Chapter 2

The combination of which of these factors describe the company's business activity? A. Basic product or service, primary markets and principal technology B. Self-concept, managerial philosophy and public image C. Concern for survival through growth, self-concept and primary markets D. Economic goals, core competencies and primary and secondary customers

A. Basic product or service, primary markets and principal technology

Three indispensable components of the mission statements are specifications of the: A. Basic product or service, primary markets and principal technology B. Self-concept, managerial philosophy and public image C. Concern for survival through growth, self-concept and primary markets D. Economic goals, core competencies and primary and secondary customers

A. Basic product or service, primary markets and principal technology

Growth means: A. Change B. Stability C. Effectiveness D. Efficiency

A. Change

The company's philosophy is sometimes also called the: A. Company creed B. Corporate profile C. Corporate motto D. Corporate symbol

A. Company creed

_____ is a statement, not of measurable targets but of attitude, outlook, and orientation. A. Company mission B. Company vision C. Company strategy D. Company policy

A. Company mission

______ is the mainstay goal of a business organization. A. Profitability B. Products C. Service D. Growth

A. Profitability

Which of these is the newest trend in mission components? A. Sensitivity to customer wants B. Concern for suppliers and distributors C. Inclusion of both positive and negative aspects of public image D. Aligning the firm's self-concept to that of competitor's

A. Sensitivity to customer wants

The strategic decision makers in the firm are responsible for: A. The firm's mission B. Rewards C. Plant efficiency D. Daily operations

A. The firm's mission

The process of defining the company mission for a specific business can be best understood by: A. Thinking about the business at its inception B. Looking at the industry attributes C. Analyzing the regulatory requirements of what to include in a mission D. Analyzing the most successful competitors in the marketplace

A. Thinking about the business at its inception

Which of these represent the most popular solution to moral dilemma and adverse selection problems? A. To more closely align the owners and agents interests through the use of executive bonus plans B. To allow the managers to act more as hired-hands only C. To remove vision components from mission D. To ensure board of directors report and work for the CEO

A. To more closely align the owners and agents interests through the use of executive bonus plans

The mission reflects the: A. Values of the decision makers B. Goals of the decision makers C. Experiences of the decision makers D. Policies of firm

A. Values of the decision makers

The mission statement is a message designed to be inclusive of the expectations of _______ stakeholders for the company's performance over the ______. A. all; long run B. only key; short run C. all; short run D. only key; long run

A. all; long run

Agency problems arise when the interests of owners and managers: A. diverge B. converge C. are compatible D. are similar

A. diverge

A firm's _____ is tied inextricably to its survival and profitability. A. growth B. prominence C. fame D. salability

A. growth

Profitability is the ______ goal of a business organization. A. mainstay B. least important C. non economic D. subjective

A. mainstay

Whereas the ______ expresses an answer to the question "What business are we in?" a company ____ is sometimes developed to express the aspirations of the executive leadership. A. mission statement; vision statement B. economic goals; self-concept C. vision statement; mission statement D. self-concept; economic goals

A. mission statement; vision statement

Whenever there is a separation of the owners (principals) and the managers (agents) of a firm, the potential exists for the wishes of the ____ to be ignored. A. owners B. managers C. employees D. customers

A. owners

_______ delegate authority to ______. A. owners; managers B. managers; owners C. managers; suppliers D. customers; managers

A. owners; managers

Given that managers implicitly accept a general, unwritten, yet pervasive code of behavior that govern business actions, the _____ vary little from one firm to another. A. philosophies B. visions C. missions D. self-concepts

A. philosophies

Most _____ are so platitudinous that they read more like public relations handouts. A. philosophies B. mission statements C. goals D. vision statements

A. philosophies

Growth means change, and _____ change is required in a _____ business environment. A. proactive; dynamic B. reactive; dynamic C. proactive; stable D. reactive; uncertain

A. proactive; dynamic

Generally, _____ is accepted as the clearest indication of a firm's ability to satisfy the principal desires of employees and stockholders. A. profit over the long term B. profit over the short term C. return on assets D. the number of lawsuits brought against the firm

A. profit over the long term

Mission statements should reflect the ____ expectations. A. public's B. managers' C. stockholders' D. Board of Directors'

A. public's

As the business grows or is forced by competitive pressures to alter its product, market, or technology, ______ the company mission may be necessary. A. redefining B. abandoning C. writing D. discarding

A. redefining

Firms ____ address the question of their public image in an intermittent fashion. A. seldom B. always C. frequently D. unanimously

A. seldom

An agency problem caused by the limited ability of stockholders to precisely determine the competencies and priorities of executives at the time they are hired refers to: A. Self-concept B. Adverse selection C. Moral hazard problem D. Concern for quality

B. Adverse selection

The unique purpose that sets a company apart from others of its type and identifies the scope of its operations. In product, market and technology terms is defined as (the): A. Adverse selection B. Company mission C. Moral hazard problem D. Vision statement

B. Company mission

All of these are Demming's well-known points on quality EXCEPT: A. Drive out fear B. Create slogans, exhortations and numerical targets C. Institute a vigorous program of education and self-improvement D. Create constancy of purpose

B. Create slogans, exhortations and numerical targets

Three issues have become prominent in the strategic planning for organizations and are increasingly becoming integral parts in the development and revisions of mission statements. These are: A. Self-concept, customers and markets B. Customers, quality and vision statement C. Markets, quality and concern for employees D. Concern for employees, suppliers and customers

B. Customers, quality and vision statement

The strategic managers at the highest level of the organization: A. Review employee complaints B. Declare the firm's sense of values C. Are appointed D. Prepare budgets

B. Declare the firm's sense of values

The mission: A. Sets policy B. Describes the firm's product C. Identifies stakeholders D. Creates the board of directors

B. Describes the firm's product

Backloaded compensation refers to: A. Board of directors getting back stock as compensation B. Executives receiving handsome premium for superior future performance C. Suppliers getting bonuses for organization's performance D. Managers getting bonuses for past performances

B. Executives receiving handsome premium for superior future performance

All of these are economic goals that guide the strategic direction of organizations EXCEPT: A. Survival B. Market share C. Profitability D. Growth

B. Market share

The company mission reflects the firm's: A. Vision B. Self-concept C. Corporate governance D. Agency costs

B. Self-concept

In general terms, which of the following questions is addressed by the mission statement? A. How should we price our products? B. What are our economic goals? C. Which employees should we hire? D. What leverage structure should we follow?

B. What are our economic goals?

Mission statement expresses an answer to which of these questions? A. How do we compete in this industry? B. What business are we in? C. Who are our competitors? D. How do we meet the regulatory requirements?

B. What business are we in?

Much behavior in firms is _______ based. A. competitively B. organizationally C. individually D. community

B. organizationally

A company's Board of Directors is elected by its: A. managers B. stockholders C. customers D. employees

B. stockholders

Which group of strategic managers is responsible for overseeing the creation and accomplishment of the company mission? A. Front-line supervisors B. Middle-managers C. Board of directors D. Employees

C. Board of directors

Which of these is one of Demming's well-known points on quality? A. Create dependence on mass inspections to achieve quality B. Award business on the measure of price tag C. Breakdown barriers between departments D. Corporate transformation should be the responsibility of top management

C. Breakdown barriers between departments

In deriving a mission statement, which of the following should be included? A. Tax advantages B. Secondary markets to be served C. Concern for survival through growth D. Employee rules and policies

C. Concern for survival through growth

The board of director's greatest impact on the behavior of a firm results from its: A. Industry experience B. Dependence on the CEO C. Determination of company mission D. Mandate of company compliance with legal and ethical dictates

C. Determination of company mission

Which of the following is NOT a problem resulting from agency? A. Executive attempt to diversify their corporate risk B. Executives avoid risks C. Executives pursue growth in company earnings rather than size D. Executives act to protect their status

C. Executives pursue growth in company earnings rather than size

Which of the following statements about public image is FALSE? A. Negative public image often prompts firms to reemphasize the beneficial aspects of their mission B. The image the company seeks to project should be reflected in its mission C. Firms always address the question of their public image in an intermittent fashion D. Concern for public image is an important components of a firm's mission

C. Firms always address the question of their public image in an intermittent fashion

Which of these is NOT true about the company mission? A. It embodies the business philosophy of the firm's strategic decision makers B. It implies the image the firm seeks to project C. It provides specific strategies for front-line managers D. It reflects the firm's self-concept

C. It provides specific strategies for front-line managers

"The customer is our top priority" is a: A. Mission statement B. Concern for quality C. Slogan D. Vision statement

C. Slogan

Which of these often reads more like public relations handouts than the commitment to values they are meant to be? A. Firm's economic goals B. Company's self-concept C. Statement of company philosophy D. Firm's core competencies and competitive advantage statement

C. Statement of company philosophy

Which of the following goals are taken for granted to such an extent that it is neglected as a principal criterion in strategic decision making? A. Maturity B. Ethics C. Survival D. Competitiveness

C. Survival

When should a company redefine its mission? A. When the competition have failed B. When the board meets with top management annually C. When the business is forced by competitive pressures to alter its products of market D. When the government requires the business to redefine it

C. When the business is forced by competitive pressures to alter its products of market

In general, ____ seek stock value maximization. A. employees B. hired-hand managers C. owners D. suppliers and distributors

C. owners

In a dynamic business environment, ______ is essential. A. status quo B. compromising ethics in decision making C. proactive change D. adverse selection

C. proactive change

Managers' stature in the business community is commonly associated with company: A. type B. age C. size D. growth

C. size

The cost of agency problems and the cost of actions taken to minimize them are called: A. Moral hazard problems B. Adverse selection C. Company creed D. Agency costs

D. Agency costs

The company mission identifies the: A. Key competitors in the marketplace B. Board of directors' responsibility towards the owners C. Specific strategies for gaining market share D. Scope of its operations in product and market terms

D. Scope of its operations in product and market terms

Ace Tools Company performs an extensive evaluation of its competitive strengths and weaknesses. This effort is directed towards determining its: A. Vision B. Economic goals C. Public image D. Self-concept

D. Self-concept

When the survival goal is taken for granted, therefore neglected in strategic decision making, the firm's focus shifts to: A. Long run B. Intermediate run C. Direction-less activities D. Short run

D. Short run

A mission statement should include all of these components EXCEPT: A. Basic types of products or services to be offered B. The firm's managerial philosophy C. The public image the firm seeks D. The government regulations the firm must meet

D. The government regulations the firm must meet

_______ is often a single sentence, designed to be memorable. A. Mission statement B. Agency theory C. Adverse selection D. Vision statement

D. Vision statement

_______ represents a statement that presents a firm's strategic intent designed to focus the energies and resources of the company on achieving a desirable future. A. Mission statement B. Agency theory C. Adverse selection D. Vision statement

D. Vision statement

Which two U.S. management experts fostered a worldwide emphasis on quality in manufacturing? A. Bill Gates and Steve Jobs B. Bill Hewlett and Gary Packard C. Bill Gates and Warren Buffet D. W. Edwards Demming and J. M. Juran

D. W. Edwards Demming and J. M. Juran

In general terms, the mission statement addresses all of the following questions EXCEPT: A. What are our economic goals? B. What is our operating philosophy in terms of quality, company image and self-concept? C. What customers do and can we serve? D. Who are our competitors and how can we collaborate with them?

D. Who are our competitors and how can we collaborate with them?

The idea that the firm must know itself is the essence of the company: A. Self-concept B. Objective C. Goal D. Strategy

A. Self-concept

In overseeing the management of a firm, the board of directors operates as representatives of the: A. Governmental agencies B. Firms stockholders C. Firms employees D. Top management

B. Firms stockholders

Which of these is NOT a newest trend in mission components? A. Concern for suppliers and distributors B. Sensitivity to customer wants C. Concern for quality D. Statements of company vision

A. Concern for suppliers and distributors

When executives manipulate personnel records to keep or acquire key company personnel, this is an example of: A. Moral hazard problem B. Adverse selection C. Self-concept D. Concern for quality

A. Moral hazard problem

When executives presell products at year-end to trigger their annual bonuses even though the deep discounts that they must offer will threaten the price stability of their products for the upcoming year, this is an example of: A. Moral hazard problem B. Adverse selection C. Self-concept D. Concern for quality

A. Moral hazard problem

When executives unrealistically assess acquisition targets' outlooks in order to increase the probability of increasing organizational size through their acquisition, this is an example of: A. Moral hazard problem B. Adverse selection C. Self-concept D. Concern for quality

A. Moral hazard problem

When owners have limited access to company information making executives free to pursue their own interests, it could lead to: A. Moral hazard problems B. Adverse selection C. Self-concept D. Concern for quality

A. Moral hazard problems

Which of these conditions is also called "self-interest combined with a smile?" A. Moral hazard problems B. Adverse selection C. Self-concept D. Concern for quality

A. Moral hazard problems

Which of these conditions is also called "shirking?" A. Moral hazard problems B. Adverse selection C. Self-concept D. Concern for quality

A. Moral hazard problems

Which external body requires that a company have a mission statement? A. None B. SEC C. Justice Department D. IRS

A. None

The company mission is a broadly framed but enduring statement of: A. A firm's intent B. Corporate structure C. A firm's competitive positioning D. Stakeholder analysis

A. A firm's intent

A set of ideas on organizational control based on the belief that the separation of the ownership from management creates the potential for the wishes of owners to be ignored is known as: A. Agency theory B. Adverse selection principle C. Moral hazard problem D. Self concept

A. Agency theory

Which of these represent a solution to the agency problem? A. Backloaded compensation for executives B. Separate the interests of the owners and agents C. Minimize executive risk-taking D. Focus performance measures on personal goals of executives

A. Backloaded compensation for executives

_____ vary little from one firm to another. A. Philosophies B. Mission statements C. Goals D. Vision statements

A. Philosophies

A revised mission will contain _____ components as the original. A. the same B. more C. fewer D. different

A. the same

A major determinant of a firm's success is the extent to which it can relate functionally to the external environment. To accomplish this, the firm must have: A. Infinite sources of capital for expansion B. A realistic self-concept C. Specific objectives and job descriptions D. Community involvement

B. A realistic self-concept

Basing decisions on a short-term concern for profitability would lead to: A. A reduced market share B. A strategic myopia C. A competitive warfare D. A governmental lawsuit

B. A strategic myopia

A firm will be incapable of satisfying its stakeholders' claims, if it does NOT insure: A. Growth B. Survival C. Profitability D. Competitive dominance

B. Survival

The statement which usually accompanies the mission statement and expresses the firm's basic beliefs, values and aspirations is known as: A. Grand strategy B. The company's statement of philosophy C. The company profile D. Long-term objectives

B. The company's statement of philosophy

The essence of the company self-concept is the idea that: A. The firm's public image is positive B. The firm must know itself C. The firm must know the industry D. The firm's economic goals must be aligned with the industry's top competitor

B. The firm must know itself

Characteristically, the company mission is a statement of all of these EXCEPT: A. Attitudes B. Outlooks C. Measurable targets D. Orientation

C. Measurable targets

The image the company seeks to project is reflected in the firm's: A. Profile B. Tactics C. Mission D. Strategic options

C. Mission

Which one of the following is NOT an outcome designed to be accomplished by a company mission? A. To provide a unifying purpose for the organization B. To provide a basis for strategic objective setting C. To provide a basis for decision making D. To reward stockholders

D. To reward stockholders

Which of these is NOT a responsibility of the board of directors? A. To establish and update the company mission B. To mandate company compliance with legal and ethical dictates C. To determine the amount and timing of the dividends paid to stockholders D. To work under the guidance of the CEO

D. To work under the guidance of the CEO

_______ presents the firm's strategic intent. A. Mission statement B. Agency theory C. Adverse selection D. Vision statement

D. Vision statement

_______ represents a statement that is sometimes developed to express the aspirations of the executive leadership. A. Mission statement B. Agency theory C. Adverse selection D. Vision statement

D. Vision statement