MG-630 Exam 2 (Ch. 7-12)

Consumer Reports is a government-sponsored effort to improve strategic planning effectiveness in the United States

False

A flat organization is composed of many hierarchical levels and narrow spans of control

False - A tall organization is composed of many hierarchical levels and narrow spans of control

Because functional strategies should be designed to support corporate and business strategies, they should not be considered before corporate and business strategies are formulated.

False - Although functional strategies are formulated after the corporate and business strategies have already been established, one still needs to consider the capabilities of the various functional areas when considering various corporate and business strategic options.

The human resources department in a cost leader should always attempt to hire managers and workers at pay rates below those of their competitors.

False - Although higher than average pay rates are generally not consistent with the low-cost strategy, businesses seeking to minimize costs may need to pay market rates to maintain a competitive workforce.

Businesses that employ the focus strategy produce and market to the entire industry products or services that can be readily distinguished from those of their competitors.

False - Businesses that employ the differentiation strategy produce and market to the entire industry products or services that can be readily distinguished from those of their competitors

The "no change" strategy is the least risky alternative

False - Choosing not to institute any strategic changes can be more risky than recommending major changes in the strategy, depending on the situation.

Crisis management refers to efforts made to eliminate the possibility that the organization can be affected negatively by unforeseen events

False - Crisis management refers to the process of planning for and implementing the response to a wide range of negative events that could severely affect an organization. Crisis management may work to reduce the likelihood of crisis events but cannot eliminate the possibility that they might occur

In general, a functional structure tends to be most appropriate for differentiated businesses

False - In general, a functional structure tends to be most appropriate for defenders and low-cost businesses.

A factor can be both an opportunity and a strength

False - Only external factors can be opportunities and/or threats, whereas only internal factors can be strengths and/or weaknesses.

Another name for an opportunity is an alternative

False - Opportunities represent the application of macroenvironmental forces to a specific organization, whereas alternatives emanate from the SW/OT matrix and represent specific courses of action that the organization may choose to pursue.

Progressive firms restructure only when firm performance declines

False - Progressive firms restructure when it becomes clear that a change is necessary—ideally before performance declines

The purchasing department in a low-cost business should always purchase raw materials at the lowest possible cost.

False - Purchasing departments in low-cost businesses should seek the "best cost"—the lowest cost within an acceptable range of quality standards.

The combination strategy can also be referred to as multiple strategies.

False - The combination strategy is a single strategy with both low-cost and differentiation dimensions whereas multiple strategies involve the employment of distinct strategies for different markets simultaneously

The first step in initiating strategic change is to create a shared vision

False - The first step in initiating strategic change is to recognize the need for change

The focus-differentiation strategy emphasizes low overall costs while serving a narrow segment of the market.

False - The focus-low-cost strategy emphasizes low overall costs while serving a narrow segment of the market, producing no-frills products or services for price-sensitive customers in a market niche.

The reduction in per-unit costs that occurs as an organization gains experience producing a product or service is known as economies of scale. Economies of scale are one of the contributing factors to the experience curve.

False - The reduction in per-unit costs that occurs as an organization gains experience producing a product or service is known as the experience curve.

The value chain is an analytical technique for identifying organizational opportunities and threats

False - The value chain is a useful tool for analyzing a firm's strengths and weaknesses and understanding how they might translate into competitive advantage or disadvantage.

Transactional leaders inspire involvement in a mission, giving followers a "dream" or "vision" of a higher calling.

False - Transformational leaders inspire involvement in a mission, giving followers a "dream" or "vision" of a higher calling, thereby seeking more dramatic changes in organizational performance

Because each organization develops its own unique culture, even organizations within the same industry and city will exhibit distinctly different ways of functioning.

True

Because environments have become less predictable in recent years, a transformational leadership style may be most appropriate for most firms.

True

Corporate restructuring efforts can include realigning divisions in the firm, shifting resources across departments, and acquiring or divesting business units

True

Corporate restructuring refers to changes that include modifying the organizational structures

True

Corrective action should usually, but not always, be taken if actual performance is less than the standard that has been established

True

Horizontal structures have fewer managerial levels than vertical structures

True

Mid-sized enterprises tend to be outperformed by their smaller and larger counterparts

True

Most effective leaders exhibit traits associated with both transformational and transactional leadership styles.

True

Organizational culture can facilitate or hinder the firm's strategic actions.

True

Strategic control can be exerted through either the formal or informal organization

True

Strategic control should be ongoing and occur throughout the strategic management process

True

The generic strategy typologies developed by Porter and Miles & Snow possess both similarities and differences.

True

There is no advantage to the reactor strategy type.

True

Crisis management involves a series of steps that can be task before a crisis occurs, while it is happening, and after is has passed.

True - A number of steps can be taken to facilitate crisis management before, during, and after the crisis

Opportunities and threats should emanate from the analysis of macroenvironmental and industry forces

True - Opportunities and threats are developed from the analysis previously performed on the macroenvironment and the industry.

The most appropriate means of securing funds likely depends on an organization's corporate and business strategies.

True - Some forms of raising capital tend to be more effective than others, depending on the strategy.

A vital characteristic of an effective information system is its ability to serve and help integrate the other functional areas of the business

True - The IS can provide data to support all of the other functional areas of the business.

The first step in crafting a strategy is the SWOT analysis.

True - The first step in crafting a strategy, a SWOT analysis, can enable the firm to position itself to take advantage of particular opportunities in the environment while avoiding or minimizing environmental threats

Deeply rooted values and ways of thinking that regulate firm behavior characterize a. A strong culture b. A weak culture c. The organizational culture d. None of the above

a. A strong culture

Which of the following approaches measures performance with quantitative and qualitative factors instead of a single quantitative measure, such as profitability? a. Balanced scorecard b. ROA analysis c. Competitive benchmarking d. None of the above

a. Balanced scorecard

Emerging markets are often more attractive than developed ones because a. Competition is not as intense b. Consumer incomes in emerging markets are not a concern c. The infrastructure in emerging markets is already developed d. None of the above

a. Competition is not as intense - because emerging markets are not yet fully developed, competition is not as intense as in developed markets

One's collection of psychological attributes, such as motivation, empathy, self-awareness, and social skills is known as a. Emotional intelligence b. Leadership traits c. Leadership style d. None of the above

a. Emotional intelligence

Which of the following structures tends to be the most centralized? a. Functional structure b. Product divisional c. Geographic divisional structure d. Matrix structure

a. Functional structure

The strategy control process begins by a. Identifying appropriate performance measures b. Establishing benchmarks c. Measuring performance d. Taking corrective action as needed

a. Identifying appropriate performance measures

A no-frills product targeted at the market at large is consistent with the a. Low-cost strategy b. Differentiation strategy c. Focus strategy d. None of the above

a. Low-cost strategy - emphasizes cost minimization through the efficient production of basic, no-frills products

The formal means by which work is coordinated in an organization is called the a. Organizational structure b. Organizational culture c. Organizational dynamic d. None of the above

a. Organizational structure

Efforts directed toward improvements or innovations in the quality or uniqueness of a company's outputs is known as a. Product R&D b. Process R&D c. Product innovation d. Structural reorganization

a. Product R&D

The description of activities that comprise the economic performance and capabilities of the firm is known as a. The value chain b. Process innovation c. Quality assessment d. None of the above

a. The value chain - The value chain describes activities that comprise the economic performance and capabilities of the firm.

Which of the following could not be an example of a weakness? a. Product quality b. Fierce competition c. Human resources d. All of the above could be weaknesses

b. Fierce competition - Fierce competition comes from outside of the organization and would be a threat, not a weakness.

Which of the following is not an important advantage of the low-cost-differentiation strategy? a. It enables the business to compete from a cost leadership position b. It is easier to implement than either the low-cost or differentiation strategy c. It allows the business to distinguish its products from the competition d. It offers the prospects of high profitability

b. It is easier to implement than either the low-cost or differentiation strategy

Benchmarks should be a. Broad, not specific b. Linked to the strategy's success c. Outside the firm's control d. All of the above

b. Linked to the strategy's success

Reducing operational costs by making the production process more efficient is known as a. Total quality management b. Process R&D c. Product innovation d. Structural innovation

b. Process R&D

The notion of a profit center is consistent with which form of organizational structure? a. Functional structure b. Product divisional c. Geographic divisional structure d. Matrix structure

b. Product divisional

The tool that enables an organization to position itself to take advantage of opportunities in the environment while avoiding or minimizing environmental threats is called a. PEST analysis b. SWOT analysis c. TQM analysis d. None of the above

b. SWOT analysis - The SWOT analysis enables a firm to position itself to take advantage of particular opportunities in the environment while avoiding or minimizing environmental threats.

The unconscious reference to one's cultural values as a standard of judgment is known as a. Emotional intelligence b. The self-reference criterion c. Global awareness d. None of the above

b. The self-reference criterion

A lack of values and ways of thinking in a firm characterize a. Strong culture b. Weak culture c. Organizational culture d. None of the above

b. Weak culture

Businesses adopting the same generic strategy are referred to as a. Low-cost businesses b. Differentiated businesses c. A strategic group d. None of the above

c. A strategic group - comprises a group of businesses in a given industry that share a common generic strategy

The process of measuring a firm's performance against that of the top performers, usually in the same industry, known as a. Competitive positioning b. Performance measurement c. Benchmarking d. Consumer analysis

c. Benchmarking

Analyzers a. Seek first-mover advantages b. Control a distinct segment of the market c. Display some of the characteristics of both prospectors and defenders d. None of the above

c. Display some of the characteristics of both prospectors and defenders - a hybrid approach of the prospector and defender types

An increase in the breadth of an organization's structure is known as a. Centralization b. Decentralization c. Horizontal growth d. Vertical growth

c. Horizontal growth

Which of the following is not a characteristic of the just-in-time (JIT) approach to inventory? a. JIT is difficult for suppliers b. JIT reduces inventory costs c. JIT is less risky than traditional inventory approaches d. JIT is popular in Japan

c. JIT is less risky than traditional inventory approaches

Strategic control is important because a. It is difficult to know how well the firm is performing without it b. The organization's environment is uncertain and always changing c. Lower-level managers need an effective means of providing feedback to top management d. A & B only

d. A & B only

Functional strategies should a. Be integrated across the business unit b. Support the business strategy c. Support the corporate strategy d. All of the above

d. All of the above

Sources of published information for strategic control available to the public include which of the following? a. The Wall Street Journal b. Consumer Reports c. Many trade journals d. All of the above

d. All of the above

The experience curve is based on which of the following? a. Potential for capital-labor substitutions b. Economies of scale c. Organizational learning d. All of the above

d. All of the above

Top-down change efforts a. Are not always successful b. Can be augmented through employee participation c. Are not necessarily more effective than bottom-up efforts d. All of the above

d. All of the above

To sustain competitive advantage, firms must acquire or develop resources that are a. Difficult for competitors to imitate b. Long-lasting c. Difficult for competitors to acquire on the market d. All of the above

d. All of the above - A firm must utilize resources that are long lasting and not easily acquired by rivals through imitation, transfer, or replication if the firm is to sustain competitive advantage.

Physical resources include a. Production facilities b. Plant locations c. Production capacity d. All of the above

d. All of the above - Physical resources include currency of technology, quality and sophistication of the distribution network, production capacity, access to suppliers, and favorable locations.

Which form of organizational structure combines two other forms? a. Functional structure b. Product divisional c. Geographic divisional structure d. Matrix structure

d. Matrix structure

Which of the following structures tends to be the most decentralized? a. Functional structure b. Product divisional c. Geographic divisional structure d. Matrix structure

d. Matrix structure

In general, an organizational culture a. Cannot be changed b. Can only be changed by a transformational leader c. Can be changed easily if proper procedures are followed d. None of the above

d. None of the above

Which of the following is not part of the marketing strategy? a. Pricing b. Distribution c. Promotion d. None of the above

d. None of the above

Modifying the structure of the organization or the business model to improve competitiveness is consistent with a. The low-cost strategy b. The focus strategy c. The differentiation strategy d. The low-cost-differentiation strategy

d. The low-cost-differentiation strategy - consistent with the combination strategy

Which type of alternative is always defensive? a. Strength-opportunity b. Strength-threat c. Weakness-opportunity d. Weakness-threat

d. Weakness-threat - Weakness-threat alternatives are always defensive in nature. Strength-opportunity alternatives are always offensive. Other alternatives can be either offensive or defensive.