MGMT 478 - EXAM ONE
In an IFE Matrix, the weights of all factors included must add up to ______.
1.0
The weight column in an EFE Matrix must add up to what number?
1.0
The range of total weighted scores in a CPM Matrix is ______.
1.0 to 4.0
The recommended length of a mission statement is fewer than _____ words.
100
In an IFE Matrix, how much more important is a weight of 0.16 than a weight of 0.07?
129 percent
In an EFE Matrix, the average total weighted score is:
2.5
How many key external factors should be included in an EFE Matrix?
20
Spending on digital advertising recently surpassed television advertising and is expected to reach nearly ______ billion dollars in 2020.
280
Regarding the AQCD criteria, strive to include all high quality factors in an external assessment for a firm. A high quality factor will meet ______ of the AQCD criteria; a low quality factor will meet ______ of the AQCD criteria.
3 or 4; 2 or fewer
Most practitioners and academicians of strategic management feel that an effective statement should include ______ mission statement components.
9
When should a vision statement reveal the type of business in which the firm engages?
Always
Which statement FALSE?
An outside person with expertise in developing vision and mission statements who has unbiased views should always manage the statement-development process.
Aspects of organizational culture listed in Table 4-4 include all but which of the following?
Analyze interest rate trends
Which of the following statements is FALSE?
Apple Computer's mission statement should open the possibility for diversification by Apple into pesticides.
Which question is NOT answered in an effective mission statement?
Are the firm's profits adequate?
The CEO of LinkedIn is Jeff Weiner, a highly respected corporate leader. What does Weiner say is the most important philosophy of a great leader?
Be clear about the organization's vision.
According to Vern McGinnis, a mission statement should do what?
Be limited enough to exclude some ventures and broad enough to allow for creative growth
_________ is a business technique that involves using software to mine huge volumes of data to help executives make decisions.
Business analytics
What characteristic(s) are included among the 5 out of 5 test for vision statements to be exemplary?
Clear and unique
An advantage of a strong dollar includes which of the following item(s)?
Companies importing goods have greater buying power because their dollars now go further overseas.
Which statement below is FALSE?
Companies should pay dividends regardless of changes in their revenue.
All elements of the strategic planning process can change over time except one element that almost never changes. What is that element?
Core value statement
Which of the following activities is included in strategy implementation?
Develop a strategy-supportive culture and create an effective organizational structure.
What is often considered the first step in strategic planning?
Developing a vision statement
When comparing mission statements of rival firms, perhaps the most important component to examine is what?
Distinctive competence
According to the chapter, a pitfall to watch for and avoid in strategic planning is:
Doing strategic planning only to satisfy accreditation or regulatory requirements
TRUE
During the process of developing vision and mission statements, some organizations use discussion groups of managers to develop and modify existing statements. The process of developing a mission statement should create an "emotional bond" and "sense of mission" between the organization and its employees.' Mission statements should include the 9 components. Vision statements should pass the 5 out of 5 test.
______ is the act of strengthening employees' sense of effectiveness by encouraging them to participate in decision making and to exercise initiative and imagination, and then rewarding them for doing so.
Empowerment
External audits attempt to identify key variables that offer highly intuitive responses.
False
The most effective strategic management is ritualistic, predictable, and formal.
False
Limitations of financial ratio analysis include all but which one of the following statements?
Financial ratios are estimates of financial condition.
What is the first step in designing an External Factor Evaluation (EFE) Matrix?
Identifying key external factors
Which of the following statements is TRUE?
If a firm possesses many highly-weighted strengths, this is likely the result of effective strategies, so higher ratings in general are warranted for strengths.
The bargaining power of consumers can be the most important force affecting competitive advantage. Consumers gain increasing bargaining power under the following circumstance:
If consumers are particularly important to the seller
In developing an IFE Matrix, what is an important guideline?
Include factors that are actionable, quantitative, comparative, and divisional (AQCD) to the extent possible.
Which statement best describes intuition?
It should be coupled with analysis in decision making.
Which of the following statements is TRUE?
Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 14.3% better than the second, but it does suggest that the first firm is better in some areas.
FALSE
Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 14.3% better than the second, but it does suggest that the first firm is much better in many areas. Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it does not necessarily follow that the first firm is precisely 12.5% better than the second, but it does suggest that the first firm is better in some areas. When one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it follows that the first firm is precisely 14.3% better than the second. Just because one firm receives a 3.20 overall rating and another receives a 2.80 in a CPM, it follows that the first firm is precisely 12.5% better than the second, and that the first firm is better in some areas.
Which of the following is listed in the chapter as a reason often given for poor or no strategic planning in a firm?
Laziness
Lorsch found that executives in successful companies are emotionally committed to the firm's culture, but he concluded that culture can inhibit strategic management in the following way:
Managers frequently miss the significance of changing external conditions because they are blinded by strongly held beliefs.
External forces can be divided into five broad categories and ten subareas EXCEPT in which of the following?
Marketing
The basic activities that comprise marketing include the following:
Marketing research and target market analysis
Which of the following best describes the vision, "To become the best retailing firm in the USA"?
Much too broad
In terms of growing globally by adding new customers, what company does the global Capsule 3 suggest may be the fastest growing company?
Netflix
In developing an IFE Matrix, when can both internal and external factors be included?
Never
Does including the word "customer" in a mission statement ensure the statement includes the customer component?
No
The Industrial Organization view of strategic planning advocates that external (industry) factors are more important than internal ones for gaining and sustaining competitive advantage. Do the authors agree?
No. Matching key external opportunities and threats with key internal strengths and weaknesses provides the basis for successful strategy formulation.
___________ captures the subtle, elusive, and largely unconscious forces that shape a workplace.
Organizational culture
If included in a mission statement, the phrase, "We follow the golden rule in all that we do" would satisfy what component?
Philosophy
______ is the process by which a person determines whether to attempt a task, works out the most effective way of reaching desired objectives, and prepares to overcome unexpected difficulties with adequate resources.
Planning
According to Michael Porter, the nature of competitiveness in a given industry includes what force?
Potential development of substitute products and bargaining power of consumers
Why are both profit and vision needed to motivate a workforce effectively?
Profit is viewed negatively by some stakeholders of a firm.
The AQCD test refers to the need for key external factors to exhibit what attributes?
Quantitative and divisional
Which of the following statements is FALSE?
Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 25 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors.
TRUE
Regarding weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 33 percent higher than 0.06, so even small differences can reveal important perceptions regarding the relative importance of various factors. Critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. The weights and total weighted scores in both a CPM and an EFE have the same meaning. The ratings in a CPM refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness.
Which of the following statements is TRUE?
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 total weighted score is 1.0.
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 8.0 and the lowest possible total weighted score is 1.0. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 10.0 and the lowest possible total weighted score is 0.0. 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 total weighted score is 0.0. Opportunities and threats can be external or internal.
According to Michael Porter, the nature of competitiveness in a given industry can be viewed as a composite of the forces. Which force is usually the most powerful?
Rivalry among competing firms
In developing an IFE Matrix, do not allow more than 30 percent of the key factors to be financial ratios. Why?
Since financial ratios are generally the result of many factors, knowing what particular strategies should be considered based on financial ratios is difficult.
TRUE
Some companies develop mission statements simply because owners or top management believe it is fashionable to do so rather than out of any real commitment. Firms establish their vision and mission before their objectives in doing strategic planning. Managers at Johnson & Johnson (J&J) meet regularly with employees to review, reword, and reaffirm the firm's vision and mission. Some strategists spend almost every moment of every day on administrative and tactical concerns, ignoring the importance of a clear mission.
The term strategic planning is used synonymously in this text with what other term?
Strategic management
_____ is the science of planning and directing large-scale military operations, of maneuvering forces into the most advantageous position prior to actual engagement with the enemy.
Strategy
Which statement below is FALSE?
The average IFE Matrix score is 2.0.
TRUE
The benefits of paying dividends to investors must be balanced against the benefits of internally retaining funds, and there is no set formula on how to balance this trade-off. Companies today are aggressively boosting their dividends paid to shareholders. Dividends are sometimes paid out even if the funds could be better reinvested in the business, and/or even if the firm has to obtain outside sources of capital to pay for the dividends. Dividends are sometimes paid out even when the firm has incurred a negative annual net income.
Recent research by Rose and Cray examined the strategic-management process and concluded that perhaps the most important "activity" is what?
The feedback loop
An example of an economic variable is "value of the dollar"—which is currently high—compared with the Yen, Euro, and the Australian dollar. The high dollar results in what economic factor(s)?
The high dollar makes U.S. goods more expensive in overseas markets.
According to James Van Horne, the basic activities of finance/accounting consist of three decisions. What are the three?
The investment decision, the financing decision, and the dividend decision
TRUE
The ratings in a CPM refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. The weights and total weighted scores in both a CPM and an EFE have the same meaning. Critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. Avoid assigning the same rating to firms included in a CPM analysis.
A meta-analysis of 20 years of empirical research on mission statements came to what conclusion?
There is a positive relationship between mission statements and measures of financial organizational performance.
Which of the following statements is TRUE?
There is no one best mission statement for a particular organization.
In general, what happens to American goods in overseas markets when there is a strong dollar?
They are more expensive.
Which of the following statements is FALSE?
The resource-based view (RBV) approach to competitive advantage contends that internal resources are equally important for a firm as external factors in achieving and sustaining competitive advantage.
TRUE
The resource-based view (RBV) approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage. In contrast to the Industrial Organization (I/O) theory presented in the previous chapter, proponents of the RBV view/theory contend that organizational performance is primarily determined by internal resources. Resource-based view theory asserts that resources are actually what helps a firm exploit opportunities and neutralize threats. Empirical research by Neffke reveals that more than any other variable in the firm's value chain, it is the nature of a firm's human capital that impacts that firm's choice of diversification targets. Specifically, firms select acquisition targets that offer opportunities to leverage existing human resources.
Unskilled leaders work out their conflicts in courtrooms and battlefields. Brilliant strategists rarely go to battle or to court. How do they usually achieve their objectives?
Through tactical positioning well in advance of any confrontation
King and Cleland recommend that organizations carefully develop a written mission statement in order to reap which benefit?
To provide a basis for the allocation of resources
Generally, in war, the best policy is to take a state intact rather than to ruin it. Likewise, the best objective is to capture the enemy's army, regiment, company, or squad intact rather than destroy them. Winning 100 victories in 100 battles is not the epitome of skill. What is the epitome of skill?
To subdue the enemy without fighting
Which of the following is NOT a reason given for poor or no strategic planning in an organization?
Trust of management makes it unnecessary
What source provides excellent online information and advice on approximately 1,700 stocks, more than 90 industries, the stock market, and the economy, including company income statements and balance sheets?
Value Line Investment Survey
Who said, "Perfection is not attainable. But if we chase perfection, we can catch excellence"?
Vince Lombardi, Head Coach Green Bay Packers (1959-67)
Which statement is FALSE?
Vision statements are more important than mission statements.
Regarding vision statements, which statement below is FALSE?
Vision statements should answer the question "What is our mission?"
Which of the following illustrates the self-concept component of a mission statement?
We are committed to leapfrogging ongoing competition within 1,000 days by unleashing the constructive and creative abilities and energies of each of our employees.
Asking the question, ______ is synonymous with asking, "What is our mission?"
What is our business?
TRUE
When a key internal factor is both a strength and a weakness, the factor may be included twice in the IFE Matrix with a weight and rating assigned to each statement. IFE ratings are company-based whereas weights are industry-based In an IFE Matrix, the number of factors has no effect on the range of total weighted scores because the weights always add up to 1.0. Always sequence factors in an IFE Matrix from highest to lowest weight.
Which of the following statements is TRUE?
When assigning weights and ratings in developing an IFE Matrix, focus on a narrow industry perspective.
According to Drucker, what is the best time to ask, "What do we want to become?" and "What is our business?"
When the firm is successful
According to the model used in this text, what should be answered when developing a strategic plan?
Where are we now, where do we want to go, and how are we going to get there?
Which of the following statements is TRUE?
Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must always be made.
FALSE
Wild guesses should never be made in formulating strategies, but reasonable assumptions based on available information must oftentimes be made. Wild guesses should rarely be made in formulating strategies, but reasonable assumptions based on available information must usually be made. Wild guesses should sometimes be made in formulating strategies, and reasonable assumptions based on available information must sometimes be made. Wild guesses oftentimes must be made in formulating strategies, but reasonable assumptions based on available information must always be made.
Are the interpretations of the weights in a CPM and EFE Matrix the same?
Yes
Is the following statement TRUE? A benefit of developing a comprehensive mission statement is that divergent views among managers can be revealed and resolved through the process.
Yes
Which of the following statements is FALSE?
You may assign the same rating to firms included in a CPM analysis if the firms are similar on the respective factor.
The potential for creative growth in an organization can be limited by
a mission statement that is too specific.
Strengths and weaknesses can be determined by elements of being rather than performance. For example, ______.
a strength may involve ownership of natural resources
To the extent possible, internal strength/weakness factors should meet the four AQCD criteria. Two of these criteria are _____.
actionable and comparative
To survive and prosper, a business must gain and sustain ______ major competitive advantages over rival firms.
at least several
The extent to which a manufacturing plant's output reaches its potential output is called ______, a key strategic variable.
capacity utilization
According to Chapter 1, ______ may be the most important word in management.
communication
Strategic management is based on the idea that organizations should monitor internal and external trends _____.
continually
The mission statement should reflect the anticipation of __________
customers.
The initial step in developing an IFE Matrix is
developing a full and narrow list of key internal factors.
Strengths that cannot be easily matched or imitated by competitors are called ______.
distinctive competencies
A firm can achieve sustained competitive advantage by _____.
effectively formulating, implementing, and evaluating strategies that capitalize on changes in trends and internal capabilities
A weak dollar means
higher exports and lower imports.
An excellent source of industry information, including industry profiles and trade statistics for many industries, is provided at what website?
http://globaledge.msu.edu/industries/
Whenever new firms can easily enter a particular industry, the intensity of competitiveness among firms tends to
increase
The strategic-management process
is a continuous process.
The times-interest-earned ratio would be classified as a(n)
leverage ratio.
Official business failure calculations include _____.
liquidations and court-mandated receiverships
Empirical indicators, or characteristics of resources that enable a firm to implement strategies, include ______.
not easily substitutable
Which function of management is concerned with span of control and chain of command?
organizing
Guidelines, rules, and procedures established to support implementation efforts are called _____.
policies
According to the chapter, the worst thing strategists can do is to develop strategic plans and then ____.
present the plans to operating managers to execute
In order to appeal to diverse stakeholders, an effective mission statement should be
reconciliatory.
The "markets" component of mission statements refers to the_____.
regions in which the company operates
A fundamental strategy-evaluation activity includes_____.
reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions
Target recently joined Best Buy in offering to match online prices of rival retailers. Both companies are seeking to combat ______ by shoppers who check out products in their stores but buy them on rival's websites.
showrooming
Building four new manufacturing plants in Europe is an example of a(n) ______.
strategy
Because of the success of the iPad and the iPhone, Apple has tremendous brand recognition. Brand recognition is one of Apple's
strengths
According to recent research by Cuddy, Fiske, and Glick, what ethics variable(s) is most important in doing business?
trustworthiness
Distribution includes
warehousing.
According to Drucker, the most important time to ask seriously, "What do we want to become?" and "What is our business?" is ______.
when a company has been successful
In multidivisional organizations, should divisional units perform strategic-management tasks, including the development of their own statement of vision and mission?
yes
In 2018, global data analytics software is expected to reach ______ billion, a ______ percent increase from 2012.
$21.7; 64
In Step 1 of developing an EFE Matrix, how many opportunities and threats should be included in the full and narrow lists, respectively?
100, 20
In an EFE Matrix, how much more important is a rating of 4 than a rating of 3?
33%
In an EFE Matrix, how much more important is a weight of 0.20 than a weight of 0.15?
33%
Dale McConkey said, "Plans are less important than planning." What does this statement mean?
Communication, understanding, and commitment are vitally important in strategic planning.
Human resource (HR) management includes activities such as:
Disciplining, promoting, transferring, and demoting
Standard & Poor's NetAdvantage does not provide online access to
Mergent's (formerly Moody's/FISOnline) Manuals.
What are the four basic activities that comprise management?
Planning, organizing, motivating, and controlling
Which of the following four types of strategies are developed in a SWOT (Strengths-Weaknesses-Opportunities-Threats) Analysis?
SO, WO, ST, WT
A mission statement should include the following components:
Survival/growth/profitability, philosophy, self-concept, and public image
Which of the following is NOT a type of strategy developed from a SWOT analysis?
Threats/Opportunities
