Multiple Choice Questions

1. A 2013 survey found that among managers, the use of _____ is popular. 
 

A.  mission and vision statements

B.  organizational diversity
C.  TQM
D.  an autocratic discipline program
E.  a synergy agenda

The 2013 survey found that the most widely used management tool in 2012 was used 12, even 14 years
earlier—namely, strategic planning, thought to be effective by about 80% of the senior managers
surveyed. The use of mission and vision statements also continued to be popular, also favored by about
80%.

2. To provide direction and momentum, encourage new ideas, and develop a sustainable competitive
advantage are reasons why an organization should adopt _____. 
 

A.  a diversity policy

B.  a positive synergy agenda
C.  strategic management and strategic planning
D.  an aggressive cost-cutting plan
E.  a strong business plan

An organization should adopt strategic management and strategic planning for three reasons: They can
(1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable
competitive advantage.

3. When an organization is able to get and stay ahead in the four areas of (1) being responsive to
customers, (2) innovating, (3) quality, and (4) effectiveness, that company can develop ____. 
 

A.  company diversity

B.  increased MBO
C.  strong employee morale
D.  an environment with few or no competitors
E.  a sustainable competitive advantage

Sustainable competitive advantage occurs when an organization is able to get and stay ahead in four
areas: (1) in being responsive to customers, (2) in innovating, (3) in quality, and (4) in effectiveness.

 
4 Strategic position emerges from three sources: _____. 
 

A.  few needs, many customers; broad needs, few customers; broad needs, many customers
B.  low-cost products; huge market needs; unique products
C.  many needs, few customers; little need, many customers; narrow needs, few customers
D.  poor products available; few products available; no products available
E.  bad economy; strong economy; stable economy

Strategic position emerges from three sources: (1) few needs, many customers; (2) broad needs, few
customers; and (3) broad needs, many customers.

5. Instructor Services is a technology company that offers many IT services in highly populated southern
Ohio. Services and products include computer training, support, monitoring, repair, network design,
virus removal, and software upgrades. It even sells refurbished computers. The source of Instructor
Services' strategic position is _____. 
 

A.  low-profit margin and many customers

B.  broad needs and few customers
C.  broad needs and many customers
D.  high-profit margin and many customers
E.  high-profit margin and few customers

Strategy is the creation of a unique and valuable position. Strategic position emerges from three sources.
One of the sources, like Instructor Services', is broad needs, many customers. This strategy may be
oriented toward serving the broad needs of many customers.

6. With small businesses in very competitive industries, small differences in performance may affect that
company's survival. So in this case, it is worth the effort to implement _______. 
 

A.  organizational diversity

B.  a synergy agenda
C.  MBO
D.  TQM
E.  strategic planning

Researchers conclude that "it may be that the small improvement in performance is not worth the effort
involved in strategic planning unless a firm is in a very competitive industry where small differences in
performance may affect the firm's survival potential."

 
7. Tom is the CEO of Yost Tech, a large global manufacturing company, and he is having lunch with a
longtime friend, Greg, owner of a small office supply store. Tom told Greg that "Strategic management
and planning have really increased our success at Yost. I just read an article about an analysis of several
studies that found that strategic management and planning _____." 
 

A.  helps only large companies

B.  benefits mostly nonprofit organizations
C.  makes performance gains inconsistent
D.  boosts performance in small companies even more than large companies
E.  benefits both small and large organizations

One analysis of several studies found that strategic planning was appropriate not just for large firms.
Companies with fewer than 100 employees could benefit as well, although the improvement in financial
performance was small.

8. One report reads that big companies, such as Amazon, Google, or Apple, "are no longer content simply
to enhance part of your life. The new strategy is to build a device, sell it to consumers, and then ____." 
 

A.  send customers to partner retailers to supply content

B.  sell them the content to play on their device
C.  sell them the maintenance agreements for their devices
D.  find service companies to assist customers if needed
E.  focus on selling more items and devices to their friends and families

With big companies, especially big-tech companies such as Amazon, Google, or Apple, the strategy is to
get consumers tied not just to a brand or device or platform but to make them captive of the company's
ecosystem and to get them connected "as tightly as possible so they and their content are locked into one
system," says analyst Michael Gartenberg.

9. In order, the steps of the strategic-management process are _____. 

 

A.  establish the mission and vision; assess the current reality; conduct a trend analysis; maintain the
feedback loop
B.  establish the mission; maintain strategic control; formulate the grand strategy; implement the
strategy
C.  establish the mission and vision; assess the current reality; formulate the grand strategy; implement
the strategy; maintain strategic control
D.  establish the vision; develop a mission statement; formulate the grand strategy; implement the
strategy; maintain the feedback loop
E.  determine the strategy; carry out the strategic plans

The steps of the strategic-management process are establishing the mission and vision, assessing the
current reality, formulating the grand strategy, implementing the strategy, and maintaining strategic
control and the feedback loop (see Figure 6.1).

 
10. Ben attended a workshop hosted by SCORE, a SBA organization that counsels small-business owners
on developing a good vision statement. In that workshop the speakers discussed how an organization's
vision needs to describe _____. 
 

A.  the organization's purpose or reason for being

B.  what the company will market and its business plan
C.  the organization's purpose or reason for being and its strategic intent
D.  the ethical and diversity standards of the organization
E.  what the company wants to become, and its long-term direction and strategic intent

An organization's vision is its long-term goal describing what it wants to become, and it is expressed in
a vision statement, which describes its long-term direction and strategic intent.

11. Who are our customers? What are our major products or services? In what geographic areas do we
compete? These are all questions that are answered in a good _____. 
 

A.  vision statement

B.  code of ethics
C.  mission statement
D.  value pact
E.  management belief statement

Good mission statements should answer these questions: 1. Who are our customers? 2. What are our
major products or services? 3. In what geographic areas do we compete? 4. What is our basic
technology? 5. What is our commitment to economic objectives? 6. What are our basic beliefs, values,
aspirations, and philosophical priorities? 7. What are our major strengths and competitive advantages? 8.
What are our public responsibilities, and what image do we wish to project? 9. What is our attitude
toward our employees? (See Table 6.1.)

 
12. Is it appropriate for the organization and for the times? Does it set standards of excellence and reflect
high ideals? Is it ambitious? These are all questions that are answered in a good _____. 
 

A.  belief agreement

B.  code of ethics
C.  mission statement
D.  vision statement
E.  management belief statement

Good vision statements should answer these questions: 1. Is it appropriate for the organization and for
the times? 2. Does it set standards of excellence and reflect high ideals? 3. Does it clarify purpose and
direction? 4. Does it inspire enthusiasm and encourage commitment? 5. Is it well articulated and easily
understood? 6. Does it reflect the uniqueness of the organization, its distinctive competence, what it
stands for, what it's able to achieve? 7. Is it ambitious?

 
131. Access Office Equipment has shifted to sales and service of laptops and PCs, and is no longer offering
repairs on older types of office equipment because the demand for service on this equipment is low,
costly, and the profits have dropped significantly. This is an example of an organization implementing a
______. 
 

A.  growth strategy

B.  cutting-edge strategy
C.  stability strategy
D.  defensive strategy
E.  diverse strategy

A growth strategy is a grand strategy that involves expansion, as in expanding sales revenues, market
share, number of employees, or number of customers or (for nonprofits) clients served. In a variation of
this strategy, it can acquire similar or complementary businesses.

14. Organic Foods International has decided to increase its market share by hiring a marketing rep to visit
businesses in the area and invite their employees to shop at Organic Foods and for monthly health
events. The store also hired two new employees to handle the anticipated increase in customer traffic.
Organic Foods is utilizing a _____. 
 

A.  cutting-edge strategy

B.  stability strategy
C.  defensive strategy
D.  growth strategy
E.  diverse strategy

A growth strategy is a grand strategy that involves expansion, as in expanding sales revenues, market
share, number of employees, or number of customers or (for nonprofits) clients served. In a variation of
this strategy, it can increase its promotion and marketing efforts to try to expand its market share.

 
15. Delux Technology has a reputation of reliability and winning customer service, building this highly
respected name brand over the last 15 years. As a speaker at a business conference, Steve, the CEO of
Delux, told his audience that "We have built our reputation by changing little over the last several years,
but consistently helping customers with great, caring service and a reliable product." Delux Technology
utilizes a ____. 
 

A.  defensive strategy

B.  merger approach
C.  retrenchment strategy
D.  growth strategy
E.  stability strategy

A stability strategy is a grand strategy that involves little or no significant change.

 
16 A defensive strategy is also known as a(n) _____. 
 

A.  retrenchment strategy

B.  fixed plan
C.  aggressive approach
D.  growth strategy
E.  stability strategy

A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts.

17. Strategic control includes ____. 

 

A.  implementing MBO

B.  a strong employee diversity and synergy agenda
C.  seldom making adjustments to a strategy
D.  monitoring the execution of strategy and making adjustments, if necessary
E.  developing a diversity plan

Strategic control consists of monitoring the execution of strategy and making adjustments, if necessary.

18. Bryan Barry suggests that to keep a strategic plan on track, organizations should ____. 
 

A.  engage people, keep it simple, stay focused, and keep moving
B.  engage people, keep people happy, provide fun activities, and provide good benefits
C.  provide fun activities, provide good benefits, and keep it simple
D.  engage people, keep it simple, stay focused, and offer a good benefit package
E.  aggressively compete, cut costs, focus on customer service, and engage people

To keep a strategic plan on track, suggests Bryan Barry, you need to do the following: engage people,
keep it simple, stay focused, and keep moving.

 
19. Pedro, CEO of a successful IT company, is constantly reading press releases, ads, and news articles
about his competition, and he regularly checks information about new competitive products and visits
trade shows to study his competition. Pedro is involved in ____. 
 

A.  environmental observation

B.  TQM
C.  corporate spying
D.  management by observation
E.  competitive intelligence

Gaining competitive intelligence isn't always easy, but there are several avenues and, surprisingly, most
of them are public sources including the public prints and advertising, investor information, and
informal sources. A competitor's customer records are not available publicly, nor would they yield much
information about upcoming plans.

20. Sue keeps a close eye on her company's internal and external environment to discover possible
opportunities for new products and threats from competition, as soon as possible. This is an example of
____. 
 

A.  the observation approach

B.  environmental scanning
C.  corporate spying
D.  management by observation
E.  competitive intelligence

Environmental scanning is careful monitoring of an organization's internal and external environments to

detect early signs of opportunities and threats that may influence the firm's plans.

 
21. A SWOT analysis is _____. 
 

A.  looking for the strengths, weaknesses, opportunities, and threats influencing an organization's
competition
B.  a diversity and synergy method
C.  a search for the strengths, weaknesses, opportunities, and threats affecting an organization
D.  developing strategies, ways to improve, output methods, and threats influencing a company
E.  an inexpensive method of implementing a forecast

SWOT analysis, also known as a situational analysis, is a search for the strengths, weaknesses,
opportunities, and threats affecting an organization.
 
22. Many customers shop at Organic Foods because of the employees' extensive product knowledge. This is
an example of the company's _____. 
 

A.  strengths
B.  threats
C.  weaknesses
D.  opportunities
E.  intelligence

Strengths are inside matters. Strengths could be work processes, organization, culture, staff, product
quality, production capacity, image, financial resources and requirements, service levels, and other
internal matters.

 
23. Don knows that one of the reasons people do not return to his electronics store is because of the slow
service. This is an example of the organization's _____. 
 

A.  strengths
B.  threats
C.  weaknesses
D.  opportunities
E.  intelligence

Weaknesses are internal matters. Weaknesses could be in the same categories as stated for strengths:
work processes, organization, culture, etc. Slow service is an internal matter that is a weakness.

 
24. Christopher's Restaurant and Catering serves delicious vegetarian and vegan dishes. So when the local
community became interested in eating a healthier diet, Christopher's benefited. The changing
community attitudes are an example of a(n) _____ for Christopher's. 
 

A.  strength
B.  threat
C.  weakness
D.  opportunity
E.  intelligence

Opportunities are outside matters. Opportunities could be market segment analysis, industry and
competition analysis, impact of technology on organization, product analysis, governmental impacts,
and other external matters.

 
25. Regarding the findings from a SWOT analysis, organizational strengths are ____. 
 

A.  external opportunities that a company can take advantage of

B.  environmental factors that the organization may exploit for competitive advantage
C.  MBO skills that should be emphasized
D.  skills and capabilities that give a company advantages in executing its strategies
E.  means that give a specific industry an advantage in a down economy

Organizational strengths are the skills and capabilities that give the organization special competencies
and competitive advantages in executing strategies in pursuit of its mission.

26. Regarding the results of a SWOT analysis, organizational opportunities are ____. 
 

A.  environmental factors that the organization may exploit for a competitive advantage
B.  weaknesses within the organizational hierarchy
C.  MBO skills and opportunities that should be emphasized
D.  skills and capabilities that give an industry advantages in executing its strategies
E.  problems that a specific industry needs to correct

Organizational opportunities are environmental factors that the organization may exploit for competitive
advantage.

 
27. Contingency planning is also known as _____. 
 

A.  organizational opportunities

B.  scenario goal-setting and plans
C.  a trend analysis
D.  scenario planning and scenario analysis
E.  strategic planning

Contingency planning is also known as scenario planning and scenario analysis, which is the creation of
alternative hypothetical but equally likely future conditions.

 
28. Sales this year at Donna's Pawn Shop have been high, and based on several factors, Donna projects next
year's sales to also be good. However, even with her forecast of continued strong sales, Donna and her
partner need to develop a plan in case sales drop unexpectedly. This type of planning for alternative
future conditions is known as ____. 
 

A.  background planning

B.  a trend analysis
C.  a vision plan
D.  contingency planning
E.  a managerial pact

Contingency planning, also known as scenario planning and scenario analysis, is the creation of
alternative hypothetical but equally likely future conditions.

29. The process by which a company compares its performance with that of high-performing organizations
is known as ___. 
 

A.  trend analysis

B.  a vision plan
C.  contingency planning
D.  a managerial pact
E.  benchmarking

Benchmarking is a process by which a company compares its performance with that of high-performing
organizations.

30. Tom and his family have developed a successful business selling fertilizer to other farmers in his area,
consisting of rich, organic compost material. Recently ABC Seed, a national seed company, has been
marketing a chemical fertilizer to his customers that is less expensive than Tom's product. ABC's efforts
are an example of ___ in Porter's model for industry analysis. 
 

A.  buyers' negotiating influence

B.  competitive rivalry among competitors
C.  threats of substitute products and services
D.  power of the suppliers
E.  threats of new ideas

In an example of the threats of substitute products or services, oil companies might worry that Brazil is
close to becoming energy self-sufficient because it is able to meet its growing demand for vehicle fuel
by substituting ethanol derived from sugarcane for petroleum.

 
31. Porter's competitive strategies of cost-leadership and differentiation focus on ____ markets, and the
cost-focus and focused-differentiation strategies focus on ____ markets. 
 

A.  narrow; wide

B.  specific; broad
C.  growth; specific
D.  diverse; narrow
E.  wide; narrow

Porter's four competitive strategies (also called four generic strategies) are (1) cost leadership (wide
markets), (2) differentiation (wide markets), (3) cost-focus (narrow markets), and (4) focused-
differentiation (narrow markets). (See Figure 6.3.)

32. Quality Services is an organization that operates several companies that market food products, restaurant
equipment, and paper and plastic products, and it even has a division that counsels restaurant owners,
helping them become established. Quality Services is involved in a _____ strategy. 
 

A.  single-product
B.  diversification
C.  focused-differentiation strategy
D.  differentiation
E.  multiproduct

Diversification strategy means operating several businesses to spread the risk. Major
entertainment/media companies follow this strategy.

 
33. Doug is the CEO of Johnson Motors, a business consisting of Chevrolet, Buick, Cadillac, and Mercedes-
Benz dealerships. He also sells Fleetwood and American Coach RVs. Doug mentioned to his sales
manager that "there is economic value in having many related businesses managed by one ownership
group. They are worth more than if they are separate companies." This is an example of ____. 
 

A.  diversity
B.  diversification
C.  synergy
D.  differentiation
E.  multiproduct

Synergy is the economic value of separate, related businesses under one ownership, and management is
greater together than the businesses are worth separately. Example: PepsiCo can apply its marketing
muscle not only to Pepsi Cola but also to 7-Up and Mountain Dew, which it also owns. When a
company has special strengths in one business, it can apply those to its other related businesses.

 
34. The BCG matrix is a means of evaluating strategic business units on the basis of their _____. 
 

A.  business costs and share of the market

B.  differentiation and profitability
C.  business growth rates and share of the market
D.  BCG ratio
E.  product quality and profitability

The BCG matrix is a means of evaluating strategic business units on the basis of (1) their business
growth rates and (2) their share of the market.

35. In the BCG matrix, companies that have high growth and high market share, and are definite keepers are
____. 
 

A.  sleeping giants

B.  stars
C.  cash cows
D.  turtles
E.  sleepers

In the BCG matrix, stars have high growth and high market share, and are definite keepers.

 
36 More important than profit growth, stimulating innovation, customer loyalty, and finding qualified
employees, global CEOs desire ____. 
 

A.  an ethical workplace

B.  organization diversity
C.  increased usage of MBO
D.  happy employees
E.  excellence in execution

How important is execution to organizational success in today's global economy? A survey of 769
global CEOs from 40 countries revealed that "excellence in execution" was their most important
concern, more important than "profit growth," "customer loyalty," "stimulating innovation," and
"finding qualified employees."

37. Successful controlling within an organization, according to Bossidy and Charan, demands that managers
build a foundation of controlling using the three core processes of _____. 
 

A.  leading, planning, and recruiting

B.  people, strategy, and operations
C.  diversity, people, and profitability
D.  people, planning, and leading
E.  leading, synergy, and diversity

Bossidy and Charan outline how organizations and managers can improve the ability to execute.
Effective execution requires managers to build a foundation for execution within three core processes
found in any business: people, strategy, and operations.

38. What is the assessment of the external environment? What are the critical issues facing the business?
Can the business execute the strategy? According to Bossidy and Charan, these are some of the
questions that should be addressed in a _____. 
 

A.  code of ethics

B.  value statement
C.  diversity agenda
D.  mission statement
E.  strong strategic plan

According to Bossidy and Charan, a strong strategic plan addresses nine questions, among them: What
is the assessment of the external environment? What are the critical issues facing the business? Can the
business execute the strategy? Are the short term and long term balanced?