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Strategic management is one decision that determines the short-term performance of a corporation. (p.2) Answer: F 2. With externally oriented planning, plans are developed by heavily involving the input of managers from lower levels. (p.3) Answer: F 3. One of the benefits of strategic management is a clearer sense of vision for the firm. Answer: T 4. Globalization is the internationalization of markets and corporations. Answer: T 5. Electronic commerce is the use of the Internet to conduct business transactions. Answer: T 6. One member of the European Union (EU) is Chile. Answer: F 7. The goal of NAFTA is complete integration with regard to trade. Answer: F 8. Chile may be a part of NAFTA and Mercosur. Answer: F 9. The rise of the Internet has not had much impact on the nature of competition. Answer: F 10. Knowledge is viewed as a competitive advantage. Answer: T 11. (p.4) (p.5) (p.5) (p.6) (p.6) (p.6) (p.7) (p.7)

Population ecology is a theory that proposes organizations can and do adapt to change by imitating other successful organizations. (p.7) Answer: F 12. With organizational learning theory, knowledge is used as a way to hedge a changing environment. (p.8) Answer: T 13. Strategic flexibility is the ability to shift from one dominant strategy to another. Answer: T 14. One tenet of the learning organization is to maintain stability. Answer: F 15. The internal environment includes the variables of opportunities and threats. Answer: F 16. Objectives are the end result of planned activity. Answer: T 17. Corporate strategy occurs at the business unit or product level. Answer: F (p.8) (p.8) (p.10) (p.12) (p.13)


is an integrative orientation from the organization's perspective. efficient utilization of assets. examines environmental opportunities and constraints. c. forecast-based planning incorporates internal and external information. (p. historical concerns. b. Answer: T 20.3) 24. e. less than one month. d. reviews the long-run performance of the corporation.15) Performance is evaluated at the strategy formulation phase of the strategic management process. scanning the internal environment. e. Answer: T 19. d. The time horizon involved with regard to basic financial planning is usually a. c.13) (p. d. The difference between basic financial planning and forecast-based planning is a. (p. more than five years. e.2) In contrast to strategic management.16) Answer: F Multiple Choice 21. (p. c. e. (p. The first phase is a. scanning the external environment. one quarter. investigates competitive actions and responses. basic financial planning utilizes consultants.18. more than three years. (p. d. (p. Strategic management differs from business policy through its heavier emphasis on a. formulating general guidelines. both a and b are correct. b. b. the time horizon with each phase. Research suggests that strategic management evolves through four sequential phases in corporations.3) 25. c. c. d. looks at the managerial decisions. 23. the primary focus of business policy a. one year.2) (p.3) 104 . e. strategic management. 22. A budget is a statement of a corporation’s programs in terms of dollars. basic financial planning. b. A hierarchy is a group of strategy types by level in the organization. b. internally-oriented planning. externally-oriented planning. basic financial planning utilizes scenarios. forecast-based planning.

middle management. In a survey of 50 corporations. c. d. should be done by the president only.3) 27. c. b. d.3) a. should be a formalized and sophisticated system. b. strategic information is available to a. should encourage a clear delineation between top management and lower-level managers. should be instigated only from the main corporate office. Top-down planning that emphasizes formal strategy formulation and leaves the implementation issues to lower management levels is known as (p. (p. strategic management. the top management responsible for decision making. people throughout the organization. d. e. c. may be informal and irregular. none of the above 28. where will the organization be in one year? If the evaluation is negative. (p.4) 31.26. c. b. e. 32. what specific actions should management take? If no changes are made. When an organization is evaluating its strategic position. clearer sense of vision for the firm. Under the phase of strategic management. which is NOT one of the strategic questions that an organization must ask itself? a. e.4) 29. (p. forecast-based planning. must be elaborate to allow for future growth. c.4) should be informal to allow complete understanding by the many participants. all of the following were rated as benefits of strategic management EXCEPT (p. operational personnel. Strategic planning within a small organization a. none of the above (p. where will the organization be in 10 years? 30. if it's not broken. b.4) a. d. externally-oriented planning. c. should be accomplished quickly to decrease the likelihood of it becoming outdated. higher levels of job satisfaction. Strategic planning in a multidivisional corporation a.4) 105 . b. e. Where is the organization now? How can functional and operational areas be improved? If no changes are made. The lesson learned by Maytag Corporation in 1978 was that a. d. sharper focus on what is strategically important. b. none of the above (p. is unnecessary and a waste of time. don't fix it. e. should always be formalized and explicitly stated. improved understanding of a rapidly changing environment. e. d. basic financial planning.

and Mexico are affiliated with the trade alliance a. NAFTA. Turkey. Mercosur. to diversify too widely is dangerous. France. (p. 33. c. additional human resource training. Mercosur. EU. 34.6) 36. Canada. c. Belgium. c. One of the countries to become a member of the European Union by 2006 is (p. its existing product line was satisfactory. f.6) 106 .5) The internationalization of markets and corporations is called a. EU. d. c. ASEAN. ABUP.6) a. Argentina. The regional trade association composed of Argentina.6) a. economies of scale. Members of the European Union (EU) include a. ASEAN. e.5) 35. regionalization. 38. Both c and d are correct. it should specialize in the field it knew best. 37. (p. nationalization. its existing product line was NOT satisfactory. Cyprus. globalization. Greece. b. d. Malaysia.b. (p. Portugal. c. c. b. d. b. Lithuania. d. One of the benefits of globalization is a. e. economic integration. e. NAFTA. (p. the United States. b. d. Uruguay. and Paraguay is called (p. c. e. normalization. increased union negotiations. b. e. d. higher production costs. b. increased taxes. Brazil. d.

d. 2000. El Salvador. (p. goods sold in the NAFTA trade alliance must have _____ North American content. d. 1994. Mercosul. c. b. dollar. Mercosur is referred to as _____ in Portuguese.5% 72. Chile. disintegration. a. 1993.6) 45.6) 41. b. Bolivia. The breaking down of traditional distribution channels is referred to as a. b. 50. Mexico. b. none of the above. (p. b. b. 1992. The currency of the European Union (EU) is called the a. Mercasa. peso. e. Uruguay. c. c. NAFTA was launched during the year a. d. e.7) 107 . Mercosur. e. disintermediation. 44.5% 70. d. c. c. d. intermediary. 40. (p. Cuba.e. NUSFTA. Brazil. disengagement. (p. d. China. Great Britain. c. d.5% 62. In order to qualify for duty-free status.6) a. Mercusa. intermediation. 1990.6) One country that has been extended a free-trade agreement by Mercosur is a. e. One country being considered for NAFTA membership and Mercosur affiliation is a. b. eurosha. e. none of the above (p.6) 43. euro. e. c. the United States. 42.5% (p.6) 39. (p.

c. changes in market access and branding. All of the following reflect trends due to the rise of the Internet EXCEPT a. e. (p. the transformation of companies. sample theory.8) a. strategic flexibility. educational institution. changing competition. and at modifying its behavior to reflect new knowledge and insights is a(an) (p. b. hypercompetitive competitor. population institution strategic choice organizational learning organizational citizenship 49. The ability of a corporation to shift from one dominant strategy to another is called a. d. learning adapting stagnant innovative none of the above (p. d. 52. institution theory. acquiring. (p. The ability of an organization to reshape its environment is described by _____ theory. c. contingency management. b. Institution Strategic choice Population Organizational learning Organizational change (p. a. e. b. chaos formulation. citizenship theory. d. protectionist borders.7) a. and transferring knowledge. population ecology. d. e. e. b. c. (p. c. _____ theory proposes an established organization can suffer from inertia. strategic theory. learning organization.8) a. c.8) 48.7) 47. c. strategy implementation.8) 51.46.7) 50. shift of power to the consumer. 108 . b. c. An organization skilled at creating. d. b. e. The theory that proposes organizations can and do adapt to changing conditions by imitating other successful organizations is known as (p. a. d. e. strategically managed corporation. b. Creating. logical incrementalism. acquiring. d. and transferring knowledge are characteristics of a(n) _____ organization.

strategies. terminal. trust. e. b. a. e.O. d.W.10) 59. learning from its own experiences and past history. c. task. scanning. e. The monitoring.8) All of the following reflect activities of a learning organization EXCEPT a. 53. Which one of the following is NOT included in the strategic management process? (p. The variables structure. environmental scanning.9) 57. solving problems systematically. none of the above (p. culture. b. (p. b. societal.O. 54. d.10) a. technical.T. c.T. d. e. transferring knowledge quickly and efficiently. b. strengths. evaluating. environmental opportunity scanning. e. strategy formulation. and resources pertain to the _____ environment.e. 109 . none of these 56.W. d. alienating competitors in the industry. stands for a. c. The S in S. strategy formulation strategy implementation statistical process control evaluation and control environmental scanning (p. and disseminating of information from the external and internal environments to key people within the corporation is referred to as a. d. external internal coincidental strategic none of the above (p. strategy implementation. external scanning.9) 58.9) 55. b. The T in S. The development of long-range plans for the effective management of environmental opportunities and threats is known as (p. c. b. e. stands for a. internal scanning. (p. c. b. Strategic management is that set of managerial decisions and actions that determine the long-run performance of a corporation. d. c. threats.9) a. experimenting with new approaches. entrepreneurial firm.

b.10) 64. (p.Procedures -. d. Policies -. 60.Programs. (p. d. b. c. A description of the activities carried out by the organization.Mission.10) 65.Strategies -. c.Objectives -. c. c. e. Which one of the following is included in the firm's task environment? a. c. Budgets -. c.Strategies -. e. b.Policies -. resources political-legal forces customers economic forces stockholders (p. Programs -. b.Budgets.Mission. encompasses the physical working areas of the organization. technological factors sociocultural factors economic factors stockholders none of these (p. strategy evaluation.Budgets -. A statement of corporate objectives. Policies -. Procedures -. d.Objectives. Strategy Implementation in the Strategic Management Model occurs in the following order: a.Programs -. e.Budgets -.Policies -.Programs.Objectives. A description of top management's responsibilities. b. The purpose or reason for the corporation's existence.Strategies -. Which one of the following is included in the firm's societal environment? a. strategy development. Mission -. Budgets -. The task environment a. includes those elements or groups within an organization's industry. (p.Procedures.Objectives -. is an accounting of the many jobs within an organization. (p.Strategies -.10) 66. d. d. strategy control. e. b. b. c. 61.Strategies -.10) The Strategic Management Model presents the following process of strategy formulation: a.10) 110 .Procedures -. competitors economic forces resources governments special interest groups (p. d. The corporate mission is best described by which one of the following? a.c. Objectives -.Policies. e. Mission -.Procedures. e. Programs -.10) 63. d. includes general forces that only indirectly affect an organization's activities.Mission -. d. e. Which one of the following is included in the firm's internal environment? a. is an advisory committee to top-management.10) 62.

d. Develop and sell quality appliances worldwide. d.12) 72. e. b. Divide a sales region into a group of sales districts. Which of the following is an example of an objective? a. d. c. A goal differs from an objective because it a. (p. c. specifies measurable results.12) 68. Increase sales by 10% over last year. Increase sales by 10% over last year. e. (p. indicates the reason for the organization’s existence. should be less formally stated to allow for growth. should set the organization apart from its competitors. Diversify product line to appeal to more people. is clearly specified. b.e. c. Which one of the following is an example of a narrow scope? (p.11) 111 . states what the organization would like to become.12) 70. Which one of the following is an example of an objective? a. Which of the following is an example of a mission? a. Diversify product line to appeal to more people. e.12) a. b.O. d. should have a different mission statement for each subsidiary division. Pay highest salaries to keep high quality employees. should describe the organization's S. c.12) 71. improve company reputation company survival increase profits market leadership raise ROI by 10% next year (p. (p. d. e. b. e. e. b. promotes the company’s social responsibility. e. transportation (vs railroads) computers (vs office equipment) health care (vs hospitals) real estate (vs apartments) telecommunications (vs television) (p. explains past failures and successes. A mission statement differs from a vision statement because a vision statement a.W. provides a time horizon. Pay highest salaries to keep high quality employees. b. should state long-range plans for management. 69. (p. c. The philosophy of the founder. proposes ways to improve profitability. The organization's corporate mission statement a. Develop and sell quality appliances worldwide. 67. Divide a sales region into a group of sales districts. c. d. is quantified. d. b.12) 73. is open-ended. c.T.

78. e.13) 79. operational. Environmental -. b. business. multidivisional business has three levels in its hierarchy of strategy: a.Functional. corporate. Increase sales by 10% over last year. functional.Corporate. The type of strategy which describes a company's overall direction in terms of its general attitude toward growth and the management of its various businesses and product lines is (p. Business -. c.13) a. environmental. e.13) 75. e.Functional. Pay highest salaries to keep high quality employees.Corporate -. 76. As defined in this course. c. environmental. The type of strategy which emphasizes the improvement of the competitive position of a corporation's products or services in a particular industry or market segment served by a business unit is (p. Industry -. The type of strategy which achieves corporate and business unit objectives and strategies by emphasizing resource productivity is a. Corporate -. functional. a statement of a corporation's programs in dollar terms. (p. corporate. e. Environmental -.Divisional. functional.Enterprise -. business. a comprehensive master plan stating how a corporation will achieve its mission and objectives. (p. b. Diversify product line to appeal to more people. b.Corporate -. e. business. d.Divisional -. operational.Functional. (p.14) 112 . operational. c. a policy is a. b. b. corporate. d. c. b.13) a. a statement of activities or steps needed to accomplish a single-use plan. the purpose or reason for a corporation's existence. Increase sales by 10% over last year. (p. environmental. b.14) 80. Which of the following is an example of a strategy? a. e. Divide a sales region into a group of sales districts. A large. (p. c. d. Which of the following is an example of a policy? a.13) 77. c.74. Diversify product line to appeal to more people. a broad guideline for making decisions. Develop and sell quality appliances worldwide. d. d.Business -. d.

pro forma financial statements. d. Used in planning and control. (p. b. e. Strategy. e. strategy development.15) 113 . Develop and sell quality appliances worldwide. e. None of the above 86. Used as a means of measuring success based on a certain criteria.15) 83. performance evaluation budgets programs procedures none of these (p. Divide a sales region into a group of sales districts. strategy evaluation. formatted financial statements.15) The process by which strategies and policies are put into action through the development of programs. and procedures is a. d. Divide a sales region into a group of sales districts. d. One means of forecasting a firm’s financial future can be accomplished through a. c. b. A budget is a statement of a corporation's programs in dollar terms. Develop and sell quality appliances worldwide. return on assets.c. Pay highest salaries to keep high quality employees. Which of the following is an example of a program? a. Which of the following is NOT a part of strategy implementation? a. Which is NOT true of the budgetary function? (p. b. passing rate. The S in SOP stands for a. c. d. pro forma budgets. c. strategy control. d.15) a. 81. Diversify product line to appeal to more people. c. e.15) 84. 82. budgets. c. simultaneous planning. (p. Serves as a detailed plan of strategy in action. b. strategy implementation. (p. c. b. Only one budget is necessary for all programs. planning budgets. (p. e. e. Details the impact on the firm's future financial situation. d.15) 87. e. Pay highest salaries to keep high quality employees. b. hurdle rate. program rate. Increase sales by 10% over last year. 85 A return on investment is sometimes referred to as a. strategy formulation.15) 85. d. (p.

evaluation and control is concerned with all of the following. Research done by Henry Mintzberg suggests that strategy formulation a. c. monitoring corporate activities and performance. Standard Scanning. is merely a checklist of actions following a logical process. pinpointing problem areas. 88. c.b. e. b. e. Which of the following is NOT one the four triggering events listed in the text that are the stimulus for a strategic change? (p. d. return on investment. c. Strength. should review after specific interval of time to make sure it is still applicable. b. a standard outside procedure. e. a plan.16) a. All of the above (p.16) 92. The existence of a performance gap 114 .17) 94. (p. e. e. a systems operating plan. d. c. a standard operating procedure. b. profits. a standard operating program. As a part of the strategic management process. d. revenues.17) a. c. Systems. d. intervention by the organization's bank annual strategic planning conference change in ownership of the organization new CEO awareness by management of decreased profitability (p.15) a. b. e. A set of sequential steps or techniques that describe in detail how a particular task or job is to be done is referred to as (p. synopsis. b. a systems operating procedure. c. that organizations find they must make significant yearly changes. c. d. is typically an irregular and a discontinuous process.16) 90. EXCEPT (p. 91. e. d. (p. generating feedback to decision makers. Performance is measured by a. perseverance. performance. 89. preference. b. is the primary concern of top management.16) 93. The end result of activities is known as a. return on assets. d. stimulating a review of the corporation's strategic management. should be followed unswervingly to ensure success of the plan.

it only has the opportunity for reactive behavior. logical incrementalism. directive consequential none of these continuous rare 96. planning mode. c. should signal the immediate revamp of the firm's strategic policy.19) 115 . d. Assumes the environment is too complex to be completely comprehended. directive. According to Mintzberg. What characterizes the planning mode of strategy formulation? a. d. is characterized by reactive solutions to existing problems. (p. Rather than utilizing a proactive search for new opportunities. e. e. Strategic decisions which set precedents for lesser decisions and future actions throughout the organization are referred to as (p.a. 99. c. d. is focused on opportunities seen by one person.18) a. b. Based on vision and large-picture strategy. c. b. 95. (p. and policies. The strategic decision making process is an eight-step approach to decision-making and is most useful when operating in the (p.19) Top management believes that the environment is a force to be used and controlled. b. assumes major responsibilities for strategy formulation. is not an indicator of problems if it only happens once. should cause management to question their objectives. but it chooses to develop a series of tentative or partial strategies instead of developing full-blown strategies is called (p.18) 98. should cause management to look only within the organization to determine the problem. entrepreneurial mode. c. b. Which of the following is NOT a characteristic of strategic decisions as mentioned in the text? (p. e. assumes the environment is unresponsive to input. 100. rare. Assumes that systematic scanning and analysis of the environment can provide the knowledge necessary to influence the environment to the corporation's advantage. c. strategies. the entrepreneurial mode of strategy formulation a. e. c. b. 97. includes the proactive search for new opportunities and reactive solutions to existing problems. d. is only the concern of top management because they set the original strategies. consequential. The mode of strategy formulation used when top management has a reasonably clear idea of the corporation's mission and objectives.18) a. adaptive mode. e. motivational. inexpensive. strategic mode. d. d.19) a. b. e.

c.a. incremental mode. planning mode. b. adaptive mode. 116 . d. a la mode. entrepreneurial mode. e.

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