's "America's Most Admired Companies?"
Amount of physical resources
Increased education and diversity of the workforce at all levels are reasons why the top-down approach should be favored in organizations.
False
According to author Alvin Toffler, what occurs when the nature, types, and speed of changes overpower an individual's or organization's ability and capacity to adapt?
Future shock
According to research, participation in strategy-evaluation activities is one of the best ways to overcome individuals' resistance to change.
True
Adequate and timely feedback is important to effective strategy evaluation.
True
Criteria for evaluating strategies should be measurable and easily verifiable.
True
Each year, Fortune publishes strategy-evaluation research on both the United States and other countries.
True
Measuring organizational performance includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives.
True
Most strategists believe that an organization's well being depends on evaluation of the strategic-management process.
True
Regardless of the size of the organization, a certain amount of "management by wandering around" at all levels is essential to effective strategy evaluation.
True
Strategies may be inconsistent if policy problems and issues continue to be brought to the top for resolution.
True
Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated.
True
The Balanced Scorecard approach deals with the question, "How satisfied are the firm's customers?"
True
There is no one ideal strategy-evaluation system for all organizations.
True
Timely approximate information is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present.
True
Modern organizational realities demand that employees demonstrate greater:
all of the above
Corrective actions are almost always ________ except when external and internal factors have not significantly changed and the firm is progressing satisfactorily toward achieving stated objectives.
needed
Strategy-evaluation activities should ideally be performed:
on a continuous basis.
All of the following are reasons strategy evaluation is more difficult today EXCEPT:
the decreasing difficulty of predicting the future with accuracy.
The Fortune 50 includes all of the following EXCEPT:
the largest hospitals
Research suggests that which of the following is one of the best ways to overcome individuals' resistance to change in strategy evaluation?
Participation
A frequently used tool in strategy evaluation is the audit.
True
The U.S. Chamber of Commerce supports the change from GAAP to IFRS, saying it will help the U.S. compete in the world economy.
True
Increased education and diversity of the workforce at all levels are reasons why:
middle- and lower-level managers, and even nonmanagers, should be involved in the strategic planning process.
Proponents of the top-down approach contend that ________ are the only persons in the firm with the collective experience, acumen, and fiduciary responsibility to make key strategy decisions.
top executives
According to researchers, all of the following encourage individuals to accept change EXCEPT:
when the nature, types, and speed of changes overpower their ability and capacity to adapt
The first time U.S. issuers would report under the international financial reporting standards (IFRS) would be approximately:
2015 or 2016
What is the cornerstone of effective strategy evaluation?
Adequate and timely feedback
What corrective actions might a firm take during strategy evaluation?
All of the above
Most quantitative evaluation criteria are geared to long-term objectives rather than annual objectives.
False
Strategy evaluation is becoming increasingly easier with the passage of time, given technological advances.
False
The form of a Balanced Scorecard does not vary for different organizations or industries.
False
Changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and MIS strengths and weaknesses should be the focus of a revised:
IFE matrix.
Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving stated objectives.
True
