MGT-413 Final Exam

Without assumptions, planning would be A) impossible. B) easier. C) difficult. D) inexpensive. E) intuitive.

A) impossible.

One difference between a competitive profile matrix (CPM) and an External Factor Evaluation is that A. CPM includes both external and internal issues B. The weights and total weighted scores have different meanings C. CPM ratings range from 1 to 10 D. CPM is performed only for the company, whereas EFE is performed both for the company and its competitors

A. CPM includes both external and internal issues

Which of the following industries is likely to be least profitable? A. High threat of substitutes, high rivalry B. High entry barriers, little competition C. High buyer power, low supplier power D. High supplier power, high entry barriers

A. High threat of substitutes, high rivalry

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry? A. it'll make the airline industry more attractive because of decreased supplier power B. it'll make the airline industry less attractive because of decreased supplier power C. it'll make the airline industry more attractive because of increased supplier power D. it'll make the airline industry more attractive because of a new entrant

A. it'll make the airline industry more attractive because of decreased supplier power

Which of the following is not descriptive of a high level of bargaining power of suppliers? A. substitutes are readily available B. The product service is unique C. The supplier industry is dominated by a few companies, but sells too many D. The purchasing industry buys only a small portion of the suppliers group's goods and services E. Suppliers are able to integrate forward and compete directly with their present customers

A. substitutes are readily available

Since _____ resources can more easily be bought and sold, ________ resources are often more important for gaining and sustaining competitive advantages. A. tangible, intangible B. intangible, tangible C. tangible, organizational D. intangible, external

A. tangible, intangible

All of the following are basic functions of marketing EXCEPT: A. value chain analysis B. product planning C. promoting products D. pricing products

A. value chain analysis

Which of the following statements is CORRECT? A. The numerator used in the TIE ratio is earnings before taxes (EBT). EBT is used because interest is paid with post-tax dollars, so the firm's ability to pay current interest is affected by taxes. B. A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure. C. The use of debt financing will tend to lower the basic earning power ratio, other things held constant. D. All else equal, increasing the debt ratio will increase the ROA. E. If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE.

B. A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital

If suppliers are unreliable or too costly, which of these strategies may be appropriate? A) Horizontal integration B) Backward integration C) Market penetration D) Forward integration E) Concentric diversification

B. Backward integration

Which of the following industries is likely to be most profitable? A. High threat substitutes, high rivalry B. High barriers, little competition C. High buyer power, high supplier power D. High Supplier power, high threat of entry

B. High barriers, little competition

Pricing is one of the basic functions of A. finance/accounting B. Marketing C. Management information systems D. production/operations E. research and development

B. Marketing

Which of the following is the last step in developing an IFE matrix? A. Determining the organizations structure B. Obtain total weighted score C. Summing the weighted scores for each variable D. Identifying the organization's function of business

B. Obtain total weighted score

If rivalry and buyer power on the online dating industry are going to increase in the future, which of the following statements is the most accurate? A. The competitive environment for Match.com will remain unchanged B. Online dating industry will be less attractive for potential entrants C. Online dating industry will be more attractive to potential entrants D. Online dating industry will have more opportunities than threats in the future.

B. Online dating industry will be less attractive for potential entrants

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

B. Planning

Which category of ratios includes return on total assets and return on stockholders' equity? A. Leverage B. Profitability C. Activity D. Growth

B. Profitability

Consider the video games industry. Sony makes the Playstation 2 video game system. Sega used to make the competing Dreamcast video game system. At the same time, Sega made video games that people could buy to play on their Playstation 2. This means that Sony and Sega were... A. Rivals B. Rivals and Complementors C. Substitutes D. Complementors

B. Rivals and Complementors

Culture and ________ must work together. A. finances B. Strategy C. Suppliers D. Customers

B. Strategy

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

B. distinctive competencies

What is the range for a firm's total weighted score in an EFE? A. 0 to 4 B. 0 to 5 C. 1 to 4 D. 1 to 5

C. 1 to 4

Intel and AMD supply more than 90% of the microprocessors in all PCs sold today. Therefore, the microprocessor market is ______ and bargaining power of buyers over Intel and AMD are ______ A. Fragmented, High B. Fragmented, Low C. Consolidated, Low D. Consolidated, High

C. Consolidated, Low

All of the following are basic activities of management EXCEPT: A. Staffing B. Planning C. Consolidating D. Organizing

C. Consolidating

An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of: A. Threat of Entry B. Backward Integration C. Forward Integration D. Threat of Substitute Products

C. Forward Integration

When the products being purchased are standard or undifferentiated, it results in ________ bargaining power of consumers. A. Marginalized B. Lower C. Higher D. Negative E. Negligible

C. Higher

The _______ decision is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization A. Financing B. Restructuring C. Investment D. Benchmark

C. Investment

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

C. Motivating

When using EFE Matrix, what is done after multiplying each factor's weight by its rating to determine a weighted score? A. Identifying key external factors B. Summing the weighted score for each competitor C. Summing the weighted score for each variable to determine the total weighted score for the organization D. Drawing the horizontal and vertical lines for the matrix E. Determining the preferred strategic factors

C. Summing the weighted score for each variable to determine the total weighted score for the organization

Which of the following statements is CORRECT? A. The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period. B. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the risk-free rate. C. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR. D. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR. E. The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period.

C. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR

The maximum weight for a factor in the IFE matrix is A. 2 B. 3 C. 4 D. 1

D. 1

Companies A and B have the same sales, tax rate, interest rate on their debt, total assets, and basic earning power. Both companies have positive net incomes. Company A has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT? A. Company A has more net income B. company A has a lower equity multiplier C. Company A has a higher time-intrest-eraned (Tie) ratio D. Company A pays less in taxes E. Company A has a higher ROA

D. Company A pays less in taxes

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

D. Controlling

Which of the following is NOT a key question that can reveal internal strengths and weaknesses regarding a firm's marketing function? A. Does the firm have an effective sales organization? B. Has the firm's market share been increasing? C. Are markets segmented effectively? D. Does the firm have good liquidity?

D. Does the firm have good liquidity?

If economies of scale are an industry's primary entry barrier, a new entrant's major risk is: A. It's inability to access labor and materials B. The inferior quality of it's products C. Its inability to match the innovation of the established firm D. Its inability to produce insufficient volume to match the cost advantage of established producers

D. Its inability to produce insufficient volume to match the cost advantage of established producers

A pattern of behavior developed by an organization as it learns to cope with its problems of of external adaptation and internal integration, and that as 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

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

D. Times-interest-earned ratio

The initial step in developing an IFE matrix is A. attaching a cost to each discrete activity B. assigning weights to key internal factors C. assigning ratings to key internal factors D. developing a full and narrow list of key internal factors

D. developing a full and narrow list of key internal factors

Which barrier to entry to entry do corporations such as P&G use to force new entrants to spend heavily to overcome existing customer loyalty? A. Rivalry among existing firms B. switching costs C. capital requirements D. product differentiation

D. product differentiation

A total weighted score of ________ in an EFE Matrix indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry A) 0.0 B) 1.0 C) 2.5 D) 3.3 E) 4.0

E. 4.0

True or False A forward integration strategy is used by firms to gain control or ownership of suppliers

False

True or False Allocating resources is one of the four basic functions performed by managers

False

True or 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

True or False Regardless of the number of key opportunities and threats included in an EFE matrix, the highest possible total weighted score for an organization is 4.0 , and the lowest possible score is 0.0

False

True or False The Porter's five forces model framework is a tool that is used to determine why some firms consistently outperform other firms in the same industry

False

True or False Porter's Five Forces model helps to determine both the nature of competition in an industry and the industry's profit potential

True

True or False Significant barriers to entry are not always sufficient to keep some new firms from entering industries with higher quality products, lower prices, and substantial marketing resources

True

True or False The IFE Matrix is an evaluation of the effectiveness of a​ firm's current​ strategies, but it does not take into account​ opportunities and threats

True

True or False 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

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. Adequate and timely feedback

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. Comparing results to competitors' expectations

Under which strategy would you offer products or services to a wide range of customers at the lowest price available on the market? a. Cost Leadership - Low Cost b. Cost Leadership - Best Value c. Focus - Low Cost d. Focus - Best Value e. Differentiation

a. Cost Leadership - Low Cost

____advantages refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms. a. First mover b. Outsourcing c. Differentiator d. Corporate e. Fast follower

a. First mover

Given the environment in which organizations must function today, which of the following statements about human resource management (HRM) is FALSE? a. HRM should be left to line managers because they know their people best. b. HRM should be viewed as a means of significantly increasing productivity. c. HRM should have an important place because of the complex legal environment. d. HRM oversees the firm's strategic investment in attracting, retaining, and motivating an effective workforce. e. HRM should be a part of the strategic planning process.a. HRM should be left to line managers because they know their people best.

a. HRM should be left to line managers because they know their people best.

Which of the following statements is NOT true about strategic groups? a. Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups. b. Profitability varies between different strategic groups. c. It is possible to have multiple strategic groups within the same industry. d. Companies within the same strategic group use similar strategies to compete against each other

a. Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups.

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

a. Social responsibility

External audits attempt to identify key variables that offer actionable responses. a. True b. False

a. True

Horizontal integration is seeking ownership or increased control over competitors. a. True b. False

a. True

Laser eye surgery would be considered a substitute product for eyeglasses and contact lenses a. True b. False

a. True

Porter's Five-Forces model helps to determine both the nature of competition in an industry and the industry's profit potential. a. True b. False

a. True

Rivalry is most intense when there are high exit barriers and high industry growth. a. True b. False

a. True

According to the law of demand, when will higher corn prices reduce the quantity demanded of corn? a. When non-price determinants, like income and the number of buyers, are unchanged b. When the supply of corn is fixed. c. When there are no shortages or surpluses of corn. d. Always.

a. When non-price determinants, like income and the number of buyers, are unchanged

An effective mission statement should do all of the following EXCEPT a. include monetary amounts, numbers, percentages and ratios. b. be inspiring. c. reveal that the firm is environmentally responsible. d. identify the utility of a firm's products. e. be reconciliatory.

a. include monetary amounts, numbers, percentages and ratios.

Strategy evaluation is necessary because a. internal and external factors are constantly changing. b. the SEC requires strategy evaluation. c. success today is a guarantee of success tomorrow. d. the IRS requires strategy evaluation. e. firms have limited resources.

a. internal and external factors are constantly changing.

Organizations using strategic management are generally______ than those that do not. a. more profitable b. more complex c. less profitable d. less successful e. less complex

a. more profitable

In the BCG Matrix, a division with a high relative market share position in a low-grow industry can be described as a a. Star. b. Cash Cow. с. Question Mark. d. Dog. e. Failure.

b. Cash Cow.

The classified Balance Sheet will subsection the assets section as follows a. Other Assets and Property, Plant and Equipment b. Current Assets and Property, Plant, and Equipment c. Current Assets and Short-Term Assets d. Current Assets and Other Assets

b. Current Assets and Property, Plant, and Equipment

A differentiation strategy can only be achieved with a large target market. a. True b. False

b. False

A vision statement commonly answers the question, "What is our business?" whereas a mission statement is more likely to answer the question "What do we want to become?" a. True b. False

b. False

An external audit focuses on identifying and evaluating trends and events within the control of management. a. True b. False

b. False

Once an effective strategy is designed, modifications are rarely required. a. true b. False

b. False

Organizations should prepare contingency plans just for unfavorable events. a. True b. False

b. False

Which of the following alternatives to specialization would require continually adding new tasks and challenges as part of the job design? a. Horizontal job loading b. Job enrichment c. Job specialization d. Job rotation e. Job stabilization

b. Job enrichment

In a period of rising prices, which inventory valuation method would generally yield both the lowest ending inventory value and the lowest net income figure? a. First in, first out (FIFO) b. Last in, first out (LIFO) c. Weighted average d. Standard cost

b. Last in, first out (LIFO)

Which strategy seeks to increase market share for present products or services markets through greater marketing efforts? a. Forward integration b. Market penetration c. Market development d. Backward integration e. Product development

b. Market penetration

When an industry relies heavily on government contracts, which forecasts can be the important part of an external audit? a. Economic b. Political c. Technological d. Competitive e. Multinational

b. Political

Which strategy is effective when new, but related, products could be offered at highly competitive prices? a. Forward integration b. Related diversification c. Related integration d. Conglomerate diversification e. Unrelated diversification

b. Related diversification

In which situation would horizontal integration be an especially effective strategy? a. When an organization competes in a slowing industry b. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for "tending substantially" to reduce competition c. When decreased economies of scale provide major competitive advantages d. When an organization has neither the capital nor human talent needed to successfully manage an expanded organization e. When competitors are succeeding due to managerial expertise or having particular resources an organization possesses

b. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for "tending substantially" to reduce competition

The purpose of a mission statement is to declare all of these EXCEPT a. reason for being. b. an annual financial plan. c. a statement of purpose. d. a statement of beliefs. e. whom an organization wants to serve.

b. an annual financial plan.

Jane, a product manager, thinks her company's product is currently in the growth stage of the product life cycle. If so, the profits for the product and the number of competitors a. are declining; is declining b. are increasing; is growing c. have peaked; is declining d. are negative; is growing e. are declining; is growing

b. are increasing; is growing

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

b. avoid external opportunities.

Centrum vitamins segments its line of vitamins based on gender and age group (e.g., one line of vitamins is for men over the age of 50). This is an example of market segmentation based on variables of a. psychographics. b. demographics. c. lifestyles. d. personality characteristics. e. behavior.

b. demographics.

Threat of substitute products comes from a. other companies in the same industry. b. firms in other industries that produce products or services that satisfy the same customer need. c. foreign companies which can use cheap labor in their countries. d. all of the above.

b. firms in other industries that produce products or services that satisfy the same customer need.

Theory says that _____ industries have a ____ concentration ratio and therefore have a ___ intensity of rivalry a. concentrated; low; low b. fragmented; low; high c. fragmented; high; low d. concentrated; high; high

b. fragmented; low; high

Financial objectives involve all of the following EXCEPT a. growth in revenues. b. larger market share. c. higher dividends. d. greater return on investment. e. a rising stock price.

b. larger market share.

What is NOT one of Michael Porter's five competitive forces? a Potential entry of new competitors b. Rivalry among competing firms c. Bargaining power of unions d. Bargaining power of suppliers e. Bargaining power of consumers

c. Bargaining power of unions

_____is NOT a basic mission of a competitive intelligence program. a. Providing a general understanding of an industry b. Providing a general understanding of a company's competitors c. Identifying industry executives who could be hired by the firm d. Identifying areas in which competitors are vulnerable and assessing the impact strategic actions would have on competitors e. Identifying potential moves a competitor might make that would endanger a firm's position in the market

c. Identifying industry executives who could be hired by the firm

Which of the following is NOT an external force that must be examined in formulating strategies? a. Economic b. Social c. Organizational d. Cultural e. Environmental

c. Organizational

The goal of strategic management is to ____ a. create competitive advantage. b. sustain competitive advantage. c. create and sustain competitive advantage. d. eliminate competitive advantage. e. eliminate and abolish competitive advantage.

c. create and sustain competitive advantage.

The shift to a service economy is an example of a(n) ____ force a. technological b. social, cultural, demographic, and environment (SCDE) c. economic d. legal e. political

c. economic

To perform an external audit, a company first must a. get an approval from the Securities and Exchange Commission. b. perform an internal audit. c. gather competitive intelligence and information about external trends. d. hire a consultant to develop a comprehensive strategic plan. e. create a budget.

c. gather competitive intelligence and information about external trends.

The United States' population is a. getting younger and less white. b. getting younger and more white. c. getting older and less white. d. getting older and more white. e. remaining stable as to age and racial make up.

c. getting older and less white.

If a firm has a bad sustainability record this will a. help a firm in the market. b. improve a firm's standing in the community. c. increase investor scrutiny of the firm. d. deflect the scrutiny of a firm by environmentalists. e. release the firm from governmental reporting obligations.

c. increase investor scrutiny of the firm.

The strategic-management process ____ a. occurs once a year. b. is a semiannual process. c. is a continuous process. d. applies mostly to companies with sales greater than $100 million e. applies mostly to small businesses.

c. is a continuous process.

Intensity of competition_____ in lower return industries a. is lowest b. is nonexistent c. is highest d. is not important e. fluctuates

c. is highest

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. on a continuous basis.

Collecting and evaluating information on competitors is essential for successful a. internal analysis. b. strategy evaluation. c. strategy formulation. d. strategy implementation. e. strategy correction.

c. strategy formulation.

Because of the success of the iPad and the iPhone, Apple has tremendous brand recognition. Brand recognition is one of Apple's a. weaknesses. b. opportunities. c. strengths. d. threats. e. strategies.

c. strengths.

The Company A has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is Company A's rate of return on investment? a. 25% b. 20% c. 56% d. 45%

d. 45%

Which of these strategies is effective when the number of suppliers is small and the number of competitors is large? a. Conglomerate diversification b. Forward integration c. Concentric diversification d. Backward integration e. Horizontal diversification

d. Backward integration

Which of the following is NOT one of the steps involved in construeting a SWOT matrix? a. List the firm's key external threats. b. Match internal strengths with external opportunities, and record the resultar strategies in the appropriate cell. c. Match internal strengths with external threats, and record the resultant ST strategies d. List the firm's external weaknesses. e. List the firm's external opportunities.

d. List the firm's external weaknesses.

Which strategy generally entails large research and development expenditures? a. Market penetration b. Retrenchment c. Forward integration d. Product development e. Divestiture

d. Product development

According to Porter, what is usually the most powerful of the five competitive forces? a. Potential development of substitute products b. Bargaining power of suppliers c. Bargaining power of consumers d. Rivalry among competing firms e. Potential entry of new competitors

d. Rivalry among competing firms

Which statement is TRUE? a. Companies must choose between having a mission statement or a vision statement. b. A company can't have a mission statement unless it has a vision statement. c. A vision statement cannot be established until a company has developed its mission statement. d. The vision statement should be established before the mission statement. e. Companies are required by law to have both mission and vision statements.

d. The vision statement should be established before the mission statement.

The acronym SCDE stands for social, cultural, demographic, and ____ forces a. economic b. ethnic c. external d. environment

d. environment

As indicated in the strategic-management model, a clear ______ is needed before before alternative strategies can be formulated and implemented. a. short-term objective b. implementation plan c. audit policy d. mission statement e. evaluation strategy

d. mission statement

Responsibility for encouraging ethical decision making and ensuring ethical behavior in a firm lies a. only with a firm's strategists. b. only with a firm's managers. c. only with a firm's shareholders. d. with both a firm's strategists and its managers. e. with neither a firm's strategists nor its managers.

d. with both a firm's strategists and its managers.

The global airline industry has high intensity of rivalry because _____ a. There are many airlines in the industry. b. Airlines provide similar services. It is very hard for them to differentiate themselves. c. Switching costs are low for customers. d. a and b, but not c e e. a, b and c

e. a, b and c

Economies of scale imply that within some range one can increase the size of operation and a. total cost will decrease. b. fixed cost will decrease. c. average variable cost will decrease. d. average total cost will increase. e. average total cost will decrease.

e. average total cost will decrease.

An organization's present strategies, objectives, vision, and mission, coupled with the external and internal audit information, provide a basis for a. generating structural strategies, but not evaluating those strategies. b. evaluating structural strategies, but not generating those strategies. c. generating feasible alternative strategies, but not evaluating those strategies. d. evaluating feasible alternative strategies, but not generating those strategies. e. generating and evaluating feasible alternative strategies

e. generating and evaluating feasible alternative strategies

When a domestic company first begins to export to India, it is an example of a. horizontal integration. b. backward integration. c. forward integration. d. concentric diversification. e. market development.

e. market development.

All of the following are political, governmental, and legal variables that can represent key opportunities or threats to organizations EXCEPT a. tariffs. b. environmental regulations. c. level of defense expenditures. d. legislation on equal employment. e. population changes by race, age, sex, and level of affluence.

e. population changes by race, age, sex, and level of affluence.

The emergence of 3D printing is an example of a(n) _____force that impacts organizations. a. economic b. legal c. political d. social, cultural, demographic, and environment (SCDE) e. technological

e. technological