Chapter 8--Strategy Formulation and Execution

Student: ___________________________________________________________________________

1. Research has shown that strategic thinking and planning positively affect a firm's performance and
financial success.

True False

2. Strategic thinking is more important -profit businesses than for non-profit organizations.

True False

3. Top managers and chief executives have the final responsibility for strategic planning.

True False

4. Front-line managers have the final responsibility for strategic planning.

True False

5. Competitive advantage refers to the set of decisions and actions used to formulate and implement
strategies.

True False

6. The interaction of Production and Sales working together to produce profit greater than the total of
both working separately is an example of synergy.

True False

7. Core competence is the plan of action that prescribes resource allocation and other activities for
dealing with the environment.

True False

8. The combination of benefits received and costs paid by the customer refers to value.

True False

9. Corporate-level strategy pertains to the organization as a whole.

True False

10 The "How do we compete?" question concerns functional-level strategy.

.
True False

11 The three levels of strategy are business, corporate, and global.

.
True False
1
12 Strategic partnerships are the current trend, rather than mergers and acquisitions.
.
True False

13 In a turbulent business climate, managers should focus on strategic stability rather than flexibility.
.
True False

14 Strategy implementation involves the planning and decision making that lead to the establishment of
. the firm's goals.

True False

15. Scenario - SS.com

Faced with rapidly growing business, Swift Stocks,

Inc., a global brokerage company with the largest
market share, recently announced that it has
established an on-line stock investment and trading
subsidiary, SS.com, where investors can trade stocks
at the lowest rates in the industry. The .com
subsidiary has less than one percent market share
but it faces a very high business growth rate. In the
brokerage industry the competition is fierce and all
players are cutting their on-line commission rates.

Swift Stock is following which strategy, according

to Porter, through the .com subsidiary?
a. Stability
b. Cost leadership
c. Focus
d. Differentiation
e. Retrenchment

16 _____ is the set of decisions and actions used to formulate and implement strategies that will provide a
. competitively superior fit between the organization and its environment so as to achieve organizational
goals.

________________________________________

2
17 The plan of action that prescribes resource allocation and other activities for dealing with the
. environment and helping the organization attain its goals is called a(n) _____.

________________________________________

18 A business activity that an organization does particularly well relative to its competition is known as
. a(n) _____.

________________________________________

19 For the social networking site Facebook, technological know-how and an aggressive and innovative
. culture are significant strengths to include in its SWOT analysis.

True False

20 Threats are characteristics of the internal environment that may prevent the organization from
. achieving its strategic goals.

True False

21 The task environment sectors are the most relevant to strategic behavior and include the behavior of
. competitors, customers, suppliers, and the labor supply.

True False

22 Opportunities are characteristics of the internal environment that have the potential to help the
. organization achieve or exceed its strategic goals.

True False

23 The mix of business units and product lines that fit together in a logical way to provide synergy and
. competitive advantage for the corporation pertains to portfolio strategy.

True False

24 An SBU stands for Star Business Unit.

.
True False

25 The BCG (Boston Consulting Group) matrix evaluates SBUs with respect to their business growth rate
. and geographical location.

True False

26 The question mark exists in a new, rapidly growing industry but has only a small market share,
. according to the BCG Matrix.

True False

27 According to the BCG Matrix, the cash cow has a large market share in a rapidly growing industry.
.
True False

3
28 The dog, according to the BCG Matrix, is a poor performer.
.
True False

29 Unrelated diversification occurs when an organization expands into a totally new line of business.
.
True False

30 Diversification is a strategy of moving into new lines of business.

.
True False

31 Vertical integration means a firm expands into businesses that either produce the supplies needed to
. make products or that distribute and sell those products to customers.

True False

32 Differentiation, cost leadership, and focus are three of Porter's competitive strategies.
.
True False

33 Cost leadership is a type of competitive strategy with which the organization seeks to distinguish its
. products or services from that of competitors.

True False

34 Organization's with a focus strategy concentrate on a specific regional market or buyer group.
.
True False

35 A director of finance would most likely be interested in executing functional level strategies.
.
True False

36 Business-level strategies include all of the major functions, including finance, research and
. development, marketing, and manufacturing.

True False

37 The world-wide standardization of product design and advertising refers to globalization.

.
True False

38 The transnational strategy handles markets independently for each country.

.
True False

39 With a multidomestic strategy, a company will achieve the globalization or standardization of

. marketing and production approaches.

True False

4
40 A transnational strategy seeks to achieve both global integration and national responsiveness.
.
True False

41 A transnational strategy combines degrees of both global standardization and national responsiveness.
.
True False

42 Communication is one of the most important methods for effective strategy execution.
.
True False

43 For successful execution, alignment of everyone in the organization must occur.

.
True False

44 In order to protect an organization’s mission, the human resource functions are removed from strategic
. goals.

True False

45 In strategy implementation, leadership is the ability to influence people to adopt the new behaviors
. needed.

True False

46. To remain competitive, companies should develop

strategies that focus on core competencies,
providing synergy, and creating value for _____.

A. custom
ers
B. suppliers
C stockholders
.
D employees
.
E board
. members

5
47. The set of decisions and actions used to formulate
and implement strategies that will provide a
competitively superior fit between the organization
and its environment so as to achieve organizational
goals is known as:

A. strategy
formulati
on.
B strategic
. planning.
C strategic
. management.
D strategy
. implementation.

E strategy
. evaluation.

48. The plan of action that prescribes resource allocation

and other activities for dealing with the environment
and helping the organization attain its goals is
known as a(n) _____.

A. go
al
B object
. ive
C missi
. on
D visio
. n
E strate
. gy

49. Which of the following is a business activity that an

organization does especially well relative to its
competition?

A. Strate
gy
B. Synergy
C. Cash cow
D Core
. competence
E Multidomes
. tic

6
50. The condition that exists when the organization's
parts interact to produce a joint effect that is greater
than the sum of the parts acting alone is known as:

A. core
competenc
e.
B. synergy.
C. value creation.
D business-level
. strategy.
E multidomestic
. strategy.

51. When properly managed, _____ can create

additional value with existing resources, providing a
big boost to the bottom line.

A. synergy
B. competitors
C. government contacts
D. command structure
E cooperation among
. customers

52. _____ can be defined as the combination of benefits

received and costs paid by the customer.

A. Organiz
ational
benefits
B. Value
C Cost-benefit
. diversity
D. Synergy
E Core
. competence

7
53. After Sunshine Systems merged with RTD
Enterprises, company executives noticed that due to
increased employee collaboration between the two
units, costs were down and revenues increased
within both areas. This is an example of what
business phenomenon?

A. Strateg
y
executi
on
B Portfolio
. strategy
C Core
. competency
D. Synergy
E Delivering
. value

54. When AT&T decided to buy Media One, a cable

company, it was pursuing a(n) _____ strategy.

A. functi
onal-
level
B internal
. growth
C multi-
. domestic
D corporate-
. level
E business-
. level

55. _____ level strategy pertains to the major functional

departments within the business unit.

A. Oper
ation
al
B Corpora
. te
C Nationa
. l
D Busines
. s
E Function
. al

8
56. When Philip-Morris, the tobacco giant, bought
Kraft, Inc., it was pursuing a _____.

A. corporate-
level
strategy
B business-level
. strategy
C functional-level
. strategy
D multidomestic
. strategy
E retrenchment
. strategy

57. Which of the following pertains to the organization

as a whole?

A. Business-
level
strategy
B Functional-level
. strategy
C Corporate-level strategy
.
D Operational-level
. strategy
E Competitive-level
. strategy

58. Sears' decision to sell off much of its financial

services division is an example of a:

A. corpora
te-level
strategy
.
B business-level
. strategy.

C functional-level
. strategy.

D growth
. strategy.
E stability
. strategy.

9
59. A corporate-level strategy is concerned with the
question:

A. what business
are we in?
B. how do we compete?
C how do we support our chosen
. strategy?
D where do we market our
. products?
E should we promote from
. within?

60. When Coca-Cola introduced Surge, a new citrus

soft-drink, what type of strategy was being
pursued?

A. Functional
-level
strategy
B Multi-domestic
. strategy
C Corporate-level
. strategy
D Retrenchment
. strategy
E Business-level
. strategy

61. Ford's decision to completely redesign its Ford

Taurus can be classified as a:

A. corpora
te level
strategy
.
B business level
. strategy.

C functional level
. strategy.

D retrenchment
. strategy.

E stability
. strategy.

10
62. Janessa is the CEO of a privately-held software
company. In defining corporate-level strategies,
which of the following questions would she most
likely be concerned with?

A. How do we compete?
B. What business are we in?
C. How does marketing support the business?
D. How can we maximize profits?
E How can we make manufacturing processes more
. efficient?

63. Decisions regarding the proper amount of

advertising for a particular good or service are
related to:

A. corporate-
level
strategies.
B functional-level
. strategies.
C tactical-level
. strategies.
D business-level
. strategies.
E retrenchment
. strategies.

64. Which of these questions is central to a functional-

level strategy?

A. What business
are we in?
B. How do we compete?
C How do we support our
. chosen strategy?

D What business do we buy?

.
E Where to market our
. products?

11
65. Which of the following lists the strategic
management process in proper order?

A. Formulate s
SWOT anal
Execute stra
B Perform SWOT analysis; Evaluate current mission/goals; For
. Define new mission/goals.
C Evaluate current mission/goals; Define new mission/goals; Fo
. Perform SWOT analysis .
D Evaluate current mission/goals; Perform SWOT analysis; Def
. strategy; Execute strategy.
E Define new mission/goals; Execute strategy; Formulate strate
. Perform SWOT analysis.

66. _____ refers to the use of managerial tools to direct

resources toward the achievement of strategic goals.

A. Strategy
formula
tion
B Strategy
. coordination
C Strategy
. execution
D Strategy
. control
E Strategy
. planning

12
67. Which of the following refers to the planning and
decision making that lead to the establishment of the
organization's goals and of a specific strategic plan?

A. Str
ate
gy
for
m
ula
tio
n
BStrateg
y
imple
mentat
ion
CStrateg
y
coordi
nation
DStrate
gy
contro
l
E SW
. OT

68. Fred has been assigned to conduct a SWOT analysis

for his organization, Acme, Inc. As part of this
assignment, Fred will:

A. conduct
an
external
wage
survey.
search for the
strengths,
weaknesses,
opportunities, and
threats that impact
his firm.
C choose a grand
strategy for his
firm.
D do a cost/benefit
. analysis.

E develop a
. mission.
13
69. Techniques used to monitor external environments
include:

A. hirin
g
scan
ning
orga
nizat
ions.
hiring the
competitive
intelligence
professiona
ls.
governme
nt reports.
D profession
al
journals.
E all of
. these.

70. Classy Clay has extremely creative employees who,

in the opinion of the organization, keep the company
ahead of the competition. The creativity of these
employees would be classified as a(n) _____.

A. intern
al
weak
ness
B external
. opportunity

C external
. strength
D internal
. strength
E neutral
. factor

14
71. Paramount, Inc. is particularly concerned about
pending legislation in Congress that would further
regulate their organization. This legislation would be
classified as a(n) _____.

A. external
opportuni
ty
B internal strength
.
C. external threat
D external
. weakness
E congressional
. chaos

72. Sherri has been asked to participate on a cross-

functional task force that is charged with performing
an audit checklist for her advertising firm. The task
force will analyze organizational strengths and
weaknesses as they apply to the firm. Sherri’s task
is to analyze management quality, staff quality,
degree of centralization, and organizational charts.
This level of analysis pertains to which area of the
audit?

A. Man
age
ment
and
orga
nizat
ion
B Marketi
. ng
C Human
. resources

DResearch
and
developm
ent
E Producti
. on

15
73. Where does the information about opportunities and
threats comes from?

A. An analysis of
the
organization's
internal
environment
B A department by department
. study of the organization

C Scanning the external

. environments
D. Employee grievances
E Financial ratios of the
. organization

74. What type of organizational unit has a unique

business mission, product line, competitors, and
markets relative to other units in the same
corporation?

A. Product unit
B. Functional unit
C. Strategic business unit
D. Operational unit
E Business consulting group
. unit

75. How business units and product lines fit together in

a logical way is the essence of:

A. business-
level
strategy.
B portfolio
. strategy.
C competitive
. strategy.
D financial
. strategy.
E functional
. strategy.

16
76. Gatekeep Utilities is a subsidiary of GW
Enterprises. Gatekeep has a mission and product
line that is unique from GW. Gatekeep’s
competitors are also very different from those of its
parent, and the subsidiary markets to a very different
group of customers. As such, Gatekeep can be
described as a(n) _____.

A. product unit
B. functional unit
C. operational unit
D strategic business unit
.
E boston consulting group
. unit

77. The BCG matrix organizes along which of the

following dimensions?

A. Market
share
and
profit
B Sales and
. market share

CBusiness
growth rate and
market share
DBusiness
growth rate and
profit
E Sales and
. profits

78. Double Click, Inc. has a number of strategic

business units. Their hand-held computer unit has a
large market share in this rapidly growing industry.
Their hand-held computer business would be
classified as:

A. a dog.
B. a star.
C a question mark.
.
D. a cash cow.
E stuck in the
. middle.

17
79. Which of these is true about the cash cow?

A. It generates tremendous
profits in a rapidly
growing industry.
B It has a small market share in a rapidly growing
. industry.
C It has a small market share in a slow growth
. industry.
D It has a large market share in a slow growth
. industry.
E It is generally a dead business that should be
. divested.

80. The star has a:

A. large market share in a

rapidly growing
industry.
B large market share in a slow growth industry.
.
C small market share in a rapidly growing
. industry.
D small share of a slow growth market.
.
E moderate market share in a slow growth
. industry.

81. Which of the following portfolio categories is made

up of poor performers who command only a small
share of a slow growth market?

A S
. t
a
r
BCa
sh
co
w
CQu
esti
on
ma
rk
D D
. o
g
E C
. a
t
18
82. The question mark has a:

A. large market share in a

rapidly growing
industry.
B large market share in a slow growth industry.
.
C small market share in a rapidly growing
. industry.
D small share of a slow growth market.
.
E moderate market share in a slow growth
. industry.

83. Which of these is true about the dog division?

A. It has a large market share in

a rapidly growing industry.
B It has a large market share in a slow growth industry.
.
C It has a small market share in a rapidly growing industry.
.
D It has a small share of a slow growth market.
.
E It has a moderate market share in a rapidly growing
. industry.

84. Gillette operates numerous strategic business units.

Most of its units in the personal care division have
low market share but high business growth. These
units are classified as _____.

A. dogs
B question
. marks
C. stars
D cash cows
.
E none of
. these

19
85. According to the BCG Matrix, which of the
following exists in a mature, slow-growth industry,
but is a dominant business in the industry, with a
large market share?

A. Que
stio
n
mar
k
B Asteris
. k
C. Dog
D. Star
E Cash
. cow

86. When an organization expands into a totally new

line of business, it is implementing a strategy of:

A. Related
diversificat
ion
B Unrelated
. diversification
C Cross-functional
. diversification

D Product line
. diversification
E Industry
. diversification

87. Semway, a regional bank, recently announced that it

would soon begin offering financial planning
services. This is an example of which of these?

A. Related
diversificat
ion
B Unrelated
. diversification
C Cross-functional
. diversification

D Product line
. diversification
E Industry
. diversification

20
88. The purpose of _____ is to expand the firm’s
business operations to produce new kinds of
valuable products and services?

A. retrenc
hment
B diversificatio
. n
C. liquidation
D. cash cow
E internal
. growth

89. Which of the following strategies refers to moving

into a new business that is related to the company's
existing business activities?

A. Horizonta
l
integratio
n
B Vertical
. integration
C Unrelated
. diversification
D Related
. diversification
E Strategic
. partnership

90. All of the following are Porter's competitive forces

except:

A. differentia
tion.
B bargaining power of
. buyers.
C bargaining power of
. suppliers.

D threat of substitute
. products.

E potential new
. entrants.

21
91. Which of the following is NOT one of Porter's
competitive forces?

A. Potential
new entrants
B Bargaining power of
. suppliers
C Bargaining power of
. stockholders
D Bargaining power of
. customers
E Rivalry among
. competitors

92. Which of the following strategies involve an attempt

to distinguish the firm's products or services from
others in the industry?

A. Cost
leade
rship
B Differenti
. ation

C. Focus
D Internal
. growth

E Liquidati
. on

93. Which strategy can be profitable for an organization

when customers are loyal and willing to pay high
prices?

A. Focu
s
B Globaliza
. tion
C Overall
cost
leadership
D Differenti
. ation

E Liquidati
. on

22
94. The _____ strategy involves seeking efficient
facilities, cutting costs and using tight cost controls
to be more efficient than competitors.

A. cost
lead
ershi
p
B differenti
. ation

C. focus
D internal
. growth

E liquidati
. on

95. The human resource department at Paula's

Powerwheels is implementing a number of
functional level strategies. These strategies include
focusing on ways to retain and develop a stable
work force and ways to improve efficiency in the
organization. These functional-level strategies are
consistent with which of the following strategies?

A. Cost
lead
ershi
p
B Differenti
. ation

CNew
product
developme
nt
DNew
market
developme
nt
E Divestitu
. re

23
96. With a(n) _____ strategy, the organization
concentrates on a specific regional market or buyer
group.

A. cost
lead
ershi
p
B differenti
. ation

C. focus
D internal
. growth

E liquidati
. on

97. Mingles, Inc. concentrates its efforts on its target

market of 18 to 25 year olds. It is using a(n) _____
strategy.

A. focus
B differentiation
.
C cost leadership
.
D multidomestic
.
E universal
. strategy

24
98. General Products Inc. is a small clothing designer
and manufacturer located in the United States. A
vast majority of the company’s revenues comes from
U.S. sales, although about ten percent of the
company’s revenue come from sales to Canada.
General Products Inc. can best be described as using
which global corporate strategy?

A. Globaliz
ation
strategy
B Multidomestic
. strategy

C Export strategy
.
D Transnational
. strategy
E Domestic
. strategy

99. FLY Industries is a global conglomerate company

headquartered in the United States that does
business in over fifty countries. The company seeks
to balance global efficiencies and local
responsiveness by hiring locally as well as from
home. It can best be described as using which
global corporate strategy?

A. Globaliz
ation
strategy
B Multidomestic
. strategy

C Export strategy
.
D Transnational
. strategy
E Domestic
. strategy

25
100. If ABC International has standardized its product
line throughout the world it is pursuing a:

A. multido
mestic
strategy.
B retrenchment
. strategy.
C diversity
. strategy.
D globalization
. strategy.
E liquidation
. strategy.

101. The assumption that a single global market exists

would lead to a:

A. globaliza
tion
strategy.
B multidomestic
. strategy.
C diversity
. strategy.
D domestic
. strategy.
E liquidation
. strategy.

102. Which of the following strategies would be

appropriate when the need for both national
responsiveness and global integration is low?

A. Gl
ob
ali
zat
io
n
B Multi
dome
stic
C Exp
. ort
D Trans
nation
al
E Imp
. ort

26
103. _____ refers to the modification of product design
and advertising strategies to suit the specific needs
of individual countries.

A. Domestic
strategy
B. Global strategy
C Transnational
. strategy
D Multidomestic
. strategy
E Market design
. strategy

104. Which of the following refers to a strategy that

combines global coordination to attain efficiency
with flexibility to meet specific needs in various
countries?

A. Domestic
strategy
B. Global strategy
C Transnational
. strategy
D Multidomestic
. strategy
E Region design
. strategy

105. Some people argue that _____ is the most difficult

and most important part of strategic management.

A. SWOT
analysis
B strategic
. formation
C strategic
. execution
D strategic
. analysis
E strategy
. evaluation

27
106. Persuasion, motivation, and changes in cultures and
values are examples of which of the dimensions
used to implement strategy?

A. Leade
rship
B Structural
. design
C Human
. resources
DInformation
and control
systems
E Compensati
. on

107. Which of the following is NOT one of the tools used

for putting strategy into action?

A. Visible
leadership
B. Diversification
C. Human Resources
D. Communication
E Clear roles and
. accountability

108. People need to understand how their individual

actions can contribute to achieving an organizational
strategy. This can be accomplished by delegating
authority, creating teams, and defining roles. These
actions are part of which tool for putting strategy
into action?

A. Visible
leadership
B. Candid communication
C. Human resources
D Clear roles and
. accountability
E Bargaining power of
. employees

28
109. The _____ function recruits selects, trains, transfers,
promotes, and lays off employees to achieve
strategic goals.

A. product
ion
B. leadership
C information
and control
systems
D structural
. design
E human
. resource

110. Scenario - Theresa Teutul

Theresa Teutul was an executive with Digital

Industries, a leading manufacturer of color
televisions. She recognized that the color television
market in the late 1970's was facing significant
challenges. After two decades of highly successful
development and marketing, the sales of color
televisions had slowed and replacing older color
television sets largely created her market.

Using the logic of the BCG grid, Theresa should

recognize that her strategic business unit was in
which quadrant?
a. Star
b. Cash Cow
c. Question Mark
d. Dog
e. None of these

29
111. Scenario - Theresa Teutul

Theresa Teutul was an executive with Digital

Industries, a leading manufacturer of color
televisions. She recognized that the color television
market in the late 1970's was facing significant
challenges. After two decades of highly successful
development and marketing, the sales of color
televisions had slowed and replacing older color
television sets largely created her market.

The strategy that the BCG matrix suggests that

Theresa should take for this SBU is:
a. invest and grow
b. liquidate while still profitable.
c. ask her astrologer for advice.
d. keep the SBU healthy and use its excess earnings to invest in other SBU's.
e. divestiture.

30
112. Scenario - SS.com

Faced with rapidly growing business, Swift Stocks,

Inc., a global brokerage company with the largest
market share, recently announced that it has
established an on-line stock investment and trading
subsidiary, SS.com, where investors can trade stocks
at the lowest rates in the industry. The .com
subsidiary has less than one percent market share
but it faces a very high business growth rate. In the
brokerage industry the competition is fierce and all
players are cutting their on-line commission rates.

Swift Stock's traditional brokerage business could

be classified as a _____.
a. cash cow
b. dog
c. star
d. question mark
e. stuck in the middle business

31
113. Scenario - SS.com

Faced with rapidly growing business, Swift Stocks,

Inc., a global brokerage company with the largest
market share, recently announced that it has
established an on-line stock investment and trading
subsidiary, SS.com, where investors can trade stocks
at the lowest rates in the industry. The .com
subsidiary has less than one percent market share
but it faces a very high business growth rate. In the
brokerage industry the competition is fierce and all
players are cutting their on-line commission rates.

SS.com subsidiary for Swift Stocks can be

classified as a _____.
a. cash cow
b. dog
c. star
d. question mark
e. stuck in the middle business

32
114. Scenario - SS.com

Faced with rapidly growing business, Swift Stocks,

Inc., a global brokerage company with the largest
market share, recently announced that it has
established an on-line stock investment and trading
subsidiary, SS.com, where investors can trade stocks
at the lowest rates in the industry. The .com
subsidiary has less than one percent market share
but it faces a very high business growth rate. In the
brokerage industry the competition is fierce and all
players are cutting their on-line commission rates.

If Swift Stock's traditional brokerage business were

to face a declining business growth, it may need to
be reclassified as a _____.
a. cash cow
b. dog
c. star
d. question mark
e. dead business

11 When organizational parts interact to produce a joint effect that is greater than the sum of the parts
5. acting alone, _____ occurs.

________________________________________

11 The question What business are we in? concerns the _____ strategy.
6.
________________________________________

11 The question How do we compete? concerns _____ strategy.

7.
________________________________________

11 The question How do we support the business-level competitive strategy? concerns _____ strategy.
8.
________________________________________

11 _____ includes the planning and decision making that lead to the establishment of the firm's goals and
9. the development of a specific strategic plan.

________________________________________
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12 The use of managerial and organizational tools to direct resources toward accomplishing strategic
0. results is known as _____.

________________________________________

12 _____ is a type of corporate-level strategy that pertains to the organization's mix of strategic business
1. units.

________________________________________

12 In the BCG matrix, the dog has _____ market share and _____ business growth rate.
2.
________________________________________

12 In the BCG matrix, the star has a(n) _____ market share in a rapidly growing industry.
3.
________________________________________

12 The acquisition of a business that is related to current product lines or that takes the corporation into
4. new areas is called _____.

________________________________________

12 The _____ strategy involves an attempt to distinguish the firm's products or services from others in the
5. industry.

________________________________________

12 With a(n) _____ strategy, the organization aggressively seeks efficient facilities, pursues cost
6. reductions, and uses tight cost controls to produce products more efficiently than competitors.

________________________________________

12 With a(n) _____ strategy, the organization concentrates on a specific regional market or buyer group.
7.
________________________________________

12 The standardization of product design and advertising strategies throughout the world is called _____.
8.
________________________________________

12 When an organization chooses a(n) _____ strategy, it means that business decisions such as product
9. design are made on a country-by-country basis.

________________________________________

13 A(n) _____ strategy seeks to achieve both global integration and national responsiveness.
0.
________________________________________

34
13 The ability to influence people to adopt the new behaviors needed for strategy implementation is called
1. _____.

________________________________________

13 It is argued that _____ is the most difficult and most important part of strategic management.
2.
________________________________________

13 List the four components of a SWOT analysis.

3.

13 List the three global corporate strategies.

4.

13 In order for companies to remain competitive, their strategies must focus on three things. Describe
5. these three focuses.

13 Compare and contrast the three levels of strategy in an organization.

6.

35
13 Differentiate between strategy formulation and strategy implementation.
7.

13 Briefly describe the Boston Consulting Group matrix, including its dimensions, quadrants, and
8. strategic recommendations.

13 Briefly discuss Porter's three competitive strategies.

9.

14 Name and describe the three types of global strategies.

0.

14 Briefly describe the tools for putting strategy into action.

1.

36
37
 Chapter 8--Strategy Formulation and Execution Key
1. TRUE

2. FALSE

3. TRUE

4. FALSE

5. FALSE

6. TRUE

7. FALSE

8. TRUE

9. TRUE

10. FALSE

11. FALSE

12. TRUE

13. FALSE

14. FALSE

15. b

16. Strategic management

17. strategy

18. core competence

19. TRUE

20. FALSE

21. TRUE

22. FALSE

23. TRUE

24. FALSE

25. FALSE

26. TRUE

27. FALSE

28. TRUE

29. TRUE

30. TRUE

38
31. TRUE

32. TRUE

33. FALSE

34. TRUE

35. TRUE

36. FALSE

37. TRUE

38. FALSE

39. FALSE

40. TRUE

41. TRUE

42. TRUE

43. TRUE

44. FALSE

45. TRUE

46. A

47. C

48. E

49. D

50. B

51. A

52. B

53. D

54. D

55. E

56. A

57. C

58. A

59. A

60. E

61. B

62. B

63. D

64. C

39
65. D

66. C

67. A

68. B

69. E

70. D

71. C

72. A

73. C

74. C

75. B

76. D

77. C

78. B

79. D

80. A

81. D

82. C

83. D

84. B

85. E

86. B

87. A

88. B

89. D

90. A

91. C

92. B

93. D

94. A

95. A

96. C

97. A

98. C

40
99. B

100. D

101. A

102. C

103. D

104. C

105. C

106. A

107. B

108. D

109. E

110. b

111. d

112. c

113. d

114. a

115. synergy

116. corporate-level

117. business-level

118. functional-level

119. Strategy formulation

120. strategy execution

121. Portfolio strategy

122. low; low

123. large

124. diversification

125. differentiation

126. cost leadership

127. focus

128. globalization

129. multidomestic

130. transnational

131. leadership

132. strategic execution

41
133. A SWOT includes strengths, weaknesses, opportunities, and threats.

134. Globalization strategy, transnational strategy, and multidomestic strategy.

135. The three focuses are core competencies, synergy, and value creation. Core competence is something the organization does very well in
comparison to its competitors. A core competence represents a competitive advantage because the company acquires expertise that competitors do not
have. Synergy occurs when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone. The
organization may attain a special advantage with respect to cost, market power, technology, or management skill. Value creation should be at the heart
of strategy. Value is the combination of benefits received and costs paid by the customer. Managers help their companies create value by devising
strategies that exploit core competencies and attain synergy.

136. There are three levels of strategy in an organization: corporate-level, business-level, and functional-level. Corporate-level strategies involve the
whole organization. This level of strategy is most concerned with answering the question: "What business are we in?" These types of decisions often
involve issues of growth, retrenchment, and/or joint ventures. Business-level strategies are concerned with the question "How do we compete?" They
focus on how the individual business unit competes within its industry. They may involve such issues as advertising, product changes, and new-
product development. Functional-level strategies are concerned with the question of "How do we support the business-level strategy?" Involving all
of the organization's major functions, these types of strategies link the functional unit with the strategic business unit.

137. Strategy formulation includes the planning and decision making that lead to the establishment of the firm's goals and the development of a
specific strategic plan. Also, it includes assessing the external environment and internal problems and integrating the results into goals and strategies.
Strategy implementation uses managerial and organizational tools to direct resources toward accomplishing strategic results.

138. The two dimensions of the matrix are business growth rate and market share. When growth is high and share is high, the SBU has the best
situation and is called a star. When growth is low and share is high, the SBU is known as a cash cow. When growth is high but share is low, the SBU
is a question mark. In the fourth quadrant, growth and share are both low. This is the worst situation, and the SBU is a dog. The strategic
recommendations are: (1) invest in stars; (2) milk the cash cow; (3) invest in question marks to create stars or divest the question marks; and (4)
divest the dogs.

139. Porter identified three competitive strategies: differentiation, cost leadership, and focus. A differentiation strategy involves the organization
attempting to distinguish its product or service from those of its competition. Advertising, product features, and customer service are some of the
ways an organization can successfully differentiate. A cost leadership strategy is based on the organization achieving a low-cost position relative to
the competition. A company may achieve a cost leadership through the operation of efficient facilities, cutting costs, or maintaining tight cost control.
When a company uses a differentiation or a cost leadership strategy in a particular market or buyer group, they are employing a focus strategy. This
strategy allows the organization to concentrate on a narrow market niche.

140. The three types of global strategies are globalization, multidomestic, and transnational. Globalization means that a company's product design
and advertising strategies are standardized throughout the world. This approach is based on the assumption that a single global market exists for
many consumer and industrial products. The theory is that people everywhere want to buy the same products and live the same way. Multidomestic
strategies believe that competition in each country is handled independently of industry competition in other countries. Thus, marketing, advertising,
and product design is encouraged to be modified and adapted to the specific needs of each country the company is present in. Many companies reject
the idea of a single global market. Transnational strategies seek to achieve both global integration and national responsiveness. A true transnational
strategy is difficult to achieve, because one goal requires close global coordination while the other goal required local flexibility. However, many
industries are finding that, although increased competition means they must achieve global efficiency, growing pressure to meet local needs demands
national responsiveness.

141.
The tools for putting strategy into action include visible leadership, clear roles and accountability, human resources, and candid communication.
· Visible leadership is used to motivate people, shape culture and values, and model desired behaviors
· Clear roles and accountability include delegating authority and responsibility, creating teams, and defining roles
· Human resource tools include recruiting employees, providing training, and managing transfers and promotions
· Candid communication is used to open lines of communication and to encourage honesty and debate

42