The Nature of Strategic Management External opportunities; external threats

__________ help an organization gather, analyze, and organize Internal weaknesses; external opportunities
The term _________ is used to refer to strategy formulation, information. Internal strengths; internal weaknesses
implementation, and evaluation, with _________referring only to Ethics officers
strategy formulation. Operatives Strategic management can be defined as the art and science of
strategic planning; strategic management Lobbyists formulating, implementing, and evaluating cross-functional
assessment; planning Strategists decisions that enable an organization to achieve its objectives.
strategic management; strategic planning True
management cycle; brainstorming A disadvantage of international operations is:
foreign operations can allow firms to establish low-cost production The action stage of strategic management is called strategy
Which of these requires a firm to establish annual objectives, facilities in locations close to raw materials and/or cheap labor. formulation.
devise policies, and allocate resources? economies of scale can be achieved from operation in global False
Strategy formulation rather than solely domestic markets.
Strategy implementation competitors in foreign markets may not exist. Three fundamental strategy evaluation activities are reviewing
Strategy manipulation language, culture, and value systems differ among countries, external and internal factors, measuring performance, and taking
Strategy evaluation causing communication barriers and problems managing corrective actions.
people. True
The rationale for periodically conducting strategic-management _________ are especially critical for successful strategy
meetings away from the work site is to encourage more implementation. Strategies can be defined as specific results that an organization
_____________ and ____________ among participants. Interpersonal skills seeks to achieve in pursuing its basic mission.
feedback; rigidity Technical plans False
creativity; candor Long-range plans Strategies are the means by which long-term objectives will be
confidence; self-interest Short-range plans achieved.
strategy evaluation; candor
9. All of these are pitfalls an organization should avoid in strategic Reasons for poor or no strategic planning on part of firms include
Anything that a firm does especially well compared to rival firms is planning except: overconfidence, too expensive, suspicion, and laziness.
referred to as: using strategic planning to gain control over decisions and True
competitive advantage. resources.
comparative advantage. failing to involve key employees in all phases of planning. Objectives are an organization's statements that answer the
an external opportunity. hastily moving from mission development to strategy formulation. question "what do we want to become?"
opportunity cost. using plans as a standard for measuring performance. False
An organization can pursue any and/or all strategies that
Both military and business organizations do all of the following ____________ and __________ refer to economic, social, potentially could benefit the firm.
except: cultural, demographic, environmental, political, legal, False
use of the element of surprise. governmental, technological, and competitive trends and events No organization can pursue all the strategies that potentially could
aim "to gain competitive advantage." that could significantly benefit or harm an organization in the benefit the firm.
use the assumption of conflict to develop strategies. future.
use their own strengths to exploit competitors' weaknesses. Internal strengths; external threats Communication is an act of strengthening employees' sense of
effectiveness by encouraging them to participate in decision States will be over 65 years old. d. Feedback
making and to exercise initiative and imagination, and rewarding Ans: T Page 88 e. Goal-setting
them for doing so.http://www.vuzs.net/
False 6. The first step for using Porter’s Five-Forces Model is to evaluate the 13. Anything that a firm does especially well compared to rival
Empowerment is the act of strengthening employees' sense of relative strength of each competitive force. firms is referred to as _____.
effectiveness by encouraging and rewarding them to participate in Ans: F Page 101 a. competitive advantage
decision making and exercise initiative and imagination. b. comparative advantage
7. Metaphors are handed-down narratives of some wonderful event that c. opportunity cost
Strategic management must be a self-reflective learning process. is based on history but has been embellished with fictional detail. d. sustainable advantage
True Ans: F Page 127 e. an external opportunity

One pitfall to avoid in strategic planning is top management 8. Benchmarking is an analytical tool used to determine whether a firm’s 14. The trends in newspaper circulation in the United States
making many intuitive decisions that conflict with formal planning. value chain activities are competitive compared to rivals. provide support for which statement?
True Ans: T Page 157 a. Sustainable competitive advantage is easy to maintain.
b. Several firms can have similar competitive advantages.
Sample Comprehensive Exam 9. Since a combination strategy is not risky, many organizations pursue a c. Some products are relatively immune to changes in the external
Chapters 1 – 5 combination of two or more strategies simultaneously. environment
True/False Ans: F Page: 171 d. Most competitive advantages are hard to sustain
e. Competition is generally good for companies and consumers
1. A vision statement answers the question, “What is our business?,” 10. Most companies favor related diversification strategies in order to
whereas a mission statement answers, “What do we want to become?” exploit common use of a well-known brand name. 15. In which phase of strategic management are annual objectives
Ans: F Page: 10-11 Ans: T Page 180 especially important?
a. Formulation
2. The changes that occurred at Disney after Robert Iger took over as b. Control
CEO exemplifies the fact that more and more organizations are Multiple Choice c. Evaluation
centralizing the strategic-management process. 11. What can be defined as the art and science of formulating, d. Implementation
Ans: F Page: 16 implementing and evaluating cross-functional decisions that e. Management
enable an organization to achieve its objectives?

3. In multidivisional organizations, each division should develop a a. Strategy formulation 16. Principles of conduct that guide decision-making are known as
mission statement independent of the parent company. b. Strategy evaluation _____.
Ans: F Page: 63 c. Strategy implementation a. human rights
d. Strategic management b. the Constitution
4. According to Vern McGinnis, to be effective, all a mission statement e. Strategic leading c. business ethics
need to do is define what the organization is and what the organization d. nonprofit organization policies
aspired to be. 12. During what stage of strategic management are a firm’s e. social responsibility requirements
Ans: F Page: 63 specific internal strengths and weaknesses determined?
a. Formulation 17. Which of these basic questions should a vision statement
5. It is predicted that, by 2025, over 18% of the population in the United b. Implementation answer?
c. Evaluation
a. What is our business? is not effective? 27. The term that refers to the EU’s effort to end competitive tax
b. Who are our employees? a. AT&T focuses on communication rather than telephones. breaks among member countries is _____.
c. Why do we exist? b. Exxon/Mobil focuses on oil and gas rather than energy. a. double taxation
d. What do we want to become? c. Union Pacific focuses on transportation rather than railroads. b. taxation bias
e. Who are our competitors? d. Universal Studios focuses on entertainment rather than movies. c. equity taxation
e. Starbucks focuses on the café experience rather than coffee. d. tax reconciliation
18. What is the first step in the comprehensive strategic- e. tax harmonization
management model? 23. Which type of trend is exemplified by the increasing numbers
a. Developing vision and mission statements of two-income households in America? 28. According to Porter, what is usually the most powerful of the
b. Performing external audits a. Social five competitive forces?
c. Performing internal audits b. Economic a. Potential development of substitute products
d. Measuring and evaluating performance c. Cultural b. Bargaining power of suppliers
e. Establishing long-term objectives d. Technological c. Bargaining power of consumers
e. Historical d. Rivalry among competing firms
19. According to the comprehensive strategic-management e. Potential entry of new competitors
model, which step needs to be completed immediately following 24. In general, what happens to American goods in overseas
the establishment of long-term objectives? markets when there is a strong dollar? 29. A standardized, detailed set of techniques and behaviors that
a. Developing vision and mission statements a. Less expensive manage anxieties, but seldom produce intended, technical
b. Performing external audits b. More attractive consequences of practical results are called _____.
c. Performing internal audits c. Cheaper a. folktales
d. Generating, evaluating, and selecting strategies d. More expensive b. rites
e. Measuring and evaluating performance e. Desirable c. metaphors
d. rituals
20. What is the best time to develop a mission statement? 25. It is predicted that the United States will have how many racial e. values
a. Before a business is opened or ethnic majorities by the year 2075?
b. When the firm is successful a. None 30. What are historical narratives describing the unique
c. When the firm is in financial trouble b. One accomplishments of a group and its leaders, usually in heroic
d. When the firm is in legal trouble c. Two terms?
e. When the firm encounters competition d. Three a. Rites
e. Five b. Sagas
21. A proactive environmental policy is likely to lead to _____. c. Stories
a. higher cleanup costs 26. Who is the largest exporter to the United States? d. Myths
b. conservation of energy a. Mexico e. Folktales
c. reduced customer loyalty b. China
d. numerous liability suits c. Canada 31. Which function of management includes areas such as job
e. higher medical costs d. United Kingdom design, job specification, job analysis and unity of command?
e. Japan a. Planning
22. Which of these examples of a mission statement’s focus area b. Organizing
c. Motivating 36. Advanced Medical Optics using acquisitions to obtain all d. Best-value focus
d. Staffing medical aspects of eye care, from laser surgery to contacts to e. Differentiation
e. Controlling implants for all ages is an example of which type of strategy?
a. Forward integration 40. Which strategy would be most appropriate when the distinctive
32. Which of the following is the process of influencing people to b. Backward integration competencies of two or more firms complement each other
accomplish specific objectives? c. Horizontal integration especially well?
a. Staffing d. Market development a. Conglomerate diversification
b. Motivating e. Product development b. Divestiture
c. Planning c. Joint venture
d. Controlling 37. In which situation would horizontal integration be an especially d. Retrenchment
e. Organizing effective strategy? e. Integration
a. When an organization can gain monopolistic
33. Which decision concerns determining the best capital characteristics in a particular area or region without being
structure for the firm and includes examining various methods by challenged by the federal government for “tending 59.The term “environment” includes all of the following except:
which the firm can raise capital? substantially” to reduce competition. a.air.
a. Investment b. When an organization competes in a slowing industry. b.water.
b. Dividends c. When decreased economies of scale provide major competitive c.firms.
c. Financing advantages. d.natural resources.
d. Capital budgeting d. When an organization has neither the capital nor human talent e.fauna.
e. Implementation needed to successfully manage an expanded organization. Ans: c Page: 4
e. When competitors are succeeding due to managerial expertise
34. What category of ratios measures how effectively a firm can or having particular resources an organization possesses. 60. The one factor that has most significantly impacted the nature and
maintain its economic position in the growth of the economy and core of buying and selling in nearly all industries has been
industry? 38. Win-Dixie closing one-third of its stores and eliminating 22,000 a.the Internet.
a. Profitability jobs in an attempt to emerge from bankruptcy would be an b.political borders.
b. Liquidity example of _____. c.corporate greed.
c. Leverage a. divestiture d.customer and employee focus.
d. Activity b. backward integration e.the government.
e. Growth c. liquidation Ans: a Page: 4
d. retrenchment
35. Budget Rent-a-Car opening car rental shops in Wal-Mart e. forward integration What Is Strategic Management?
stores is an example of which type of strategy? 61. What can be defined as the art and science of formulating,
a. Forward integration 39. According to Porter, which strategy offers products or services implementing and evaluating cross-functional decisions that
b. Backward integration to a small range of customers at the lowest price available on the enable an organization to achieve its objectives?
c. Horizontal integration market? a.Strategy formulation
d. Related diversification a. Low-cost b.Strategy evaluation
e. Unrelated diversification b. Best-value c.Strategy implementation
c. Low-cost focus d.Strategic management
e. Strategic leading c.It should be coupled with analysis in decision-making.
Ans: d Page: 5 66. What types of skills are especially critical for successful strategy d.It is better than analysis in decision-making.
implementation? e.It is management by ignorance.
62. ____________ is used to refer to strategic formulation, a.Interpersonal Ans: c Page: 7
implementation and evaluation, with ______________ referring only to b.Marketing
strategic formulation. c.Technical 71. _________ and _________ are external forces transforming business
a.Strategic planning; strategic management d.Conceptual and society today.
b.Strategic planning; strategic processing e.Thinking a.E-commerce; strategy
c.Strategic management; strategic planning Ans: a Page: 6 b.E-commerce; globalization
d.Strategic management; strategic processing c.Strategy; globalization
e.Strategic implementation; strategic focus 67. Which phase of strategic management is called the action phase? d.Corporate culture; stakeholders
Ans: c Page: 5 a.Strategy formulation e.Stakeholders; strategy
b.Strategy implementation Ans: b Page: 8
63. During what stage of strategic management are a firm’s specific c.Strategy evaluation
internal strengths and weaknesses determined? d.Allocating resources 72. Anything that a firm does especially well compared to rival firms is
a.Formulation e.Measuring performance referred to as:
b.Implementation Ans: b Page: 6 a.competitive advantage.
c.Evaluation b.comparative advantage.
d.Feedback 68. __________ is not a strategy-implementation activity. c.opportunity cost.
e.Goal-setting a.Taking corrective actions d.sustainable advantage.
Ans: a Page: 5 b.Establishing annual objectives e.an external opportunity.
c.Devising policies Ans: a Page: 8
64. An important activity in __________ is taking corrective action. d.Allocating resources
a.strategy evaluation e.Motivating employees
b.strategy implementation Ans: a Page: 6 Key Terms in Strategic Management

c.strategy formulation 73. The trends in newspaper circulation in the United States

d.strategy leadership 69. Strategy evaluation is necessary because provide support for which statement?

e.all of the above a.internal and external factors are constantly changing. a.Sustainable competitive advantage is easy to maintain.

Ans: a Page: 6 b.the SEC requires strategy evaluation. b.Several firms can have similar competitive advantages.

c.competitors change their strategies. c.Some products are relatively immune to changes in the external

65. What step in the strategic development process involves mobilizing d.the IRS requires strategy evaluation. environment

employees and managers to put strategies into action? e.firms have limited resources. d.Most competitive advantages are hard to sustain

a.Formulating strategy Ans: a Page: 6 e.Competition is generally good for companies and consumers

b.Strategy evaluation Ans: d Page 9

c.Implementing strategy 70. Which statement best describes intuition?

d.Strategic advantage a.It represents the marginal factor in decision-making. 74. Which individuals are most responsible for the success and

e.Competitive advantage b.It represents a minor factor in decision-making integrated with failure of an organization?

Ans: c Page: 6 analysis. a.Strategists

b.Financial planners
c.Personnel directors 79. Specific results an organization seeks to achieve in pursuing c.Annual objectives
d.Stakeholders its basic mission are: d.Strategies
e.Human resource managers a.strategies e.Management
Ans: a Page: 10 b.rules Ans: c Page: 13
c.objectives
75. The first step in strategic planning is generally: d.policies 84. In which phase of strategic management are annual objectives
a.Developing a vision statement e.mission especially important?
b.Establishing goals and objectives Ans: c Page: 13 a.formulation
c.Making a profit b.control
d.Developing a mission statement 80. Internal __________ are activities in an organization that are c.evaluation
e.Determining opportunities and threats performed especially well. d.implementation
Ans: a Page: 10 a.opportunities e.management
b.competencies Ans: d Page: 13
76. What are enduring statements of purpose that distinguish one c.strengths
business from other similar firms? d.management 85. What are guides to decision making?
a.policies e.factors a.laws
b.mission statements Ans: c Page: 13 b.rules
c.objectives c.policies
d.rules 81. What are the means by which long-term objectives will be d.procedures
e.employee conduct guidelines achieved? e.goals
Ans: b Page: 10 a.strategies. Ans: c Page: 13
b.strengths.
77. The largest company in the world is: c.weaknesses.
a.Honda Motor d.policies.
b.ING Group e.opportunities. The Strategic-Management Model

c.Wal-Mart Ans: a Page: 13 86. The strategic-management process

d.Ford Motor Company a.occurs once a year.

e.Royal Dutch/Shell Group 82. Long-term objectives should be all of the following except: b.is a sequential process.

Ans: d Page: 10 a.measurable. c.is a continuous process.

b.continually changing. d.applies mostly to companies with sales greater than $100

78. Usually, external opportunities and threats are: c.reasonable. million.

a.uncontrollable by a single organization. d.challenging. e.applies mostly to small businesses

b.controlled by governments. e.consistent. Ans: c Page: 13

c.not as important as internal strengths and weaknesses. Ans: b Page: 13

d.key functions in strategy implementation. 87. Which of the following is not included in the strategic

e.key functions in strategy exploitation. 83. __________ can best be described as short-term in nature. management model?

Ans: a Page: 12 a.Mission statements a.Measure and evaluate performance.

b.Tenure b.Perform internal research to identify customers.

c.Establish long-term objectives.
d.Implement strategies. c.increased decentralizing of strategic management strategic planning except:
e.Develop mission and vision statements. d.increased emphasis on strategic planning a.using plans as a standard for measuring performance.
Ans: b Page: 14 e.increased central planning of the strategic management process b.using strategic planning to gain control over decisions and
Ans: c Page 16 resources.
Benefits of Strategic Management c.failing to involve key employees in all phases of planning.
88. Strategic management enables an organization to 92. According to research, organizations using strategic d.too hastily moving from mission development to strategy
__________, instead of companies just responding to threats in management are __________ than those that do not. formulation.
their business environment. a.more profitable e.being so formal in planning that flexibility and creativity are
a.be proactive b.more complex stifled.
b.determine when the threat will subside c.less profitable Ans: a Page: 19
c.avoid the threats d.less static
d.defeat their competitors e.less complex 96. What is not a pitfall an organization should avoid in strategic
e.foresee into the future Ans: a Page: 17 planning?
Ans: a Page: 16 a.Failing to communicate the plan to employees
93. According to Greenley, strategic management offers all of b.Involving all managers rather than delegating planning to a
89. The act of strengthening employees’ sense of effectiveness by these benefits except that “planner”
encouraging and rewarding them to participate in decision-making a.it provides an objective view of management problems. c.Top managers not actively supporting the strategic planning
and exercise initiative and imagination is referred to as: b.it creates a framework for internal communication among process
a.Authoritarianism personnel. d.Doing strategic planning only to satisfy accreditation or
b.Proaction c.it encourages a favorable attitude toward change. regulatory requirements
c.Empowerment d.it maximizes the effects of adverse conditions and changes. Ans: b Page: 19
d.Transformation e.it gives a degree of discipline and formality to the management
e.Delegation of a business. 97. Which of the following statements is false?
Ans: c Page: 16 Ans: d Page: 17- 18 a.Open-mindedness is an important guideline for effective
strategic management.
90. How do line managers become “owners” of the strategy? b.Strategic management must become a self-perpetuating
a.by attending top manager meetings Why Some Firms Do No Strategic Planning socialist mechanism.
b.by gathering information about competitors 94. What is not a reason given for poor or no strategic planning in c.No organization has unlimited resources.

c.by involvement in the strategic-management process organizations? d.Strategic decisions require trade-offs.
d.by becoming a shareholder of the firm a.Wasting of time e.Strategic management must be a self-reflective learning
e.by buying off top managers b.Being content with success process.
Ans: c Page: 16 c.Fire-fighting Ans: b Page: 20
d.Poor reward structure

91. The changes that occurred when Robert Iger took over the e.Trust of management

reigns at Disney, demonstrate which current trend in Ans: e Page: 18-19 Business Ethics and Strategic Management

organizations?
a.increased formalization of the strategic management process 98. Principles of conduct that guide decision-making are known as
Pitfalls in Doing Strategic Planning a.human rights.
b.increased structuring of strategic management
95. All of these are pitfalls an organization should avoid in b.the Constitution.
c.business ethics. e.all of the above e.Franchises
d.nonprofit organization policies. Ans: e Page: 25 Ans: b Page: 28
e.social responsibility requirements.
Ans: c Page: 20 103.Ethical standards come out of __________ in a final analysis. 107.A(n) __________ refers to a firm investing in international
a.government operations, while the _________ is the country where that
99. A (n) ____________ can provide a basis on which policies can b.competitors business is conducted.
be devised to guide daily decisions and behavior at the work site. c.history and heritage a.parent company; host country
a.list of guidelines d.stakeholder analysis b.home country; parent company
b.policy for safety e.community involvement c.parent country; host company
c.vision statement Ans: c Page: 25 d.host company; home country
d.code of business ethics e.exporting company; importing company
e.annual objective Comparing Business and Military Strategy Ans: a Page: 28
Ans: d Page: 23 104.A strong __________ heritage underlies the study of strategic
management. 108.The greatest advantage of international operations is:
100.Because they must take the __________ of the firm, a.military a.Reduced tariffs and taxes
strategists’ salaries are high compared to those of other b.government b.Spreading economic risks over a wider number of markets
individuals in the organization. c.political c.Access to global technology, culture and business practices
a.moral risks d.social d.Gaining new customers
b.social risks e.cultural e.Less-intense competition
c.environmental risks Ans: a Page: 25 Ans: d Page: 28
d. societal criticism
e. employee criticism 105.Military strategy is based on an assumption of __________, 109.All of these are potential disadvantages of an international
Ans: a Page: 23 whereas business strategy is based on an assumption of operation except:
__________. a.overestimated weaknesses and underestimated strengths of
101.What can be created by ethics training and an ethics culture? a.conflict; cooperation competitors.
a.Competitive responsibility b.conflict; competition b.differing languages, cultures and value systems.
b.Competitive advantage c.cooperation; conflict c.reduced tariffs and taxes.
c.Strategic advantage d.competition; conflict d.complexity due to a multiple monetary system.
d.Employee cooperation e.cooperation; competition e.all of these are potential disadvantages.
e.Comparative advantage Ans: b Page: 26 Ans: c Page: 29
Ans: c Page: 25

102.Which of these business actions is (are) always considered to The Nature of Global Competition
be unethical? 106.____________ are organizations that conduct business

a.poor product or service safety operations across national borders.

b.using nonunion labor in a union shop a.Domestic firms

c.dumping flawed products in a foreign market b.Multinational corporations

d.insider trading c.Parent companies

d.Government-backed companies