Bus 195 Chapter 6-10
16) The major benefit of the Boston Consulting Group (BCG) Matrix is that it draws attention to the cash flow, investment characteristics, and needs of an organization's various divisions.
16. - T
17) After decades of debate and struggle, the business community has finally definitively determined the appropriate social policies.
17. - F
17) The focus of restructuring is changing the way work is actually carried out.
17. - F
17) A projected financial analysis can be used to forecast the impact of various implementation decisions.
17. - T
17) Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm's objectives.
17. - T
17) The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time.
17. - T
18) Corporate social policy should be reaffirmed or changed during strategy implementation.
18. - F
18) The test of an effective evaluation system is its complexity.
18. - F
18) Both the Internal-External (IE) and Boston Consulting Group (BCG) Matrices are called portfolio matrices.
18. - T
18) Resistance to change can be considered the single greatest threat to successful strategy implementation.
18. - T
18) The percentage-of-sales method should be used for projecting the cost of goods sold in the income statements.
18. - T
19) Firms should strive to engage in social activities that have no economic benefits, to avoid their being viewed as public relations ploys.
19. - F
19) On the x-axis of the IE Matrix, an IFE total weighted score of 2.5 represents a weak internal position.
19. - F
19) The cash account is used as the plug figure in projected balance sheets.
19. - T
2) Bad ethics can derail all but the best strategic plans.
2. - F
16) Yahoo was one of the world's most admired companies, according to Fortune's 2014 evaluation.
16. - F
16) The first social responsibility of any business must be to make enough profit to cover the costs of the future because if this is not achieved, no other social responsibility can be met.
16. - T
1) Effective strategy formulation can usually guarantee successful strategy implementation.
1. - F
1) Good ethics is not a prerequisite for good strategic management.
1. - F
1) According to Rumelt, consistency and feasibility are largely based on a firm's internal assessment.
1. - T
11) A firm can usually serve two or more market segments with the same strategy.
11. - F
25) Recruitment, promotion, and mentoring are ways to alter an organization's culture.
25. - T
26) California is the nation's second-largest producer of solar energy.
26. - F
26) IFRS standards comprise 25,000 pages, whereas GAAP standards comprise 5,000 pages.
26. - F
9) Market penetration can be classified as either a conservative, aggressive, or competitive strategy when using the Strategic Position and Action Evaluation (SPACE) Matrix.
9. - T
25) Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategy linkages.
25. - T
26) The work and family issue is overwhelmingly a women's issue.
26. - F
27) A recent study reports that nearly 90 percent of employers today offer some kind of wellness incentives or prizes to employees who "get healthier."
27. - T
9) Perceptual mapping entails developing schematic representations that reflect how your products or services compare to competitors' on dimensions most important to success in the industry.
9. - T
23) Social responsibility refers to actions an organization takes that are legally required to protect or enhance the well-being of living things.
23. - F
23) A frequently used tool in strategy evaluation is the audit.
23. - T
24) As a balance sheet entry, goodwill represents the favor a business has acquired through its environmentally conscious and socially responsible actions.
24. - F
24) Changing a strategy to fit an existing culture is usually more effective than changing a firm's culture to fit a new strategy.
24. - F
24) Public accounting firms usually avoid strategy-evaluation services.
24. - F
24) Culture includes the set of shared values, beliefs, attitudes, customs, norms, rites, rituals, personalities, heroes, and heroines that describe a firm.
24. - T
24) Sustainability refers to the extent that an organization's operations and actions protect, mend, and preserve rather than harm or destroy the natural environment.
24. - T
25) While it is socially responsible to be a good steward of the natural environment, doing so will not enable a firm to gain competitive advantage.
25. - F
25) Believing it will make it easier for investors to compare firms across countries and make it easier to raise capital globally, most large accounting firms and multinational firms favor the switch from GAAP to IFRS.
25. - T
25) It is generally not recommended for companies with less than $10 million in sales to go public.
25. - T
26) Trying to achieve optimal results with an unpopular strategy is always better than achieving satisfactory results with a popular strategy.
26. - F
26) Decisions about an initial public offering are better described as being finance and accounting matters than as marketing matters.
26. - T
27) Despite greater interest in sustainability, uniform standards defining environmentally responsible company actions are only slowly being incorporated into the legal landscape.
27. - F
27) If the rate of market growth and technical progress is rapid, then in-house R&D is the preferred solution.
27. - F
27) Shifting focus from general issues to specific issues generally helps strategists gain commitment and achieve desired results.
27. - F
27) Most executives believe that some strategic information should remain confidential to top managers.
27. - T
28) Which of the following is a management issue central to strategy implementation? A) Devising policies B) Revising reward and incentive plans C) Minimizing resistance to change D) Developing an effective human resources function E) All of the above
28. - E: All of the above
28) It has gotten easier for firms to get away with placing "green" terminology on their products and labels because there are still no legal or generally accepted definitions of terms like "organic," "green," "safe," or "earth-friendly."
28. - F
28) The trend in the United States is toward larger boards of directors, with an average of 18 members being the norm.
28. - F
28) To enhance effectiveness, R. T. Lenz recommends keeping the strategic management process routine.
28. - F
28) R&D issues include emphasis on product or process improvements.
28. - T
29) Which of the following is NOT true about objectives? A) They should be communicated throughout the organization. B) They should have an appropriate time dimension. C) They should use terms like "maximize," "minimize," and "as soon as possible." D) They should be measurable. E) They should be consistent.
29. - C: They should use terms like max, min, and as soon as possible
29) While open-mindedness is generally considered to be a good trait, it endangers effective strategic management.
29. - F
29) One major R&D approach is to be an innovative imitator of successful products.
29. - T
29) The ISO 14000 family of standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance.
29. - T
29) The Sarbanes-Oxley Act put an end to the "country-club" atmosphere of most boards and has shifted power from CEOs to directors.
29. - T
3) Market penetration can be defined as the subdividing of a market into distinct subsets of customers according to needs and buying habits.
3. - F
3) The first stage of the strategy-formulation framework is the input stage, and it is directly followed by the decision stage.
3. - F
3) A firm's annual objectives can be stated by business segment.
3. - T
3) A rising tide of consciousness about the importance of business ethics is sweeping the United States and the rest of the world.
3. - T
3) Adequate and timely feedback is critical to effective strategy evaluation.
3. - T
30) 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
30. - B: Subjective; objective
30) All of these are Richard Rumelt's criteria to evaluate a strategy EXCEPT ) advantage. B) consistency. C) feasibility. D) distinctiveness. E) consonance.
30. - D: Distinctiveness
30) Policies A) let both employees and managers know what is expected of them. B) provide a basis for management control. C) allow coordination across organizational units. D) reduce the amount of time managers spend making decisions. E) all of the above
30. - E: all of the above
30) Increased costs are a disadvantage of a good information system.
30. - F
30) There are no countries that favor or engage in commercial whaling today.
30. - F
31) Competitive advantage normally is the result of superiority in resources, skills, or A) employees. B) position. C) consistency. D) feasibility. E) governance.
31. - B: Position
31) Which of the following variables is NOT directly affected by market segmentation? A) Product B) Place C) Process D) Promotion E) Price
31. - C: Process
31) "All of our locations will be open at least two evenings per week until 8:30 p.m." is an example of a(n) A) administration. B) goal. C) objective. D) policy. E) procedure.
31. - D: policy
31) Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies? A) Input B) Output C) Decision D) Throughput E) Matching
31. - E: Matching
31) Many New Zealanders, supported by Japanese, are outraged about Australia's "large-scale" whaling operations in Antarctic.
31. - F
32) Which stage of the strategy-formulation framework includes an IFE Matrix and the Competitive Profile Matrix? A) Input B) Matching C) Decision D) Penetration E) Research
32. - A: Input
4) Dumping banned or flawed products in foreign markets is considered to be an unethical business practice.
4. - T
8) Monitoring departmental and corporate performance regarding ethical issues can cause firms to misalign ethical and strategic decision-making.
8. - F
8) Exchanging members of conflicting parties so each can gain an appreciation of the other's point of view exemplifies a confrontation approach.
8. - T
8) 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).
8. - T
8) When measuring organizational performance, a comparison should be made between expected results and actual results.
8. - T
9) Financial ratios are rarely used as criteria to evaluate strategies.
9. - F
9) Policies largely dictate how structure will be established.
9. - F
51) ________ includes the set of shared values, beliefs, attitudes, customs, norms, rites, rituals, personalities, heroes, and heroines that describe a firm. A) Strategy B) Culture C) Mission D) Objectives E) QSPM
B: Culture
56) Which of the following is NOT a guideline for an effective strategic planning process? A) It should not become ritualistic, stilted, or orchestrated. B) It should employ International Financial Reporting Standards (IFRS). C) It should not be too formal, predictable, or rigid. D) It should not contain jargon or arcane planning language. E) It should not be a formal system for control.
B: It should employ International Financial Reporting Standards (IFRS).
52) Which statement is NOT true? A) Having an effective management information system may be the most important factor in differentiating successful from unsuccessful firms. B) Like inventory and human resources, information is now recognized as a valuable organizational asset that can be controlled and managed. C) Computer vulnerability has nearly been eradicated by recent innovations, and it is now possible to secure and safeguard all corporate communications, files, and business conducted over the Internet. D) In many firms, information technology is allowing employees to work at home or anywhere, anytime. E) Improved quality and service often result from an improved management information system.
C: Computer vulnerability has nearly been eradicated by recent innovations, and it is now possible to secure and safeguard all corporate communications, files, and business conducted over the Internet.
51) What has been shown to permit quick response to change, prevent panic in crisis situations, and make managers more adaptable? A) Audits B) Balanced Scorecards C) Contingency plans D) Corrective actions E) Measuring performance
C: Contingency plans
50) Aspects of an existing culture that are antagonistic to a proposed strategy should be A) preserved. B) emphasized. C) built upon. D) changed. E) celebrated.
D: Changed
50) ________ plans can be defined as alternative plans that can be put into effect if certain key events do not occur as expected. A) Agile B) Scenario C) Evaluation D) Contingency E) Forecast
D: Contingency
50) What portion of the firms going public in 2014 were unprofitable? A) Less than one tenth B) About one quarter C) About one half D) Nearly three quarters E) Nearly all
D: Nearly three quarters
54) Increased education and diversity of the workforce at all levels are reasons why A) the top-down approach is preferred. B) the bottom-up approach is untenable. C) only top executives have the experience and acumen to make strategy decisions. D) middle-level and lower-level managers, and even non-managers, should be involved in the strategic planning process. E) the horizontal approach is the most pragmatic choice.
D: middle-level and lower-level managers, and even non-managers, should be involved in the strategic planning process.
51) According to the information in the text, how many Fortune 500 have women CEOs? A) Two B) Five C) Twelve D) Eighteen E) Twenty-six
E: 26
52) In 2017, which governmental entity will impose penalties up to $450 on any employee who fails to undergo certain health screenings or treatment plans? A) City of Boston B) City of New York C) Hennepin County Minnesota D) State of Massachusetts E) State of Maryland
E: State of Maryland
50) Sustainability refers to the extent that an organization's operations and actions ________ the natural environment. A) protect B) mend C) preserve D) reflect good stewardship of E) all of the above
E: all of the above
55) All of the following are reasons to be completely open as opposed to secretive with the strategy process EXCEPT A) managers, employees and other stakeholders can readily contribute to the process. B) stakeholders have greater basis for understanding and committing to a firm that is open. C) visibility promotes democracy, whereas secrecy promotes autocracy. D) participation and openness enhance understanding, commitment and communication within the firm. E) openness limits rival firms from imitating or duplicating the firm's strategies.
E: openness limits rival firms from imitating or duplicating the firm's strategies.
5) A well written code of ethics ensures ethical business behavior.
5. - F
9) Three individuals received $170 million for helping investigators obtain a record $16.65 billion penalty against Bank of America for inflating the value of mortgage properties and selling defective loans to investors.
9. - T
53) Jeff Wells of the National Audubon Society asks "Why should we be willing to watch ________ destroyed any more than allowing a great work of art to be destroyed?" A) coral reefs B) economic progress C) natural history D) shark habitat E) songbirds
A: Coral reefs
53) Which of the following is NOT a current development or trend? A) Efforts to repeal federal laws currently preventing businesses from using GPS devices to monitor employees B) Tracking the location of employees through company provided hand-held devices C) The use of smartphones as hotel room keys D) Desktop videoconferencing E) Assertions by employees that employers are invading their privacy with various monitoring practices
A: Efforts to repeal federal laws currently preventing businesses from using GPS devices to monitor employees
52) Successful strategists minimize their own political exposure on issues that are ________ and in circumstances where opposition from major power centers is likely. A) highly controversial B) nominally controversial C) power centered D) strategy centered E) tactic optimized
A: highly controversial
54) Today, boards of directors are composed mostly of A) outsiders. B) management. C) union members. D) company employees. E) past executives.
A: outsiders
51) All of the following are mentioned by the authors as environmental strategies that a firm might adopt EXCEPT A) reinvesting in environment-damaging businesses. B) including an environmental representative on their board of directors. C) implementing bonuses for favorable environmental results. D) incorporating environmental values in mission statements. E) conducting regular environmental audits.
A: reinvesting in environment-damaging businesses.
52) International financial reporting standards (IFRS) comprise approximately ________ pages. A) 1,000 B) 5,000 C) 10,000 D) 25,000 E) 100,000
B: 5,000
52) All of the following statements are true EXCEPT A) ISO is the world's largest developer of sustainability standards. B) ISO standards are widely accepted all over the world. C) ISO has legal authority to enforce its regulations' implementation. D) ISO standards are voluntary. E) ISO itself does not regulate or legislate.
C: ISO has legal authority to enforce its regulations' implementation.
51) R&D employees and managers perform all of the following tasks EXCEPT A) transferring complex technology. B) altering products to particular tastes and specifications. C) researching resource availability. D) adapting processes to local markets. E) adjusting processes to local raw materials.
C: Researching resource availability
53) 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
23) One positive feature of QSPM is that it does not require intuitive judgments and educated assumptions.
23. - F
1) An example of a marketing decision is whether or not to limit the share of business done with a single customer.
1. - T
1) An organization's present strategies, objectives, vision, and mission, coupled with the external and internal audit information, provide a basis for generating and evaluating feasible alternative strategies.
1. - T
10) Most firms warn managers and employees that reporting an ethical violation by others could cause them to be discharged.
10. - F
10) Tasks and activities are grouped together by business function in a divisional organizational structure.
10. - F
10) An area on a perceptual map where there is a cluster of ideal points indicates a market segment.
10. - T
10) Conservative strategies in a SPACE Matrix most often include product development, market development, market penetration, and related diversification.
10. - T
10) Intuitive judgments are almost always involved in deriving quantitative criteria.
10. - T
11) A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (+2, +3).
11. - F
11) In order to be considered bribery, the gift offered must be either money or a physical item.
11. - F
11) Measuring organizational performance requires making changes to reposition a firm competitively for the future.
11. - F
11) Most large companies have abandoned the functional structure in favor of decentralization.
11. - T
12) The U.S. Foreign Corrupt Practices Act and a new provision in the Dodd-Frank financial regulation-law allows company employees who bring cases of financial fraud, such as bribery, to the government's attention to receive at least 30 percent of any sum recovered.
12. - F
12) To be a price leader or a price follower is a decision that may require finance/accounting policies.
12. - F
12) Relative market share position is given on the x-axis of the Boston Consulting Group (BCG) Matrix.
12. - T
12) Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated.
12. - T
12) With a divisional structure by customer, an organization can effectively cater to the requirements of clearly defined customer groups.
12. - T
13) A Wall Street Journal article reported that 80 percent of all firms sampled had no restrictions on relationships between a supervisor and a subordinate.
13. - F
13) The midpoint on the x-axis of a Boston Consulting Group (BCG) Matrix is typically set at 0.05.
13. - F
13) The primary sources of capital are known as debt and EPS.
13. - F
13) 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.
13. - T
13) The most complex of all organizational structures is a matrix structure.
13. - T
14) In Europe, romantic relationships at work are frowned upon, and most firms have policies prohibiting the practice.
14. - F
14) Too much debt in the capital structure of an organization can endanger stockholders' returns and jeopardize company survival, particularly in periods of high earnings.
14. - F
14) According to research, participation in strategy-evaluation activities is one of the best ways to overcome resistance to change.
14. - T
14) The pie slice in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.
14. - T
14) When developing an organizational chart, it is not wise to recommend that any executive have a dual title.
14. - T
15) In publicly held U.S. companies it is becoming increasingly common to combine the positions of chairperson of the board and the CEO.
15. - F
15) Some strategists agree with Ralph Nader, who asserts that organizations have no obligation to do any more for society than is legally required.
15. - F
15) An EPS/EBIT chart can be constructed to determine the break-even point, where one financing alternative becomes more attractive than another.
15. - T
15) Stars, Question Marks, Cash Cows, and Dogs are the four quadrants exhibited by the Boston Consulting Group (BCG) Matrix.
15. - T
15) The Balanced Scorecard approach addresses the question "How satisfied are the firm's customers?"
15. - T
16) When additional stock is issued to finance implementation of strategy, the existing stockholders' ownership and control of the enterprise are strengthened.
16. - F
16) Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs.
16. - T
19) There is no one ideal strategy-evaluation system for all organizations.
19. - T
19) When the rational type change strategy is successful, strategy implementation can be relatively easy.
19. - T
2) It is vital that strategists always consider all feasible alternatives that could benefit the firm.
2. - F
2) The online community of customers is more expensive to reach than traditional focus groups and surveys.
2. - F
2) Strategies may be inconsistent if policy problems and issues continue to be brought to the top for resolution.
2. - T
2) Unlike strategy formulation, strategy implementation varies considerably among different types and sizes of organizations.
2. - T
20) Organizations should prepare contingency plans just for unfavorable events.
20. - F
20) The effects of the Sarbanes-Oxley Act include increased inflation of financial projections.
20. - F
20) In Japan, Italy, and Germany the percentage of the population age 65 or older exceeds 20 percent.
20. - T
20) The rational change strategy is one that presents information to convince people of the need for change.
20. - T
20) When a firm located in Quadrant I of the Grand Strategy Matrix is too heavily committed to a single product, related diversification may be appropriate to reduce the risks associated with a narrow product line.
20. - T
21) All the methods for determining a business' worth can be grouped into three basic approaches: what a firm earns, what a firm spends, and what a firm will bring in the market.
21. - F
21) Like the United States, Japan is eager to rely on large-scale immigration to bolster its workforce.
21. - F
21) Organizational change today should be viewed as a project or event rather than as a continuous process.
21. - F
21) Contingency plans should be as simple as possible.
21. - T
21) To objectively evaluate feasible alternative strategies identified in Stage 2, the Quantitative Strategic Planning Matrix (QSPM) uses input information derived from Stage 1.
21. - T
22) Four common corporate Valuation methods are the Net Worth Method, the Net Income Method, the Gross Income Method, and the Outstanding Shares Method.
22. - F
22) 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 Quantitative Strategic Planning Matrix (QSPM).
22. - F
22) According to Linneman and Chandran, identifying both good and bad events that could jeopardize strategies should be the first step in contingency planning.
22. - T
22) Besides reducing worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial tax savings.
22. - T
22) Unlike the United States, Japan has no law against discrimination based on age.
22. - T
23) In Japan, performance rather than seniority has traditionally been the key factor in determining pay.
23. - F
23) One of the four recommended approaches for determining a firm's worth is to base the analysis on the selling price of a similar company.
23. - F
32) What term refers to the need for strategists to examine sets of trends, as well as individual trends, in evaluating strategies? A) Consistency B) Consonance C) Synergy D) Feasibility E) Advantage
32. - B: Consonance
32) A disagreement between two or more parties on one or more issues is called a(n) A) integrated solution. B) conflict. C) compromise. D) diffusion. E) avoidance.
32. - B: conflict
32) Bad ethics can ________ strategic plans. A) derail all but the best B) derail even the best C) derail only poorly-intentioned D) derail only ill-conceived E) never affect
32. - B: derail even the best
32) All of the following are true EXCEPT A) marketing has evolved to be more about building a two-way relationship with consumers. B) in 2015 the number of LinkedIn users was closer to the number of Facebook users than to the number of Twitter users. C) the online community of customers is much quicker, cheaper, and effective to reach than traditional focus groups and surveys. D) successful strategy implementation requires a firm to know what people are saying about it and its products. E) company websites should enable customers to interact with the firm on a variety of social media networks.
32. - B: in 2015 the number of LinkedIn users was closer to the number of FB users than to Twitter users
33) What is the cornerstone of effective strategy evaluation? A) Adequate and timely feedback B) Quality and quantity of managers C) Smaller ratio of top- to lower-level management D) Evaluation preceding implementation stage E) Punitive corrective actions
33. - A: Adequate and timely feedback
33) An absence of conflict can signal ________ within an organization. A) indifference and apathy B) insight and apathy C) indifference and indignation D) disputes E) all of the above
33. - A: indifference and apathy
33) All of the following business actions are considered to be unethical EXCEPT A) dumping banned or flawed products in foreign markets. B) preventing environmental harm. C) overpricing. D) sexual harassment. E) insider trading.
33. - B: preventing environmental harm
33) 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.
33. - C: strategy
33) Subdividing a market into distinct subsets of customers according to their needs and buying habits is known as A) market penetration. B) product diversification. C) market segregation. D) market segmentation. E) positioning.
33. - D: Market segmentation
34) Which strategies aim at improving internal weaknesses by taking advantage of external opportunities? A) SO B) WO C) SW D) ST E) WT
34. - B- WO
34) Why is market segmentation an important variable in the strategy-implementation process? A) Company strategies do not require increased sales through new markets and products. B) It allows a firm to operate with no resources. C) It directly affects marketing mix variables. D) It allows a firm to minimize per-unit profits and per-segment sales. E) All of the above
34. - C: it directly affects marketing mix variables
34) Simply having a code of ethics A) will ensure ethical business behavior. B) eliminates the need for periodic ethics workshops. C) is all that is necessary to sensitize people to workplace circumstances in which ethics issues may arise. D) is insufficient to guarantee that employees behave in an ethical manner. E) secures an ethics culture in the workplace.
34. - D: is insufficient to guarantee that employees behave in an ethical manner.
34) All of the following are reasons strategy evaluation is more difficult today EXCEPT A) a dramatic increase in the environment's complexity. B) the increasing number of variables. C) the increase in the number of both domestic and world events affecting organizations. D) the increasing time span for which planning can be done with any degree of certainty. E) the rapid rate of obsolescence of even the best plans.
34. - D: the increasing time span for which planning can be done with any degree of certainty.
34) Which approach for managing and resolving conflict involves exchanging members of conflicting parties so that each can gain an appreciation of the other's point of view? A) Avoidance B) Resistance C) Compliance D) Diffusion E) Confrontation
34. - E: confrontation
35) Which variable would be considered part of the "product" element of the marketing mix? A) Advertising B) Packaging C) Payment terms D) Inventory levels and location E) Publicity
35. - B: Packaging
35) Success today A) guarantees success tomorrow. B) is no guarantee of success tomorrow. C) provides significant assurance of success tomorrow. D) is all that really matters. E) none of the above
35. - B: is no guarantee of success tomorrow
35) Which approach for managing and resolving conflict involves playing down differences between conflicting parties, while accentuating similarities and common interests? A) Avoidance B) Resistance C) Compliance D) Diffusion E) Confrontation
35. - D: Diffusion
35) Responsibility for encouraging ethical decision making and ensuring ethical behavior in a firm lies A) only with a firm's strategists. B) only with a firm's managers. C) only with a firm's shareholders. D) with both a firm's strategists and its managers. E) with neither a firm's strategists nor its managers.
35. - D: with both a firm's strategists and its managers
35) How many cells are in a SWOT Matrix? A) Two B) Four C) Six D) Eight E) Nine
35. - E:9
36) Which is NOT a required step in perceptual mapping? A) Select key criteria that effectively differentiate products or services in the industry. B) Serve two segments with the same strategy. C) Plot major competitors' products or services in the resultant matrix. D) Identify areas in the positioning map where the company's products or services could be most competitive in the given target market. E) Develop a marketing plan to position the company's products and services appropriately.
36. - B: Serve 2 segments with the same strategy
4) Strategy evaluation is becoming increasingly easier with the passage of time, given technological advances.
4. - F
4) There are five component variables in the marketing mix: product, place, promotion, price, and people.
4. - F
36) 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.
36. - C: It is a static assessment in time
36) Strategy-evaluation activities should ideally be performed A) just on a periodic basis. B) only at the onset of a problem. C) on a continuous basis. D) solely upon completion of major projects. E) annually only.
36. - C: On a continuous basis
36) Why do changes in company strategy often require changes in the way an organization is structured? A) Structure dictates how objectives and policies will be established. B) Structure dictates how resources will be allocated. C) Structure should be designed to facilitate the strategic pursuit of a firm. D) All of the above E) None of the above
36. - D: All of the above
36) Firms can align ethical and strategic decision making by A) omitting ethical considerations from long-term planning. B) excluding ethical decision making from the performance appraisal process. C) discouraging whistle-blowing. D) monitoring departmental and corporate performance regarding ethical issues. E) All of the above
36. - D: monitoring departmental and corporate performance regarding ethical issues.
37) Bribery involves A) bestowing a gift to influence the recipient's conduct. B) requiring employees to report any unethical violations they discover or see in the firm. C) prohibiting love affairs between bosses and their subordinates. D) encouraging firms to play a role in curing society of its ills. E) forcing companies to take responsibility for the impact their actions have on society.
37. - A: bestowing a gift to influence the recipient's conduct.
37) What type of organizational structure promotes specialization of labor and allows rapid decision-making? A) Divisional structure by product B) Functional structure C) Divisional structure by customer D) Strategic business unit E) Matrix structure
37. - B: Functional Structure
37) Which of these is NOT a SPACE Matrix quadrant? A) Aggressive B) Defensive C) Competitive D) Offensive E) Conservative
37. - D: Offensive
37) Multidimensional scaling is used in A) determining the size of a new building. B) determining the size of a new department. C) evaluating the amount of high-tech equipment a firm needs. D) perceptual mapping. E) market segmentation.
37. - D: Perceptual mapping
37) Which of these is a basic activity of strategy evaluation? A) Examining the underlying bases of current strategies B) Measuring organizational performance C) Taking corrective actions D) Choices B and C only E) All of the above
37. - E: All of the above
38) Medium-sized firms tend to use which type of structure? A) Divisional B) Matrix C) SBU D) Functional E) Centralized
38. - A: Divisional
38) 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
38. - A: Stability position and industry position
38) If you discover during the course of strategy evaluation that major changes have occurred in the firm's internal strategic position, you should A) continue on the present strategic course. B) wait until the next quarter to see if things revert. C) take corrective actions. D) follow the original strategic plan. E) none of the above
38. - C: Take corrective actions
38) Which of these is NOT a rule for using product positioning as a strategy-implementation tool? A) Look for the hole or vacant niche, a segment of the market currently not being served. B) Do not serve two segments with the same strategy. C) Position yourself in the middle of the map, if you are one of only two competitors. D) Position yourself in the middle of the map, if there are more than two competitors. E) All of these are rules for using product positioning as a strategy-implementation tool.
38. - D: Position yourself in the middle of the map, if there are more than two competitors
38) The United Kingdom's new Bribery Law A) is less stringent than the similar U.S. FCPA. B) carries a minimum 10-year prison sentence for those convicted of bribery. C) allows foreign companies doing business in the United Kingdom to bribe officials if that is their national convention. D) stipulates that failure to prevent bribery is an offense. E) All of the above
38. - D: stipulates that failure to prevent bribery is an offense.
39) In low-earning periods, too much ________ in the capital structure of an organization can endanger stockholders' return and jeopardize company survival. A) debt B) liquidity C) equity D) cash E) tax liability
39. - A: Debt
39) 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
39. - B: Conservative
39) A revised ________ should indicate how effective a firm's strategies have been in response to key opportunities and threats. A) IFE Matrix B) mission C) EFE Matrix D) vision E) CPM Matrix
39. - C: EFE Matrix
39) All of the following are reasons that workplace romance can be detrimental to workplace morale and productivity EXCEPT A) favoritism complaints can arise. B) personal arguments can lead to work arguments. C) whispering secrets can lead to tensions and hostilities among coworkers. D) increased quality and quantity of work can occur. E) sexual harassment charges may ensue, either by the involved female or a third party.
39. - D: increased quality and quantity of work can occur.
39) A divisional structure by product is most effective when A) special emphasis needs to be placed on specific products. B) an organization offers few products. C) an organization's products or services differ substantially. D) special emphasis needs to be placed on specific services. E) all of the above
39. - E: All of the above
4) Horizontal consistency is less important than vertical consistency in developing annual objectives, but it still contributes to improved objectives.
4. - F
4) 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.
4. - T
40) The Boston Consulting Group (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
40. - A: Companies with more than one division
40) Which divisional structure stands out for effectiveness when a few major customers are of paramount importance and many different services are provided to these customers? A) By geographic area B) By customer C) By product D) By process E) By cost
40. - B: By customer
40) What is the most widely used technique for determining the best combination of debt and stock? A) Debt-to-Stock Ratio B) Earnings Per Share/Earnings Before Interest and Taxes Analysis C) Gross Profit Analysis D) Capital Asset Pricing Model E) Present Value Analysis
40. - B: Earnings Per Share/Earnings Before Interest and Taxes Analysis
40) Workplace romance A) is defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. B) is defined as illegal by the Equal Employment Opportunity Commission. C) should be strictly forbidden by organizations. D) simply happens so organizations should determine how to best manage the phenomenon. E) is an intimate relationship between two employees, one of whom is not consenting.
40. - D: simply happens so organizations should determine how to best manage the phenomenon.
40) Which of the following is a corrective action a company might take to correct unfavorable variances? A) Divesting a division B) Revising objectives C) Raising capital with stock or debt D) Allocating resources differently E) All of the above
40. - E: All of the above
41) In the Boston Consulting Group (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
41. - A: Question Mark
41) What tends to become a more attractive financing technique when interest rates are high? A) Stock issuance B) Debt C) Cost cutting D) Borrowing E) Staying privately owned
41. - A: Stock Issuance
41) Social policy can best be defined as A) the responsibilities a firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups. B) a document providing behavioral guidelines that cover daily activities and decisions within a firm. C) an SEC mandate to report any unethical behavior. D) the legal requirement to reveal how a firm's operations impact the natural environment. E) mandatory technical standards that result in an environmental management system.
41. - A: the responsibilities a firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups.
41) Which of these is a potential problem associated with using only quantitative criteria for selecting strategies? A) Most quantitative criteria are geared to long-term objectives rather than annual objectives. B) Different accounting methods can provide different results on many quantitative criteria. C) Intuitive judgments are almost never used in deriving quantitative criteria. D) Quantitative criteria include human factors that may be underlying causes of declining performance. E) Quantitative criteria are not useful for comparisons of the firm's performance over different periods of time.
41. - B: Different accounting methods can provide different results on many quantitative criteria.
41) What is the most complex form of organizational structure? A) Divisional B) SBU C) Matrix D) Functional E) Geographic
41. - C: Matrix
42) The percentage of persons age 65 or older exceeds 20 percent in Japan, Italy, and A) Germany. B) the United States. C) France. D) China. E) all of the above
42. - A: Germany
42) A benefit of using projected balance sheets and income statements is that A) the impact of various implementation decisions can be forecasted. B) money can be put aside to pay future income taxes. C) insurance needs can be computed. D) it is useful in analyzing past performance. E) all of the above
42. - A: the impact of various implementation decisions can be forecasted
42) 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.
42. - B: Cash Cow
42) Most quantitative criteria are geared to ________ objectives rather than to ________ objectives. A) top-management; employee B) short-term; annual C) annual; long-term D) environmental; community E) long-term; short-term
42. - C: Annual; Long-term
42) When developing an organizational chart, you should A) recommend dual titles for executives. B) use the title "president" for the top executive of the firm. C) make sure that the chief financial officer is not at the same level as the chief operating officer (COO). D) have division presidents report to a chief operating officer (COO). E) have employees report to more than one person in the chain of command.
42. - D : have division presidents report to a COO
43) The primary benefit sought from restructuring is A) employee involvement. B) cost reduction. C) increased morale. D) increased number of hierarchical levels in the organization. E) increased innovation.
43. - B: Cost reduction
43) 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? A) Corporate insecurity B) Corrective actions C) Future shock D) Corporate agility E) Projected performance
43. - C: Future shock
43) What is a central strategy-implementation technique that allows an organization to examine the expected results of various strategy implementation decisions? A) EPS/EBIT B) Financial budgeting C) TOWS analysis D) Projected financial statement analysis E) External analysis
43. - D: Projected financial statement analysis
43) Japan is suffering from a decline in overall economic production A) due to its growing population. B) related to the declining age of its workforce. C) because of a surge in the number of its taxpaying workers. D) since worker productivity increases are not able to offset declines in number of workers. E) because more and more women are working outside the home.
43. - D: since worker productivity increases are not able to offset declines in number of workers.
43) Forward integration would be an appropriate strategy for which of the following types of divisions in the Boston Consulting Group (BCG) Matrix? A) Dogs B) Failures C) Question Marks D) Cat E) Star
43. - E: Star
44) Research suggests that which of the following is one of the best ways to overcome individuals' resistance to change in strategy evaluation? A) Participation B) Command-and-control C) Laissez-faire system D) Rational argument E) Emotional reactions
44. - A: Participation
44) Which state generates the greatest number of megawatts of wind power? A) Texas B) Iowa C) California D) Minnesota E) New Jersey
44. - A: Texas
44) What change strategy involves giving orders and enforcing those orders? A) Self-interest B) Educative C) Force D) Rational E) Diffusion
44. - C: Force
44) In preparing projected statements, to project cost of goods sold in the income statement, which of these methods is recommended? A) Net Worth Method B) Net Income Method C) Percentage-of-Sales Method D) Price-Earnings Ratio method E) Outstanding Shares Method
44. - C: Percentage-of-Sales Method
44) Which of the following analytical tools consists of a nine-cell matrix? A) Boston Consulting Group (BCG) Matrix B) Competitive Profile Matrix (CPM) C) Strategic Position and Action Evaluation (SPACE) Matrix D) Grand Strategy Matrix E) Internal-External (IE) Matrix
44. - E: Internal- External (IE) Matrix
45) The amount by which retained earnings changes is obtained by subtracting A) any dividends to be paid for that year from net income. B) net income from EBIT. C) taxes from EBIT. D) interest expense from EBIT. E) EBIT from CGS.
45. - A: Any dividends to be paid for that year from net income
45) It is ________ for a business to provide a sustainability report annually to the public. A) good business B) irresponsible C) a decreasing trend D) unethical E) poor planning
45. - A: Good business
45) 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
45. - A: I
45) Corrective action should do all of the following EXCEPT A) capitalize upon internal strengths. B) avoid external opportunities. C) avoid, reduce, or mitigate external threats. D) improve internal weaknesses. E) strengthen an organization's competitive position.
45. - B: avoid external opportunities.
45) A change strategy that attempts to convince people that the change is to their personal advantage is A) diffusion. B) force. C) educative. D) rational. E) compromise.
45. - D: Rational
46) 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.
46. - A: extensive cost and asset reduction
46) Just-in-time describes A) implementing strategies just before bankruptcy. B) delivering materials just as they are needed. C) a scheduling method for meetings. D) a personnel planning method. E) a process for improving quality.
46. - B: Delivering materials just as they are needed
46) What aims to balance long-term with short-term concerns, financial with nonfinancial concerns, and internal with external concerns? A) Contingency planning B) The Balanced Scorecard approach C) Taking corrective action D) Benchmarking E) Consonance
46. - B: The Balanced Scorecard approach
46) If a firm incurs a loss during a particular year, or if the firm paid out more in dividends than it had in net income, what happens to the retained earnings (RE) amount? A) It increases. B) It is unchanged. C) It decreases. D) It doubles. E) It cannot be determined from the information given.
46. - C: It decreases
46) Managers and employees today must be careful not to ignore, conceal, or disregard a pollution problem or they could A) be fired. B) be demoted. C) be held indirectly responsible for their firm's pollution. D) be turned on in their firm's quest for leniency. E) all of the above
46. - E: All of the above
47) What challenge facing all organizations requires managers to formulate strategies that preserve and conserve natural resources and control pollution? A) Economic B) Ecological C) Compensational D) Benchmarking E) Sociological
47. - B: Ecological
47) All of the following statements regarding the recent trend in Japan of switching from seniority-based pay to performance-based approaches are true EXCEPT A) the switch is an effort to cut costs. B) the switch is boosting employee morale. C) the switch is an effort to increase productivity. D) the switch opposes the traditional training of Japanese employees to cooperate rather than compete. E) the switch goes against decades of encouraging workers to work in groups instead of individually.
47. - B: the switch is boosting employee morale
47) Which item is included in net worth? A) Retained earnings B) Common stock C) Additional paid-in-capital D) All of the above are included in net worth. E) None of the above are included in net worth.
47. - D: All of the above are included in net worth
47) 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"? A) People management B) Innovativeness C) Financial soundness D) Amount of physical resources E) Social responsibility
47. - D: Amount of physical resources
47) 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
47. - D: IV
8) Matching competition and positioning factors would allow factories to produce desirable levels without extra shifts, overtime, or subcontracting.
8. - F
48) Controls need to be ________ rather than ________. A) action-oriented; information-oriented B) cultural; political C) qualitative; quantitative D) measurable; timely E) universal; diverse
48. - A: action-oriented; information-oriented
48) In an effort to manage ecological challenges, many companies are A) moving environmental affairs from the staff side of the organization to the line side. B) moving environmental affairs from the line side of the organization to the staff side. C) making the chief operating officer report directly to the corporate environmental group. D) omitting an environmental representative from their board of directors. E) purging environmental values from their mission statements.
48. - A: moving environmental affairs from the staff side of the organization to the line side.
48) Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization help an organization A) abide by SEC rules. B) link culture to strategy. C) set guidelines for firing. D) increase profits. E) manage conflicts between stakeholders.
48. - B: link culture to strategy
48) Evaluating the worth of a firm A) is an exact science. B) requires both qualitative and quantitative skills. C) is based solely on financial facts. D) is known only to the firm's accountants. E) is static.
48. - B: requires both qualitative and quantitative skills
48) 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) Boston Consulting Group (BCG) Matrix B) Strategic Position and Action Evaluation (SPACE) Matrix C) Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix D) Internal-External (IE) Matrix E) Quantitative Strategic Planning Matrix (QSPM)
48. - E: QSPM
49) In the context of a balance sheet, goodwill represents A) a premium paid over the book value for an acquisition. B) the value attached to a firm's reputation. C) the excess of assets over liabilities. D) the value associated with benefits from environmental programs. E) the excess of current assets over liabilities.
49. - A: A premium paid over the book value for an acquisition
49) 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
49. - A: Total Attractiveness Scores
49) Which of the following is true regarding the design of a firm's strategy-evaluation system? A) There is a one-size-fits-all system that works for all companies. B) It does not need to take into account the organization's size. C) The management style of a firm has no bearing on the design. D) It should be determined based on the unique aspects of a company. E) There is one ideal system.
49. - D: It should be determined based on the unique aspects of a company.
49) All of the following are examples of offerings at companies to promote a corporate wellness culture EXCEPT A) stress management programs. B) health fairs. C) abundance of bicycle racks onsite. D) free health insurance for employees who exercise regularly. E) cash incentives for completing Ironman triathlons.
49. - D: free health insurance
49) Preserving the environment should be a permanent part of doing business for which of the following reasons? A) Consumer demand for environmentally safe products and packages is low. B) Public opinion demanding that firms conduct business in ways that preserve the natural environment is weak. C) Federal and state environmental regulations are fairly simple and static. D) Many consumers, suppliers, distributors, and investors shun doing business with environmentally strong firms. E) More lenders are examining the environmental liabilities of businesses seeking loans
49. - E: More lenders are examining the environmental liabilities of businesses seeking loans
5) Strategies clarify what can and cannot be done in pursuit of an organization's objectives.
5. - F
5) When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be completed before the SPACE Matrix.
5. - F
5) Regardless of the size of the organization, a certain amount of "management by wandering around" at all levels is essential to effective strategy evaluation.
5. - T
5) The most common bases for segmenting markets are geographic and demographic.
5. - T
6) Avoidance, diffusion, and confrontation are the classifications for the various types of conflict that can arise in organizations.
6. - F
6) It is most effective to conduct strategy evaluation annually, at the end of the fiscal year.
6. - F
6) Primary responsibility for ensuring ethical behavior rests with middle- and low-level managers, since they are in a position to influence many employees.
6. - F
6) Segmentation often reveals that large, random fluctuations in demand actually consist of several small, predictable, and manageable patterns.
6. - T
6) Strengths-opportunities strategies are based on using a firm's internal strengths to take advantage of external opportunities.
6. - T
7) History has proven that the lower the trust and confidence of people in the ethics of an institution or society, the greater its economic strength.
7. - F
7) In strategy evaluation, a revised IFE Matrix should indicate how effective a firm's strategies have been in response to key opportunities and threats.
7. - F
7) In the context of conflict management and resolution, ignoring the problem in the hopes that the conflict will resolve itself is classified as a diffusion technique.
7. - F
7) In general, the Internet makes market segmentation easier.
7. - T
7) One of the steps of the SWOT Matrix is to list the firm's key external opportunities.
7. - T
53) With regard to the visible or hidden issue, most executives agree that A) the SEC should regulate whether or not companies make their strategic information visible. B) some strategic information should remain confidential to top managers. C) a company has gone too far when it takes steps to ensure that strategic information is not disseminated beyond "the inner circle." D) the potential benefit of improved employee and stakeholder motivation and input is not worth the risk of rival firms easily knowing and exploiting a firm's strategies. E) keeping strategies secret from employees and stakeholder will likely improve communication, understanding, and commitment.
B: some strategic information should remain confidential to top managers.
50) 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 informed judgments. D) Strategies cannot be examined sequentially. E) It makes it more likely that key factors will be overlooked or weighted inappropriately.
C: requires intuitive informed judgements
