CHAPTER 6 Strategy Analysis and Choice

True/False
The Nature of Strategy Analysis and Choice 1. An organization’s present strategies, objectives and mission provide a basis for generating and evaluating feasible alternative strategies, coupled with the external and internal audit information. Ans: T 2. Page: 196-197

Strategic analysis and choice largely involves making objective decisions based on subjective information. Ans: F Page: 197

3.

Identifying and evaluating alternative strategies shouldn’t involve the managers and employees who earlier assembled the organizational vision and mission statements, performed the external audit and conducted the internal audits. Ans: F Page: 198

A Comprehensive Strategy-Formulation Framework 4. The first stage of the strategy-formulation framework is the input stage, followed by the matching stage. Ans: T 5. Page: 198

Stage 2 in the strategy-formulation framework involves a single technique, the Quantitative Strategic Planning Matrix. Ans: F Page: 198

6.

The Internal Factor Evaluation Matrix and the External Factor Evaluation Matrix are part of the final stage of the strategy formulation framework. Ans: F Page: 198

99

7.

The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Business Portfolio Matrix, the Internal-External (IE) Business Portfolio Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework. Ans: T Page: 198

The Input Stage 8. Basic input information for the matching and decision stage matrices is provided by the information derived from SPACE, TOWS and BCG matrices. Ans: F 9. Page: 198

Strategists themselves, not analytical tools, are always responsible and accountable for strategic decisions. Ans: T Page: 199

10.

The divisions of an organization should utilize strategy-formulation analytical tools to develop their own strategies and objectives. Ans: T Page: 199

11.

Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices. Ans: T Page: 199

The Matching Stage 12. The number of internal factors and external factors in the matching stage is reduced to generate feasible strategies. Ans: F 13. Page: 199

The purpose of matching key factors is to generate feasible alternative strategies. Ans: T Page: 199

14.

To effectively formulate competitive strategies, an organization should match its external opportunities and threats. Ans: F Page: 199

100

15.

SO strategies are based on using a firm’s internal strengths to take advantage of external opportunities and threats. Ans: F Page: 200

16.

Matching strengths with weaknesses is how SW strategies are created. Ans: F Page: 200

17.

A TOWS Matrix is composed of four cells for four types of strategies it creates. Ans: F Page: 200

18.

The purpose of each stage 2 matching tool is to generate feasible alternative strategies, not to select or determine which strategies are best. Ans: T Page: 200

19.

Only to get into a situation where they can work from strengths to take advantage of opportunities, organizations generally will pursue the other three types of strategies (WO, ST, or WT). Ans: T Page: 200-202

20.

From matching an internal weakness with an external threat, a WT strategy in the TOWS Matrix could result. Ans: F Page: 201

21.

WT strategies are defensive tactics. Ans: T Page: 201

22.

Matching techniques include both the SPACE Matrix and the TOWS Matrix. Ans: T Page: 203

23.

The ES and CA dimension variables in a SPACE Matrix are assigned a numerical value ranging from –1 (best) to –6 (worst). Ans: T Page: 204

101

Ans: F Page: 206 102 . Conservative strategies in a SPACE Matrix most often include intensive strategies and concentric diversification. is typically set at 0. Ans: F Page: 204 27. In performing SPACE analysis. Ans: F Page: 206 32. barriers to entry into market are best categorized as a competitive advantage (CA) variable. Integration and diversification strategies are most often included in competitive strategies in a SPACE Matrix. Ans: F Page: 205 30. The four strategies of the SPACE Matrix are aggressive. Relative market share position is given on the x-axis of the BCG Matrix. industry strength (IS) and environmental stability (ES). Ans: F Page: 204 26. Ans: F Page: 205 28. conservative. defensive and competitive. offensive and defensive. Ans: T Page: 204 25.05. which corresponds to a division that has half the market share of the leading firm in the industry. defensive and diversification when a firm’s directional vector is located in the aggressive quadrant of the SPACE Matrix. The SPACE Matrix axes are labeled aggressive. conservative. Ans: T Page: 206 31. The most important determinants of an organization’s overall strategic position are considered to be the two internal dimensions. The appropriate strategies are intensive. Ans: T Page: 205 29. financial strength (FS) and competitive advantage (CA). integration.24. The midpoint on the x-axis of a BCG Matrix. and the two external dimensions.

3).33. profit potential and financial stability could all fall under the category of industry strength. Ans: F Page: 206 36. The company’s total sales and number of employees are key considerations in the Boston Consulting Group Matrix.” Ans: T Page: 206 38. The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are (5. Ans: T Page: 206 35. In the SPACE Matrix. Ans: F Page: 206 39. Ans: T Page: 207 103 . Product quality is an important consideration in the BCG Matrix.4). A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (2. Ans: T Page: 206 37.4). a multidivisional organization is allowed to manage its portfolio of businesses. Ans: T Page: 206 34. Technical know-how. Ans: F Page: 207 41. The Boston Consulting Group Matrix is good for firms with many “profit centers. growth potential. The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (1. By examining the relative market share and industry growth rate of each division relative to all other divisions with the BCG matrix. Ans: F Page: 207 40. market share and product life cycle are some examples of areas to consider when evaluating a company’s competitive advantage.

Dogs on the BCG Matrix usually become stars after market penetration. the BCG Matrix and the IE Matrix are used only in formulating strategies in multidivisional firms. Star. A firm should pursue competitive strategies if the coordinates of a SPACE directional vector are (4. Ans: T Page: 211 104 . The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit. Ans: T Page: 208 45. question mark. The pie slice indicates the proportion of corporate profits generated by that division.6). Ans: T Page: 210 49. Ans: F Page: 210 48. Generally. Ans: F Page: 208 44.42. Ans: F Page: 207 43. Ans: F Page: 210 50. Cash cows represent the organization’s best long-run opportunities for growth and profitability. Divisions in Quadrant IV are called dogs because the organization must decide whether to strengthen them by pursuing intensive strategies or engaging in joint venture. Ans: T Page: 208 46. The major overall benefit of the BCG Matrix is that it draws attention to the cash flow. investment characteristics and needs of an organization’s various divisions. Ans: F Page: 209 47. Divisions with a low relative market share position and a high industry growth are called question marks in the BCG Matrix. cash cow and dogs are the four quadrants exhibited by the SPACE Matrix.

market share and market growth. Viewing businesses as star. hold and maintain and harvest or divest. Both IE and BCG Matrices are called portfolio matrices. successful organizations are able to achieve a portfolio of businesses. The Grand Strategy Matrix is based on two evaluative dimensions. the BCG Matrix is a snapshot of an organization at a given point in time. Positioned in or around cell IX in the IE Matrix. Ans: T Page: 212-213 58. The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. Ans: T Page: 211 55. cash cow. On the x-axis of the IE Matrix. or question mark is an oversimplification. Ans: T Page: 211 54. BCG Matrix requires more information about the divisions than the IE Matrix. dog. Ans: F Page: 212 57. Ans: F Page: 213 59. The IE Matrix can be divided into three major regions that have different strategy implications: grow and build. an internal factor evaluation score of 2. Having no temporal qualities. Ans: F Page: 213 105 .5 represents a weak internal position.51. Ans: T Page: 211 52. Ans: F Page: 212 56. Ans: T Page: 211 53.

Ans: T Page: 214 61.60. Ans: T Page: 216 65. The left column of a QSPM consists of information taken directly from the Internal Factor Evaluation Matrix and the External Factor Evaluation Matrix. and any number of strategies can comprise a given set. Ans: F Page: 216 67. Ans: T Page: 216 66. Ans: F Page: 214 The Decision Stage 62. then concentric diversification may reduce the risks associated with a narrow product line. the QSPM uses input information derived from Stage 1. according to the Grand Strategy Matrix. Page: 215 Small companies could skip Stages 1 and 2 of the strategy-formulation framework and develop a QSPM. Quadrant III organizations compete in rapid-growth industries and have weak competitive positions. The Quantitative Strategic Planning Matrix is an excellent decision stage analytical tool. According to the Grand Strategy Matrix. BCG Matrix. Ans: F Page: 216 64. Step 1 of a QSPM assigns weights to each key external and internal factor. Ans: T 63. when a Quadrant I firm is too heavily committed to a single product. Alternative strategies derived from the TOWS Matrix. SPACE Matrix. Ans: F Page: 217 106 . IE Matrix and Competitive Profile Matrix are included in the QSPM’s top row. Ans: T Page: 216 68. To objectively evaluate feasible alternative strategies identified in Stage 2. Any number of sets of alternative strategies can be included in the QSPM.

Ans: F Page: 219 73. Ans: F Page: 218 71. Total attractiveness scores are defined as the sum of the attractiveness scores in a given column of the QSPM. norms. customs. heroes and heroines that describe a firm. The relative desirability of one strategy over another is indicated by the magnitude of the difference between the total attractiveness scores in a given set of strategic alternatives. Ans: T 76. small organizations have a business plan whereas large organizations have culture. Ans: F Page: 219 107 . Two limitations of the Quantitative Strategic Planning Matrix are weights and ratings. Culture includes the set of shared values. A positive feature of OSPM is that sets of strategies can be examined sequentially or simultaneously. Ans: T Page: 219 74. Page: 219 Generally. attitudes. One positive feature of OSPM is that it does not require intuitive judgments and educated assumptions. Ans: F Page: 218 70. beliefs. The Sum Total Attractiveness Scores are defined by the product of multiplying the weights (step 2) by the attractiveness scores (step 4) in each row of the QSPM. Ans: F Page: 218 72. personalities.69. Ans: F Page: 219 Cultural Aspects of Strategy Choice 75.

successful CEOs stay abreast of how things are progressing and know when to step in to intervene. Ans: T Page: 221 84. By continuously chatting and informally questioning. Successful strategists establish additional hurdles or tests for strongly supported ideas that are considered unacceptable. Ans: T Page: 220 The Politics of Strategy Choice 79. Ans: T Page: 221 82. Ans: F Page: 221 85. Ans: T Page: 221 83. but which are best not opposed openly. Page: 220-221 Successful top managers keep a low political profile on acceptable proposals. Shifting focus from specific issues to more general ones may increase strategists’ options for gaining organizational commitment. Ans: T Page: 221 108 . Ans: T Page: 219 78. Whenever two firms merge. it becomes especially important to evaluate and consider culture-strategies linkages. Culture is the unique way an organization does business. Equifinality means it is often possible to achieve similar results using different means or paths. Ans: F Page: 221 81. Ans: T 80.77. Satisficing means it is often possible to achieve similar results using different means or paths. Successful strategists minimize their own political exposure on issues that are highly controversial and in circumstances where opposition from major power centers was likely.

Now averaging 18 members rather than 12 as they did a few years ago. Ans: F Page: 223 89.The Role of a Board of Directors 86. Ans: T Page: 224 93. The impact of increasing legal pressures on board members is that directors are demanding access to more financial performance information on a regular basis. Page: 222 Boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management. Ans: T Page: 222 88. Ans: F Page: 224 109 . Ans: F 87. the trend in America is toward larger boards. Ans: T Page: 224 91. violated the interests of shareholders when they hastily accepted a takeover bid from the Marmon Group. according to a ruling by the Supreme Court of Delaware in 1985. Business Week recommends the entire board of directors be up for election annually. There are on average five times more outsiders on the board than insiders at American firms. Ans: T Page: 223 90. Business Week recommends board members retire at age 65. Boards of directors today are composed mostly of outsiders who are becoming more involved in the company’s strategic-management activities. Ans: T Page: 224 92. The board of directors of Trans Union Corporation.

a. EFE and CPM. Input b. long-term d. Matching e. long-term. Stage 1 consists of IFE. Stage 3 e. What stage is this in the strategy formulation framework? a. board directors must assume a more activist stance in management development. Rather than just react to management initiatives.Conclusion 94. short-term. Strategy analysis and choice largely involves making __________ decisions based on __________ information. Decision d. Output b. objective. Input d. Ans: T Page: 225 Multiple Choice The Nature of Strategy Analysis and Choice 95. subjective Ans: b Page: 196 A Comprehensive Strategy-Formulation Framework 96. subjective. Page: 198 Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies? a. short-term b. Functional Ans: c 97. short-term e. Output c. Decision c. objective c. subjective. Matching Ans: e Page: 198 110 .

QSPM d. decision d. a. IFE e. The __________ stage includes an Internal Factor Evaluation Matrix and a Competitive Profile Matrix. Ans: d Page: 198 The Input Stage 101. Input d. A(n) __________ reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies. synergy. b. input b. d. e. financial formulas and statistics. Stage 1 Ans: b Page: 198 99. research Ans: a Page: 198 111 . strictly factual data. matching c. a. Decision c. The ________ stage involves a single technique. penetration e. TOWS b.98. Stage 2 b. a. QSPM. Each of the nine techniques included in the strategy formulation framework rely on the use of a. Matching e. SPACE c. c. luck. intuition and analysis. CPM Ans: c Page: 198 100.

a. ST e. WO c. ST strategies. a. the SPACE Matrix. The Business Portfolio Matrix e.102. WT Ans: c Page: 200 106. a. input stage b. SW d. b. decision stage d. Page: 198 The __________ of the strategy formulation framework contains the TOWS Matrix. None of the above Ans: e Page: 199 105. the Grand Strategy Matrix and the Competitive Profile Matrix. The Grand Strategy Matrix c. Poor product quality. WT strategies. IFE b. The SPACE Matrix b. __________ is not an input stage matrix. coupled with reliable suppliers. SO strategies. matching stage c. __________ is not a TOWS strategy. IE c. a. The Competitive Profile Matrix d. CPM d. Ans: b Page: 200 112 . __________ is not a Stage 2 matching technique. SO b. output stage e. EFE Ans: b Page: 198 The Matching Stage 103. would suggest a. d. The TOWS Matrix Ans: c 104. c. WO strategies.

Matching internal strengths with external opportunities is part of which section of the TOWS Matrix? a. pick the best strategy for the firm to carry out. WO c. WT strategies Ans: d Page: 201 113 . generate the feasible alternative strategies for the firm. SO strategies. WT strategies. WO strategies c. opportunities and threats of the firm. WO strategies. weaknesses. c. The purpose of each Stage 2 matching tool is to a. SO b. The center four cells Ans: d Page: 200 108. ST e. SO strategies b. The SO cell e. If an organization were to match high employee turnover with increased local competition. Ans: a Page: 200 109. c. The WT cell b. decide who the company’s major competitors are. SW d.107. WT Ans: b Page: 200 110. The most ideal situation for a company to be in on the TOWS Matrix would be if they had all a. b. d. what type of strategies would be appropriate? a. identify the strengths. The ST cell d. b. ST strategies d. Ans: b Page: 200 111. ST strategies. The WO cell c. Which strategies aim at improving internal weaknesses by taking advantage of external opportunities? a. d.

WO c. a. eight e. SW WO SW ST WT Which strategies use a firm’s strengths to avoid or reduce the impact of external threats? Ans: d 113. e. six c. ST e. SO b. a. SW d. b. four b. nine d. d. WT Ans: e Page: 201 114. a. two Ans: c Page: 201 115. A TOWS Matrix is composed of __________ cells. c.112. Which of the following is not a step of a TOWS Matrix? List the firm’s key external threats Match strengths with external opportunities and record the resultant SO strategies in the appropriate cell Match internal weaknesses with external threats and record the resultant WT strategies List the firm’s external weaknesses List the firm’s external threats Ans: d Page: 202 114 . Page: 201 __________ strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats.

Conservative Ans: d Page: 204 117. b. leverage. liquidity. QSPM Ans: b Page: 204 118. __________ reveals whether aggressive. Competitive Profile Matrix d. The two positive-rated dimensions on SPACE Matrix are a. avoid external threats. do all of the above. working capital and a. d. e. ease of entry into the market. Ans: d Page: 205 120. Which of these is not a SPACE Matrix quadrant? a. or competitive strategies are most appropriate. Grand Strategy Matrix b.116. Aggressive b. d. FS and IS. FS and CA. FS and ES. product quality. c. c. TOWS Matrix e. conservative. CA and ES. IS and ES. defensive. SPACE Matrix c. working capital. Ans: d Page: 206 115 . c. A firm located in the aggressive quadrant of the SPACE Matrix should use its internal strengths to a. Defensive c. b. overcome internal weaknesses. a. d. Offensive e. b. Ans: c Page: 204 119. operations and facilities. Financial strengths are measured on the SPACE Matrix by variables such as investment. take advantage of external opportunities. Competitive d.

a. What are two external dimensions of SPACE Matrix? a. Large companies Ans: a Page: 206 122. All companies c. Ans: b Page: 206 123. The BCG measures relative market share position as a. Industry strength and competitive advantage d. Liquidity e.121. a division’s market share divided by the market share of the largest rival in that industry. What is the BCG Matrix ideal for analyzing? a. c. Companies with more than one division b. Rate of inflation d. __________ should not be included as a factor in the Environmental Stability (ES) computation. Technological changes b. Seasonal effects Ans: d Page: 206 124. Competitive pressure c. Companies with annual sales greater than $1 million d. b. Competitive advantage and financial strength. d. Environmental stability and competitive advantage. Ans: a Page: 206 116 . c. the number of products a division has on the market compared to the competitors. a division’s sales compared to the sales of similar companies. Companies with annual sales of less than $1 million e. Financial strength and industry strength. e. the number of employees in a division compared to the number of employees in the largest rival in the industry. b. Environmental stability and industry strength.

Aggressive b. Integrative c. Diversification d. Conservative c. Conservative b. Integrative Ans: b Page: 207 117 . +3)? a. Aggressive e. What type of strategies would you recommend when a firm’s SPACE Matrix directional vector has the coordinates (-2. Combination Ans: d Page: 206 126. Divestiture d. Competitive d. None of these Ans: a Page: 206 127. ______________ is common to the defensive and conservative quadrants of a SPACE Matrix. Which of these quadrants in SPACE Matrix implies staying close to the firm’s basic competencies and not taking excessive risks? a. Defensive e. which of these strategies are not appropriate? a. Market penetration e. a. Competitive c. Product development b. Retrenchment Ans: b Page: 206 128. Defensive d. Concentric diversification c.125. Intensive b. If the SPACE Matrix directional vector falls in the aggressive quadrant. Defensive e.

A strong industry b. c. When a division of an organization has a high relative market share and is in a fastgrowing industry. c. A stable environment d. An unstable environment c. star. question mark. question mark. Dog Ans: a Page: 208 131.129. cash cow. Stuck-in-the-middle e. d. b. Cash cow c. d. dog. Ans: b Page: 210 133. +3) strategy profile portray? a. Conglomerate diversification d. Forward integration Ans: a Page: 210 118 . How would a division with a low relative market share position in a high growth industry be described? a. failure. star. dog. In the SPACE analysis what does a (+6. it is called a a. Which of these is an attractive strategy for a cash cow division? a. Star d. A weak financial position Ans: a Page: 207 130. A division with a high relative market share position in a low-growth industry can be described as a a. A weak industry e. Backward integration e. cash cow. Concentric diversification b. e. Question mark b. Horizontal integration c. Ans: a Page: 209 132. b.

I b. d. Most likely. calf d. both c & d.134. What has four quadrants based on two dimensions: competitive position and market growth? a. b. III d. SPACE Matrix d. failure Ans: d Page: 210 135. dog b. d. a. not allowing a company to be classified as somewhere in between two categories. IV Ans: a Page: 213 119 . Competitive Profile Matrix b. Firms located in which quadrant of the Grand Strategy Matrix are in an excellent strategic position? a. c. being a time-consuming and costly analysis. The BCG Matrix limitations include a. requiring at least three years’ worth of data. e. Grand Strategy Matrix e. question mark c. the IE requires more information about the divisions than the BCG Matrix. not reflecting divisional or industry growth over time. b. II c. Ans: e Page: 211 136. TOWS Matrix c. QSPM Ans: d Page: 213 138. c. The BCG Matrix and the IE Matrix are different in all of the following aspects except their axes. Ans: b Page: 212 137. star e. a cash cow was what in the past? a. their strategic implications. the way they plot organizational divisions.

I II III IV Ans: b Page: 214 120 . d. Liquidation Ans: a Page: 213 140. a. c. just whole companies. the first strategy recommended is a. Joint venture d. immediate liquidation of assets. and they need to determine why the firm’s current approach is ineffective and how the company can best change to improve its competitiveness. asset expansion. employee expansion. Ans: a Page: 214 142. b. a. c. d. Market penetration b. Ans: c Page: 213 141. __________ in the Grand Strategy Matrix is recommended for a firm with rapid market growth and a strong competitive position. they are unable to compete effectively. Although Quadrant _____ companies are growing. d. company divisions and individual products. For companies located in Quadrant III of the Grand Strategy Matrix. whole companies and company divisions. extensive cost and asset reduction. b. c. The Grand Strategy Matrix can be used to evaluate competitive position and market growth for a. according to the Grand Strategy Matrix. Conglomerate diversification c. Retrenchment e. individual products. b.139.

Ans: d Page: 216 121 . b. IE Matrix. a. Grand Strategy Matrix e. a. according to the Grand Strategy Matrix. backward integration b. SPACE Matrix Ans: b 146. Quadrant _____ organizations have a strong competitive position but are in a slowgrowth industry. integration Ans: c Page: 215 The Decision Stage 145. concentric diversification d. BCG Matrix. c. BCG Business Portfolio Matrix d. Space Matrix. forward integration c. Quantitative Strategic Planning Matrix c. Page: 215 The top row of a QSPM consists of alternative strategies derived from all of these except a. TOWS Matrix. d. e. A(n) __________ strategy could be most effective when a firm has excess production capacity and its basic industry is experiencing declining sales and profits. __________ is included in the decision stage of the strategy formulation framework. b. Internal Factor Evaluation Matrix b.143. c. d. I II III IV Ans: d Page: 214 144. CPM Matrix. a. joint venture e.

40. Total attractiveness scores b. 2. In the QSPM. 20 Ans: c Page: 217 149. Which of the following is the first step in developing QSPM? Compute the Total Attractiveness Scores Examine the Stage 2 matrices and identify alternative strategies the organization should consider implementing Assign weights to each key external and internal factor Determine the Attractiveness Scores Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM Ans: e 150. a. b. 20. BCG Matrix SPACE Matrix TOWS Matrix IE Matrix QSPM Ans: e Page: 216 148. Total weighted scores e. Weighted scores d. d. a minimum of _______ internal and ______ external critical success factors should be included. 40 e. e. b. 4 c. 2 b.147. 4. Sum total attractiveness scores c. c. 10. The __________ determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized. a. 10 d. a. e. Page: 217-218 What term is defined as the product of multiplying ratings by attractiveness scores in each row of the QSPM? a. c. Factors Ans: a Page: 218 122 . d.

It is only as good as the prerequisite input information and matching analyses upon which it is based e. 1 d. The cost of doing the analysis c. What is the highest number of strategies that can be examined at one time with the QSPM? a. 10 e. heroes and heroines that describe a firm? a. Which of these do QSPM limitations include? a.151. 5 b. Mission d. Objectives e. Culture c. 2 c. strategies that encourage corporate expansion. norms. There is no limit. Ans: e Page: 219 153. QSPM Ans: b Page: 219 123 . Both c & d Ans: e Page: 219 Cultural Aspects of Strategy Choice 154. only the best or most promising strategies suggested by Stage 2 matrices. Only a few strategies can be evaluated simultaneously b. all strategies suggested by Stage 2 matrices. Subjective judgments and educated guesses are required d. b. personalities. beliefs. Strategy b. What includes the set of shared values. customs. Ans: b Page: 218 152. attitudes. b. What should be included in strategies in the QSPM? a. c. strategies that will assure organizational success.

Today. Employees always welcome cultural change. The culture of a firm is important when considering strategies because a. outsiders b.155. Focus on higher-order issues c. union d. boards of directors are composed mostly of __________. None of the above Ans: c 157. a. Specialization Ans: d Page: 221 The Role of a Board of Directors 158. Equifinality b. employees e. d. c. Ans: a Page: 219-220 The Politics of Strategy Choice 156. Generalization d. Satisficing c. everyone in the firm should have a vote as to which strategies to implement. culture can dictate the choice of strategies. Generalization b. __________ is known as the tactic of shifting focus from specific issues to more general ones. b. a. cultural products can support strategies so managers can often implement changes swiftly and easily. Equifinality e. Focus on higher-order issues d. Page: 221 __________ means it is possible to achieve similar results using different means or paths a. stockholders Ans: a Page: 222 124 . management c. Satisficing e.

c. Ans: b Page: 223-224 161. Page: 199-200 125 . According to Business Week. require directors to retire at age 70. place the entire board up for election every five years. link the CEO’s pay to specific goals. consideration of stakeholders’ interests d. b. adhering to legal prescriptions c. control and oversight over management b. Ban interlocking directorships d. e. Except for ________________. advancement of stockholders’ rights e. Limit the number of other boards a member can serve on c. require each director to own a large amount of company stock. See Table 6-1 on page 200 for examples of matching.159. expansion of management stock options Ans: e Page: 223 160. the roles and duties of a board of directors include all of these broad categories. compensate board members only in company stock. What did Business Week conclude a board of directors should do? a. Ensure no more than two board members are insiders b. Explain the concept of matching in the strategy formulation framework. All of the above Ans: d Page: 223-224 Essay Questions 162. a good board of directors performs all of these responsibilities except a. Give at least three examples of matching. a. Matching external and internal critical success factors is the key to effectively generating feasible alternative strategies. d.

In a BCG Matrix. stars. Give five coordinates of a SPACE Matrix directional vector that would suggest conservative strategies to be most appropriate.5). and (-5. five examples they may suggest are (-1. Dogs have a low relative market share position and compete in a slow.or no-marketgrowth industry. what type of strategies would you recommend? Give several examples. If the directional vector points to the lower-left quadrant of the SPACE Matrix. divestiture. or dogs. Page: 205 164. Defensive strategies include retrenchment. (-2. students should suggest defensive strategies. If you construct a SPACE Matrix and the directional vector points to the lower left quadrant. all divisions are called question marks. yet they compete in a highgrowth industry. Question Marks have a low relative market share position.4). Student answers will vary. Stars represent the organization’s best long-run opportunities for growth and profitability. cash cows.2). (-3. liquidation and concentric diversification. Page: 205 165. Cash Cows have a high relative market share position but compete in a low-growth industry. However.3). Page: 208-210 126 . (-4. Define each of these terms.163.1).

Page: 210-211 167. Quadrant III strategies include retrenchment. 2) the BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. Page: 214 169. Describe the positive features and limitations of QSPM. conglomerate diversification. dog. Also. Student answers will vary when elaborating on what these strategies could mean for a college or university. the matrix has no temporal qualities. or question mark is an oversimplification. Compare and contrast the IE Matrix with the BCG Matrix. Explain the benefits and limitations of developing a Boston Consulting Group Matrix. The BCG Matrix has some limitations: 1) Viewing every business as either a star. The BCG Matrix has one major benefit: draws attention to the cash flow. Page: 211-212 168. students should mention that the college or university could possibly have to be closed or facility and staff may have to be drastically reduced which leads to unhappy students in very large classes. divestiture and liquidation. many businesses fall right in the middle of the BCG Matrix and thus are not easily classified. The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organizational divisions in a schematic diagram. horizontal diversification. Using a Grand Strategy Matrix approach. investment characteristics and needs of an organization’s various divisions. concentric diversification. cash cow. However.166. what strategies are recommended for a firm that is a weak competitor in a slow-growing market? Elaborate on what these strategies could mean for a college or university. 127 . and pie slices reveal the percentage profit contribution of each division in both the BCG and IE Matrix. A firm that is a weak competitor in a slow-growing market would be located in Quadrant III. but rather it is a snapshot of an organization as any given point in time and 3) other variables besides relative market share position and industry growth rate in sales are important in making strategic decisions about various divisions. that is. the size of each circle represents the percentage sales contribution of each division. Some important differences between the IE Matrix and the BCG Matrix include 1) different axes. 2) the IE Matrix requires more information about the divisions than the BCG Matrix and 3) the strategic implications of each matrix are different.

even though they should be based on objective information and 3) it can be only as good as the prerequisite information and matching analyses upon which it is based. The QSPM is not without some limitations: 1) It always requires intuitive judgments and educated assumptions. 2) there is no limit to the number of strategies that can be evaluated or the number of sets of strategies that can be examined at once using the QSPM and 3) the last positive feature is that it requires strategists to integrate pertinent external and internal factors into the decision process. Page: 219 170. Discuss the appropriate role of a board of directors in an organization. Please refer to Table 6-7 on page 223 for Board of Directors Duties and Responsibilities. Page: 221-224 128 .There are three positive features of QSPM: 1) Sets of strategies can be examined sequentially or simultaneously. 2) The ratings and attractiveness scores require judgmental decisions.

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