Strategic Management Midterm

In an IFE Matrix, the weights of all factors included must add up to ______.

1.0

The weight column in an EFE Matrix must add up to what number?

1.0

The range of total weighted scores in a CPM Matrix is ______.

1.0 to 4.0

The recommended length of a mission statement is fewer than _____ words.

100

In Step 1 of developing an EFE Matrix, how many opportunities and threats should be included in the full and narrow lists, respectively?

100, 20

In an IFE Matrix, how much more important is a weight of 0.16 than a weight of 0.07?

129 percent

In an EFE Matrix, the average total weighted score is:

2.5

How many key external factors should be included in an EFE Matrix?

20

Spending on digital advertising recently surpassed television advertising and is expected to reach nearly ______ billion dollars in 2020.

280

In an EFE Matrix, how much more important is a rating of 4 than a rating of 3?

33%

In an EFE Matrix, how much more important is a weight of 0.20 than a weight of 0.15?

33%

Most practitioners and academicians of strategic management feel that an effective statement should include ______mission statement components.

9

In 2018, global data analytics software is expected to reach ______ billion, a ______ percent increase from 2012. A. $21.7; 64 B. $217; 640 C. $.217; .64 D. $2.17; 6.4 E. $50; 50

A. $21.7; 64

Which of the following statements is FALSE? A. Apple Computer's mission statement should open the possibility for diversification by Apple into pesticides. B. A mission statement needs to be broad to reconcile differences effectively among and appeal to an organization's diverse stakeholders. C. Excess specificity in a mission statement would limit the potential of creative growth for the organization. D. A good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity. E. An overly general mission statement that does not exclude any strategy alternatives could be dysfunctional.

A. Apple Computer's mission statement should open the possibility for diversification by Apple into pesticides.

Limitations of financial ratio analysis include all but which one of the following statements? A. Financial ratios are estimates of financial condition. B. Seasonal factors can influence comparative financial ratios. C. Financial ratios are not very "actionable" in terms of revealing potential strategies needed(because they generally are based on performance of the overall firm). D. Financial ratios are based on accounting data, and firms differ in their treatment of such items as depreciation, inventory valuation, R&D expenditures, pension plan costs, mergers, and taxes. E. Departures from industry average financial ratios do not always indicate that a firm is doing especially well or badly.

A. Financial ratios are estimates of financial condition.

Which of the following statements is FALSE? A. Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 25 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors. B. The weights and total weighted scores in both a CPM and an EFE have the same meaning. C. The ratings in a CPM refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. D. Critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 =minor weakness, and 1 = major weakness. E. Avoid assigning the same rating to firms included in a CPM analysis.

A. Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 25 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors.

Which of the following statements is FALSE? A. You may assign the same rating to firms included in a CPM analysis if the firms are similar on the respective factor. B. The weights and total weighted scores in both a CPM and an EFE have the same meaning. C. The ratings in a CPM refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. D. Critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 =minor weakness, and 1 = major weakness. E. Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 33 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors.

A. You may assign the same rating to firms included in a CPM analysis if the firms are similar on the respective factor.

When should a vision statement reveal the type of business in which the firm engages?

Always

Aspects of organizational culture listed in Table 4-4 include all but which of the following?

Analyze interest rate trends

Which of the following statements is TRUE? A. An effective mission statement paves the way for an effective vision statement. B. There is no one best mission statement for a particular organization. C. Mission statements should not be published for competitors to see. D. Mission statements should be employee-oriented first and foremost and shareholder-oriented secondarily. E. A single-division organization could have several mission statements for different purposes.

B. There is no one best mission statement for a particular organization.

Which statement is FALSE? A. Some companies develop mission statements simply because owners or top management believe it is fashionable to do so rather than out of any real commitment. B. Vision statements are more important than mission statements. C. Managers at Johnson & Johnson (J&J) meet regularly with employees to review, reword, and reaffirm the firm's vision and mission. D. Some strategists spend almost every moment of every day on administrative and tactical concerns, ignoring the importance of a clear mission. E. Firms establish their vision and mission before their objectives in doing strategic planning.

B. Vision statements are more important than mission statements.

Which of the following statements is TRUE? A. When assigning weights and ratings in developing an IFE Matrix, focus on a narrow industry perspective for strengths and a broad industry perspective for weaknesses. B. When assigning weights and ratings in developing an IFE Matrix, focus on a narrow industry perspective. C. When assigning weights and ratings in developing an IFE Matrix, focus on the top three competitors in the industry. D. When assigning weights and ratings in developing an IFE Matrix, focus on all competitors in the industry. E. When assigning weights and ratings in developing and IFE Matrix, focus on a broad industry perspective.

B. When assigning weights and ratings in developing an IFE Matrix, focus on a narrow industry perspective.

The CEO of LinkedIn is Jeff Weiner, a highly respected corporate leader. What does Weiner say is the most important philosophy of a great leader?

Be clear about the organization's vision.

According to Vern McGinnis, a mission statement should do what?

Be limited enough to exclude some ventures and broad enough to allow for creative growth

Regarding the AQCD criteria, strive to include all high quality factors in an external assessment for a firm. A high quality factor will meet ______ of the AQCD criteria; a low quality factor will meet ______ of the AQCD criteria. A. 4; 0 B. All; none C. 3 or 4; 2 or fewer D. 3 or 4; 0 E. 3; 1

C. 3 or 4; 2 or fewer

Which statement FALSE? A. During the process of developing vision and mission statements, some organizations use discussion groups of managers to develop and modify existing statements. B. The process of developing a mission statement should create an "emotional bond" and "sense of mission" between the organization and its employees. C. An outside person with expertise in developing vision and mission statements who has unbiased views should always manage the statement-development process. D. Mission statements should include the 9 components. E. Vision statements should pass the 5 out of 5 test.

C. An outside person with expertise in developing vision and mission statements who has unbiased views should always manage the statement-development process.

Which statement below is FALSE? A. Dividends are sometimes paid out even if the funds could be better reinvested in the business, and/or even if the firm has to obtain outside sources of capital to pay for the dividends. B. Companies today are aggressively boosting their dividends paid to shareholders. C. Companies should pay dividends regardless of changes in their revenue. D. The benefits of paying dividends to investors must be balanced against the benefits of internally retaining funds, and there is no set formula on how to balance this trade-off. E. Dividends are sometimes paid out even when the firm has incurred a negative annual net income.

C. Companies should pay dividends regardless of changes in their revenue.

Which of the following statements is TRUE? A. If a firm possesses many highly-weighted weaknesses, this is likely the result of effective strategies, so higher ratings in general are warranted for weaknesses. B. If a firm possesses many highly-weighted strengths, this is likely the result of effective strategies, so higher ratings in general are warranted for strengths and weaknesses. C. If a firm possesses many highly-weighted strengths, this is likely the result of effective strategies, so higher ratings in general are warranted for strengths. D. If a firm possesses many highly-weighted weaknesses, this is likely the result of effective strategies, so higher ratings in general are warranted for strengths. E. If a firm possesses many highly-weighted weaknesses, this is likely the result of effective strategies, so higher ratings in general are warranted for both strengths and weaknesses.

C. If a firm possesses many highly-weighted strengths, this is likely the result of effective strategies, so higher ratings in general are warranted for strengths.

Dale McConkey said, "Plans are less important than planning." What does this statement mean?

Communication, understanding, and commitment are vitally important in strategic planning.

An advantage of a strong dollar includes which of the following item(s)?

Companies importing goods have greater buying power because their dollars now go further overseas.

All elements of the strategic planning process can change over time except one element that almost never changes. Whatis that element?

Core value statement

Which of the following statements is TRUE? A. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 8.0 and the lowest possible total weighted score is 1.0. B. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 10.0 and the lowest possible total weighted score is 0.0. C. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 0.0. D. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. E. Opportunities and threats can be external or internal.

D. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0.

Which statement below is FALSE? A. When a key internal factor is both a strength and a weakness, the factor may be included twice in the IFE Matrix with a weight and rating assigned to each statement. B. IFE ratings are company-based whereas weights are industry-based C. Always sequence factors in an IFE Matrix from highest to lowest weight. D. The average IFE Matrix score is 2.0. E. In an IFE Matrix, the number of factors has no effect on the range of total weighted scores because the weights always add up to 1.0.

D. The average IFE Matrix score is 2.0.

Regarding vision statements, which statement below is FALSE? A. Vision statements should be one sentence long. B. Vision statements should do more than identify the product/service a firm offers. C. Vision statements should be written from a customer perspective. D. Vision statements should answer the question "What is our mission?" E. Firms should develop a vision statement before a mission statement.

D. Vision statements should answer the question "What is our mission?"

Which of the following statements is TRUE? A. Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must oftentimes be made. B. Wild guesses should rarely be made in formulating strategies, but reasonable assumptions based on available information must usually be made. C. Wild guesses oftentimes must be made in formulating strategies, but reasonable assumptions based on available information must always be made. D. Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must always be made. E. Wild guesses should sometimes be made in formulating strategies, and reasonable assumptions based on available information must sometimes be made.

D. Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must always be made.

Which of the following activities is included in strategy implementation? -Develop a SWOT Matrix -Motivate employees and establish a mission statement. -Establish annual objectives and develop a vision statement. -Redirect marketing efforts and prepare a vision statement. -Develop a strategy-supportive culture and create an effective organizational structure.

Develop a strategy-supportive culture and create an effective organizational structure.

What is often considered the first step in strategic planning?

Developing a vision statement

Human resource (HR) management includes activities such as:

Disciplining, promoting, transferring, and demoting

When comparing mission statements of rival firms, perhaps the most important component to examine is what?

Distinctive competence

According to the chapter, a pitfall to watch for and avoid in strategic planning is:

Doing strategic planning only to satisfy accreditation or regulatory requirements

What characteristic(s) are included among the 5 out of 5 test for vision statements to be exemplary? A. Inspiring and complacent B. Congruent and congenial C. Futuristic and objective D. Consistent and competitive E. Clear and unique

E. Clear and unique

Which of the following statements is FALSE? A. The resource-based view (RBV) approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage. B. In contrast to the Industrial Organization (I/O) theory presented in the previous chapter, proponents of the RBV view/theory contend that organizational performance is primarily determined by internal resources. C. Resource-based view theory asserts that resources are actually what helps a firm exploit opportunities and neutralize threats. D. Empirical research by Neffke reveals that more than any other variable in the firm's value chain, it is the nature of a firm's human capital that impacts that firm's choice of diversification targets. Specifically, firms select acquisition targets that offer opportunities to leverage existing human resources. E. The resource-based view (RBV) approach to competitive advantage contends that internal resources are equally important for a firm as external factors in achieving and sustaining competitive advantage.

E. The resource-based view (RBV) approach to competitive advantage contends that internal resources are equally important for a firm as external factors in achieving and sustaining competitive advantage.

The bargaining power of consumers can be the most important force affecting competitive advantage. Consumers gain increasing bargaining power under the following circumstance:

If consumers are particularly important to the seller

In developing an IFE Matrix, what is an important guideline?

Include factors that are actionable, quantitative, comparative, and divisional (AQCD) to the extent possible.

Lorsch found that executives in successful companies are emotionally committed to the firm's culture, but he concluded that culture can inhibit strategic management in the following way:

Managers frequently miss the significance of changing external conditions because they are blinded by strongly held beliefs

External forces can be divided into five broad categories and ten subareas EXCEPT in which of the following?

Marketing

The basic activities that comprise marketing include the following:

Marketing research and target market analysis

Which of the following best describes the vision, "To become the best retailing firm in the USA"?

Much too broad

In terms of growing globally by adding new customers, what company does the global Capsule 3 suggest may be the fastest growing company?

Netflix

In developing an IFE Matrix, when can both internal and external factors be included?

Never

Does including the word "customer" in a mission statement ensure the statement includes the customer component?

No

The Industrial Organization view of strategic planning advocates that external (industry) factors are more important than internal ones for gaining and sustaining competitive advantage. Do the authors agree?

No. Matching key external opportunities and threats with key internal strengths and weaknesses provides the basis for successful strategy formulation.

If included in a mission statement, the phrase, "We follow the golden rule in all that we do" would satisfy what component?

Philosophy

______ is the process by which a person determines whether to attempt a task, works out the most effective way of reaching desired objectives, and prepares to overcome unexpected difficulties with adequate resources.

Planning

What are the four basic activities that comprise management?

Planning, organizing, motivating, and controlling

According to Michael Porter, the nature of competitiveness in a given industry includes what force?

Potential development of substitute products and bargaining power of consumers

Why are both profit and vision needed to motivate a workforce effectively?

Profit is viewed negatively by some stakeholders of a firm.

The AQCD test refers to the need for key external factors to exhibit what attributes?

Quantitative and divisional

According to Michael Porter, the nature of competitiveness in a given industry can be viewed as a composite of the forces. Which force is usually the most powerful?

Rivalry among competing firms

Which of the following four types of strategies are developed in a SWOT (Strengths-Weaknesses-Opportunities-Threats)Analysis? - SW, ST, WO, WT - WT, WO, WS, SW - ST, WT, SW, OT - SO, WO, ST, WT - OT, WO, ST, WT

SO, WO, ST, WT

In developing an IFE Matrix, do not allow more than 30 percent of the key factors to be financial ratios. Why?

Since financial ratios are generally the result of many factors, knowing what particular strategies should be considered based on financial ratios is difficult.

The term strategic planning is used synonymously in this text with what other term?

Strategic management

_____ 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.

Strategy

A mission statement should include the following components:

Survival/growth/profitability, philosophy, self-concept, and public image

Recent research by Rose and Cray examined the strategic-management process and concluded that perhaps the most important "activity" is what?

The feedback loop

An example of an economic variable is "value of the dollar" which is currently high compared with the Yen, Euro, and the Australian dollar. The high dollar results in what economic factor(s)?

The high dollar makes U.S. goods more expensive in overseas markets.

According to James Van Horne, the basic activities of finance/accounting consist of three decisions. What are the three?

The investment decision, the financing decision, and the dividend decision

A meta-analysis of 20 years of empirical research on mission statements came to what conclusion?

There is a positive relationship between mission statements and measures of financial organizational performance.

Unskilled leaders work out their conflicts in courtrooms and battlefields. Brilliant strategists rarely go to battle or to court. How do they usually achieve their objectives?

Through tactical positioning well in advance of any confrontation

King and Cleland recommend that organizations carefully develop a written mission statement in order to reap which benefit?

To provide a basis for the allocation of resources

Generally, in war, the best policy is to take a state intact rather than to ruin it. Likewise, the best objective is to capture the enemy's army, regiment, company, or squad intact rather than destroy them. Winning 100 victories in 100 battles is not the epitome of skill. What is the epitome of skill?

To subdue the enemy without fighting

What source provides excellent online information and advice on approximately 1,700 stocks, more than 90 industries, the stock market, and the economy, including company income statements and balance sheets?

Value Line Investment Survey

Who said, "Perfection is not attainable. But if we chase perfection, we can catch excellence"?

Vince Lombardi, Head Coach Green Bay Packers (1959-67)

Asking the question, ______ is synonymous with asking, "What is our mission?"

What is our business?

According to the model used in this text, what should be answered when developing a strategic plan?

Where are we now, where do we want to go, and how are we going to get there?

Are the interpretations of the weights in a CPM and EFE Matrix the same?

Yes

In multidivisional organizations, should divisional units perform strategic-management tasks, including the development of their own statement of vision and mission?

Yes

Is the following statement TRUE? A benefit of developing a comprehensive mission statement is that divergent views among managers can be revealed and resolved through the process.

Yes

Strengths and weaknesses can be determined by elements of being rather than performance.For example, ______

a strength may involve ownership of natural resources

To the extent possible, internal strength/weakness factors should meet the four AQCD criteria. Two of these criteria are_____

actionable and comparative

To survive and prosper, a business must gain and sustain ______ major competitive advantages over rival firms.

at least several

The extent to which a manufacturing plant's output reaches its potential output is called ______, a key strategic variable

capacity utilization

According to Chapter 1, ______ may be the most important word in management.

communication

Strategic management is based on the idea that organizations should monitor internal and external trends _____.

continually

Strengths that cannot be easily matched or imitated by competitors are called ______.

distinctive competencies

A firm can achieve sustained competitive advantage by _____.

effectively formulating, implementing, and evaluating strategies that capitalize on changes intrends and internal capabilities

______ is the act of strengthening employees' sense of effectiveness by encouraging them to participate in decision making and to exercise initiative and imagination, and then rewarding them for doing so

empowerment

An excellent source of industry information, including industry profiles and trade statistics for many industries, is provided at what website?

http://globaledge.msu.edu/industries/5

Which of the following is listed in the chapter as a reason often given for poor or no strategic planning in a firm? -Substantial monetary rewards for doing planning -laziness -reshoring -Benchmarking -Adequate formal training in strategic management

laziness

Official business failure calculations include _____.

liquidations and court-mandated receiverships

Empirical indicators, or characteristics of resources that enable a firm to implement strategies, include ______

not easily substitutable

Guidelines, rules, and procedures established to support implementation efforts are called _____.

policies

According to the chapter, the worst thing strategists can do is to develop strategic plans and then ____.

present the plans to operating managers to execute

The "markets" component of mission statements refers to the_____.

regions in which the company operates

A fundamental strategy-evaluation activity includes_____.

reviewing external and internal factors that are the bases for current strategies, measuringperformance, and taking corrective actions

Target recently joined Best Buy in offering to match online prices of rival retailers. Both companies are seeking to combat______ by shoppers who check out products in their stores but buy them on rival's websites.

showrooming

Building four new manufacturing plants in Europe is an example of a(n) ______.

strategy

According to recent research by Cuddy, Fiske, and Glick, what ethics variable(s) is most important in doing business?

trustworthiness

According to Drucker, the most important time to ask seriously, "What do we want to become?" and "What is our business?" is ______.

when a company has been successful