Chapter 1: Strategic Management: Creating Competitive Advantages

1. The CEO of Lucent Technologies made a lot of mistakes, such as committing errors in assessing the
market and competitive conditions, as well as improperly redesigning the organization into 11
business units. Such errors led to performance declines. According to the text, this example illustrates
the _________________ perspective of leadership.
A) romantic
B) internal mechanism
C) operational
D) external control
Ans. romantic

2. The "advance work" in the strategic management process is comprised of

A) strategy formulation.
B) strategy implementation.
C) strategic posturing.
D) strategy analysis.
Ans. strategy formulation.

3. Strategy implementation and formulation is a challenging, on-going process. To be effective, it

should involve
A) the board of directors, CEO, and CFO
B) line and staff managers.
C) the CEO and the board of directors
D) all of the above.
Ans.all of the above.

4. Members of an organization's board of directors should, while working to prioritize and fulfill their
responsibilities,
A) direct all actions of the CEO.
B) emphasize the importance of short-term goals.
C) represent their own interests.
D) represent the interests of the shareholders.
Ans.represent the interests of the shareholders.

5. The "triple bottom line" approach to corporate accounting, according to the text, includes which
three components
A) financial, organizational, and psychological.
B) financial, environmental, and customer..
C) financial, organizational, and customer.
D) financial, environmental, and social.
Ans. financial, environmental, and social.

6. As our world increases in complexity, the global environment is increasingly challenging and
competitive. The key to effective globalization is
A) more people speaking more languages.
B) the flow of capital, people, and information.
C) governmental regulations.
D) the flow of goods.
Ans. the flow of capital, people, and information.

7. Which of the following lists is the hierarchy of organizational goals in order from least specific to
most specific?
A) mission statements, strategic objectives, vision statements.
B) mission statements, vision statements, strategic objectives.
C) vision statements, strategic objectives, mission statements.
D) vision statements, mission statements, strategic objectives.
Ans. vision statements, mission statements, strategic objectives.

8. An organization's mission, in contrast to it's vision, should

A) be less detailed .
B) encompass all the major rules and regulations of the corporate work force.
C) encompass both the purpose of the company as well as the basis of competition.
D) be shorter in length.
Ans.encompass both the purpose of the company as well as the basis of competition.

9. Vision statements are used to create a higher understanding of the organization's overall direction
and purpose. Vision statements
A) provide specific objectives.
B) are very specific.
C) evoke powerful and compelling mental images.
D) set organizational structure.
Ans. evoke powerful and compelling mental images.

Chapter 2: Analyzing the External Environment of the Firm

1. Developing forecasts, as discussed in the text, include two key inputs, which are
A) environmental scanning and stakeholder identification.
B) environmental scanning and competitor intelligence.
C) assessing internal strengths and environmental scanning.
D) environmental scanning and a SWOT analysis.
E) Ans. environmental scanning and competitor intelligence.

2. A risk of forecasting discussed in the text is that

A) in most cases, the expense of collecting the necessary data exceeds the benefit.
B) forecasting's retrospective nature provides little information about the future.
C) managers may view uncertainty as black and white while ignoring important gray areas.
D) it can create legal problems for the firm if regulators discover the company is making forecasts.
E) Ans. managers may view uncertainty as black and white while ignoring important gray areas.

3. Which of the following would be thought of as part of a firm's general environment?

A) increased trade deficit
B) decreased entry barriers
C) increased bargaining power of the firm's suppliers
D) increased competitive intensity
Ans. increased trade deficit

4. Interest rate increases have a ________ impact on the residential home construction industry and
a ___ effect on industries that produce consumer necessities, such as prescription drugs or basic
grocery items.
A) positive; negligible
B) positive; negative
C) negative; positive
D) negative; negligible
Ans. negative; negligible

5. An independent group of suppliers, such as farmers, gather to form a cooperative in order to sell
their products to buyers directly, replacing their previous distributor. This is an example of
A) forward integration.
B) backward integration.
C) threat of substitute products.
D) threat of entry.
Ans. forward integration

6. The bargaining power of the supplier is less than that of the buyer when
A) volume of purchase is low.
B) the buyer's profit margin is low.
C) cost savings from the supplier's product are minimal.
D) threat of backward integration by buyers is low.
E) Ans. the buyer's profit margin is low.

7. As seen in Porter's Five Forces model, conditions under which a supplier group can be powerful
include all the following except
A) lack of importance of the buyer to the supplier group.
B) high differentiation by the supplier.
C) readily available substitute products.
D) dominance by a few suppliers.
Ans. readily available substitute products

8. The most extreme rivalry results from

A) a high level of differentiation.
B) few competitors, slow industry growth, lack of differentiation, high fixed or storage costs.
C) numerous equally balanced competitors, manufacturing capacity increases only in large
increments, low exit barriers.
D) numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
Ans. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.

9. Which of the following is an example of the interrelationship between the competitive and general
environments?
A) A decline in a nation's educational standards results in a decline in the nation's productivity.
B) Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic
beverages industry.
C) A country's technological inferiority results in its enactment of strong trade barriers against
importation.
D) Greater awareness of the environment results in environmental legislation.
Ans. Increased awareness of personal health leads to lower demand, and greater rivalry in the
alcoholic beverages industry.

Chapter 3: Assessing the Internal Environment of the Firm

1.Which of the following is not a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats)
analysis?
A) Organizational strengths may not lead to competitive advantage
B) SWOT gives a one-shot view of a moving target
C) SWOT's focus on the external environment is too broad and integrative
D) SWOT overemphasizes a single dimension of strategy
Ans. SWOT's focus on the external environment is too broad and integrative

2. A marketing department that promises delivery quicker than the production department's ability to
produce is an example of a lack of understanding of the
A) synergy of the business units.
B) need to maintain the reputation of the company.
C) organizational culture and leadership.
D) interrelationships among functional areas and firm strategies.
Ans. interrelationships among functional areas and firm strategies.

3. XYZ Corp. is centering on the objective of low-cost, high quality, on-time production by curtailing
idle productive facilities and workers. The XYZ Corp. is taking advantage of a ____________ system.
A) Just-In-Time (JIT)
B) Last In, First Out (LIFO)
C) First In, First Out (FIFO)
D) Highly mechanized
Ans. Just-In-Time (JIT)

4. Which of the following lists is comprised of support activities:

A) human resource management, information systems, procurement, and firm infrastructure
B) customer service, information systems, technology development, and procurement
C) human resource management, technology development, customer service, and procurement
D) human resource management, customer service, marketing and sales, and operations
Ans. human resource management, information systems, procurement, and firm infrastructure
5. Although firm infrastructure is quite frequently viewed only as overhead expense, it can become a
source of competitive advantage. Examples include all of the following except:
A) negotiating and maintaining ongoing relations with regulatory bodies.
B) marketing expertise increasing a firm's revenues and enabling it to enter new
markets.
C) effective information systems contributing significantly to a firm's overall cost
leadership strategy.
D) top management providing a key role in collaborating with important customers.
Ans. marketing expertise increasing a firm's revenues and enabling it to enter new markets.

6. The competencies or skills that a firm employs to transform inputs into outputs are:
A) tangible resources.
B) intangible resources.
C) organizational capabilities.
D) reputational resources.
Ans. organizational capabilities.

7. An array of firm resources include interpersonal relations among managers in the firm, its culture,
and its reputation with its customers and suppliers. Such competitive advantages are based upon
A) physical uniqueness.
B) path dependency.
C) social complexity.
D) tangible resources.
Ans. social complexity.

8. A company's ability to meet its short-term financial obligations is measured by which of the
following categories?
A) liquidity ratios
B) profitability ratios
C) activity ratios
D) leverage ratios
Ans. liquidity ratios

9. The "balanced scorecard" supplies top managers with a _____________ view of the business.
A) long-term financial
B) detailed and complex
C) simple and routine
D) fast but comprehensive
Ans. fast but comprehensive

Chapter 4: Recognizing a Firm’s Intellectual Assets: Moving Beyond a Firm’s

Tangible Resources

1. A company that is known for its inability to leverage human capital is Xerox. The relatively short
tenure of Rich Thoman, CEO, is one example. One of the main reasons he was fired is that
A) Xerox restructured their sales force to meet local needs.
B) he did not have inside connections like other board members and executives had.
C) he did not have the skills required for the job.
D) Xerox became known for being too "loosely" organized.
Ans. he did not have inside connections like other board members and executives had.

2. If a large segment of a firm's value is in intellectual and human assets, the difference between the
company's market value and book value in the knowledge economy should ___________ a company
with mostly physical and financial assets.
A) be equal to
B) be smaller than
C) not be correlated with
D) be larger than
Ans. be larger than

3. New knowledge includes the continual contact between ________________ and ___________
knowledge.
 A) tacit; explicit
B) theoretical; practical
C) intellectual; pragmatic
D) detailed; tacit
Ans. tacit; explicit

4. Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high
turnover should
A) make their work environment less stimulating.
B) decrease money spent on human capital.
C) adopt effective retention strategies.
D) increase recruiting.
Ans. adopt effective retention strategies.

5. An essential part of maintaining a competitive advantage in today's knowledge economy is

developing human capital. Efforts and initiatives to develop human capital should be directed
A) throughout the firm at all levels.
B) at top managers.
C) at human resource departments.
D) at the employees themselves.
Ans. throughout the firm at all levels.

6. ______________ rate a person's skill and performance in a 360-degree evaluation and feedback
system.
A) colleagues
B) direct reports
C) superiors
D) all of the above
Ans. all of the above

7. In an attempt to secure key employees from competitors, firms may attract the symbolic leader of
a group within a competing firm, hoping others will follow. This has been termed
A) the "Columbus effect."
B) strategically competitive hiring.
C) the "Pied Piper effect."
D) the "tech exit" effect.
Ans. the "Pied Piper effect."

8. There are elements of team building that have an impact on a team's success, according to the
text. These include all of the following except
A) work. Work should be relevant and meaningful to group members.
B) titles. Titles are important to a team's success.
C) people bonding during the "heat of battle." Team members become more unified
during a crisis.
D) teams taking care of their own. Team members look after each others' best interest.
Ans. titles. Titles are important to a team's success.

9. The use of information technology (e.g., email) in many organizations has increased in recent
years. This has helped to
A) restrict social network growth.
B) make more effective use of time in every situation.
C) increase social capital.
D) create smaller social networks.
Ans. increase social capital.

Chapter 5: Business-Level Strategy: Creating and Sustaining Competitive

Advantages

1. Businesses without a competitive advantage are not likely to earn more than "normal" profits
in the long run. Normal profits are
A) profits one would expect to earn on investments that have a similar level of risk.
B) profits received by corporations in the normal course of business.
C) what one would receive on U.S. Treasury securities.
D) profits earned by a corporation on a diversified portfolio of stocks.
Ans. profits one would expect to earn on investments that have a similar level of risk.
 2. Primary value chain activities that involve the effective layout of receiving dock operations
(inbound logistics) and support value chain activities that include expertise in process
engineering (technology development) characterize what generic strategy?
A) differentiation
B) overall cost leadership
C) differentiation focus
D) stuck-in-the-middle
Ans. overall cost leadership

3. Which of the following is false regarding how a differentiation strategy can help a firm to
improve its competitive position vis à vis Porter's five forces?
A) by increasing a firm's margins, it avoids the need for a low cost position
B) it helps a firm to deal with supplier power and reduces buyer power since buyers
lack comparable alternatives
C) supplier power is increased because suppliers will be able to charge higher prices for
their inputs
D) firms will enjoy high customer loyalty, thus experiencing less threat from substitutes
than its competitors
Ans. supplier power is increased because suppliers will be able to charge higher prices for their inputs

4. A narrow market focus is to a differentiation-based strategy as a

A) growth market is to a differentiation-based strategy.
B) growth market is to a cost-based strategy.
C) technological innovation is to a cost-based strategy.
D) broadly-defined target market is to a cost leadership strategy.
Ans. broadly-defined target market is to a cost leadership strategy.

5. The total profits in an industry at all points along the industry's value chain is called the
A) profit maximizer.
B) revenue enhancer.
C) profit outsourcing.
D) profit pool.
Ans. profit pool.

6. The emphasis on product design is very high, the intensity of competition is low, and the
market growth rate is low in the ______ stage of the industry life cycle.
A) maturity
B) growth
C) introduction
D) decline
Ans. introduction

7. In the _______ stage of the industry life cycle, there are numerous segments, competition is
very intense, and the emphasis on process design is high.
A) introduction
B) maturity
C) growth
D) decline
Ans.maturity

8. As markets mature
A) there is increasing emphasis on efficiency.
B) costs continue to increase.
C) application for patents increase.
D) differentiation opportunities increase.
Ans. there is increasing emphasis on efficiency.

9. The most probable time to pursue a harvest strategy is in a situation of

A) high growth.
B) decline in the market life cycle.
C) strong competitive advantage.
D) mergers and acquisitions.
Ans. decline in the market life cycle.
Chapter 6:Corporate-Level Strategy: Creating Value Through Diversification

1. Individual investors are reliant on upon the corporation's managers to

A) diversify the stockholder's investments in order to reduce risk.
B) achieve risk reduction at a lower cost than stockholders could obtain on their own.
C) maximize short-term returns in the form of dividends.
D) add value to their investments in a way that the stockholders could not accomplish
on their own.
Ans. add value to their investments in a way that the stockholders could not accomplish on their own.

2. One of the primary advantages of diversification is sharing core competencies. In order for
diversification to be most successful, it is important that
A) the methods of production are the same.
B) the similarity required for sharing core competencies must be in the value chain, not
in the product.
C) the products use similar distribution channels.
D) the target market is the same, even if the products are very different.
Ans. the similarity required for sharing core competencies must be in the value chain, not in the
product.

3. Vertical integration may be beneficial when

A) flexibility is reduced, providing a more stationary position in the competitive
environment.
B) the minimum efficient scales of two corporations are different.
C) lower transaction costs and improved coordination are vital and achievable through
vertical integration.
D) various segregated specializations will be combined.
Ans. lower transaction costs and improved coordination are vital and achievable through vertical
integration.

4. When a firm's corporate office helps subsidiaries make wise choices in their own acquisitions,
divestures, and new ventures, it is called___________.
A) restructuring
B) leveraging core competencies
C) uncreasing market power
D) parenting
Ans. parenting

5. In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an
industry set apart by high market growth is termed a
A) star.
B) cash cow.
C) question mark.
D) dog.
Ans. question mark.

6. Denoted in the Boston Consulting Group Portfolio management technique, a "cash cow, refers to a
business that has
A) relatively low market share and low market growth.
B) low market growth and relatively high market share.
C) relatively low market share and high market growth.
D) high market growth and relatively high market share.
Ans. low market growth and relatively high market share.

7. As stated by Michael Porter: "There's a tremendous allure to _______________. It's the big play,
the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story,
and create excitement in markets."
A) mergers and acquisitions
B) strategic alliances and joint ventures
C) internal development
D) differentiation strategies
Ans. mergers and acquisitions

8. All of the following are guiding principles for managing strategic alliances except
 A) establishing a clear understanding between partners.
B) not shortchanging your partner.
C) relying primarily on a contract to make the joint venture work.
D) working hard to ensure a collaborative relationship between partners.
Ans. relying primarily on a contract to make the joint venture work.

9. "Golden parachutes" signifies

A) pay given to executives fired because of a takeover.
B) a clause requiring that huge dividend payments be made upon takeover.
C) financial inducements offered by a threatened firm to stop a hostile suitor from
acquiring it.
D) managers of a firm involved in a hostile takeover approaching a third about
acquisition.
Ans. pay given to executives fired because of a takeover.

Chapter 7: International Strategy: Creating Value in Global Markets

1. In Michael Porter's framework, which of the following factors does not affect a nation's
competitiveness?
A) factor conditions
B) policies that protect the nation's domestic competitors
C) demand characteristics
D) related and supported industries
Ans. B) policies that protect the nation's domestic competitors

2. The sale of Boeing's commercial aircraft and Microsoft's operating systems in many countries
enable these companies to benefit from
A) higher prices in their domestic markets.
B) economies of scale.
C) optimizing the location for many activities in their value chain.
D) reducing their exposure to currency risks.
Ans. B) economies of scale.

3. Demands to "reduce costs" require that

A) the company needs to supplement the local foreign economy in a manner specified
by the local government.
B) a company should not trade idiosyncratic preferences in product features for higher
economic returns.
C) a company must pursue what is economically beneficial to the company including
maximizing economies of scale and learning curve effects.
D) the manager should follow a multidomestic strategy to maximize the economic
benefits to the company.
Ans. C) a company must pursue what is economically beneficial to the company including maximizing
economies of scale and learning curve effects.

4. High pressure for lower costs combined with high pressure for local adaptation would imply what
type of international strategy:
A) global
B) multidomestic
C) differentiation
D) transnational
Ans. D) transnational

5. All of the following are global strategy limitations except

A) ability to locate activities in optimal locations.
B) limited ability to adapt to local markets.
C) concentration of activities may increase dependence on a single facility.
D) single locations may lead to higher tariffs and transportation costs.
Ans. A) ability to locate activities in optimal locations.

6. Which of the following is not a limitation of a multidomestic strategy?

 A) less ability to realize cost savings through scale economies
B) greater difficulty in transferring knowledge across countries
C) may lead to "overadaptation" as conditions change
D) single locations may lead to higher tariffs and transportation costs
Ans. D) single locations may lead to higher tariffs and transportation costs

7. Which of the following describes the most standard order of entry into foreign markets?
A) franchising, licensing, exporting, joint venture, and wholly owned subsidiary
B) licensing, exporting, franchising, joint venture, and wholly owned subsidiary
C) exporting, licensing, franchising, joint venture, and wholly owned subsidiary
D) exporting, franchising, licensing, joint venture, and wholly owned subsidiary
Ans. C) exporting, licensing, franchising, joint venture, and wholly owned subsidiary

8. ____________ involve the creation of a third-party legal entity, whereas __________ do not.
A) Licensing agreements, joint ventures
B) Franchising agreements; strategic alliances
C) Strategic alliances; joint ventures
D) Joint ventures; strategic alliances
Ans. D) Joint ventures; strategic alliances

Chapter 8: The Internet and E-Commerce: Creating Value Through E-Business

StrategiesChapter

1. The Garden.com start-up, the opening case in this chapter, failed because
A) it spent heavily on content and capabilities that customers did not
value.
B) its reputation was damaged by rumors that spread via word of mouth.
C) it was unable to turn shoppers into buyers.
D) all of the above
Ans. D)all of the above

2. The types of industries that are expected to be most radically transformed by the
Internet, according to the text are:
A) information-intensive such as financial services
B) research-intensive industries such as pharmaceuticals
C) manufacturing-intensive such as microprocessors
D) all of the above
Ans. A)information-intensive such as financial services

3. End users are

A) usually the AC in B2C.
B) the final consumers in a distribution channel.
C) likely to have greater bargaining power because of the Internet.
D) all of the above
Ans. D)all of the above

4. One of the utmost threats to supplier power that has materialized because of the
Internet is
A) Internet technologies cannot easily be imitated.
B) the Internet inhibits the ability of suppliers to offer highly differentiated
products or services.
C) procurement technologies eliminate the need for suppliers.
D) the cost of accessing business customers has increased.
Ans. B)the Internet inhibits the ability of suppliers to offer highly differentiated
products or services.

5. On the whole, the threat of substitutes is heightened because the Internet:

A) lowers switching costs.
 B) lowers barriers to entry.
C) introduces new ways to accomplish the same tasks.
D) increases output per unit of cost.
Ans. C)introduces new ways to accomplish the same tasks.

6. All of the following are reasons the Internet increases the intensity of competitive
rivalry except:
A) the Internet has made it more difficult to imitate the advantages
achieved by competitors.
B) the Internet makes it more difficult for firms to differentiate
themselves.
C) the Internet has Acommoditized@ products that previously were
regarded as rare or unique.
D) the Internet has eliminated the importance of location by making
geographically distant products available online.
Ans. A)the Internet has made it more difficult to imitate the advantages achieved by
competitors.

7. Which of the following is not a way that Internet technologies are being used to
improve an overall cost leadership strategy?
A) Direct access to progress reports and the ability for customers to
periodically check work-in-progress is minimizing rework.
B) Online bidding and order processing are eliminating the need for sales
calls and minimizing sales force expenses.
C) Quick online responses to service requests and rapid feedback to
customer surveys and product promotions are enhancing marketing efforts.
D) Online purchase orders are making many transactions paperless,
reducing the costs of procurement and paper.
Ans. C)Quick online responses to service requests and rapid feedback to customer
surveys and product promotions are enhancing marketing efforts.

8. Which of the following phrases best completes the following sentence: Because of
the Internet, firms that utilize a focus strategy have new opportunities to
_____________________
A) respond quickly to customer requests.
B) access niche markets in a highly specialized fashion.
C) provide more services and features.
D) access markets less expensively.
Ans. B)access niche markets in a highly specialized fashion.

9. An enormous amount of money was spent promoting Pets.com's brand, but the
company ultimately closed during the dot-com downturn. Which of the following was
not one of the reasons Pets.com failed:
A) it overextended its focus on a market niche and tried to appeal to an
overly broad audience.
B) it was based on a faulty business model with overly thin margins.
C) despite its efforts, the Pets.com marketing campaign was ill-conceived
and did not create name recognition.
D) its strategy was based on a value proposition that customers did not
value
Ans. A)it overextended its focus on a market niche and tried to appeal to an overly
broad audience.

Chapter 9: Implementing Strategy: Achieving Effective Strategic Control

 1. Bausch & Lomb, the chapter-opening case, managers who were driven to
accomplish revenue objectives secretly moved inventory into storage and counted it
as sales. This was
A) standard operating procedure.
B) the result of a flawed system of strategic controls that failed to define
the boundaries of acceptable behavior.
C) a good way to meet revenue goals given B & L's strong emphasis on
"moving inventory."
D) a good way to ensure strong, positive culture.
Ans. B) the result of a flawed system of strategic controls that failed to define the
boundaries of acceptable behavior.

2. In businesses faced with complex and turbulent business environments

A) goals and objectives that are uncertain prevent opportunism.
B) complacency about predetermined milestones can prevent adaptability.
C) traditional strategic controls are usually inappropriate.
D) detailed plans are needed to maintain order.
Ans. C)traditional strategic controls are usually inappropriate.

3. Which of the following is a benefit of continuous monitoring?

A) replacing the time-consuming process of organizational learning
B) dramatically altering the organization's response to its competitive
environment
C) enhancing the organization's ability to respond with speed and
flexibility
D) all of the above
Ans. C)enhancing the organization's ability to respond with speed and flexibility

4. "As firms simultaneously downsize and face the need for increased coordination
across organization boundaries, a control system based primarily on
________________________________is dysfunctional."
A) culture and rewards
B) organizational loyalty
C) innovation and risk taking
D) boundaries and constraints
Ans. D)boundaries and constraints

5. The founder of Wal-Mart, the late Sam Walton, used to give pep rallies at local
Wal-Mart stores. What purpose did this serve?
A) it helped reinforce and sustain Wal-Mart's culture.
B) it was used to remind employees of Wal-Marts rules and regulations.
C) it demonstrated to employees the importance of articulating explicit
goals and objectives.
D) it was mostly an ego trip for Sam Walton.
Ans. A) it helped reinforce and sustain Wal-Mart's culture.

6. As countercultures surface that have shared values opposite from the dominant
culture of an organization,
A) organizational cohesiveness increases.
B) individuals begin working at cross purposes.
C) information is shared rather than hoarded.
D) individuals gain insights into overarching goals and objectives.
Ans. B) individuals begin working at cross purposes.

7. Which of the following is not a priority of effective short-term objectives?

A) providing a specific time horizon for their attainment
 B) being achievable yet challenging
C) being specific and measurable
D) an emphasis on "do your best" goals
Ans. D)an emphasis on "do your best" goals

8. Cadbury Schweppes has a policy that, no matter how unusual, all payments are
recorded in the company's books. This rule is
A) overly cumbersome.
B) designed to minimize improper and unethical conduct.
C) aimed at encouraging managers to make better budgetary decisions.
D) directed at protecting client confidentiality.
Ans. B) designed to minimize improper and unethical conduct.

9. The usage of culture and intangible rewards as the principal means of controlling
individual behavior is considered more effective than rules and boundaries when
A) work is autonomous and creative.
B) output is standardized.
C) measurement of performance is straightforward.
D) tasks are repetitive and routine.
Ans. A) work is autonomous and creative.

Chapter 10: Implementing Strategy: Creating Effective Organizational

Designs

1. In the chapter-opening case, This End Up's efforts to integrate operations

across multiple organizational boundaries was unsuccessful. The principal reason
for this failure was:
A) a lack of support by top management.
B) the inability to establish close and effective working relationships
among both its internal activities and external parties.
C) improper and unethical conduct by the firm's new CEO.
D) a downward spiral in market demand for This End Up styles of
furniture.
Ans. B) the inability to establish close and effective working relationships among both
its internal activities and external parties.

2. As a rule, discussions of the relationship between strategy and structure

strongly connote that
A) strategy follows structure.
B) strategy can effectively be formulated without considering structural
elements.
C) structure typically has a very small influence on a firm's strategy.
D) structure follows strategy
Ans. D)structure follows strategy

3. Work is separated into units that specialize in production, marketing, research

and development, and other management tasks at Sharp Corporation. This is an
example of
A) simple structure.
B) divisional structure.
C) functional structure.
D) matrix structure.
Ans. C)functional structure.
 4. An advantage of a divisional type of organizational structure is
A) an enhanced ability to respond quickly to changes in the external
environment.
B) efficient use of managerial and technical talent.
C) high degree of emphasis on long term performance.
D) uniformity in image and quality across divisions.
Ans. A) an enhanced ability to respond quickly to changes in the external
environment.

5. Significant advantages of a holding company structure include

A) gaining synergistic benefits across businesses.
B) a high level of awareness at the corporate office of issues facing
individual divisions.
C) a high level of control of division executives by executives at the
corporate level.
D) savings in personnel and overhead expenses associated with a small
corporate office.
Ans. D)savings in personnel and overhead expenses associated with a small corporate
office.

6. Multifaceted working relationships, intense power struggles, and excessive

reliance on group processes are disadvantages of what type of organizational
structure?
A) divisional
B) holding company
C) matrix
D) functional
Ans. C)matrix

7. Oticon, a hearing aid manufacturer, removed offices and cubicles and gave
employees freewheeling workstations that could be rearranged on a project-by-
project basis. Oticon also purged its organizational chart. The purpose of these
effort was to create a
A) modular structure.
B) barrier-free structure.
C) virtual structure.
D) all of the above
Ans. B) barrier-free structure.

8. Which of the following is not considered a strategic risk of outsourcing?

A) loss of non-vital functions
B) loss of control over a supplier
C) loss of cross-functional skills
D) loss of critical skills
Ans. A) loss of non-vital functions

Chapter 11: Effective Strategic Leadership: Creating a Learning Organization

and an Ethical Culture

1. Which of the following is an key attribute of a leader?

A) reactive
B) satisfied with the status quo
C) goal-oriented
D) focused on past performance
Ans. C)goal-oriented
2. Which of the following is not a result of poor organizational design by leaders?
A) insufficient mechanisms that integrate and coordinate activities across
the firm
B) teams, systems, and organizational processes that facilitate
implementation
C) inadequate accountability among managers and employees
D) inappropriate budgeting and control systems
B) teams, systems, and organizational processes that facilitate implementation

3. Organizations that get caught up in day-to-day work activities

A) fail to ask probing questions about their basic assumptions.
B) fail to think objectively about themselves and their business.
C) fail to refresh their strategies or reengineer their work processes.
D) all of the above
Ans. D)all of the above

4. The "top down" perspective of empowerment

A) delegates responsibility.
B) encourages intelligent risk-taking.
C) trusts people to perform.
D) encourages cooperative behavior.
Ans. A) delegates responsibility.

5. Manufacturing employees at Chaparral Steel are closely involved with customers

and have access to the modern innovative knowledge being developed in its
manufacturing processes. This is an example of
A) hierarchical control.
B) employee empowerment.
C) knowledge management.
D) enabling heroes and drones.
Ans. B) employee empowerment.

6. All of the following is one of the guidelines for management by walking around
except:
A) be open and don't argue. The goal is to provide an open environment
of trust.
B) be a good listener. Don't try to steer the conversation. Let the other
person do most of the talking.
C) wander aimlessly without an agenda.
D) have a clear idea of what type of information you need and want to
evaluate.
Ans. D)have a clear idea of what type of information you need and want to evaluate.

7. Which of the following explains why organizations are prone to inertia and slow to
change?
A) political barriers
B) vested interests in the status quo
C) personal time constraints
D) all of the above
Ans. D)all of the above

8. Which of the following statements about ethical organizations is not true?

A) ethical values shape the search for opportunities.
 B) organizational ethics define what a company is and what it stands for.
C) the potential benefits of an ethical organization are few but direct.
D) ethics provide a common frame of reference that serves as a unifying
force.
Ans. C)the potential benefits of an ethical organization are few but direct.

9. A statement describing an organization's commitment to particular standards of

ethical behavior is a
A) corporate credo
B) role model
C) control system
D) reward structure
Ans. A) corporate credo

Chapter 12: Effective Strategic Leadership: Fostering Corporate

Entrepreneurship and New Venture Creation

1. In the chapter-opening case, the entrepreneurial start-up Rosen Motors failed even
though it had created an energy-saving, breakthrough product. What happened?
A) their failed product demonstration gave other technologies time to
move ahead.
B) industry and competitive forces did not support their product coming to
market.
C) they had no buyers by the time they were about to enter the
expensive crash test phase so they closed up shop.
D) all of the above
Ans. D)all of the above

2. All of the following are characteristics of an entrepreneurial opportunity except:

A) attractive.
B) achievable.
C) affordable.
D) value creating.
Ans. C)affordable.

3. A study conducted in the 1970s by MIT professor David Birch found that
A) small business create the majority of new jobs.
B) fast-growing entrepreneurial firms are the most likely to fail.
C) the number of small businesses that are formed each year equals the
number that close each year.
D) small businesses tend to enter mature industries with low
innovativeness.
Ans. A) small business create the majority of new jobs.

4. The bulk of entrepreneurial start-ups are financed with

A) venture capital financing.
B) personal savings and the contributions of family and friends.
C) public financing (e.g., SBA loans).
D) bank financing
Ans. B) personal savings and the contributions of family and friends.

5. Which of the following is not an illustration of the liability of newness?

A) entrepreneurial start-ups are unknown in their industry.
B) entrepreneurial start-ups lack credibility with suppliers and financial
sources.
 C) entrepreneurial start-ups lack the kind of organizational structures that
promote rapid decision making.
D) entrepreneurial start-ups lack experience.
Ans. C)entrepreneurial start-ups lack the kind of organizational structures that
promote rapid decision making.

6. Which of the following impact which people within the corporation recognize
entrepreneurial opportunities?
A) organizational systems that foster learning and manage rewards
B) corporate culture
C) structural features that guide and constrain action
D) all of the above
Ans. D)all of the above

7. Intel has invested $8 billion in several e-business start-ups. This is an example of

A) corporate venture funding.
B) mergers and acquisitions.
C) internal development.
D) strategic renewal.
Ans. A) corporate venture funding.

8. Which of the following scopes of entrepreneurial orientation is expressed as "a

forward-looking perspective characteristic of a marketplace leader that has the
foresight to seize opportunities"?
A) opportunism
B) proactiveness
C) risk taking
D) autonomy
Ans. B) proactiveness

9. Firms that are the first to enter new markets, establish brand identity, and/or
adopt new technologies, hence gaining benefits, are known as
A) first-mover advantages.
B) technological capabilities.
C) competitive aggressiveness.
D) breakthrough innovations.
Ans. A) first-mover advantages.

10. Which kind of risk taking entails that a company borrows heavily or commits a
large portion of its resources in order to grow?
A) business risk taking
B) technological risk taking
C) personal risk taking
D) financial risk taking
Ans. D)financial risk taking