Chapter 1 Quiz

1. The term _________ is used to refer to strategy formulation, implementation, and

evaluation, with _________referring only to strategy formulation.
strategic planning; strategic management
assessment; planning
strategic management; strategic planning
management cycle; brainstorming

Correct Answer:strategic management; strategic planning

2. Which of these requires a firm to establish annual objectives, devise policies, and
allocate resources?
Strategy formulation
Strategy implementation
Strategy manipulation
Strategy evaluation

3.The rationale for periodically conducting strategic-management meetings away from

the work site is to encourage more _____________ and ____________ among
participants.
feedback; rigidity
creativity; candor
confidence; self-interest
strategy evaluation; candor

4.Anything that a firm does especially well compared to rival firms is referred to as:
competitive advantage.
comparative advantage.
an external opportunity.
opportunity cost.

5.Both military and business organizations do all of the following except:

use of the element of surprise.
Aim "to gain competitive advantage."
use the assumption of conflict to develop strategies.
use their own strengths to exploit competitors' weaknesses.

6.__________ are the individuals who are most responsible for the success or failure of
an organization.
Ethics officers
Operatives
Consultants
Strategists

7.A disadvantage of international operations is:

foreign operations can allow firms to establish low-cost production
facilities in locations close to raw materials and/or cheap labor.
economies of scale can be achieved from operation in global rather than
solely domestic markets.
competitors in foreign markets may not exist.
Language, culture, and value systems differ among countries, causing
communication barriers and problems managing people.

8.The problem of limited resources within a firm makes ______________ particularly

important as the firm decides how to allocate its resources.
strategy formulation
strategy implementation
long-range planning
short-range planning

9.All of these are pitfalls an organization should avoid in strategic planning except:
using strategic planning to gain control over decisions and resources.
failing to involve key employees in all phases of planning.
hastily moving from mission development to strategy formulation.
using plans as a standard for measuring performance.

10.The process of conducting research and gathering and assimilating external

information is called:
lobbying.
industry analysis.
long-range planning.
mission development.

11.The term strategic planning refers only to strategy formulation.

True
False

12.The action stage of strategic management is called strategy formulation.

True
False

13.Three fundamental strategy evaluation activities are reviewing external and internal
factors, measuring performance, and taking corrective actions.
True
False

14.Strategies can be defined as specific results that an organization seeks to achieve in

pursuing its basic mission.
True
False

15.Reasons for poor or no strategic planning on part of firms include overconfidence, too
expensive, suspicion, and laziness.
True
False

16.In a multidivisional firm, objectives should be established for the overall company and
not for each division.
 True
False

17.An organization can pursue any and/or all strategies that potentially could benefit the
firm.
True
False

18.Communication is an act of strengthening employees' sense of effectiveness by

encouraging them to participate in decision making and to exercise initiative and
imagination, and rewarding them for doing so.
True
False

19.Given that formality creates flexibility and creativity, managers must be very formal in
strategic planning.
True
False

20.One pitfall to avoid in strategic planning is top management making many intuitive
decisions that conflict with formal planning.
True
False

Identify and describe the three stages of the strategic-management process. Give
reasons within your answer to describe why each of these stages is important in strategic
management.

Answers
1.Correct Answer: strategic management; strategic planning

2.Correct Answer: Strategy implementation

.

3.Correct Answer: creativity; candor

4. Correct.: competitive advantage.

5.Correct Answer: use the assumption of conflict to develop strategies.

6.Correct Answer: Strategists

 .

7.Correct Answer: language, culture, and value systems differ among countries, causing
communication barriers and problems managing people.

8.Your Answer: strategy formulation

Correct.

9.Correct Answer: using plans as a standard for measuring performance.

10.Correct Answer: industry analysis.

11.True

Correct.

12.Correct Answer:
False

Incorrect. Strategy implementation is called the action stage.

13.True Correct.

14.Correct Answer:
False

15.Incorrect. Strategies are the means by which long-term objectives will be achieved.

Correct Answer:
True

16.Incorrect. Some firms do not engage in strategic planning due to overconfidence, too
expensive, suspicion, and laziness.

False

Correct.

17.Correct Answer:
False

Incorrect. No organization can pursue all the strategies that potentially could benefit the
firm.
18.Correct Answer:
False

Incorrect. Empowerment is the act of strengthening employees' sense of effectiveness by

encouraging and rewarding them to participate in decision making and exercise initiative and
imagination.

19.Correct Answer:
False

Incorrect. Managers that are very formal in strategic planning can stifle flexibility and
creativity.

20.True

Correct.

21. Identify and describe the three stages of the strategic-management process.
Give reasons within your answer to describe why each of these stages is important in strategic
management.
Your Answer:
(blank)

22. What is sustained competitive advantage? Define this concept and explain how a
firm can achieve it. Why is it important in strategic management?
Your Answer:
(blank)

23. How do external opportunities and threats differ in their strategic implications
from those of internal strengths and weaknesses? Be sure to include in your answer a brief
description of each of these four terms.
Your Answer:
(blank)

24. What is the strategic-management model? What does it represent? Describe

several characteristics of the strategic-management process based on what you understand
about the strategic-management model.
Your Answer:
(blank)

25. Describe the concept of empowerment. How is empowerment related to the

decentralization of the strategic-management process?
Your Answer:
(blank)
\

Chapter 2

The operating ______ of organizations should be to identify customersÕ' needs and then
provide a product or service to fulfill those needs.
philosophy
culture
self-concept
concern for public image

Carefully prepared _____________ and ____________ are widely recognized by both

practitioners and academicians as the first step in strategic management.
long-term objectives; goals
creeds; long-term objectives
vision statements; mission statements
short-term objectives; long-term objectives

The vision and mission statement can often be found:

on supplier invoices.
in a competitive market analysis.
on the front of annual reports.
in the SEC report.

It is important to involve ______________ in the process of developing a mission

statement.
only those managers who will use the mission
very few people to ease consensus-building
as many managers as possible
as wide a variety of upper-level managers as possible

Which of the following is not one of the reasons identified by King and Cleland for
carefully developing a written mission?
To ensure ambiguity of purpose within the organization
To establish a general tone or organizational climate
To provide a basis for allocating organizational resources
To facilitate the translation of objectives into a work structure involving the
assignment of tasks to responsible elements within the organization

During strategy _________, corporate social policy should be set and administered.
formulation
control
evaluation
implementation

What is the recommended length of an effective mission statement?

Less than 200 words
One sentence of 10 to 20 words
 There is no recommendation. It can be as long as the management wants.
One page

A study by Rarick and Vitton found that firms with a formalized mission statement have
the average return on shareholdersÕ' equity compared to those firms without a
formalized mission statement.
twice
five times
half
one quarter

A good operating philosophy of organizations should be to ________ and then

_________.
identify customersÕ' needs; provide a product or service to fulfill them
develop a market; identify a customer base
take an environmental orientation first; take a customer orientation
develop a product or service; identify a market for the product or service

Which of the following is a question that an effective mission statement answers?

Is the firm technologically current?
What is the company we want to be in the long-range future?
What is our net worth?
What is our profitability?

The vision statement should be short, preferably one sentence.

True
False

Commitment to a companyÕ's strategy and intellectual agreement on the strategies to be

pursued do not necessarily translate into an emotional bond.
True
False

The highest level of managers should develop the vision statement, which should be
concise.
True
False

Each division of a multidivisional organization should develop a mission statement.

True
False

Stakeholders of an organization include stockholders, customers and creditors, but not

the competitors.
True
False

Developing a comprehensive mission statement is important because divergent views

can be revealed and resolved through the process.
True
False
 An effective mission statement should include five components.
True
False

During strategy formulation, social policy should be reaffirmed and changed.

True
False

A mission statement should be specific and thus encourage the creative potential for the
organization.
True
False

The term social policy embraces managerial philosophy and thinking at the highest levels
of an organization.
True
False

What is the purpose of a mission statement? Differentiate between a mission and a vision
statement.

Many organizations develop both a mission statement and a vision statement. Whereas the
mission statement answers the question Ò"What is our business?Ó" the vision statement
answers the question Ò"What do we want to become?Ó" Students should refer to Ò"What Is Our
Business?Ó" and Ò"Vision Versus MissionÓ" for more information related to this question. These
sections are located on pages 59-60.

Why are the vision and mission statements important to a given organization? Why are
they important to effective strategic management? Cite several reasons organizations should
carefully develop a written mission statement.

King and Cleland recommend that organizations carefully develop a written mission
statement. They provide several reasons stated in the text. These include ensuring unanimity of
purpose within the organization, providing a basis for allocating resources, establishing a general
organizational climate, serving as a focal point for identification with the organizationÕ's purpose
and direction, and others. Students should refer to the importance of vision and mission
statements on pages 61-62 in developing their answers.

Why is the resolution of divergent views important in an organization? How can the
development of a mission statement help the organization to achieve this? What could happen if
considerable disagreement over the vision and mission of a firm is not resolved?
 The resolution of divergent views is important in any organization. It is more important to
build consensus on the mission and vision of the firm than to make compromises that do not
represent the views of either party. If left unresolved, divergent views can lead to constant
disagreements among the organizationÕ's strategists. Students may refer to a resolution of
divergent views on pages 62-64 for more information.

What does it mean to reflect the anticipations of customers? How can a company
incorporate this idea when developing its mission statement?

A good mission statement reflects the anticipations of customers. Rather than developing
a product and then trying to find a market, the operating philosophy of organizations should be to
identify customersÕ' needs and then provide a product or service to fulfill those needs. This is
part of establishing a customer orientation instead of a product orientation or specific service
orientation. A major reason for developing a mission statement is to attract customers who give
meaning to an organization. For more regarding this question, students may refer to a customer
orientation on pages 66-68.

List and explain the nine essential components of a mission statement. Why are these
important?

The mission statement is often the most visible and public part of the strategic-
management process. There are nine critical components that should be included in the mission
statement. They can be addressed by asking several questionsÑ-who, what, where, how much,
or what. Students should identify all nine componentsÑ-customers, products, markets,
technology, concern for survival, growth and profitability, philosophy, self-concept, concern for
public image, and concern for employees. Students can refer to mission statement components
on page 70 for more information related to this question.
Your Results for "Chapter Quiz"

1.
Your Answer: philosophy

Correct.

2.
Your Answer: long-term objectives; goals

Correct Answer:vision statements; mission statements

Incorrect. The correct answer is vision statements; mission statements.

3.
Your Answer: in a competitive market analysis.

Correct Answer:on the front of annual reports.

Incorrect. The correct answer is on the front of annual reports.

4.
Your Answer: only those managers who will use the mission

Correct Answer:as many managers as possible

Incorrect. The correct answer is as many managers as possible.

5.
Correct Answer:To ensure ambiguity of purpose within the organization

6.
Your Answer: implementation

Correct.

7.
Your Answer: Less than 200 words

Correct.

8. .

Correct Answer:twice

Incorrect. The correct response is twice.

9.
Your Answer: identify customersÕ' needs; provide a product or service to fulfill them

Correct.

10.Your Answer: Is the firm technologically current?

Correct.

11.
Your Answer:
True

Correct.

12.

Correct Answer:
True

Incorrect. This does not necessarily translate into an emotional bond; hence, strategies
that have been formulated may not be implemented.

13.

Correct Answer:
False

Incorrect. As many managers as possible should have input into developing the vision
statement.

14.

Correct Answer:
True

Incorrect. Each division of a multidivisional organization should develop a mission

statement.

15.
Your Answer:
False

Correct.

16.
Your Answer:
True

Correct.

17.

Correct Answer:
False

Incorrect. An effective mission statement should include nine components.

18.

Correct Answer:
False

Incorrect. It should be changed during strategy evaluation.

19.

Correct Answer:
False

Incorrect. A good mission statement should not be too specific; otherwise, it could stifle
the potential for creative growth for the organization.

20.
Your Answer:
True

Correct.
Chapter 3 Chapter Quiz

According to I/O theorists, which of the following contributes least to firm performance?
Internal resources
Economies of scale
Barriers to market entry
Product differentiation

The external audit is aimed at:

taking advantage of potential threats and minimizing external opportunities.
developing an exhaustive list of factors that could influence the business.
identifying key variables that offer actionable responses.
developing an infinite list of opportunities that could benefit a firm.

Which of the following is not a misperception about business intelligence that prevails
among American executives today?
Running an intelligence program requires lots of people, computers, and other
resources.
Business is not equal to espionage.
Intelligence gathering is an unethical business practice.
Collecting intelligence about competitors violates antitrust laws.

__________ are the results of a low value of the dollar.

Lower imports and higher exports
Lower imports and lower exports
Higher imports and higher exports
Higher imports and lower exports

has replaced as the world's hottest destination for foreign direct investment.
Great Britain; China
Great Britain; the United States
The United States; China
China; the United States

_______________ and ______________ are creating similar patterns of consumption in

diverse cultures worldwide.
Tax harmonization; legal factors
Distinct domestic markets; the climate for international business
Mass communication; high technology
 Corporate tax breaks; mass communication

Many businesses use _____________ to obtain most of their information on competitors

because it is fast, thorough, and accurate.
past performance
the Internet
SEC reports
other firms' mission statements

All of these, except__________, are part of Porter's competitive forces in industry

analysis.
potential entry of new competitors
bargaining power of suppliers
development of substitute products
bargaining power of unions

In its simplest sense, the international challenge faced by U.S. business is twofold:
how to increase exports to other countries and how to increase imports
from other countries.
how to defend domestic markets against imported goods while minimizing exports.
how to maximize exports to other nations and how to defend domestic markets against
imported goods.
how to minimize imports and exports in domestic markets and slowly decrease
globalization.

_______________ are most appropriate when historical data are available and when the
relationships among key variables are expected to remain the same in the future.
Qualitative forecasts
Econometric model analyses
Quantitative forecasts
A scenario forecast

Five major categories of external variables are: (1) economic forces, (2) social and
cultural forces, (3) political, governmental and legal forces, (4) technological forces and (5)
demographic forces.
True
False

Significant and unequal effects on companies in different industries and in different

locations come from trends in the dollar's value.
True
False

The absence of a legal system deters firms from initiating business with China.
True
False

Research findings suggest that approximately 36 percent of a firm's profitability can be

explained by the industry, whereas 20 percent is attributed to the firm's internal factors.
True
False

Nine out of 10 large companies have employees dedicated solely to gathering

competitive intelligence.
True
False

Acquisition is essential to growth in the most competitive companies.

True
False

Bargaining power of consumers is usually the most powerful of Porter's five competitive
forces.
True
False

Many large multinational firms are moving out of EU member-countries into Switzerland
and Ireland to avoid costs associated with tax harmonization.
True
False

Poor infrastructure and little respect for legal contracts are two risks that still restrain firms
from initiating business with China.
True
False

Based on the best information at the time, assumptions serve as checkpoints on the
validity of strategies.
True
False

Identify the five broad categories of external forces. Which two do you think are the most
important for a firm that specializes in government contracts for the military? Support your
response.
To create paragraphs in your essay response, type <p> at the beginning of the
paragraph, and </p> at the end.

Briefly explain the rationale behind the industrial organization (I/O) approach to
competitive advantage. Do you agree with this approach?
To create paragraphs in your essay response, type <p> at the beginning of the
paragraph, and </p> at the end.

Explain the importance of technological forces for a firm. Identify some recent
technological forces that have been factors in how companies compete in a particular industry
and explain how those forces affected competition.
To create paragraphs in your essay response, type <p> at the beginning of the
paragraph, and </p> at the end.

Differentiate between market commonality and resource similarity. What is meant by each
of these terms? How are they used?
To create paragraphs in your essay response, type <p> at the beginning of the
paragraph, and </p> at the end.

What is the Competitive Profile Matrix? How is it used? What factors are included in this
analysis?
To create paragraphs in your essay response, type <p> at the beginning of the
paragraph, and </p> at the end.

Copyright © 1995-2008, Pearson Education, Inc., publishing as Pearson Prentice Hall

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Your Results for "Chapter Quiz"
Print this page

Site Title: Strategic Management: Concepts and Cases, 11E

Book's Title: Strategic Management: Concepts and Cases, 11th Edition

Book's Author: David

Location on Site: Chapter 3 > Chapter Quiz

Date/Time Submitted:
October 27, 2008 at 1:06 AM (EDT)
Summary of Results
45% Correct of 20 scored items: 9 correct: 45%
11 incorrect: 55%

5 questions not scored. 20 scored questions.

More information about scoring

1. According to I/O theorists, which of the following contributes least to firm

performance?

Your Answer: Internal resources

Correct.

2. The external audit is aimed at:

Your Answer: taking advantage of potential threats and minimizing external opportunities.
Correct Answer:identifying key variables that offer actionable responses.

Incorrect. The correct answer is identifying key variables that offer actionable responses.

3. Which of the following is not a misperception about business intelligence that

prevails among American executives today?

Your Answer: Running an intelligence program requires lots of people, computers, and other
resources.

Correct Answer:Business is not equal to espionage.

Incorrect. This is a misperception about business intelligence. The correct answer is that
business is not equal to espionage.

4. __________ are the results of a low value of the dollar.

Your Answer: Lower imports and higher exports

Correct.

5. has replaced as the world's hottest destination for foreign direct investment.

Your Answer: Great Britain; the United States

Correct Answer:China; the United States

Incorrect. The correct answer is China; the United States.

6. _______________ and ______________ are creating similar patterns of

consumption in diverse cultures worldwide.

Your Answer: Mass communication; high technology

Correct.

7. Many businesses use _____________ to obtain most of their information on

competitors because it is fast, thorough, and accurate.

Your Answer: other firms' mission statements

Correct Answer:the Internet

Incorrect. The correct answer is the Internet.

8. All of these, except__________, are part of Porter's competitive forces in industry

analysis.

Your Answer: bargaining power of unions

 Correct.

9. In its simplest sense, the international challenge faced by U.S. business is

twofold:

Your Answer: how to minimize imports and exports in domestic markets and slowly decrease
globalization.

Correct Answer:how to maximize exports to other nations and how to defend domestic markets
against imported goods.

Incorrect. The correct answer is how to maximize exports to other nations and how to
defend domestic markets against imported goods.

10. _______________ are most appropriate when historical data are available and
when the relationships among key variables are expected to remain the same in the future.

Your Answer: Quantitative forecasts

Correct.

11. Five major categories of external variables are: (1) economic forces, (2) social
and cultural forces, (3) political, governmental and legal forces, (4) technological forces and (5)
demographic forces.

Your Answer:
True

Correct Answer:
False

Incorrect. The five categories are: (1) economic forces, (2) social, cultural, demographic,
and environmental forces, (3) political, governmental, and legal forces, (4) technological forces,
and (5) competitive forces.

12. Significant and unequal effects on companies in different industries and in

different locations come from trends in the dollar's value.

Your Answer:
True

Correct.

13. The absence of a legal system deters firms from initiating business with China.

Your Answer:
False

Correct Answer:
True
 Incorrect. The absence of a legal system is one among several serious risks that still
deters firms from initiating business with China.

14. Research findings suggest that approximately 36 percent of a firm's profitability

can be explained by the industry, whereas 20 percent is attributed to the firm's internal factors.

Your Answer:
False

Correct.

15. Nine out of 10 large companies have employees dedicated solely to gathering
competitive intelligence.

Your Answer:
False

Correct Answer:
True

Incorrect. Nine out of 10 large companies have employees dedicated solely to gathering
competitive intelligence.

16. Acquisition is essential to growth in the most competitive companies.

Your Answer:
True

Correct Answer:
False

Incorrect. Acquisition is essential to growth; the most successful purchases are in niches
that add a technology or a related market.

17. Bargaining power of consumers is usually the most powerful of Porter's five
competitive forces.

Your Answer:
False

Correct.

18. Many large multinational firms are moving out of EU member-countries into
Switzerland and Ireland to avoid costs associated with tax harmonization.

Your Answer:
False

Correct Answer:
True
 Incorrect. Many large multinational firms are moving out of EU member-countries into
Switzerland and Ireland to avoid costs associated with tax harmonization.

19. Poor infrastructure and little respect for legal contracts are two risks that still
restrain firms from initiating business with China.

Your Answer:
True

Correct.

20. Based on the best information at the time, assumptions serve as checkpoints on
the validity of strategies.

Your Answer:
False

Correct Answer:
True

Incorrect. Based on the best information at the time, assumptions serve as checkpoints
on the validity of strategies.

21. Identify the five broad categories of external forces. Which two do you think are
the most important for a firm that specializes in government contracts for the military? Support
your response.
Your Answer:

sdas

The five broad categories include economic forces; social, cultural, demographic, and
environmental forces; political, governmental, and legal forces; technological forces; and
competitive forces. The two that would likely be most directly important to a firm that did
government contract work to support the military would be technological forces and the political,
governmental, and legal forces. Students should refer to key external forces on page 83 for more
information.

22. Briefly explain the rationale behind the industrial organization (I/O) approach to
competitive advantage. Do you agree with this approach?
Your Answer:

sa

In the first part of the answer, students should explain that the I/O approach advocates
that external (industry) factors are more important that internal factors in a firm achieving
competitive advantage. Competitive advantage is determined largely by competitive positioning
within an industry. In the second part of the response, students should demonstrate an
understanding of the I/O view as separate and distinct from other views on competitive
advantage.
23. Explain the importance of technological forces for a firm. Identify some recent
technological forces that have been factors in how companies compete in a particular industry
and explain how those forces affected competition.
Your Answer:

sda

Revolutionary technological changes and discoveries are having a dramatic impact on

organizations. Superconductivity, for instance, has revolutionized transportation, utility,
healthcare, electrical, and computer industries. The Internet is another example. Students should
offer several examples and may refer to technological forces on page 93 in the text for further
explanation on this topic.

24. Differentiate between market commonality and resource similarity. What is meant
by each of these terms? How are they used?
Your Answer:

asd

Market commonality and resource similarity are used to study rivalry among competitors.
Market commonality can be defined as the number and significance of markets that a firm
competes in with rivals. Resource similarity is the extent to which the type and amount of a firm's
internal resources are comparable to a rival. Students may refer to market commonality and
resource similarity on page 99 for more information regarding this question.

25. What is the Competitive Profile Matrix? How is it used? What factors are included
in this analysis?
Your Answer:

dsa

The Competitive Profile Matrix (CPM) identifies a firm's major competitors and its
particular strengths and weaknesses in relation to a sample firm's strategic position. Critical
success factors in a CPM include both internal and external issues. Factors often included in this
analysis include breadth of product line, effectiveness of sales distribution, proprietary or patent
advantages, location, production capacity and efficiency, experience, union relations,
technological advantages, and e-commerce expertise. Students should refer to the Competitive
Profile Matrix (CPM) on pages 111-112.

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Home Chapter 4 Chapter 4: The Internal Assessment

Chapter 4: The Internal Assessment

This activity contains 25 questions.

A firmÕ's strengths that cannot be easily matched or imitated by competitors are called:
external opportunities.
distinctive competencies.
special properties.
competitive ventures.

___________ can inhibit strategic management, for example, by leading managers to

miss the significance of changing external conditions.
Rules and guidelines
Culture
Market segmentation
Competitive awareness