BUS Chapters 1-5
What are the means by which long-term objectives will be achieved? A) Strategies B) Strengths C) Weaknesses D) Policies E) Opportunities
A) Strategies
The IFE Matrix should be ________ in multidivisional firms. A) constructed for each autonomous division B) all-inclusive C) constructed only for the major divisions D) developed before the EFE Matrix E) revised monthly
A) constructed for each autonomous division
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
Both business and military organizations must ________ and ________ to be successful. A) be impervious to change; continually improve B) adapt to change; constantly improve C) shun change; stay the course D) be impervious to change; stay the course E) none of the above
B) adapt to change; constantly improve
The purpose of a mission statement is to declare all of these EXCEPT A) 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.
Metaphors are A) several rites connected together. B) shorthand of words used to capture a vision or to reinforce old or new values. C) narratives based on true events. D) fictional stories. E) any objects, acts, events, qualities, or relations used to convey meaning.
B) shorthand of words used to capture a vision or to reinforce old or new values.
Specific results an organization seeks to achieve in pursuing its basic mission are A) strategies. B) rules. C) objectives. D) policies. E) tenets.
C) objectives.
There were far more global mergers and acquisitions in 2014 than in any year since A) 2007. B) 1999. C) 1985. D) 1967. E) 1951.
A) 2007.
One difference between a Competitive Profile Matrix (CPM) and an External Factor Evaluation (EFE) is that A) CPM includes both internal and external 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 for both the company and its competitors. E) CPM is only used in small firms.
A) CPM includes both internal and external issues.
Which of the following is NOT a characteristic that describes the most competitive companies in America? A) Divestiture is essential to growth. B) Hire and retain the best employees and managers possible. C) Continually adapt, innovate, improve—especially when the firm is successful. D) Strive to stay cost-competitive on a global basis. E) Whether it's broke or not, fix it.
A) Divestiture is essential to growth.
During what stage of strategic management are a firm's specific internal strengths and weaknesses determined? A) Formulation B) Implementation C) Evaluation D) Feedback E) Goal-setting
A) Formulation
In which phase of strategic management are long-term objectives especially important? A) Formulation B) Control C) Evaluation D) Implementation E) Management
A) Formulation
Amazon's start of rapid delivery services in some U.S. cities is an example of which type of strategy? A) Forward integration B) Backward integration C) Horizontal integration D) Related diversification E) Unrelated diversification
A) Forward integration
What principle is based on the belief that the true measure of a really good strategist is the ability to solve problems? A) Managing by crisis B) Managing by objectives C) Managing by extrapolation D) Managing by exception E) Managing by hope
A) Managing by crisis
Which strategy seeks to increase market share for present products or services in present markets through greater marketing efforts? A) Market penetration B) Forward integration C) Market development D) Backward integration E) Product development
A) Market penetration
According to Campbell and Yeung, what is/are most likely associated with behavior and the present? A) Mission B) Values C) Long-term objectives D) Vision E) Possibilities
A) Mission
Which of the following does the text call an up-front investment in success? A) Planning B) Organizing C) Motivating D) Staffing E) Controlling
A) Planning
In recent times, ________ perhaps has instituted the most protectionist measures by raising tariffs on most imports and subsidizing its own exports. A) Russia B) The United States C) The European Union D) India E) Switzerland
A) Russia
All of the following are mentioned as places where vision and mission statements can often be found EXCEPT A) SEC reports. B) annual reports. C) customer service agreements. D) supplier agreements. E) business plans.
A) SEC reports.
Which of the following is NOT one of the nine recommended components of a mission statement? A) Strategies B) Self-concept C) Employees D) Markets E) Customers
A) Strategies
Which individuals are most responsible for the success and failure of an organization? A) Strategists B) Financial planners C) Personnel directors D) Stakeholders E) Human resource managers
A) Strategists
A ________ integration strategy is used by firms to gain control or ownership of suppliers. A) backward B) forward C) horizontal D) vertical E) vortexed
A) backward
The Internet has transferred power from ________ to ________. A) businesses; individuals B) governments; businesses C) individuals; businesses D) businesses; governments E) individuals; governments
A) businesses; individuals
All stakeholders' claims on an organization ________ pursued with equal emphasis. A) cannot be B) should always be C) are required to be D) must ideally be E) can usually be
A) cannot be
An overly general mission statement that ________ could be dysfunctional. A) does not exclude any strategy alternatives B) encourages management creativity C) excludes all diversification D) endorses the consideration of feasible potential strategies E) allows for the generation and consideration of a range of alternative objectives
A) does not exclude any strategy alternatives
Organizational resources include all of the following EXCEPT A) employee training. B) firm structure. C) planning processes. D) information systems. E) copyrights.
A) employee training.
Without assumptions, planning would be A) impossible. B) easier. C) difficult. D) inexpensive. E) intuitive.
A) impossible.
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.
The ________ decision is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization. A) investment B) dividend C) financing D) restructuring E) benchmark
A) investment
The investor relations pages of a company website ________ information about a firm. A) is a good place to start to find B) is not a reliable source of C) is only acceptable as a last resort for D) should not be used as the first place to look for E) is a waste of time when searching for
A) is a good place to start to find
According to McGinnis, a mission statement should be all of the following EXCEPT A) it should be broad enough to include all ventures. B) it should be stated in clear terms. C) it should distinguish an organization from all others. D) it should define what an organization is. E) it should serve as a framework for evaluating both current and prospective activities.
A) it should be broad enough to include all ventures.
Pricing is one of the basic functions of A) marketing. B) finance/accounting. C) management information systems. D) production/operations. E) research and development.
A) marketing.
A strong ________ heritage underlies the study of strategic management. A) military B) government C) political D) social E) cultural
A) military
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
Terms such as objectives, mission, strengths, and weaknesses were first formulated to address problems A) on the battlefield. B) in the boardroom. C) on the trading floor. D) in the military hierarchy. E) in interpersonal relationships.
A) on the battlefield.
Good mission statements identify the ________ of a firm's products to its customers. A) utility B) price C) profit margin D) demand E) popularity
A) utility
All of the following are basic functions of marketing EXCEPT A) value chain analysis. B) customer analysis. C) product and service planning. D) pricing. E) distribution.
A) value chain analysis.
Life-directing attitudes that serve as behavioral guidelines are called A) values. B) rites. C) beliefs. D) metaphors. E) legends.
A) values.
A total weighted score of ________ in an External Factor Evaluation (EFE) Matrix indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry. A) 1.0 B) 4.0 C) 5.0 D) 10.0 E) 100.0
B) 4.0
What occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity? A) Retrenchment B) A joint venture C) Liquidation D) Forward integration E) Divestiture
B) A joint venture
Which of the following is NOT a published source of external strategic information? A) Periodicals B) Customer surveys C) Journals D) Reports E) Directories
B) Customer surveys
Which strategy should be implemented when a division is responsible for an organization's overall poor performance? A) Backward integration B) Divestiture C) Forward integration D) Cost leadership E) Related diversification
B) Divestiture
Which of the following is NOT a pitfall an organization should avoid in strategic planning? A) Failing to communicate the plan to employees B) Involving all managers rather than delegating planning to a "planner" C) Top managers not actively supporting the strategic-planning process D) Doing strategic planning only to satisfy accreditation or regulatory requirements E) Failing to create a collaborative climate supportive of change
B) Involving all managers rather than delegating planning to a "planner"
What category of ratios measures a firm's ability to meet its short-term obligations? A) Profitability B) Liquidity C) Leverage D) Activity E) Growth
B) Liquidity
When two organizations of about equal size unite to form one enterprise, which of these occurs? A) Hostile takeover B) Merger C) Acquisition D) Leveraged buyout E) Friendly takeover
B) Merger
Which function of management is concerned with span of control and chain of command? A) Planning B) Organizing C) Controlling D) Staffing E) Motivating
B) Organizing
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 E) Organizing
B) Planning
Which strategy is appropriate when an organization competes in an industry characterized by rapid technological developments? A) Retrenchment B) Product development C) Backward integration D) Liquidation E) Market penetration
B) Product development
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
With which phase of strategic management is most strongly associated with "action"? A) Strategy formulation B) Strategy implementation C) Strategy evaluation D) Competing advantages E) Measuring performance
B) Strategy implementation
The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called A) The Resource-Based Approach. B) Value Chain Analysis. C) Strategic Cost Analysis. D) The Internal Factor Evaluation Matrix. E) Cost-Benefit Analysis.
B) Value Chain Analysis.
Which of the following illustrates the self-concept component of a mission statement? A) To earn our customer's loyalty, we listen to them, anticipate their needs, and act to create value in their eyes. B) 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. C) Our emphasis is on North American markets, although global opportunities will be explored. D) To compensate its employees with remuneration and fringe benefits competitive with other employment opportunities in its geographical area and commensurate with their contributions toward efficient corporate operations. E) In this respect, the company will conduct its operations prudently and will provide the profits and growth which will assure our ultimate success.
B) 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.
Under which condition would a differentiation strategy be especially effective? A) When there are few ways to differentiate the product or service that buyers perceive as having value B) When technological change is fast paced and competition revolves around rapidly evolving product features C) When most buyers use the product in the same way D) When many rival firms are following a similar differentiation approach E) When the differentiation base is easy or inexpensive for rivals to duplicate
B) When technological change is fast paced and competition revolves around rapidly evolving product features
A good mission statement has A) an employee orientation. B) a customer orientation. C) a shareholder orientation. D) an environmental orientation. E) a profit orientation.
B) a customer orientation.
In the process of developing a mission statement, it is important to involve A) as few managers as possible. B) as many managers as possible. C) upper-level management only. D) lower-level management only. E) the board of directors only.
B) as many managers as possible.
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. E) internal properties.
B) distinctive competencies.
When companies are hired by other companies to take over functional operations such as human resources, information systems, payroll, accounting, or customer service, this is called A) marketing. B) outsourcing. C) licensing. D) franchising. E) divestiture.
B) outsourcing.
What is the range for a firm's total weighted score in an External Factor Evaluation Matrix? A) 0 to 4 B) 0 to 5 C) 1 to 4 D) 1 to 5 E) 0 to 10
C) 1 to 4
If total fixed costs are $10,000, variable costs per unit are $5, and the price per unit is $15, what is the breakeven quantity? A) 500 B) 667 C) 1,000 D) 2,000 E) 5,000
C) 1,000
How do line managers become "owners" of the strategy? A) By attending top manager meetings B) By executing plans formulated by other people C) By involvement in the strategic-management process D) By becoming a shareholder of the firm E) By buying off top managers
C) By involvement in the strategic-management process
All of the following utility statements are relevant in developing a mission statement EXCEPT A) Do not offer me shoes. Offer me comfort for my feet and the pleasure of walking. B) Do not offer me furniture. Offer me comfort and the quietness of a cozy place. C) Do not offer me ideas, emotions, ambience, feelings, and benefits. Offer me things. D) Do not offer me books. Offer me hours of pleasure and the benefit of knowledge. E) Do not offer me a house. Offer me security, comfort, and a place that is clean and happy.
C) Do not offer me ideas, emotions, ambience, feelings, and benefits. Offer me things.
Who is referred to as "the father of modern management"? A) Cleland B) Campbell C) Drucker D) McGinnis E) Yeung
C) Drucker
________ exemplifies the complexity of relationships among the functional areas of business. A) Government auditing B) External auditing C) Financial ratio analysis D) Environmental scanning E) Distribution strategy
C) Financial ratio analysis
According to Porter, which strategy offers products or services to a niche group 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
C) Focus - Low Cost
Websites that sell products directly to consumers are examples of which type of strategy? A) Backward integration B) Product development C) Forward integration D) Horizontal integration E) Conglomerate diversification
C) Forward integration
What are guides to decision making that address repetitive or recurring situations called? A) Strategies B) Rules C) Policies D) Objectives E) Goals
C) Policies
What step in the strategic management process involves mobilizing employees and managers to put strategies into action? A) Strategy formulation B) Strategy evaluation C) Strategy implementation D) Strategic advantage E) Competitive advantage
C) Strategy implementation
Which is NOT one of the four common approaches to determine R&D budget allocations? A) Finance as many project proposals as possible. B) Budget for R&D about what competitors spend. C) Use a percentage-of-costs method. D) Decide how many successful new products are needed and work backwards to estimate the required R&D investment. E) Use a percentage-of-sales method.
C) Use a percentage-of-costs method.
What question is asked in conjunction with the philosophy component of a mission statement? A) What are the firm's major products or services? B) Is the firm committed to growth and financial soundness? C) What are the basic beliefs, values, aspirations, and ethical priorities of the firm? D) Is the firm responsive to social, community, and environmental concerns? E) Are employees a valuable asset of the firm?
C) What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
The goal of strategic management is to A) achieve competitive advantage. B) maintain competitive advantage. C) achieve and maintain competitive advantage. D) eliminate competitive advantage. E) eliminate and abolish competitive advantage.
C) achieve and maintain competitive advantage.
Staffing involves all of these activities EXCEPT A) recruiting employees. B) rewarding employees. C) analyzing customers. D) managing union relations. E) training and developing employees.
C) analyzing customers.
The critical success factors in a Competitive Profile Matrix and EFE Matrix include A) internal but not external issues. B) external but not internal issues. C) both internal and external issues. D) neither internal or external issues. E) only non-quantifiable data.
C) both internal and external issues.
Bankruptcy A) should never be used as a strategy. B) should be used only when one is legally forced to do so. C) can be an effective type of retrenchment strategy. D) should only be used for large firms. E) should only be used for small, private firms.
C) can be an effective type of retrenchment strategy.
A systematic and ethical process for gathering and analyzing information about the competition's activities and general trends to further a business' own goals is called A) unethical business practices. B) artificial intelligence. C) competitive intelligence. D) industrial espionage. E) competitive advantage.
C) competitive intelligence.
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) all of the above
C) gather competitive intelligence and information about external trends.
Retrenchment would be an effective strategy when an organization A) has shrunk so quickly that major internal reorganization is needed. B) is one of the stronger competitors in a given industry. C) is plagued by inefficiency, low profitability, poor employee morale and pressure from stockholders to improve performance. D) has decided to capitalize on opportunities, maximize threats, take advantage of strengths and overcome weaknesses. E) does not have a clearly distinctive competence and has failed to meet its objectives and goals consistently over time.
C) is plagued by inefficiency, low profitability, poor employee morale and pressure from stockholders to improve performance.
The strategic-management process represents a(n) ________, ________, and ________ approach for determining an enterprise's future direction. A) logical; systematic; subjective B) intuitive; disorganized; subjective C) logical; systematic; objective D) intuitive; disorganized; objective E) inconsistent; systematic; subjective
C) logical; systematic; objective
The ideal length of a vision statement is A) one page. B) several paragraphs. C) one sentence. D) several sentences. E) as long as is necessary to convey the message.
C) one sentence.
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.
Business or military success is A) generally the happy result of accidental strategies. B) undermined by the element of surprise. C) the product of both attention to changing external and internal conditions and the insightful adaptations to those conditions. D) unrelated to external conditions. E) none of the above
C) the product of both attention to changing external and internal conditions and the insightful adaptations to those conditions.
Distribution includes A) customer analysis. B) pricing. C) warehousing. D) advertising. E) test marketing.
C) warehousing.
The world population is expected to grow to an estimated billion in 2054. A) 6 B) 7 C) 8 D) 9 E) 10
D) 9
Which of the following is noted in the text as a serious obstacle for many small business owners? A) A lack of business ethics B) An excess of employees and managerial staff C) A lack of experience in networking D) A lack of strategic-management knowledge E) Having too many suppliers
D) A lack of strategic-management knowledge
Long-term objectives are needed at which level(s) in an organization? A) Corporate B) Divisional C) Functional D) All of the above E) Corporate & divisional levels, but not functional level
D) All of the above
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
The Family Farmer Bankruptcy Act of 1986 created which of the major types of bankruptcy? A) Chapter 7 B) Chapter 8 C) Chapter 9 D) Chapter 12 E) Chapter 13
D) Chapter 12
What refers to a strategy of seeking ownership of, or increased control over a firm's competitors? A) Forward integration B) Conglomerate diversification C) Backward integration D) Horizontal integration E) Concentric diversification
D) Horizontal integration
According to I/O theorists, which of the following contributes LEAST to firm's performance? A) Economies of scale B) Barriers to market entry C) Product differentiation D) Internal resources E) Level of competitiveness
D) Internal resources
Which state has the highest union membership rate? A) Arkansas B) Colorado C) New Hampshire D) New York E) North Carolina
D) New York
What marketing function includes test marketing? A) Selling products and services B) Pricing C) Customer analysis D) Product and service planning E) Distribution
D) Product and service planning
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
________ management deals with inputs, transformations, and outputs that vary across industries and markets. A) Marketing B) Financial C) Research and development D) Production and operations E) Information systems
D) Production and operations
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
What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives? A) Strategy formulation B) Strategy evaluation C) Strategy implementation D) Strategic management E) Strategic leading
D) Strategic management
Which of the following is NOT a reason joint ventures fail? A) Managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture. B) The venture may not be supported equally by both partners. C) The venture may benefit the partnering companies but may not benefit the customers who then complain about poorer service or criticize the companies in other ways. D) Venture risk was minimized. E) The venture may begin to compete more with one of the partners than the other.
D) Venture risk was minimized.
Which of these basic questions should a vision statement answer? A) What is our business? B) What is our core strength? C) What are our challenges? D) What do we want to become? E) Who are our competitors?
D) What do we want to become?
An organization's vision statement A) is a constant reminder to its employees of why the organization exists. B) broadly charts the future direction of an organization. C) addresses the basic question: "What is our business?" D) answers the question: "What do we want to become?" E) none of the above
D) answers the question: "What do we want to become?"
The controversial practice of a company borrowing money simply to fund dividend payouts to itself is known as A) a leveraged buyout. B) retrenchment. C) first mover advantage. D) dividend recapitalization. E) dividend divestiture.
D) dividend recapitalization.
According to Drucker, a business' mission is the foundation for all of the following EXCEPT A) priorities. B) strategies. C) plans. D) employee wage rates. E) work assignments.
D) employee wage rates.
In mass retailing, big-box companies like Walmart, Best Buy, and Sears are A) gaining competitive advantage over smaller stores. B) participating in a dramatic shift to becoming bigger. C) increasing the square-footage of their retail locations. D) finding that less brick and mortar is better. E) noticing a sharp decline in online purchases.
D) finding that less brick and mortar is better.
Intensity of competition in lower-return industries. A) is lowest B) is nonexistent C) is highest D) is not important E) fluctuates
D) is not important
As indicated in the strategic-management model, a clear ________ is needed 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
There is a dramatic shift in mass retailing to A) "trading up" and taking customers from more exclusive stores. B) selling only the most expensive merchandise. C) opening dramatically larger supercenters. D) operating stores with less square footage. E) cutting back on their online presence.
D) operating stores with less square footage.
A pattern of behavior developed by an organization as it learns to cope with its problems of external adaptation and internal integration, and that has 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.
In order to appeal to diverse stakeholders, an effective mission statement should be A) inflammatory. B) provocative. C) contentious. D) reconciliatory. E) dysfunctional.
D) reconciliatory.
Staples 170 store closings in North America in 2014 is an example of A) divestiture. B) backward integration. C) liquidation. D) retrenchment. E) forward integration.
D) retrenchment.
A standardized set of behaviors used to manage anxieties is called a A) folktale. B) rite. C) metaphor. D) ritual. E) value.
D) ritual.
It is predicted that the United States will have no racial or ethnic majorities by the year A) 2035. B) 2045. C) 2055. D) 2065. E) 2075.
E) 2075.
Changes in which of the following can significantly affect firms? A) Patent laws B) Antitrust legislation C) Tax rates D) Lobbying activities E) All of the above
E) All of the above
When developing a mission statement, what is needed before people can focus on specific strategy formulation activities? A) Negotiation B) Compromise C) Eventual agreement D) A and B only E) All of the above
E) All of the above
Which group would be classified as stakeholders? A) Governments B) Creditors C) Suppliers D) Employees E) All of the above
E) All of the above
Which of the following is part of the Strategic-Management Model? A) Measure and evaluate performance B) Develop mission and vision statements C) Establish long-term objectives D) Implement strategies E) All of the above
E) All of the above
________ is a commonly used approach to determine R&D budget allocations. A) Financing as many project proposals as possible B) Using a percentage-of-sales method C) Budgeting for R&D about what competitors spend D) Deciding how many successful new products are needed and working backward to estimate the required R&D investment E) All of the above
E) All of the above
Which question(s) is answered in an effective mission statement? A) Is the firm committed to growth and financial soundness? B) Are employees a valuable asset of the firm? C) Geographically, where does the firm compete? D) Who are the firm's customers? E) All of the above questions are answered in an effective mission statement.
E) All of the above questions are answered in an effective mission statement.
What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry? A) Profitability B) Liquidity C) Leverage D) Revenue Growth E) Growth
E) Growth
Who are the world's longest-living people? A) Americans B) Mexicans C) Indians D) Filipinos E) Japanese
E) Japanese
Which strategy would be effective when the stockholders of a firm can minimize their losses by selling the organization's assets? A) Integration B) Differentiation C) Diversification D) Cost leadership E) Liquidation
E) Liquidation
Which component of a mission statement addresses the firm's distinctive competence or major competitive advantage? A) Technology B) Philosophy C) Concern for public image D) Customers E) Self-concept
E) Self-concept
Which ratio is calculated by dividing profits before interest and taxes by total interest charges? A) Inventory turnover B) Fixed assets turnover C) Total assets turnover D) Debt-to-equity ratio E) Times-interest-earned ratio
E) Times-interest-earned ratio
Which of the following is NOT a guideline for when an organization should use an unrelated diversification strategy? A) When revenues derived from an organization's current products or services would increase significantly by adding the new unrelated, products B) When an organization's present channels of distribution can be used to market the new products to current customers C) When the new products have countercyclical sales patterns compared to an organization's present products D) When an organization competes in a highly competitive and/or a no-growth industry E) When existing markets for an organization's present products are not yet saturated
E) When existing markets for an organization's present products are not yet saturated
An effective information management system ________ information in such a way that it answers important operating and strategic questions. A) collects B) codes C) stores D) synthesizes E) all of the above
E) all of the above
Synergy A) is the 2 + 2 = 5 effect. B) can result in powerful competitive advantages. C) can be developed by an organization through planning. D) exists when everyone pulls together as a team that knows what it wants to achieve. E) all of the above
E) all of the above
The strategic-management process is becoming more widely used by A) small firms. B) nonprofit institutions. C) governmental organizations. D) multinational conglomerates. E) all of the above
E) all of the above
The process of performing an external audit should involve A) key representatives from each stakeholder group. B) as many stakeholders as possible. C) only strategists. D) primarily strategists. E) as many managers and employees as possible.
E) as many managers and employees as possible.
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.
After a draft mission statement has been developed, it is important to A) ask managers to read several articles about mission statements as background information. B) vote on the mission statement. C) ask managers to prepare a mission statement for the organization. D) ask managers to seek support for the mission statement from their subordinates. E) request modifications, additions, and deletions.
E) request modifications, additions, and deletions.
Effective and carefully planned mission statements A) require major changes every few months. B) require major changes every few quarters. C) require major revision every few years. D) do not require revision. E) require infrequent major changes, but are always subject to revision.
E) require infrequent major changes, but are always subject to revision.
"If it ain't broke, don't fix it" refers to managing by crisis.
False
A differentiation strategy can only be achieved with a large target market.
False
A firm's philosophy in a mission statement addresses the question, "What is the firm's distinctive competence?"
False
A growing trend is for franchisers to buy out their part of the business from their franchisees.
False
A low value of the dollar means lower exports and higher imports.
False
A mission statement is usually just a simple statement of specific details.
False
A secondary buyout occurs when a corporation's shares are bought by the company's management and other private investors using borrowed funds.
False
A total weighted score of 1.0 for an EFE Matrix indicates that the firm is responding in an outstanding way to existing opportunities and threats in its industry.
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?"
False
A vision statement describes an organization's values and priorities.
False
AT&T's mission statement focuses on telephones rather than on communication.
False
According to Drucker, the most important time for a company to develop mission and vision statements is when the company is experiencing financial difficulty.
False
According to Peter Drucker "Imagination is more important than knowledge, because knowledge is limited, whereas imagination embraces the entire world."
False
Allocating resources is one of the five basic activities (functions) performed by managers.
False
Although bankruptcy can be an effective type of retrenchment strategy, it does not allow firms to avoid major debt obligations and to void union contracts.
False
An external audit focuses on identifying and evaluating trends and events within the control of management.
False
An important question a mission statement should answer is, "What do we want to become?"
False
An objective, logical, systematic, & non intuitive approach for making major decisions in an organization is a way to describe the strategic-management process.
False
Annual objectives are especially important in strategy formulation.
False
As presented in the text book Vern McGinnis believes that a mission statement should empower keenly insightful leadership by an organization's top management.
False
Assumptions have no place in planning.
False
Bargaining power of consumers is usually the most powerful of Porter's five competitive forces.
False
Because a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously.
False
By 2050, the Census Bureau projects that the number of Americans age 100 and older will dramatically decrease.
False
By occasionally monitoring external events, companies should be able to identify when change is required.
False
Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations.
False
Companies are avoiding outsourcing more and more because it is more expensive than traditional methods and it does not allow a firm to concentrate on its core business.
False
Corporate intelligence is the name for a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals.
False
Customer's and creditors are considered stockholders of an organization.
False
Determining opportunities and threats is generally the first step in strategic planning.
False
Divestiture has become a popular strategy for firms to become more diversified.
False
Divestiture is selling all of a company's assets, in parts, for their tangible worth.
False
External audits attempt to identify key variables that offer highly intuitive responses.
False
Financial ratios are not applicable to nonprofit organizations.
False
If a firm's present suppliers are expensive and unreliable in meeting the firm's needs for parts, components, and/or raw materials, the firm should pursue a horizontal integration strategy.
False
In most cases, at least 500 words are required to effectively state a mission statement.
False
In most industries, only minor costs of producing a product or service are incurred within operations, so production and operations does not have great value as a competitive weapon in a company's overall strategy.
False
In multidivisional organizations, each division should develop a mission statement consistent with and supportive of the corporate mission but use the corporate vision statement instead of a divisional vision statement.
False
It is predicted that, by 2050, over 25 percent of the population in the United States will be 65 years or older.
False
It is unusual for the claims and concerns of a company's stakeholders to vary or conflict.
False
Middle managers are generally the most visible and critical of all strategic managers.
False
Most producers today sell their goods directly to consumers.
False
Most traditional retailers have tried in vain to use their online sales to boost in-store sales.
False
Once a firm acquires a competitive advantage, it is usually able to sustain it indefinitely.
False
Once an effective strategy is designed, modifications are rarely required.
False
Opportunities are a firm's distinctive competencies that cannot be easily matched or imitated by competitors.
False
Organizing is the cornerstone of effective strategy formulation.
False
Regardless of the number of key opportunities and threats included in an External Factor Evaluation Matrix, the highest possible total weighted score for an organization is 4.0, and the lowest possible total weighted score is 0.0.
False
Research and Development (R&D) Management is focused on managing inputs, transformations, and outputs that vary across industries and markets.
False
Research has failed to find a positive relationship between mission statements and organizational performance.
False
Research indicates that strategic management in small firms is more formal than in large firms.
False
Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, and improved cash flow.
False
Strategists in governmental organizations operate with far more strategic autonomy than their counterparts in private firms.
False
Successful strategy formulation generally rests upon the ability of an organization to sell some product or service.
False
Technology ties all business functions together and provides the basis for all managerial decisions.
False
Test marketing is used more frequently by industrial companies than consumer goods companies.
False
The Fuld & Co. website explains that the term competitive intelligence is a polite way of referring to corporate espionage.
False
The I/O approach to competitive advantage advocates that internal factors are more important than external factors in a firm achieving competitive advantage.
False
The United States has been more active than other nations in protectionist measures and has engaged in many "Buy American" policies.
False
The best approach for strategists is to carefully develop strategic plans themselves and then present them to operating managers to execute.
False
The decision to merge is a strategy-formulation issue but the decision to form a joint venture is a strategy-implementation issue.
False
The final stage in strategic management is strategy implementation.
False
The increase in high tech manufacturing base in the United States is reflected in the sharp increase in labor union membership in the last decade.
False
The management function of organizing is included in human resource management.
False
The mission statement should be short, preferably one sentence.
False
The operating philosophy of organizations should be to develop a product and then try to find a market for it.
False
The purchase of 80 percent of Procter & Gamble's pet-food brands by Mars Inc., best known for its M&M chocolates and its Mars and Snickers candy bars, is an example of related diversification.
False
The total assets turnover ratio is calculated by dividing sales by fixed assets.
False
There are now more American households consisting of married couples with children than of people living alone or with unrelated people.
False
To succeed, a differentiation strategy depends on the existence of many different niches and segments within a market, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.
False
U.S. firms are not being aggressively challenged in the computer industry.
False
Union Pacific's mission statement focuses on environmental stewardship rather than on transportation or railroads because good mission statements identify the utility of a firm's products to its customers.
False
Unrelated diversification may be an especially effective strategy when an organization's basic industry is experiencing increasing annual sales and profits.
False
Well-conceived and properly executed mission and vision statements are not subject to revision.
False
When developing a mission statement, it is usually advisable to involve as few managers as possible.
False
When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy.
False
While forecasts might not be perfect, they are never wildly inaccurate.
False
While interesting, organizational culture does not significantly affect business decisions.
False
A characteristic that describes the most competitive companies is adopting the adage, "Whether it's broke or not, fix it"; in other words, continually strive to improve everything about the firm.
True
A clear mission statement describes the values and priorities of an organization.
True
A cost leadership strategy can be especially effective when the market is composed of many price-sensitive buyers.
True
A good mission statement serves as a framework for evaluating both current and prospective activities.
True
A leveraged buyout occurs when a firm's management and other private investors use borrowed funds to buy out the firm's shareholders.
True
A limitation of financial ratios is the fact that they are based on accounting data.
True
A low-cost focus strategy offers products or services to a small range of customers at the lowest price available on the market.
True
A mission statement can sometimes be called a statement of philosophy.
True
A mission statement is a declaration of an organization's reason for being.
True
A mission statement should be broad enough to reconcile differences among an organization's various stakeholders.
True
A ritual is a standardized set of behaviors used to manage anxieties.
True
A sense of self-concept is one of the nine components found in a good mission statement.
True
According to Campbell and Yeung, the process of developing a mission statement should create an "emotional bond" and "sense of mission" between the organization and its employees.
True
According to George Steiner, a mission statement should be broad in scope, since concrete specification could be the base for rallying opposition.
True
According to Peter Drucker, answering the question "What is our business?" is the first responsibility of strategists.
True
According to William King, a task force of managers from different units of the organization should be charged with determining the 20 most important strengths and weaknesses that should influence the future of the organization.
True
Activity ratios measure how effectively a firm is using its resources.
True
All firms have a strategy, even if it is informal, unstructured, and sporadic.
True
An acquisition occurs when a large organization purchases a smaller one or vice versa.
True
An appropriate strategy when an organization has excess production capacity is market development.
True
An organization's culture compares to an individual's personality in the sense that no two organizations have the same culture and no two individuals have the same personality.
True
Analytical and intuitive thinking complement each other.
True
Benchmarking is an analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals.
True
Chapter 9 bankruptcy applies to municipalities.
True
Cultural products include values, beliefs, stories, and language.
True
During the 2015 Super Bowl, a 30-second advertisement cost over $4 million.
True
External audits attempt to identify key variables that offer actionable responses.
True
Firms can be more proactive with strategic management.
True
Four common approaches to determine R&D budget allocations are: 1) finance as many project proposals as possible; 2) use a percentage-of-sales method; 3) budget for R&D about what competitors spend; or 4) decide how many successful new products are needed and work backwards to estimate the required R&D investment.
True
Gaining ownership or increased control over distributors or retailers is called forward integration strategy.
True
Having a clear mission and vision can provide a basis for a company's internal and external assessments.
True
Hiring top executives from rival firms is a way companies obtain competitive intelligence.
True
In order to exploit common use of a well-known brand name, most companies favor related diversification strategies.
True
In order to motivate a workforce effectively, both profit and vision are needed.
True
Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.
True
Laser eye surgery would be considered a substitute product for eyeglasses and contact lenses.
True
Limited availability of quality distributors is a reason why competitive advantage could result from forward integration.
True
Long-term objectives represent the results expected from pursuing certain strategies.
True
Low-performing firms typically underestimate their competitor's strengths and overestimate their own strengths.
True
Major competitors' strengths may represent key threats.
True
Market penetration, market development, and product development are intensive strategies.
True
Marketing research is the systematic gathering, recording and analyzing, of data about problems relating to the marketing of goods and services.
True
Objectives should be measurable, challenging, reasonable, consistent, and clear.
True
One benefit of having a clear mission and vision is that it projects a sense of worth and intent to all stakeholders.
True
One of the fundamental strategy evaluation activities is reviewing the external and internal factors on which strategies are based.
True
Political issues and stances impact strategic decisions.
True
Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.
True
Protectionism is used by various countries around the world to safeguard their domestic industries.
True
Stakeholders both affect and are affected by an organization's strategic decisions.
True
Strategic management focuses on integrating management, marketing, finance and accounting, production and operations, research and development, and information systems to achieve organizational success.
True
Substantial research indicates that a healthier workforce can more effectively and efficiently implement strategies.
True
The Internal Factor Evaluation Matrix should use a total of 20 internal factors.
True
The United States is getting older and less white.
True
The basic premise of the research-based view is that the mix, type, amount, and nature of a firm's internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage.
True
The critiqued mission statements of PepsiCo and Royal Caribbean both lacked the "Customers" component.
True
The five major categories of variables known as external forces are: 1) economic forces, 2) social, cultural, demographic, and natural environment forces, 3) political, governmental, and legal forces, 4) technological forces and 5) competitive forces.
True
The foundation for development of a comprehensive mission statement is provided by a clear vision.
True
The idea that paying dividends results in a higher stock price is a myth.
True
The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.
True
The purpose of organizing is to achieve coordinated effort by defining task and authority relationships.
True
The relative attention an organization will devote to meeting the claims of various stakeholders is indicated in a good mission statement.
True
The strengths and weaknesses of an organization are determined relative to the strengths and weaknesses of its competitors.
True
The terms strategic management and strategic planning are used synonymously in this text.
True
There are seven basic functions of marketing: customer analysis, selling products and services, product and service planning, pricing, distribution, marketing research, and opportunity analysis.
True
To be effective, strategic-management must be a process that familiarizes managers and employees with the key strategic issues facing an organization and the feasible alternatives for resolving those issues.
True
U.S. households are making more and more purchases online
True
Value chain analysis can enable a firm to better identify its own strengths and weaknesses especially as compared to competitors' value chain analyses and their own data over time.
True
Vision and mission statements can often be found in the front of annual reports.
True
When developing a vision statement, input should be received from as many managers as possible.
True
Wild guesses should never be made in formulating strategies.
True
Wisconsin recently passed a law eliminating most collective-bargaining rights for the state's public-employee unions.
True