Chapter 4-Strategic Management

What marketing function includes test marketing? A) Selling products and services B) Pricing C) Customer analysis D) Product and service planning E) Distribution

D) Product and service planning

________ management deals with inputs, transformations, and outputs that vary across industries and markets. A) Marketing B) Financial C) Research and development D) Production and operations E) Information systems

D) Production and operations

The first step in the controlling function of management is to A) take corrective actions. B) restrict the number of breaks employees take. C) evaluate expense reports. D) establish performance standards. E) measure individual and organizational performance.

D) establish performance standards.

In most industries, the major costs of producing a product or service are incurred within A) marketing. B) management. C) research and development. D) operations. E) management information systems.

D) operations.

Synergy A) is the 2 + 2 = 5 effect. B) can result in powerful competitive advantages. C) can be developed by an organization through planning. D) exists when everyone pulls together as a team that knows what it wants to achieve. E) all of the above

E) all of the above

Financial ratio analysis really should not go beyond the actual calculation and interpretation of ratios.

False

Financial ratios are not applicable to nonprofit organizations.

False

In most industries, only minor costs of producing a product or service are incurred within operations, so production and operations does not have great value as a competitive weapon in a company's overall strategy.

False

Leverage ratios measure a firm's ability to meet maturing short-term obligations.

False

Metaphors are handed-down narratives of some wonderful event that are based on history but have been embellished with fictional detail.

False

Most producers today sell their goods directly to consumers.

False

Opportunities are a firm's distinctive competencies that cannot be easily matched or imitated by competitors.

False

Organizing is the cornerstone of effective strategy formulation.

False

Planning should be performed mostly by middle management and then presented to top management for analysis and approval.

False

Proponents of the resource-based view argue that external factors are more important than internal factors for a firm in achieving and sustaining competitive advantage.

False

Resources that are common are never considered valuable.

False

Successful strategy formulation generally rests upon the ability of an organization to sell some product or service.

False

The management function of organizing is included in human resource management.

False

The quantity or number of units of product that a firm must sell to break even is total fixed costs divided by (price per unit + variable costs per unit).

False

The total assets turnover ratio is calculated by dividing sales by fixed assets.

False

Activity ratios measure how effectively a firm is using its resources.

True

Benchmarking is an analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals.

True

Chief marketing officers now spend more than 50 percent of their budget on technology to manage activities like online marketing and social media.

True

Constructing an Internal Factor Evaluation Matrix is a summary step when conducting an internal strategic-management audit.

True

Cultural products include values, beliefs, stories, and language.

True

Dividend decisions concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock.

True

During the 2012 Super Bowl, a 30-second advertisement cost about $3 million.

True

Established companies are coming to realize that their next generation of potential customers spends more time online than watching TV.

True

Five major stakeholders that affect pricing decisions are consumers, governments, suppliers, distributors, and competitors.

True

For a resource to be valuable, it must be either rare, hard to imitate, or not easily sustainable

True

For calendar 2013, companies in the S&P 500 are expected to pay at least $300 billion in dividends.

True

Four common approaches to determine R&D budget allocations are: 1) finance as many project proposals as possible; 2) use a percentage-of-sales method; 3) budget for R&D about what competitors spend; or 4) decide how many successful new products are needed and work backwards to estimate the required R&D investment.

True

Increased efficiency, quality, productivity, and job satisfaction can come from cross-training workers.

True

Internal R&D and contract R&D are the two basic forms of R&D in organizations.

True

Linkages between a firm's culture and strategies often determine success.

True

Marketing research is the systematic gathering, recording and analyzing, of data about problems relating to the marketing of goods and services.

True

Motivation is one explanation why some people work hard and others do not.

True

One aspect of ads in a recession is that they generally take more direct aim at competitors

True

The Internal Factor Evaluation Matrix should use a total of 20 internal factors.

True

The RBV theory asserts that it is advantageous for a firm to pursue a strategy that is not currently being implemented by any competing firm.

True

The basic premise of the research-based view is that the mix, type, amount, and nature of a firm's internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage.

True

The controlling function of management is especially important for effective strategy evaluation.

True

The only certain thing about the future of any organization is change.

True

The process of performing an internal audit, compared to the external audit, provides more opportunity for participants to understand how their jobs, departments and divisions fit into the whole organization.

True

The subtle, elusive and largely unconscious forces that shape the workplace are captured by the organizational culture.

True

There are seven basic functions of marketing: customer analysis, selling products and services, product and service planning, pricing, distribution, marketing research, and opportunity analysis.

True

Value chain analysis can enable a firm to better identify its own strengths and weaknesses especially as compared to competitors' value chain analyses and their own data over time.

True

According to Roger Schroeder, which basic function within production and operations deals with aggregate planning and scheduling? A) Capacity B) Inventory C) Workforce D) Process E) Quality

A) Capacity

________ can reveal the demographic characteristics of an organization's customers. A) Customer profiling B) Test marketing C) Market development D) The vision statement E) Telemarketing

A) Customer profiling

Which of the following does the text call an up-front investment in success? A) Planning B) Organizing C) Motivating D) Staffing E) Controlling

A) Planning

Who does a planning horizon of two to five years apply to? A) Top-level management B) General management C) Middle-level management D) Lower-level management E) All levels of management

A) Top-level management

The IFE Matrix should be ________ in multidivisional firms. A) constructed for each division B) all-inclusive C) constructed only for the major divisions D) developed before the EFE Matrix E) revised monthly

A) constructed for each division

Opportunity analysis is one of the basic functions of A) marketing. B) finance/accounting. C) computer information systems. D) production/operations E) research and development.

A) marketing.

The Robinson-Patman Act affects a company's A) pricing. B) product/service planning. C) customer analysis. D) marketing research. E) distribution.

A) pricing.

Life-directing attitudes that serve as behavioral guidelines are called A) values. B) rites. C) beliefs. D) metaphors. E) legends.

A) values.

Which of the following is the process of influencing people to accomplish specific objectives? A) Staffing B) Motivating C) Planning D) Controlling E) Organizing

B) Motivating

Which function of management includes areas such as job design, job specifications, job analysis, and unity of command? A) Planning B) Organizing C) Motivating D) Staffing E) Controlling

B) Organizing

Which function of management is concerned with span of control and chain of command? A) Planning B) Organizing C) Controlling D) Staffing E) Motivating

B) Organizing

What is the essential bridge between the present and the future that increases the likelihood of achieving desired results? A) Motivating B) Planning C) Controlling D) Staffing E) Organizing

B) Planning

What is the term for a historical narrative describing the unique accomplishments of a group and its leaders? A) Rite B) Saga C) Story D) Myth E) Folktale

B) Saga

The times-interest-earned ratio would be classified as a(n) A) activity ratio. B) leverage ratio. C) profitability ratio. D) liquidity ratio. E) growth ratio.

B) leverage ratio.

Metaphors are A) several rites connected together. B) shorthand of words used to capture a vision or to reinforce old or new values. C) narratives based on true events. D) fictional stories. E) any objects, acts, events, qualities, or relations used to convey meaning.

B) shorthand of words used to capture a vision or to reinforce old or new values.

All of the following are basic duties of management EXCEPT A) staffing. B) planning. C) consolidating. D) organizing. E) motivating.

C) consolidating.

Selling includes all of these marketing activities EXCEPT A) advertising. B) dealer relations. C) customer analysis. D) publicity. E) sales promotion.

C) customer analysis.

If total fixed costs are $10,000, variable costs per unit are $5, and the price per unit is $15, what is the breakeven quantity? A) 500 B) 667 C) 1,000 D) 2,000 E) 5,000

C) 1,000

Staffing involves all of these activities EXCEPT A) recruiting. B) transferring. C) analyzing customers. D) managing union relations. E) training and developing.

C) analyzing customers.

The three all-encompassing internal resource categories used in the resource-based view are physical resources, human resources, and A) financial resources. B) shareholder resources. C) organizational resources. D) non-renewable resources. E) technological resources.

C) organizational resources.

Distribution includes A) customer analysis. B) pricing. C) warehousing. D) advertising. E) test marketing.

C) warehousing.

Empirical indicators of resources are: being rare, hard to imitate, or A) expensive. B) inexpensive. C) easily substitutable. D) not easily substitutable. E) inefficient.

D) not easily substitutable.

An effective information management system ________ information in such a way that it answers important operating and strategic questions. A) collects B) codes C) stores D) synthesizes E) all of the above

E) all of the above

The initial step to implementing value chain analysis is A) attaching a cost to each discrete activity. B) establishing costs in terms of time. C) establishing costs in terms of money. D) converting the cost data into information by looking for competitive cost strengths and weaknesses. E) dividing a firm's operations into specific activities or business processes.

E) dividing a firm's operations into specific activities or business processes.

Test marketing is used more frequently by industrial companies than consumer goods companies.

False

The controlling function of management is synonymous with strategy formulation.

False

One aspect of ads recently is that they A) take more direct aim at competitors. B) do not mention competitors. C) allude to competitors in a positive light. D) are less combative. E) none of the above

A) take more direct aim at competitors.

All of the following are basic functions of marketing EXCEPT A) value chain analysis. B) customer analysis. C) product and service planning. D) pricing. E) distribution.

A) value chain analysis.

The heart of an information system is a database containing the kinds of records and data important to managers.

True

The idea that paying dividends results in a higher stock price is a myth.

True

Capacity decisions concern distances from raw materials to production sites to customers

False

Which of the following are NOT mentioned as an example of cultural products? A) Rites B) Emotions C) Rituals D) Sagas E) Symbols

B) Emotions

All of the following are key questions that can reveal internal strengths and weaknesses in the management department EXCEPT A) Is the organization's structure appropriate? B) Are reward and control mechanisms effective? C) Are the organization's products positioned well against competing products? D) Does the firm use strategic-management concepts? E) Do managers delegate authority well?

C) Are the organization's products positioned well against competing products?

Which ratio would be considered an activity ratio? A) Debt-to-equity B) Net profit margin C) Average collection period D) Earnings per share E) Current ratio

C) Average collection period

________ become(s) ________ only when evaluated, filtered, condensed, analyzed, and organized for a specific purpose, problem, individual, or time. A) Information; data B) Information; material C) Data; information D) Data; competitive advantages E) Competitive advantages; material

C) Data; information

________ exemplifies the complexity of relationships among the functional areas of business. A) Government auditing B) External auditing C) Financial ratio analysis D) Environmental scanning E) Distribution strategy

C) Financial ratio analysis

Which of the three finance and accounting decisions concerns determining the best capital structure for the firm and includes examining various methods by which the firm can raise capital? A) Investment B) Dividend C) Financing D) Capital budgeting E) Implementation

C) Financing

________ ties all business functions together and provides the basis for all managerial decisions. A) Management B) Marketing C) Information D) Technology E) Workforce

C) Information

Which of the following is the first step in developing an IFE Matrix? A) Determining the organization's structure B) Summing the weighted scores for each variable C) Listing key internal strengths and weaknesses D) Identifying the organization's functions of business E) Assigning a weight to each factor

C) Listing key internal strengths and weaknesses

Which management function includes breaking tasks into jobs, combining jobs to form departments, and delegating authority? A) Motivating B) Staffing C) Organizing D) Controlling E) Planning

C) Organizing

What category of ratios includes return on total assets and return on stockholders' equity? A) Leverage B) Activity C) Profitability D) Growth E) Liquidity

C) Profitability

Who should perform an internal audit? A) A private auditing firm B) The organization's accounting department C) Representative managers and employees from throughout the firm D) A small team of top-level managers E) The chief executive officer

C) Representative managers and employees from throughout the firm

A pattern of behavior developed by an organization as it learns to cope with its problems of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel is called A) dysfunctional behavior. B) groupthink. C) behavior modification. D) organizational culture. E) internal audit effect.

D) organizational culture.

A standardized set of behaviors used to manage anxieties is called a A) folktale. B) rite. C) metaphor. D) ritual. E) value.

D) ritual.

Any object, act, event, quality, or relation used to convey meaning is known as a A) myth. B) rite. C) value. D) symbol. E) metaphor.

D) symbol.

Which ratio is calculated by dividing profits before interest and taxes by total interest charges? A) Inventory turnover B) Fixed assets turnover C) Total assets turnover D) Debt-to-equity ratio E) Times-interest-earned ratio

E) Times-interest-earned ratio

________ is a commonly used approach to determine R&D budget allocations. A) Financing as many project proposals as possible B) Using a percentage-of-sales method C) Budgeting for R&D about what competitors spend D) Deciding how many successful new products are needed E) All of the above

E) All of the above

________, perhaps the most important word in management, is a major component in motivation. A) Forecasting B) Organizational structure C) Recruiting D) Management development E) Communication

E) Communication

Which function of management includes all of those activities undertaken to ensure actual operations conform to planned operations? A) Planning B) Organizing C) Motivating D) Staffing E) Controlling

E) Controlling

Which of the following is NOT a key question that can reveal internal strengths and weaknesses of the marketing department? A) Does the firm have an effective sales organization? B) Is our product quality good? C) Are markets segmented effectively? D) Are the firm's products and services priced appropriately? E) Does the firm have good liquidity?

E) Does the firm have good liquidity?

What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry? A) Profitability B) Liquidity C) Leverage D) Activity E) Growth

E) Growth

Allocating resources is one of the five basic activities (functions) performed by managers

False

Although a useful step in the strategic management process, value chain analysis does little to help a firm monitor whether its prices and costs are competitive.

False

At Google the culture is very rigid, while in contrast the culture at Proctor & Gamble is very informal.

False

A cost/benefit analysis is an appraisal of the costs, benefits, and risks associated with marketing decisions.

True

A form of customer analysis is administering customer surveys.

True

A limitation of financial ratios is the fact that they are based on accounting data.

True

A new trend with regard to advertising products or services on the Internet is to base advertising rates solely on sales rates.

True

A ritual is a standardized set of behaviors used to manage anxieties.

True

A task force of managers from different units of the organization, supported by staff, should be charged with determining the 20 most important strengths and weaknesses that should influence the future of the organization.

True

Organizational resources include all of the following EXCEPT A) employee training. B) firm structure. C) planning processes. D) information systems. E) copyrights.

A) employee training.

The ________ decision is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization. A) investment B) dividend C) financing D) restructuring E) benchmark

A) investment

What category of ratios measures a firm's ability to meet maturing short-term obligations? A) Profitability B) Liquidity C) Leverage D) Activity E) Growth

B) Liquidity

A firm's strengths that cannot be easily matched or imitated by competitors are called A) internal audits. B) distinctive competencies. C) external audits. D) interrelated properties. E) internal properties.

B) distinctive competencies.

The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called A) the resource-based approach. B) value chain analysis. C) strategic cost analysis. D) the internal factor evaluation matrix. E) cost-benefit analysis.

B) value chain analysis.

Distribution becomes especially important when a firm is striving to implement a product development or backward integration strategy.

False

While interesting, organizational culture does not significantly affect business decisions.

False

According to James Van Horne the basic decision areas of finance are: the investment decision, the financing decision, and the dividend decision.

True

An organization's culture compares to an individual's personality in the sense that no two organizations have the same culture and no two individuals have the same personality.

True

The purpose of organizing is to achieve coordinated effort by defining task and authority relationships.

True