Geb4891 Chapter 9

101) Proponents of the top-down approach contend that ________ are the only persons in the firm with the collective experience, acumen, and fiduciary responsibility to make key strategy decisions. A) top executives B) divisional managers C) middle-level managers D) lower-level managers E) non-management employees

A

104) Most strategy literature advocates that strategic management is A) more of a science than an art. B) more of an art than a science. C) based on analysis rather than research. D) based on intuition rather than analysis. E) based on creativity rather than intuition.

A

55) Too much emphasis on evaluating strategies A) may be expensive and counterproductive. B) is not possible - the more emphasis the better. C) is good for morale, as employees like being closely evaluated. D) is always advised if the firm can afford it. E) is worse than too little or no evaluation.

A

56) 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

A

58) With the passage of time strategy evaluation is becoming A) increasingly difficult. B) much simpler. C) very convenient. D) an unnecessary activity. E) less important.

A

60) Which of the following is NOT a reason for the increasing difficulty of evaluating strategies? A) Product life cycles are longer. B) Domestic and world economies are less stable. C) Product development cycles are shorter. D) Technological advancement is more rapid. E) Change is occurring more frequently.

A

73) Which of the following is NOT included in measuring organizational performance? A) Comparing results to competitors' expectations B) Examining progress being made toward meeting stated objectives C) Investigating deviations from plans D) Evaluating individual performance E) Comparing expected results to actual results

A

82) Corrective actions should always A) strengthen an organization's competitive position in its industry. B) streamline asset holdings. C) have no risk. D) involve abandoning existing strategies. E) all of the above

A

83) 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

A

86) Which of the following is NOT one of the four perspectives from which the Balanced Scorecard allows firms to evaluate strategies? A) Social responsibility B) Financial performance C) Customer knowledge D) Internal business processes E) Learning and growth

A

91) Controls need to be ________ rather than ________. A) action-oriented; information-oriented B) cultural; political C) qualitative; quantitative D) measurable; timely E) universal; diverse

A

92) The strategy-evaluation process should foster A) mutual understanding. B) doubt. C) corporate culture. D) complexity. E) division.

A

98) What term is defined as "a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users?" A) Auditing B) Innovation C) R&D D) Strategic Management E) Accounting

A

106) Which of the following is NOT a reason why some firms prefer to conduct strategic-planning in secret? A) Dissemination of a firm's strategies may translate into competitive intelligence for rival firms. B) It enhances understanding, commitment and communication within the firm. C) It limits criticism, second-guessing, and hindsight. D) Participants in a visible strategy process become more attractive to rival firms, who may lure them away. E) Secrecy limits rival firms from imitating or duplicating the firm's strategies.

B

61) Success today A) guarantees success tomorrow. B) is no guarantee of success tomorrow. C) should lull a firm into complacency. D) is all that really matters. E) none of the above.

B

62) According to Rumelt, the final broad test of strategy is its A) advantage. B) feasibility. C) consonance. D) consistency. E) distinctiveness.

B

63) Competitive advantage normally is the result of superiority in resources, skills, and A) employees. B) position. C) consistency. D) feasibility. E) governance.

B

64) 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

B

65) Rumelt's criteria of consonance refers to the need for strategists to examine A) inconsistent goals. B) sets of trends. C) impractical objectives. D) competitive advantages. E) the costs associated with particular strategies.

B

69) Corrective actions are almost always ________ except when external and internal factors have not significantly changed and the firm is progressing satisfactorily toward achieving stated objectives. A) unnecessary B) needed C) undesirable D) prohibitively expensive E) futile

B

71) Changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and MIS strengths and weaknesses should be the focus of a revised A) mission. B) IFE matrix. C) vision. D) EFE matrix. E) EPM matrix.

B

76) Which of these is NOT a key financial ratio? A) Market share B) Production quality C) Earnings per share D) Asset growth E) Return on equity

B

77) Also important in evaluating strategies are ________ criteria, like high absenteeism and turnover rates, or low employee satisfaction. A) numerical B) qualitative C) quantitative D) accounting E) financial

B

85) Corrective action should do all of the following EXCEPT A) capitalize upon internal strengths B) avoid external opportunities C) avoid external threats D) improve internal weaknesses E) strengthen an organization's competitive position

B

87) 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

B

99) International financial reporting standards (IFRS) comprise approximately ________ pages. A) 1,000 B) 5,000 C) 10,000 D) 25,000 E) 100,000

B

68) 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.

C

70) 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

C

72) 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

C

79) Most quantitative criteria are geared to ________ objectives rather than ________ objectives. A) top-management; employee B) short-term; annual C) annual; long-term D) environmental; community E) profit; social

C

81) 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

C

94) ________ organizations require more elaborate and detailed strategy-evaluation systems than ________ ones because it is more difficult to coordinate efforts among different divisions and functional areas. A) Non-profit; for-profit B) For-profit; non-profit C) Large; small D) Small; large E) Foreign; domestic

C

97) What has been shown to permit quick response to change, prevent panic in crisis situations, and make managers more adaptable? A) Auditing B) Implementing a Balanced Scorecard C) Contingency planning D) Taking corrective actions E) Measuring performance

C

102) A particularly important twenty-first-century challenge facing all strategists today is A) deciding whether the process should be more an art or a science. B) deciding whether strategies should be visible or hidden from stakeholders. C) deciding whether the process should be more top-down or bottom-up in their firm. D) all of the above E) none of the above

D

103) 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- and lower-level managers, and even nonmanagers, should be involved in the strategic planning process. E) the horizontal approach is the most pragmatic choice.

D

57) All of these are Richard Rumelt's criteria to evaluate a strategy EXCEPT A) advantage B) consistency C) feasibility D) distinctiveness E) consonance

D

59) 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 decreasing difficulty of predicting the future with accuracy E) the rapid rate of obsolescence of even the best plans

D

75) Quantitative criteria commonly used to evaluate strategies are A) ash budgets. B) Balanced Scorecards. C) Capital Asset Pricing Models. D) financial ratios. E) present value analyses.

D

89) 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) Use of corporate assets

D

90) The strategy-evaluation process should A) dominate decisions. B) be complex. C) be cumbersome. D) foster mutual understanding and trust. E) be restrictive.

D

93) 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 characteristics of a company. E) There is one ideal system.

D

95) What activity is defined as having alternative plans that can be put into effect if certain key events do not occur as expected? A) Corporate agility B) Scenario planning C) Strategy evaluation D) Contingency planning E) Forecasting

D

96) Which of the following statements about contingency plans is NOT true? A) Contingency plans should be as simple as possible. B) Only high-priority areas require the insurance of contingency plans. C) Contingency plans should be developed for favorable and unfavorable events. D) Strategists should plan for all possible contingencies. E) Contingency plans minimize the impact of potential threats.

D

100) The first time U.S. issuers would report under the international financial reporting standards (IFRS) would be approximately _______. A) 2011 or 2012 B) 2012 or 2013 C) 2013 or 2014 D) 2014 or 2015 E) 2015 or 2016

E

105) All of the following are reasons to be completely open with the strategy process EXCEPT A) Managers, employees and other stakeholders can readily contribute to the process. B) Investors, creditors and other stakeholders have greater basis for supporting a firm that is open. C) Visibility promotes democracy whereas secrecy promotes autocracy. D) Participation and openness enhances understanding, commitment and communication within the firm. E) Openness limits rival firms from imitating or duplicating the firm's strategies.

E

54) Which of these is a basic activity of strategy evaluation? A) Reviewing the underlying bases of current strategies B) Comparing expected results with actual results C) Taking corrective actions D) Choices B and C only E) All of the above

E

66) If success for one organizational department means failure for another department, then strategies may be A) synergistic. B) advantageous. C) trendy. D) feasible. E) inconsistent.

E

67) Modern organizational realities demand that employees demonstrate greater A) flexibility. B) innovation. C) creativity. D) initiative. E) all of the above

E

74) 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

E

78) Financial ratios are used to compare a firm's performance over different time periods, to compare the firm's performance to industry averages, and to compare a firm's performance with A) overall business standards. B) projected goals. C) the performance of suppliers. D) non-financial ratios. E) the performance of competitors.

E

80) What corrective actions might a firm take during strategy evaluation? A) Revising the business mission B) Issuing stock C) Revising objectives D) Selling a division E) All of the above

E

84) According to researchers, all of the following encourage individuals to accept change EXCEPT A) when they have a cognitive understanding of the changes B) when they have a sense of control over the situation C) when they have an awareness that necessary actions are going to be taken to implement change D) when they participate in strategy-evaluation activities E) when the nature, types, and speed of changes overpower their ability and capacity to adapt

E

88) The Fortune 50 includes all of the following EXCEPT A) the largest retailers B) the largest transportation companies C) the largest utilities D) the largest banks E) the largest hospitals

E

14) It is most effective to conduct strategy evaluation annually, at the end of the fiscal year.

False

15) Changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and MIS strengths and weaknesses should all be the focus of a revised EFE matrix in strategy evaluation.

False

16) In strategy evaluation, a revised IFE matrix should indicate how effective a firm's strategies have been in response to key opportunities and threats.

False

20) Financial ratios are rarely used as criteria to evaluate strategies.

False

23) Most quantitative evaluation criteria are geared to long-term objectives rather than annual objectives.

False

24) Measuring organizational performance requires making changes to reposition a firm competitively for the future.

False

30) The form of a Balanced Scorecard does not vary for different organizations or industries.

False

33) The most admired electronics company in 2011 was Tyco International.

False

36) The test of an effective evaluation system is its complexity.

False

37) Small organizations require a more elaborate and detailed strategy-evaluation system because they are still evolving.

False

4) Strategy evaluation should have a long-run focus and avoid a short-run focus.

False

40) Organizations should prepare contingency plans just for unfavorable events.

False

41) Strategists should try to cover all bases by planning for all possible contingencies.

False

43) Alternative strategies not selected for implementation should be discarded, as they have a tendency to contaminate the contingency plans.

False

46) The U.S. Chamber of Commerce is against the accounting switch from GAAP to IFRS, saying it will cause cross-border commerce to decline.

False

47) Public accounting firms usually avoid strategy-evaluation services.

False

49) Unless the timetable is changed, all companies will be required to use the IFRS procedures in 2011.

False

5) According to Richard Rumelt, consonance and consistency are mostly based on a firm's external assessment.

False

51) IFRS standards comprise 25,000 pages, whereas GAAP standards comprise 5,000 pages.

False

53) Increased education and diversity of the workforce at all levels are reasons why the top-down approach should be favored in organizations.

False

7) Consistency, distinctiveness, advantage, and feasibility are Richard Rumelt's four criteria for evaluating a strategy.

False

8) Strategy evaluation is becoming increasingly easier with the passage of time, given technological advances.

False

1) Most strategists believe that an organization's well being depends on evaluation of the strategic-management process.

True

10) Strategies may be inconsistent if policy problems and issues continue to be brought to the top for resolution.

True

12) Regardless of the size of the organization, a certain amount of "management by wandering around" at all levels is essential to effective strategy evaluation.

True

13) Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored.

True

17) Strengths, weaknesses, opportunities, cost and threats should continually be monitored for change because it is not really a question of whether these factors will change, but rather when they will change and in what ways.

True

18) When measuring organizational performance, you need to compare expected results to actual results.

True

19) Criteria for evaluating strategies should be measurable and easily verifiable.

True

2) Adequate and timely feedback is important to effective strategy evaluation.

True

21) Measuring organizational performance includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives.

True

22) Intuitive judgments are almost always involved in deriving quantitative criteria.

True

25) Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated.

True

26) Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving stated objectives.

True

27) Alvin Toffler argues that environments are becoming so dynamic and complex that they threaten people and organizations with future shock, in his thought-provoking books entitled Future Shock and The Third Wave.

True

28) Future shock occurs when the nature, type, and speed of changes overpower an individual's or organization's ability and capacity to adapt.

True

29) According to research, participation in strategy-evaluation activities is one of the best ways to overcome individuals' resistance to change.

True

3) Too much emphasis on evaluating strategies may be expensive and counterproductive.

True

31) The Balanced Scorecard approach deals with the question, "How satisfied are the firm's customers?"

True

32) Each year, Fortune publishes strategy-evaluation research on both the United States and other countries.

True

34) Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm's objectives.

True

35) Timely approximate information is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present.

True

38) There is no one ideal strategy-evaluation system for all organizations.

True

39) Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.

True

42) Contingency plans should be as simple as possible.

True

44) Identifying both beneficial and unfavorable events that could possibly derail the strategy or strategies is the first step of effective contingency planning.

True

45) A frequently used tool in strategy evaluation is the audit.

True

48) The accounting switch from GAAP to IFRS in the U.S. is going to cost businesses millions of dollars in fees and upgraded software systems and training.

True

50) The U.S. Chamber of Commerce supports the change from GAAP to IFRS, saying it will help the U.S. compete in the world economy.

True

52) The strategic management process should be completely open because participation and openness enhance understanding, commitment, and communication within the firm.

True

6) According to Rumelt, consistency and feasibility are largely based on a firm's internal assessment.

True

9) The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is more difficult today.

True

11) Competitive advantages normally are the result of superiority in one of three areas

feasibility, consistency, or consonance. : False