Strategic Planning MBA Program (MCOs & True or False Test Exam)

Chapter 1
1) 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

Answer: D

2) 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

Answer: E

3) An organization should take a(n)---------- approach in its industry.

A) Adversarial rather than a collegial

B) Collegial rather than an adversarial

C) Reactive rather than a proactive

D) Proactive rather than a reactive

E) Cooperative rather than a competitive

Answer: D

4) 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.

Answer: C

5) 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

Answer: A

6) An important activity in ________ is taking corrective action.

A) strategy evaluation

B) strategy implementation

C) strategy formulation

D) strategy leadership

E) all of the above

Answer: A

7) 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

Answer: A

8) What are enduring statements of purpose that distinguish one business from other similar firms?

A) Policies

B) Mission statements

C) Objectives

D) Rules
E) Employee conduct guidelines

Answer: B

9) Specific results an organization seeks to achieve in pursuing its basic mission are

A) strategies.

B) rules.

C) objectives.

D) policies.

E) tenets.

Answer: C

10) Long-term objectives should be all of the following EXCEPT

A) measurable.

B) continually changing.

C) reasonable.

D) challenging.

E) consistent.

Answer: B

11) 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

Answer: E

12) According to Greenley, strategic management offers all of the following benefits

EXCEPT

A) increased discipline.

B) enhanced communication.

C) increased synergy.

D) increased resistance to change.

E) more effective allocation of time and resources.

Answer: D

13) Anything that a firm does especially well compared to rival firms is referred to as

A) competitive advantage.

B) comparative disadvantage.

C) opportunity cost.

D) unsustainable advantage.

E) an external opportunity.

Answer: A

14) All of these are pitfalls an organization should avoid in strategic planning EXCEPT

A) using plans as a standard for measuring performance.

B) using strategic planning to gain control over decisions and resources.

C) failing to involve key employees in all phases of planning.

D) too hastily moving from mission development to strategy formulation.

E) being so formal in planning that flexibility and creativity are stifled.

Answer: A

15) 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

Answer: B

Chapter 1 (True or False)

1) Strategic management is an attempt to organize qualitative and quantitative information in a way
that allows effective decisions to be made under conditions of uncertainty.

Answer: TRUE

2) Both military and business strategy are formulated, implemented, and evaluated with an assumption
of competition.
Answer: FALSE

3) The strengths and weaknesses of an organization are determined relative to the strengths and
weaknesses of its competitors.

Answer: TRUE

4) The final stage in strategic management is strategy implementation.

Answer: FALSE

5) In most large organizations that engage in strategic management, the formulation, implementation,
and evaluation of strategy activities occur at three hierarchical levels: corporate; divisional or strategic
business unit, and functional.

Answer: TRUE

6) Identifying an organization's existing vision, mission, objectives, and strategies is the final step for the
strategic management process.

Answer: FALSE

7) The lack of monetary rewards is one cause of managers not engaging in strategic planning.

Answer: TRUE

8) Internal crises give an organization's managers extra time needed to plan ahead.

Answer: FALSE

9) Managers must be very formal in strategic planning in order to foster flexibility and creativity.

Answer: FALSE

10) The element of surprise provides great competitive advantages in both military and business
strategy.

Answer: TRUE

Chapter 2
1) Organizations that conduct business operations across national borders are called

A) protectionists.

B) national firms.

C) multinational corporations.

D) domestic companies.

E) all of the above

Answer: C
2) The _____________ competitive opportunities and threats that face a multinational

corporation are almost limitless.

A) social

B) cultural

C) environmental

D) political

E) all of the above

Answer: E

3) All of the following are potential disadvantages to initiating, continuing, or expanding business across
national borders EXCEPT

A) firms confront different social, cultural, and political forces when doing business internationally,
which can make communication in the firm difficult.

B) keeping informed about the number and nature of competitors is more difficult when doing business
internationally.

C) foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a
wider number of markets.

D) dealing with two or more monetary systems can complicate international business operations.

E) foreign operations could be seized by nationalistic forces.

Answer: C

4) Strengths of competitors in foreign lands are often ------------, and weaknesses are often------------

A) overestimated; overestimated

B) overestimated; underestimated

C) underestimated; underestimated

D) underestimated; overestimated

E) none of the above

Answer: D

5) In an industry that is, or is rapidly becoming global, the riskiest possible posture is to

A) become a global competitor.

B) remain a domestic competitor.

C) remain a global competitor.

D) expand beyond the role of domestic competitor.

E) none of the above

Answer: B

6) The various opportunities and threats that face multinational corporations are almost limitless, and
the number and complexity of these factors———————

the number of

products and the number of geographic areas served.

A) decrease dramatically with

B) dramatically increase with

C) drop slightly with

D) are constant despite

E) are unaffected by

Answer: B

7) Communication between domestic headquarters and overseas operations is often made difficult by

A) geographic distance.

B) cultural differences.

C) variations in business practices.

D) national differences.

E) all of the above

Answer: E

8)———————-is a process of doing business worldwide, so strategic decisions are made

based on global profitability of the firm rather than just domestic considerations.

A) Multinational corporation

B) Protectionism

C) Globalization

D) Assimilation

E) World recession

Answer: C
9) The strategic-management process for multinational firms is ——————- for purely domestic firms,
but the process is ——————-for the purely domestic firms.

A) conceptually the same as; more complex

B) conceptually the same as; more simple

C) conceptually different than; more simple

D) conceptually different than; more complex

E) conceptually the same; less important

Answer: B

10) All of the following are potential advantages to initiating, continuing, and/or expanding international
operations EXCEPT

A) firms can gain new customers for their products.

B) foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a
wider number of markets.

C) foreign operations can allow firms to establish low-cost production facilities in locations close to raw
materials and/or cheap labor.

D) foreign operations could be seized by nationalistic factions.

E) foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment.

Answer: D

11) Which of the following is a potential advantage of conducting international operations?

A) Competitors in foreign markets may not exist, or competition may be less intense than in domestic
markets.

B) Dealing with two or more monetary systems can complicate international business operations.

C) Differing language, culture, and value systems can make communication difficult.

D) Gaining an understanding of regional organizations is difficult but is often required in doing business
internationally.

E) All of the above

Answer: A

12)—————— can enable firms to learn the technology, culture, and business practices of other
people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign
countries.

A) Economies of scale
B) Joint ventures

C) Low-cost production facilities

D) Reduced tariffs

E) Domestic operations

Answer: B

13) Joint ventures and partnerships between domestic and foreign firms are

A) falling out of favor.

B) increasingly difficult to engineer.

C) the exception rather than the rule.

D) extremely commonplace.

E) subject to too many regulations to be feasible.

Answer D

14) Which of the following nations has the highest corporate tax rate?

A) Ireland

B) United States

C) Great Britain (United Kingdom)

D) France

E) Germany

Answer: B

15) In general, U.S. managers feel the day has been productive if it is spent

A) rushing to meetings, appointments, and conferences.

B) resting.

C) listening.

D) meditating.

E) thinking.

Answer: A

True or false
1) In today's global climate, many companies may find it difficult to survive by relying solely on domestic
markets.

Answer: TRUE

2) A global strategy means considering individual countries distinctly when designing, producing, and
marketing products.

Answer: FALSE

3) The smile is one form of communication that works the same worldwide.

Answer: TRUE

4) Weaknesses of competitors in foreign lands are often underestimated, and strengths are often
overestimated.

Answer: FALSE

5) As long as the price and quality of a firm's products and services are competitive on a local basis, it
has nothing to worry about.

Answer: FALSE

6) The need to amortize massive R&D investments over many markets is a major reason why the aircraft
manufacturing industry became global.

Answer: TRUE

7) Shifts in the nature and location of production systems, especially to China and India, are reducing the
response time to changing market conditions.

Answer: TRUE

8) Time spent with the family and the qualities of relationships are more important in some cultures
than the personal achievement and accomplishments espoused by the traditional U.S. manager.

Answer: TRUE

9) Punctuality is generally revered in all cultures of the world.

Answer: FALSE

10) In the United States, an amicable relationship is typically required before conducting business.

Answer: FALSE

Chapter 3

1) Workplace romance
A) is defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical
conduct of a sexual nature.

B) is defined as illegal by the Equal Employment Opportunity Commission.

C) should be strictly forbidden by organizations.

D) simply happens so organizations should determine how to best manage the phenomenon.

E) is an intimate relationship between two employees, one of whom is not consenting.

Answer: D

2) —————— are the individuals primarily responsible for ensuring that high ethical

principles are espoused and practiced in an organization.

A) Non-management employees

B) Mid-level managers

C) Shareholders

D) Strategists such as CEOs and business owners

E) Governmental regulatory bodies

Answer: D

3) All of the following business actions are considered to be unethical EXCEPT

A) dumping banned or flawed products in foreign markets.

B) preventing environmental harm.

C) overpricing.

D) sexual harassment.

E) insider trading.

Answer: B

4) Business ethics,—————— , and sustainability issues are interrelated and impact all

areas of the comprehensive strategic-management model.

A) social responsibility

B) social networking

C) fiscal irresponsibility

D) cultural indifference

E) None of the above

Answer: A

5) Bad ethics can————— strategic plans.

A) derail all but the best

B) derail even the best

C) derail only poorly-intentioned

D) derail only ill-conceived

E) never affect

Answer: B

6) Simply having a code of ethics

A) will ensure ethical business behavior.

B) eliminates the need for periodic ethics workshops.

C) is all that is necessary to sensitize people to workplace circumstances in which ethics issues may arise.

D) is insufficient to guarantee that employees behave in an ethical manner.

E) secures an ethics culture in the workplace.

Answer: D

7) Which of the following is NOT a way that companies can help create an ethical culture in their
organization?

A) Outlining ethical expectations

B) Giving examples of ethical situations that commonly occur in their businesses

C) Providing code-of-conduct manuals

D) Creating interactive exercises that pose hypothetical ethical dilemmas

E) Discouraging whistle-blowing

Answer: E

8) 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.

Answer: D

9) More and more firms believe that ethics training and an ethics culture

A) are socially irresponsible.

B) are admirable but damage a firm's competitive positioning.

C) are costly and provide no practical benefit to the company.

D) create strategic advantage.

E) can tarnish the reputation of a firm.

Answer: D

10)—————— refers to employees reporting any unethical violations they

discover or see in the firm.

A) Whistle-blowing

B) Bribery

C) Adultery

D) Sustainability

E) Stewardship

Answer: A

11) Bribery involves

A) bestowing a gift to influence the recipient's conduct.

B) requiring employees to report any unethical violations they discover or see in the firm.

C) prohibiting love affairs between bosses and their subordinates.

D) encouraging firms to play a role in curing society of its ills.

E) forcing companies to take responsibility for the impact their actions have on society.

Answer: A

12) Japan is suffering from a decline in overall economic production

A) due to its growing population.

B) related to the declining age of its workforce.

C) because of a surge in the number of its taxpaying workers.

D) since worker productivity increases are not able to offset declines in number of workers.

E) because more and more women are working outside the home.
Answer: D

13) Which is NOT a reason why preserving the environment should be a permanent part of doing
business?

A) Public opinion demanding that firms conduct business in ways that preserve the natural environment
has been weakening.

B) Environmental advocacy groups now have over 20 million Americans as members.

C) Federal and state environmental regulations are changing rapidly and becoming more complex.

D) Liability suits and fines against firms having environmental problems are on the rise.

E) Consumer demand for environmentally safe products and packages is high.

Answer: A

14) All of the following are mentioned by the authors as environmental strategies that a firm might
adopt EXCEPT

A) reinvesting in environment-damaging businesses.

B) including an environmental representative on their board of directors.

C) implementing bonuses for favorable environmental results.

D) incorporating environmental values in mission statements.

E) conducting regular environmental audits.

Answer: A

15)—————— is a set of standards in fields such as environmental auditing, performance

evaluation, and labeling, that is adopted by thousands of firms worldwide to certify to their
constituencies that they are conducting business in an environmentally friendly

manner.

A) ISO 14001

B) EMS 14000

C) UN 5000

D) SEC 100

E) A sustainability report

Answer: A

True or False
1) The first social responsibility of any business must be to make enough profit to cover the costs of the
future because if this is not achieved, no other social responsibility can be met.

Answer: TRUE

2) According to a study by the Institute of Business Ethics, companies that do not display ethical conduct
consistently outperform companies that show a clear commitment to ethical conduct.

Answer: FALSE

3) More and more firms believe that ethics training and an ethics culture create strategic advantage.

Answer: TRUE

4) History has proven that the lower the trust and confidence of people in the ethics of an institution or
society, the greater its economic strength.

Answer: FALSE

5) Whistle-blowing refers to employees reporting unethical behavior that they discover or see in the
firm.

Answer: TRUE

6) Most firms warn managers and employees that reporting an ethical violation by others could cause
them to be discharged.

Answer: FALSE

7) A bribe is a gift bestowed to influence a recipient's conduct.

Answer: TRUE

8) In order to be considered bribery, the gift offered must be either money or a physical item.

Answer: FALSE

9) Firms should strive to engage in social activities that have no economic benefits; to avoid their being
viewed as public relations ploys.

Answer: FALSE

10) Some ways in which firms are working to be more environmentally responsible include using solar
power and developing green products and packages.

Answer: TRUE

Chapter 4

1) 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

Answer: B

2) Forward integration and backward integration are sometimes collectively referred to as

A) horizontal integration.

B) diversification.

C) vertical integration.

D) stuck-in-the-middle.

E) hierarchical integration.

Answer: C

3) 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

Answer: C

4) Long-term objectives are needed at which levels) in an organization?

A) Corporate

B) Divisional

C) Functional

D) All of the above

E) Corporate & divisional levels, but not functional level

Answer: D

5) 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.

Answer: B

6) 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

Answer: A

7) Which level of strategy is most likely NOT present in small firms?

A) Company

B) Functional

C) Divisional

D) Operational

E) All of the above are present in small firms.

Answer: C

8) 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

Answer: A

9) 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

Answer: C

10) 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

Answer: D

11) Backward integration is effective in all of these cases EXCEPT

A) when an organization competes in an industry that is growing rapidly.

B) when an organization has both capital and human resources to manage the new business of supplying
its own raw materials.

C) when an organization needs to acquire a needed resource quickly.

D) when the advantages of stable prices are not particularly important.

E) when present suppliers have high profit margins.

Answer: D

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

Answer: D
13) Procter & Gamble's (P&G) sale of many of its brands in order to focus on its core brands is an
example of which type of strategy?

A) Related diversification

B) Unrelated diversification

C) Retrenchment

D) Divestiture

E) Liquidation

Answer: D

14) 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.

Answer: D

15) 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.

Answer: B

True or False
1) A strategy of seeking ownership or increased control of a firm's suppliers is backward integration.

Answer: TRUE

2) Market penetration, market development, and product development are intensive strategies.
Answer: TRUE

3) Long-term objectives represent the results expected from pursuing certain strategies.

Answer: TRUE

4) Objectives provide direction and allow for organizational synergy.

Answer: TRUE

5) Horizontal integration is seeking ownership or increased control over competitors.

Answer: TRUE

6) Divestiture is selling all of a company's assets, in parts, for their tangible worth.

Answer: FALSE

7) A chief executive officer is located in the divisional level of a large firm.

Answer: FALSE

8) Gaining ownership or increased control over distributors or retailers is called forward integration
strategy.

Answer: TRUE

9) Market development includes introducing present products into new geographic areas.

Answer: TRUE

10) Unrelated diversification may be an especially effective strategy when an organization's basic
industry is experiencing increasing annual sales and profits.

Answer: FALSE

Chapter 5

1) 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?

Answer: D
2) 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.

Answer: B

3) Which group would be classified as stakeholders?

A) Governments

B) Creditors

C) Suppliers

D) Employees

E) All of the above

Answer: E

4) 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.

Answer: D

5) 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?

Answer: D
6) What is the first step in the comprehensive strategic-management model?

A) Developing vision and mission statements

B) Performing external audits

C) Performing internal audits

D) Measuring and evaluating performance

E) Establishing long-term objectives

Answer: A

7) 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.

Answer: B

8) According to Drucker, which question is synonymous with asking "What is our mission?"?

A) What is our business?

B) How can we improve ourselves?

C) What do we want to become?

D) Who are our stakeholders?

E) How can we increase profitability?

Answer: A

9) The potential for creative growth in an organization can be limited by

A) an overemphasis on stakeholders.

B) not enough emphasis on stakeholders.

C) a mission statement that is too general.

D) a mission statement that is too specific

E) a mission statement that is too dynamic.

Answer: D
10) The general public is especially interested in ————— , whereas stockholders are more interested
in ——————-•

A) environmental concerns; social responsibility

B) social responsibility; the treatment of employees

C) the treatment of employees; environmental concerns

D) profitability; social responsibility

E) social responsibility; profitability

Answer: E

11) 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.

Answer: C

12) The recommended length of an effective mission statement is ————— words.

A) approximately 25

B) no more than 100

C) less than 150

D) at least 300

E) more than 500

Answer: C

13) The following excerpt from a mission statement illustrates which of the nine essential components
of admission statement?

"We believe our first responsibility is to the doctors, nurses, patients, mothers, and all others who use
our products and services."

A) Markets

B) Customers

C) Concern for Employees

D) Concern for Public Image

E) Technology

Answer: B

14) 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

Answer: E

15) Which component of a mission statement addresses the basic beliefs, values, aspirations, and ethical
priorities of the firm?

A) Technology

B) Philosophy

C) Concern for public image

D) Customers

E) Self-concept

Answer: B

True or False
1) In most cases, at least 500 words are required to effectively state a mission statement.

Answer: FALSE

2) While vision and mission statements are part of numerous internal reports, they should neverbe
displayed in a firm's premises.

Answer: FALSE

3) A good mission statement serves as a frame work for evaluating both current and prospective
activities.

Answer: TRUE
4) The foundation for development of a comprehensive mission statement is provided by a clear vision.

Answer: TRUE

5) Whereas the mission statement answers the question, "What do we want to become?" the vision
statement answers the question, "What is our business?"

Answer: FALSE

6) When developing a mission statement, it is usually advisable to involve as few managers as possible.

Answer: FALSE

7) In multidivisional organizations, each division should develop a mission statement consistent with and
supportive of the corporate mission.

Answer: TRUE

8) One benefit of having a clear mission and vision is that it projects a sense of worth and intent to all
stakeholders.

Answer: TRUE

9) An effective mission statement generates the impression a firm is successful, has direction, and is
worthy of time, support and investment.

Answer: TRUE

10) A sense of self-concept is one of the nine components found in a good mission statement.

Answer: TRUE

Chapter 6

1) 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.

Answer: B

2) Who should perform an internal audit?

A) A private auditing firm

B) The organization's accounting department

C) Representative managers and employees from throughout the firm

D) A small team of top-level managers

E) The chief executive officer

Answer: C

3)——————- 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

Answer: C

4) The three all-encompassing internal resource categories used in the resource based view are physical
resources, human resources, and

A) financial resources.

B) shareholder resources.

C) organizational resources.

D) non-renewable resources.

E) technological resources.

Answer: C

5) Organizational resources include all of the following EXCEPT

A) employee training.

B) firm structure.

C) planning processes.

D) information systems.

E) copyrights.

Answer: A

6) 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

Answer: B

7) All of the following are basic activities of management EXCEPT

A) staffing.

B) planning.

C) consolidating.

D) organizing.

E) motivating.

Answer: C

8) Which of the following does the text call an up-front investment in success?

A) Planning

B) Organizing

C) Motivating

D) Staffing

E) Controlling

Answer: A

9) Which function of management includes areas such as job design, job specifications, job analysis, and
unity of command?

A) Planning

B) Organizing

C) Motivating

D) Staffing

E) Controlling

Answer: B

10) 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

Answer: E

11) 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

Answer: A

12) Which of the three finance and accounting decisions involves determining the best capital structure
for the firm?

A) Investment

B) Dividend

C) Financing

D) Capital budgeting

E) Implementation

Answer: C

13) 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
Answer: B

14) What category of ratios includes return on total assets and return on stockholders equity?

A) Leverage

B) Activity

C) Profitability

D) Growth

E) Liquidity

Answer: C

15) 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

Answer: E

True or False

1) The subtle, elusive and largely unconscious forces that shape the workplace are captured by the
organizational culture.

Answer: TRUE

2) Cultural products include values, beliefs, stories, and language.

Answer: TRUE

3) A ritual is a standardized set of behaviors used to manage anxieties.

Answer: TRUE

4) Allocating resources is one of the five basic activities (functions) performed by managers.

Answer: FALSE

5) The only certain thing about the future of any organization is change.
Answer: TRUE

6) Organizing is the cornerstone of effective strategy formulation.

Answer: FALSE

7) The idea that paying dividends results in a higher stock price is a myth.

Answer: TRUE

8) In 2014-2016, companies are aggressively boosting their dividends paid to shareholders.

Answer: TRUE

9) Activity ratios measure how effectively a firm is using its resources.

Answer: TRUE

10) Leverage ratios measure a firm's ability to meet maturing short-term obligations.

Answer: FALSE

Chapter 7

1) 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

Answer: C

2) The process of performing an external audit needs to include

A) only top level managers, as it is a planning function.

B) as many managers and employees as possible.

C) primarily front-line supervisors.

D) between 15 to 20 managers for it to be valid.

E) stockholders and external government agencies.

Answer: B
3) 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.

Answer: C

4) External audits attempt to identify key variables that offer——————- responses.

A) actionable

B) authoritative

C) profitable

D) strategic

E) terminal

Answer: A

5) 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

Answer: E

6) Many economists say the current rash of trade constraints will make it ————— for global
economic growth.

A) easier

B) impossible

C) harder

D) more likely

E) less time-consuming

Answer: C
7) 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.

Answer: E

8) Competition in virtually all industries is

A) nonexistent.

B) intense.

C) never cutthroat.

D) easily avoidable.

E) insignificant.

Answer B

9) 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

Answer: C

10) 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

Answer: D

11) Whenever new firms can easily enter a particular industry, the intensity of competitiveness among
firms tends to

A) stay the same.

B) increase.

C) decrease.

D) neutralize.

E) become irrelevant.

Answer: B

12) 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

Answer: B

13) What are educated assumptions about future trends and events called?

A) Wild guesses

B) Forecasts

C) Facts

D) Statistics

E) Premonitions

Answer: B

14) 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

Answer: C

15) When using External Factor Evaluation (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 scores 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

Answer: C

True or False

1) External audits attempt to identify key variables that offer highly intuitive responses.

Answer: FALSE

2) External audits attempt to identify key variables that offer intuitive responses.

Answer: FALSE

3) 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.

Answer: TRUE

4) To perform an external audit, a company first must gather competitive intelligence and information
about economic, social, cultural, demographic, environmental, political, governmental, legal, and
technological trends.

Answer: TRUE

5) The I/O approach to competitive advantage advocates that internal factors are more important than
external factors in a firm achieving competitive advantage.

Answer: FALSE

6) Organizations never develop their own projections.

Answer: FALSE
7) Wild guesses should never be made in formulating strategies.

Answer: TRUE

8) In an EFE Matrix, opportunities often receive higher weights than threats, but threats too can receive
high weights if they are especially severe or threatening.

Answer: TRUE

9) The weights and total weighted scores in both a Competitive Profile Matrix (CPM) and an External
Factor Evaluation (EFE) Matrix have the same meaning.

Answer: TRUE

10) 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.

Answer: FALSE

Chapter 8

1) Strategy analysis and choice largely involves making

decisions based on

information.

A) long-term; short-term

B) subjective; objective

C) short-term; long-term

D) subjective; short-term

E) objective; subjective

Answer: B

2) 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.

Answer: B

3) Which stage of the strategy-formulation framework involves the Quantitative Strategic

Planning Matrix?

A) Stage 1

B) Stage 2

C) Stage 3

D) Stage 4

E) Stage 5

Answer: C

4) Which stage of the strategy-formulation framework includes an IFE Matrix and the Competitive
Profile Matrix?

A) Input

B) Matching

C) Decision

D) Penetration

E) Research

Answer: A

5) Which section of the SWOT Matrix involves matching internal strengths with external opportunities?

A) The WT cell

B) The SW cell

C) The WO cell

D) The ST cell

E) The SO cell

Answer: E

6) Which strategies aim at improving internal weaknesses by taking advantage of external

opportunities?

A) SO

B) WO

C) SW
D) ST

E) WT

Answer: B

7) The two internal dimensions represented on the axes of the SPACE Matrix are

A) stability position and industry position.

B) industry position and internationalization.

C) internationalization and competitive position.

D) competitive position and financial position.

E) financial position and stability position.

Answer: D

8) What are the two external dimensions of the SPACE Matrix?

A) Stability position and industry position

B) Stability position and competitive position

C) Industry position and competitive position

D) Competitive position and financial position

E) Financial position and industry position

Answer: A

9) The two positive-rated dimensions on the SPACE Matrix are

A) FP and CP.

B) CP and SP

C) FP and IP.

D) IP and SP.

E) FP and SP.

Answer: C

10) The Boston Consulting Group (BCG) Matrix is designed specifically to enhance which type of firm's
efforts to formulate strategies?

A) Companies with more than one division

B) Large companies

C) Companies with annual sales greater than $1 million

D) Companies with annual sales of less than $1 million

E) All companies

Answer: A

11) In the Boston Consulting Group (BCG) Matrix, which element represents the industry growth rate in
sales, measured in percentage terms?

A) X-axis

B) Y-axis

C) First quadrant

D) Second quadrant

E) Third quadrant

Answer: B

12)————- includes the set of shared values, beliefs, attitudes, customs, norms, rites,

rituals, personalities, heroes, and heroines that describe a firm.

A) Strategy

B) Culture

C) Mission

D) Objectives

E) QSPM

Answer: B

13) Today, boards of directors are composed mostly of

A) outsiders.

B) management.

C) union members.

D) company employees.

E) past executives.

Answer: A

14) All of the following are principles of good organizational governance, as established by
BusinessWeek, EXCEPT

A) each director attends at least 75 percent of all meetings.

B) the audit, compensation and nominating committees are made up solely of outside directors.

C) each director owns a large equity stake in the company.

D) at least three directors are current or former company executives.

E) the CEO is not also the Chairperson of the Board.

Answer: D

15)—————— is the unique way an organization does business.

A) Attitude

B) Belief System

C) Culture

D) Demographics

E) Strategy

Answer: C

True or False

1) The purpose of matching key factors is to generate feasible alternative strategies.

Answer: TRUE

2) Relative market share position is given on the x-axis of the Boston Consulting Group

(BCG) Matrix.

Answer: TRUE

3) An organization's present strategies, objectives, vision, and mission, coupled with the external and
internal audit information, provide a basis for generating and evaluating feasible alternative strategies.

Answer: TRUE

4) Alternative strategies don't come out of the blue; they are derived from the firm's vision, mission,
objectives, external audit, and internal audit.

Answer: TRUE

5) It is vital that strategists always consider all feasible alternatives that could benefit the

firm.

Answer: FALSE
6) The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (-1,
+4).

Answer: TRUE

7) A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (+2, +3).

Answer: FALSE

8) Culture includes the set of shared values, beliefs, attitudes, customs, norms, rites, rituals,
personalities, heroes, and heroines that describe a firm.

Answer: TRUE

9) Whenever two firms merge, it becomes especially important to evaluate and consider culture-
strategy linkages.

Answer: TRUEI

10) Successful strategists minimize their own political exposure on issues that are highly controversial
and in circumstances where opposition from major power centers is likely.

Answer: TRUE

Chapter 9

1) Which of the following variables is NOT directly affected by market segmentation?

A) Product

B) Place

C) Process

D) Promotion

E) Price

Answer: C

2) All of the following are strategic marketing issues or decisions EXCEPT

A) to be a price leader or a price follower.

B) to use operating leverage.

C) to offer a complete or limited warranty.

D) to use heavy, light, or no TV advertising versus online advertising.

E) to use exclusive dealerships or multiple channels of distribution.

Answer: B
3) All of the following are true EXCEPT

A) marketing has evolved to be more about building a two-way relationship with consumers.

B) in 2015 the number of LinkedIn users was closer to the number of Facebook users than to the
number of Twitter users.

C) the online community of customers is much quicker, cheaper, and effective to reach than traditional
focus groups and surveys.

D) successful strategy implementation requires a firm to know what people are saying about it and its
products.

E) company websites should enable customers to interact with the firm on a variety of social media
networks.

Answer: B

4) Subdividing a market into distinct subsets of customers according to their needs and buying habits is
known as

A) market penetration.

B) product diversification.

C) market segregation.

D) market segmentation.

E) positioning.

Answer: D

5) What makes market segmentation an important variable in strategy implementation?

A) It allows a small firm to compete successfully with a large firm.

B) It allows a firm to operate with limited resources.

C) New or improved market-segmentation approaches are required for the successful execution of
market development & market penetration.

D) Market segmentation decisions directly affect marketing mix variables.

E) All of the above

Answer: E

6) Why is market segmentation an important variable in the strategy-implementation process?

A) Company strategies do not require increased sales through new markets and products.

B) It allows a firm to operate with no resources.

C) It directly affects marketing mix variables.

D) It allows a firm to minimize per-unit profits and per-segment sales.

E) All of the above

Answer: C

7) Matching which factors would allow factories to produce desirable levels without extra shifts,
overtime, or subcontracting?

A) Markets and competitors

B) Competition and positioning

C) Customer behavior and positioning

D) Supply and demand

E) Segments and competitors

Answer: D

8) What is a central strategy-implementation technique that allows an organization to examine the

expected results of various strategy implementation decisions?

A) EPS/EBIT

B) Financial budgeting

C) TOWS analysis

D) Projected financial statement analysis

E) External analysis

Answer: D

9) Information collection, retrieval, and storage can be used to create competitive advantages in ways
such as

A) cross-selling to customers.

B) monitoring suppliers.

C) keeping managers and employees informed.

D) coordinating activities among divisions.

E) all of the above

Answer: E

10) Which of the following is NOT a current development or trend?

A) Efforts to repeal federal laws currently preventing businesses from using GPS devices to monitor
employees
B) Tracking the location of employees through company provided hand-held devices

C) The use of smartphones as hotel room keys

D) Desktop videoconferencing

E) Assertions by employees that employers are invading their privacy with various monitoring practices

Answer: A

11) If a firm incurs a loss during a particular year, or if the firm paid out more in dividends than it had in
net income, what happens to the retained earnings (RE) amount?

A) It increases.

B) It is unchanged.

C) It decreases.

D) It doubles.

E) It cannot be determined from the information given.

Answer: C

True or False

1) The online community of customers is more expensive to reach than traditional focus groups and
surveys.

Answer: False

2) Seemingly minor ethical and questionable actions can catapult these days into huge public relations
problems for companies as a result of the monumental online social and business communications.

Answer: FALSE

3) An example of a marketing decision is whether or not to limit the share of business done with a single
customer.

Answer: TRUE

4) Market penetration can be defined as the subdividing of a market into distinct subsets of customers
according to needs and buying habits.

Answer: FALSE

5) Market segmentation can be defined as the subdividing of a market into distinct subsets of customers
according to needs and buying habits.

Answer: TRUE
6) There are five component variables in the marketing mix: product, place, promotion, price, and
people.

Answer: FALSE

7) A projected financial analysis can be used to forecast the impact of various implementation decisions.

Answer: TRUE

8) When performing projected financial analysis, the balance sheet should be prepared before the
income statement.

Answer: FALSE

9) The process of strategic management is facilitated immensely in firms that have an effective
information system.

Answer: TRUE

10) Increased costs are a disadvantage of a good information system.

Answer: FALSE

Chapter 10

1) Which of the following is a management issue central to strategy implementation?

A) Devising policies

B) Revising reward and incentive plans

C) Minimizing resistance to change

D) Developing an effective human resources function

E) All of the above

Answer: E

2) Which of the following is NOT a management issue central to strategy implementation?

A) Devising policies

B) Revising reward and incentive plans

C) Performing an internal audit

D) Minimizing resistance to change

E) Developing an effective human resources function

Answer: C
3) Which of the following is NOT true about objectives?

A) They should be communicated throughout the organization.

B) They should have an appropriate time dimension.

C) They should use terms like "maximize," "minimize," and "as soon as possible."

D) They should be measurable.

E) They should be consistent.

Answer: C

4) Which word or phrase would be most suitable to use in written objective statements?

A) Maximize

B) Minimize

C) 10 percent increase

D) Adequate

E) As soon as possible

Answer: C

5) What type of organizational structure promotes specialization of labor and allows rapid decision
making?

A) Divisional structure by product

B) Functional structure

C) Divisional structure by customer

D) Strategic business unit

E) Matrix structure

Answer: B

6) Which organizational structure is the most widely used?

A) Departmental

B) Strategic business unit

C) Functional

D) Decentralized

E) Matrix

Answer: C
7) Medium-sized firms tend to use which type of structure?

A) Divisional

B) Matrix

C) SBU

D) Functional

E) Centralized

Answer: A

8) What is NOT one of the basic ways a divisional structure can be organized?

A) By geographic area

B) By product

C) By customer

D) By process

E) By cost

Answer: E

9) Which organizational structure has the disadvantage of ambiguous roles for some senior executives?

A) Functional

B) Divisional

C) Strategic Business Unit (SBU)

D) Matrix

E) Process

Answer: C

10) Which term is primarily concerned with shareholder well-being rather than employee well-being?

A) Benchmarking

B) Reengineering

C) Product redesign

D) Process management

E) Restructuring

Answer: E

11) The primary benefit sought from restructuring is

A) employee involvement.

B) cost reduction.

C) increased morale.

D) increased number of hierarchical levels in the organization.

E) increased innovation.

Answer: B

12) What change strategy involves giving orders and enforcing those orders?

A) Self-interest

B) Educative

C) Force

D) Rational

E) Diffusion

Answer: C

13) Wellness programs

A) are too expensive for most companies to afford.

B) are desired by employees but don't provide value to the company.

C) are becoming more prevalent as companies realize the benefits to the firm.

D) attract prospective employees who then fail to take advantage of them.

E) are facing legal challenges from the health-care industry.

Answer: C

14) Formal statements of organizational philosophy, charters, creeds, materials used for recruitment
and selection, and socialization help an organization

A) abide by SEC rules.

B) link culture to strategy.

C) set guidelines for firing.

D) increase profits.

E) manage conflicts between stakeholders.

Answer B

15) Changing a strategy to fit an existing culture

A) is usually less effective than changing a firm's culture to fit a new strategy.

B) is usually more effective than changing a firm's culture to fit a new strategy.

C) is just as effective as changing a firm's culture to fit a new strategy.

D) is always the best option.

E) none of the above

Answer: A

True or False

1) Effective strategy formulation can usually gliarantee successful strategy implementation.

Answer: FALSE

2) It is always easier to say you are going to do something (strategy formulation) than to actually do it
(strategy implementation).

Answer: TRUE

3) Unlike strategy formulation, strategy implementation varies considerably among different types and
sizes of organizations.

Answer: TRUE

4) Four types of resources that can be used to achieve desired objectives are financial, physical, human,
and technological.

Answer: TRUE

5) Conflict is highly unusual in well-run organizations.

Answer: FALSE

6) The most complex of all organizational structures is a matrix structure.

Answer: TRUE

7) With the matrix structure it is common for functional resources to be duplicated.

Answer: FALSE

8) Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss
or employee layoffs.

Answer: TRUE
9) The United States is a leader globally in promoting women and minorities into mid-and top-level
managerial positions in business.

Answer: TRUE

10) A recent study reports that nearly 90 percent of employers today offer some kind of wellness
incentives or prizes to employees who "get healthier."

Answer: TRUE