MAN4720 CHAPTER 9
23) Some strategies take years to implement.
Answer: TRUE
59) Which of the following is NOT one of the 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
Answer: A
2) Adequate and timely ________ is/are the cornerstone of effective strategy evaluation. A) rewards B) feedback C) punishment D) reminders E) prompts
Answer: B
42) 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.
Answer: B
77) ________ 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
Answer: D
78) 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.
Answer: D
85) Only high-priority areas require the insurance of ________ plans. A) financial B) strategic C) operational D) contingency E) functional
Answer: D
64) The act of oversight and direction for an organization is referred to as A) corporate lawmaking. B) centralized control. C) organizational direction. D) establishing norms. E) governance.
Answer: E
82) Already the European Union and 113 nations including Australia, Mexico, and Canada have ________ IFRS rules. A) adopted and then abandoned the use of B) been prohibited from adopting C) spoken out publicly against the adoption of D) revised the standard version of the E) adopted or soon plan to use
Answer: E
18) Competitive advantages are normally the result of superiority in one of three areas: feasibility, consistency, or consonance.
Answer: FALSE
19) Goal setting is critical to effective strategy evaluation.
Answer: FALSE
21) Strategy evaluation is becoming increasingly easier with the passage of time, given technological advances.
Answer: FALSE
52) Measuring organizational performance requires making changes to reposition a firm competitively for the future.
Answer: FALSE
68) The trend in the United States is toward larger boards of directors, with an average of 18 members being the norm.
Answer: FALSE
74) Dr. David Yermack believes that bigger boards are generally more decisive, more cohesive, more hands-on, and have more informal meetings and fewer committees.
Answer: FALSE
108) The strategic planning process should be a learning process for all managers and employees.
Answer: TRUE
110) Most organizations can afford to pursue only a few corporate-level strategies at any given time.
Answer: TRUE
15) Adequate and timely feedback is the cornerstone of effective strategy evaluation.
Answer: TRUE
50) Intuitive judgments are almost always involved in deriving quantitative criteria.
Answer: TRUE
55) Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving stated objectives.
Answer: TRUE
57) According to Alvin Toffler, future shock occurs when the nature, type, and speed of changes overpower an individual's or organization's ability and capacity to adapt.
Answer: TRUE
58) According to research, participation in strategy-evaluation activities is one of the best ways to overcome resistance to change.
Answer: TRUE
92) Contingency plans should be as simple as possible.
Answer: TRUE
65) Today, boards of directors are composed mostly of A) outsiders. B) management. C) union members. D) company employees. E) past executives.
Answer: A
79) 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
Answer: C
66) All of the following are principles of good organizational governance, as established by BusinessWeek, EXCEPT A) each director attends at least 75 percent of all meetings. B) the audit, compensation and nominating committees are made up solely of outside directors. C) each director owns a large equity stake in the company. D) at least three directors are current or former company executives. E) the CEO is not also the Chairperson of the Board.
Answer: D
84) The GAAP standards are comprised of ________ pages. A) 5,000 B) 10,000 C) 15,000 D) 25,000 E) 30,000
Answer: D
9) 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.
Answer: D
12) Modern organizational realities demand many skills of employees. Which of the following is NOT a required skill? A) Flexibility B) Innovation C) Creativity D) Initiative E) Patience
Answer: E
103) Smaller firms favor the switch to IFRS from GAAP.
Answer: FALSE
39) Corrective actions are expected to A) strengthen an organization's competitive position in its industry. B) streamline asset holdings. C) have no risk. D) involve abandoning existing strategies. E) help decrease debt.
Answer: A
11) 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) predicts tomorrow's success.
Answer: B
29) A revised ________ should focus on changes in the organization's management, marketing, finance and accounting, production and operations, research and development (R&D), and management information systems (MIS) strengths and weaknesses. A) mission B) IFE Matrix C) vision D) EFE Matrix E) EPM Matrix
Answer: B
3) Competitive advantage is normally the result of superiority in resources, skills, or A) employees. B) position. C) consistency. D) feasibility. E) governance.
Answer: B
5) ________ advantage tends to be self-sustaining so long as key external and internal factors that underlie it (them) remain(s) stable. A) Resource B) Positional C) Synergy D) Skills E) Capital
Answer: B
60) 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
Answer: B
30) 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
Answer: C
36) 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
Answer: C
33) ________ are quantitative criteria commonly used to evaluate strategies. A) Cash budgets B) Balanced Scorecards C) Capital Asset Pricing Models D) Financial ratios E) Present value strategic analyses
Answer: D
90) Organizations should prepare contingency plans just for unfavorable events.
Answer: FALSE
35) 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.
Answer: E
101) IFRS standards comprise 25,000 pages, whereas GAAP standards comprise 5,000 pages.
Answer: FALSE
96) The U.S. Chamber of Commerce is against the accounting switch from GAAP to IFRS, saying it will cause cross-border commerce to decline.
Answer: FALSE
97) Public accounting firms usually avoid strategy-evaluation services.
Answer: FALSE
31) 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
Answer: A
100) The U.S. Chamber of Commerce supports a change from IFRS to GAAP, saying it will help the United States compete in the world economy.
Answer: FALSE
62) A question answered by the Balanced Scorecard approach is "How satisfied are the firm's customers?"
Answer: TRUE
107) To enhance effectiveness, R. T. Lenz recommends keeping the strategic management process routine.
Answer: FALSE
98) Auditors examine the financial statement of firms to determine whether they have been prepared according to generally accepted accounting principles (GAAP).
Answer: TRUE
40) 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
Answer: A
7) 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
Answer: A
24) Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored.
Answer: TRUE
104) Most organizations can afford to pursue ________ corporate-level strategies at any given time. A) only a few B) 8-12 C) about 15 D) at least 20 E) virtually an unlimited number of
Answer: A
26) Which of the following is the first activity in strategy evaluation? A) Examining the underlying bases of current strategies B) Measuring organizational performance C) Taking corrective actions D) Monitoring the external environment E) Monitoring the internal environment
Answer: A
105) 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.
Answer: B
83) 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 stakeholders will likely improve communication, understanding, and commitment.
Answer: B
13) 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.
Answer: C
28) 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) acquire additional capital.
Answer: C
67) In a Spencer Stuart 2017 survey, women made up ________ percent of new directors appointed at S&P 500 companies. A) 22 B) 18 C) 36 D) 44 E) 51
Answer: C
25) It is most effective to conduct strategy evaluation annually, at the end of the fiscal year.
Answer: FALSE
43) Changes in the organization's management, marketing, finance and accounting, production and operations, research and development (R&D), and management information systems (MIS) strengths and weaknesses should all be points of focus of a revised EFE Matrix in strategy evaluation.
Answer: FALSE
44) In strategy evaluation, a revised IFE Matrix should indicate how effective a firm's strategies have been in response to key opportunities and threats.
Answer: FALSE
46) When measuring organizational performance, a comparison should be made between expected results and actual results.
Answer: TRUE
47) Criteria for evaluating strategies should be measurable and easily verifiable.
Answer: TRUE
10) 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.
Answer: A
34) 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.
Answer: B
4) The first activity in the strategy-evaluation process is to A) develop organizational goals. B) examine the underlying bases of a firm's strategy. C) compare expected results with actual results. D) examine the capital structure. E) take corrective actions to ensure that performance conforms to plans.
Answer: B
81) International financial reporting standards (IFRS) comprise approximately ________ pages. A) 1,000 B) 5,000 C) 10,000 D) 25,000 E) 100,000
Answer: B
38) 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
Answer: C
1) Competitive advantages are normally the result of superiority in one of three areas. Which of the following is one of them? A) Markets B) Products C) Profits D) Resources E) Revenues
Answer: D
72) Shareholders are increasingly wary of boards of directors.
Answer: TRUE
27) 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
Answer: B
6) The idea that the positioning of one's ________ can enhance their combined effectiveness is familiar to military theorists, chess players, and diplomats. A) people B) facilities C) profits D) products E) resources
Answer: E
16) Strategy evaluation is essential for developing objectives.
Answer: FALSE
70) The act of oversight and direction over management is referred to as corporate governance.
Answer: TRUE
73) A benefit of fewer board members is that CEOs are more often reprimanded (or dismissed) if needed.
Answer: TRUE
76) The average size of a U.S. company board is 11 members.
Answer: TRUE
91) In contingency planning it is crucial that strategists cover all bases.
Answer: FALSE
86) 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.
Answer: A
54) Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated.
Answer: TRUE
8) 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.
Answer: A
80) 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) Financial ratios
Answer: A
63) 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
Answer: C
88) Mintzberg's notion of "crafting" strategies A) is consistent with the view that strategic management is more a science than an art. B) contends that firms need to assess their environments, do research, evaluate alternatives, analyze, and then choose a course of action. C) suggests that strategic decision making be based primarily on holistic thinking, intuition, creativity, and imagination. D) reject strategies that result from subjective imagination in favor of objective analysis. E) insists on formality.
Answer: C
32) Which of the following is NOT 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) Taking punitive action
Answer: E
37) A firm takes corrective actions during strategy evaluation. Which of the following is NOT a type of corrective action? A) Alter strategies B) Replace one or more key individuals C) Revise objectives D) Divest a division E) Take on more debt
Answer: E
41) According to researchers, all of the following encourage individuals to accept change EXCEPT A) having a cognitive understanding of the changes. B) having a sense of control over the situation. C) having an awareness that necessary actions are going to be taken to implement change. D) participating in strategy-evaluation activities. E) being overpowered by the nature, types, and speed of changes.
Answer: E
87) 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.
Answer: E
109) While open-mindedness is generally considered to be a good trait, it endangers effective strategic management.
Answer: FALSE
14) Comparing expected results with the actual results is the first activity in the strategy-evaluation process.
Answer: FALSE
48) Financial ratios are rarely used as criteria to evaluate strategies.
Answer: FALSE
51) Most quantitative evaluation criteria are geared to long-term objectives rather than annual objectives.
Answer: FALSE
61) The construction of a Balanced Scorecard is consistent across organizations and industries.
Answer: FALSE
71) The government is held accountable for the entire performance of an organization.
Answer: FALSE
75) Today, boards of directors are composed mostly of insiders who are becoming more involved in organizations' strategic management.
Answer: FALSE
93) Alternative strategies not selected for implementation should be discarded, as they have a tendency to contaminate the contingency plans.
Answer: FALSE
102) Most executives believe that some strategic information should remain confidential to top managers.
Answer: TRUE
106) "Welcome bad news" is one of six guidelines for effective strategic management offered by R. T. Lenz.
Answer: TRUE
17) Too much pressure to achieve specific goals can lead to dysfunctional behavior.
Answer: TRUE
20) Too much emphasis on evaluating strategies may be expensive and counterproductive.
Answer: TRUE
22) The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is more difficult today.
Answer: TRUE
45) Strengths, weaknesses, opportunities, cost and threats that represent the bases of current strategies 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.
Answer: TRUE
49) 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.
Answer: TRUE
53) Taking corrective actions, requires making changes to competitively reposition a firm for the future.
Answer: TRUE
56) 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.
Answer: TRUE
69) Today boards of directors are composed mostly of outsiders who are becoming more involved in an organization's strategic management.
Answer: TRUE
89) Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.
Answer: TRUE
94) According to Linneman and Chandran, identifying both good and bad events that could jeopardize strategies should be the first step in contingency planning.
Answer: TRUE
95) A frequently used tool in strategy evaluation is the audit.
Answer: TRUE
99) 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.
Answer: TRUE
