STRAMA - Chapters 5 and 6

TRUE/FALSE.Write'T'ifthestatementistrueand'F'ifthestatementisfalse.
1)Longtermobjectivesrepresenttheresultsexpectedfrompursuingcertainstrategies.
Diff:1
PageRef:165
Topic:LongTermObjectives
Objective:5.01Discussthevalueofestablishinglongtermobjectives.
2)Objectivesprovidedirectionandallowfororganizationalsynergy.
Diff:1
PageRef:165
3)Strategicobjectivesincludethoseassociatedwithgrowthinrevenues,growthinearnings,higherdividends,
largerprofitmarginsandimprovedcashflow.
Diff:2
PageRef:166
Objective:5.09Compareandcontrastfinancialwithstrategicobjectives.
4)Strategicobjectivesincludelargermarketshare,quickerontimedeliverythanrivals,quicker
designtomarkettimesthanrivals,lowercoststhanrivals,andwidergeographiccoveragethanrivals.
Diff:2
PageRef:166
5)"Ifitain'tbroke,don'tfixit"referstomanagingbycrisis.
Diff:2
PageRef:167
6)TheoverallaimoftheBalancedScorecardistobalancefinancialobjectiveswithstrategicobjectives.
Diff:3
PageRef:167
Objective:5.08DiscusstheBalancedScorecard.
7)Sinceacombinationstrategybearsnorisk,manyorganizationspursueacombinationoftwoormore
strategiessimultaneously.
Diff:3
PageRef:169
Objective:5.02Identify16typesofbusinessstrategies.
8)Horizontalintegrationisseekingownershiporincreasedcontrolovercompetitors.
Diff:2
PageRef:169
Page 2
9)Divestitureissellingallofacompany'sassets,inparts,fortheirtangibleworth.
Diff:2
PageRef:169
10)Achiefexecutiveofficerislocatedinthedivisionallevelofalargefirm.
Diff:1
PageRef:170
11)Gainingownershiporincreasedcontroloverdistributorsorretailersiscalledforwardintegrationstrategy.
Diff:2
PageRef:171
Topic:IntegrationStrategies
12)Franchisingisaneffectivemeansofimplementingforwardintegration.
Diff:2
PageRef:171
13)Agrowingtrendisforfranchiserstobuyouttheirpartofthebusinessfromtheirfranchisees.
Diff:2
PageRef:171
14)McDonaldscurrentlyownsmorethan50percentofitsrestaurants.
Diff:1
PageRef:171
Objective:5.03Identifynumerousexamplesoforganizationspursuingdifferenttypesofstrategies.
15)Forwardintegrationstrategyisespeciallyeffectivewhentheavailabilityofqualitydistributorsissolimitedas
toofferacompetitiveadvantagetothosefirmsthatintegrateforward.
Diff:2
PageRef:171
Objective:5.04Discussguidelineswhenparticularstrategiesaremostappropriatetopursue.
16)Astrategyofseekingownershiporincreasedcontrolofafirm'ssuppliersisbackwardintegration.
Diff:2
PageRef:172
17)Ifafirm'spresentsuppliersareexpensiveandunreliableinmeetingthefirm'sneedsforparts,components
and/orrawmaterials,thefirmshouldpursueahorizontalintegrationstrategy.
Diff:2
PageRef:172
Page 3
18)Horizontalintegrationisanappropriatestrategywhenthecompetitorsofanorganizationaredoingpoorly.
Diff:3
PageRef:173
19)Marketpenetration,marketdevelopment,andproductdevelopmentareintensivestrategies.
Diff:2
PageRef:173
Topic:IntensiveStrategies
20)Whenthecorrelationbetweendollarsalesanddollarmarketingexpenditureshashistoricallybeenlow,
marketpenetrationisanappropriatestrategy.
Diff:3
PageRef:174
21)Marketdevelopmentincludesintroducingpresentproductsintonewgeographicareas.
Diff:1
PageRef:174
22)Anappropriatestrategywhenanorganizationhasexcessproductioncapacityismarketdevelopment.
Diff:2
PageRef:174
23)Pepsihas41percentofthepotatochipmarketinChina.
Diff:2
PageRef:174
24)Productdevelopmentisastrategythatseeksincreasedsalesbyimprovingormodifyingpresentproductsor
services.
Diff:1
PageRef:174
25)Productdevelopmentisanappropriatestrategywhenanorganizationhassuccessfulproductsthatareinthe
maturitystageoftheproductlifecycle.
Diff:2
PageRef:175
26)Therearefourbasictypesofdiversification:concentric,conglomerate,forwardandbackward.
Diff:1
PageRef:175
Topic:DiversificationStrategies
Page 4
27)Mostcompaniesfavorrelateddiversificationstrategiesinordertoexploitcommonuseofawellknownbrand
name.
Diff:2
PageRef:175
28)Diversificationstrategiesarebecomingmorepopularasorganizationsarefindingiteasiertomanagediverse
businessactivities.
Diff:2
PageRef:175
29)J.M.SmuckersCo.'sacquisitionofProcter&Gamble'sFolger'scoffeebusinessisanexampleofrelated
diversification.
Diff:2
PageRef:176
30)Unrelateddiversificationisanappropriatestrategywhenanorganization'spresentchannelsofdistribution
canbeusedtomarketthenewproductstocurrentcustomers.
Diff:2
PageRef:177
31)IBM'sentranceintothewatermanagementbusinessisanexampleofrelateddiversification.
Diff:3
PageRef:177
32)Unrelateddiversificationmaybeanespeciallyeffectivestrategywhenanorganization'sbasicindustryis
experiencingincreasingannualsalesandprofits.
Diff:2
PageRef:177
33)Retrenchmentandturnaroundarethesamestrategy.
Diff:1
PageRef:178
Topic:DefensiveStrategies
34)Althoughbankruptcycanbeaneffectivetypeofretrenchmentstrategy,itdoesnotallowfirmstoavoidmajor
debtobligationsandtovoidunioncontracts.
Diff:3
PageRef:179
Page 5
35)Chapter7bankruptcyisaliquidationprocedureusedonlywhenafirmseesnohopeofbeingabletooperate
successfullyortoobtainnecessarycreditoragreement.
Diff:2
PageRef:179
36)Chapter9bankruptcyappliestomunicipalities.
Diff:1
PageRef:179
37)PersonalbankruptcyfilingsintheU.S.exceeded1millionforthefirsttimeeverin2008.
Diff:2
PageRef:179
38)Chapter13bankruptcyissimilartoChapter11,butavailableonlytolargecorporations.
Diff:2
PageRef:179
39)Divestitureisthesellingofallofacompany'sassets.
Diff:2
PageRef:180
40)Divestiturehasbecomeapopularstrategyforfirmstofocusontheircorebusinessandbecomemore
diversified.
Diff:3
PageRef:180
41)Liquidationisoftenappropriatewhenretrenchmentanddivestiturehavefailed.
Diff:2
PageRef:183
42)AccordingtoPorter,strategiesalloworganizationstogaincompetitiveadvantagefromthreedifferentbases:
costleadership,differentiationandintegration.
Diff:3
PageRef:183
Topic:MichaelPorter'sFiveGenericStrategies
Objective:5.05DiscussPorter'sfivegenericstrategies.
43)Forconsumerswhoarepricesensitive,costleadershipemphasizesproducingstandardizedproductsatvery
lowperunitcost.
Page 6
Diff:2
PageRef:183
44)Abestvaluestrategyoffersproductsorservicestoawiderangeofcustomersatthebestpricevalueavailable
onthemarket.
Diff:2
PageRef:183
45)Alowcostfocusstrategyoffersproductsorservicestoasmallrangeofcustomersatthelowestprice
availableonthemarket.
Diff:2
PageRef:183
46)JiffyLubeInternationalwouldbeagoodexampleofafirmseekingthebestvaluefocusstrategy.
Diff:2
PageRef:183
47)Acostleadershipstrategycanbeespeciallyeffectivewhenmostbuyersusetheproductinthesameway.
Diff:2
PageRef:185
48)Adifferentiationstrategycanonlybeachievedwithalargetargetmarket.
Diff:2
PageRef:183
49)Differentiationguaranteescompetitiveadvantage.
Diff:2
PageRef:185
50)Themosteffectivedifferentiationbasesarethosethatarehardorexpensiveforrivalstoduplicate.
Diff:2
PageRef:186
51)Alowcostfocusstrategycanbeespeciallyattractivewhenthetargetmarketnicheissmall.
Diff:2
PageRef:187
Page 7
52)Adifferentiationstrategycanbeespeciallyattractivewhentheindustryhasmanydifferentnichesand
segments,therebyallowingafocusertopickacompetitivelyattractivenichesuitedtoitsownresources.
Diff:3
PageRef:187
53)Inaturbulent,highvelocitymarket,aleadchangestrategyisbestwheneverthefirmhastheresourcesto
pursuethisapproach.
Diff:2
PageRef:187
Objective:5.13Discussstrategiesforcompetinginturbulent,highvelocitymarkets.
54)Cooperativearrangementsandjointventuresbetweencompetitorsarebecomingincreasinglypopular.
Diff:2
PageRef:187
Topic:MeansforAchievingStrategies
55)Jointventurestendtofailwhenmanagerswhomustcollaboratedailyinoperatingtheventurearenot
involvedinformingorshapingtheventure.
Diff:2
PageRef:189
Objective:5.07DiscussjointventuresasawaytoentertheRussianmarket.
56)Divestiturewouldbeanappropriatestrategywhenaneedexiststointroduceanewtechnologyquickly.
Diff:2
PageRef:190
57)Anacquisitionoccurswhenalargeorganizationpurchasesasmalleroneorviceversa.
Diff:1
PageRef:190
Topic:Merger/Acquisition
58)Whenanacquisitionormergerisnotdesiredbybothparties,itiscalledatakeoverorhostiletakeover.
Diff:2
PageRef:190
59)Forallof2008,globalmergerandacquisitionvolumeincreased12percent,puttingitonparwiththevolume
in2005.
Diff:1
PageRef:190
60)Whiteknightisatermthatreferstoafirmthatagreestoacquireanotherfirmwhentheotherfirmisfacinga
hostiletakeoverbysomecompany.
Diff:2
PageRef:191
Page 8
61)Aleveragedbuyoutoccurswhenafirm'smanagementandotherprivateinvestorsuseborrowedfundstobuy
outthefirm'sshareholders.
Diff:2
PageRef:192
62)Firstmoveradvantagereferstothebenefitsafirmmayachievebyenteringanewmarketordevelopinganew
productorservicepriortorivalfirms.
Diff:2
PageRef:193
Objective:5.11ExplaintheFirstMoverAdvantagesconcept.
63)Companiesareavoidingoutsourcingmoreandmorebecauseitismoreexpensivethantraditionalmethods
anditdoesnotallowafirmtoconcentrateoncorecompetencies.
Diff:3
PageRef:193
Objective:5.12Discussrecenttrendsinoutsourcing.
64)Whileoutsourcingmanufacturing,techsupport,andbackofficeworkisquitecommon,itisstillunheardof
forcompaniestooutsourceanyoftheirresearchanddevelopmentactivities.
Diff:2
PageRef:194
65)ThenonprofitsectorisAmerica'slargestemployer.
Diff:3
PageRef:194
Topic:StrategicManagementinNonprofitandGovernmentOrganizations
Objective:5.06Describestrategicmanagementinnonprofit,governmental,andsmallorganizations.
66)Strategistsingovernmentalorganizationsoperatewithfarmorestrategicautonomythantheircounterpartsin
privatefirms.
Diff:2
PageRef:195
Topic:StrategicManagementinNonprofitandGovernmentOrganizations
67)Publicenterprisesgenerallycannotdiversifyintounrelatedbusinessesormergewithotherfirms.
Diff:2
PageRef:195
Topic:StrategicManagementinSmallFirms
68)Allsizesandtypesoforganizationscanutilizeandbenefitfromstrategicmanagementconceptsand
techniques.
Diff:1
PageRef:196
Page 9
Objective:5.10Discussthelevelsofstrategiesinlargeversussmallfirms.
69)Researchshowsstrategicmanagementinsmallfirmsismoreformalthaninlargefirms,butlargefirmsthat
engageinstrategicmanagementoutperformthosethatdonot.
Diff:2
PageRef:196
MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswersthequestion.
70)Longtermobjectivesareneededatwhichlevel(s)inanorganization?
A.Functional
B.Divisional
C.Corporate
D.Alloftheabove
E.Noneoftheabove
Diff:1
PageRef:195
71)Financialobjectivesinvolveallofthefollowingexcept:
A.growthinrevenues.
B.largermarketshare.
C.arisingstockprice.
D.greaterreturnoninvestment.
E.higherdividends.
Diff:2
PageRef:166
72)Whatprincipleisbasedonthebeliefthatthetruemeasureofareallygoodstrategististheabilitytosolve
problems?
A.Managingbyextrapolation
B.Managingbycrisis
C.Managingbyexception
D.Managingbyobjectives
E.Managingbyhope
Diff:1
PageRef:167
73)Whatprincipleisbuiltontheideathatthereisnogeneralplanforwhichwaytogoandwhattodo?
A.Managingbyextrapolation
B.Managingbyhope
C.Managingbyobjectives
D.Managingbysubjectives
E.Managingbycrisis
Diff:2
PageRef:167
Page 10
74)Allofthefollowingarelistedamongthe"softer"factorsintheBalancedScorecardexcept:
A.customerservice.
B.productquality.
C.businessethics.
D.stockholderequity.
E.employeemorale.
Diff:2
PageRef:168
Objective:5.08DiscusstheBalancedScorecard.
75)Whichlevelofstrategyismostlikelynotpresentinsmallfirms?
A.Divisional
B.Functional
C.Corporate/company
D.Operational
E.Alloftheabovearepresentinsmallfirms.
Diff:2
PageRef:170
76)Microsoftopeningitsownretailstoresisanexampleofwhichtypeofstrategy?
A.Horizontalintegration
B.Backwardintegration
C.Forwardintegration
D.Relateddiversification
E.Unrelateddiversification
Diff:2
PageRef:171
77)CadburyPLCsellingitsAustraliandrinksbusinesstoAsahiBreweriesLtd.ofJapanisanexampleofwhich
typeofstrategy?
A.Liquidation
B.Relateddiversification
C.Retrenchment
D.Unrelateddiversification
E.Divestiture
Diff:2
PageRef:180
78)BurgerKingopeningitsfirstrestaurantinJapanisanexampleofwhichtypeofstrategy?
A.Forwardintegration
C.Productdevelopment
D.Marketdevelopment
E.Horizontalintegration
Diff:2
PageRef:174
Page 11
79)Whichofthefollowingismostlikelynotincludedinthefunctionallevelofasmallcompany?
A.Departmentmanagers
B.Humanresourcemanagers
C.R&D
D.Marketing
E.Finance
Diff:2
PageRef:170
80)Integrationstrategiesaresometimescollectivelyreferredtoaswhichofthefollowingcategoriesofstrategies?
A.Verticalintegration
B.Hierarchicalintegration
C.Diversification
D.Stuckinthemiddle
Diff:3
PageRef:171
81)Websitesthatsellproductsdirectlytoconsumersareexamplesofwhichtypeofstrategy?
A.Conglomeratediversification
B.Productdevelopment
D.Backwardintegration
Diff:2
PageRef:171
82)ThepercentofMcDonalds'restaurantsactuallyownedbytheMcDonaldscorporationisapproximately
A.43percent.
B.55percent.
C.23percent.
D.35percent.
E.63percent.
Diff:2
PageRef:171
83)Whichofthesestrategiesiseffectivewhenthenumberofsuppliersissmallandthenumberofcompetitorsis
large?
A.Conglomeratediversification
C.Concentricdiversification
D.Forwardintegration
E.Horizontaldiversification
Diff:2
PageRef:172
Page 12
84)Backwardintegrationiseffectiveinalloftheseexcept
A.whentheadvantageofstablepricesarenotimportant.
B.whenanorganizationneedstoacquireaneededresourcequickly.
C.whenanorganizationhasbothcapitalandhumanresourcestomanagethenewbusinessofsupplying
itsownrawmaterials.
D.whenanorganizationcompetesinanindustrythatisgrowingrapidly.
E.whenpresentsuppliershavehighprofitmargins.
Diff:1
PageRef:172173
85)Whatreferstoastrategyofseekingownershipof,orincreasedcontroloverafirm'scompetitors?
A.Concentricdiversification
B.Horizontalintegration
D.Conglomeratediversification
E.Backwardintegration
Diff:3
PageRef:173
86)Inwhichsituationwouldhorizontalintegrationbeanespeciallyeffectivestrategy?
A.Whenanorganizationcangainmonopolisticcharacteristicsinaparticularareaorregionwithoutbeing
challengedbythefederalgovernmentfor"tendingsubstantially"toreducecompetition.
B.Whendecreasedeconomiesofscaleprovidemajorcompetitiveadvantages.
C.Whenanorganizationcompetesinaslowingindustry.
D.Whenanorganizationhasneitherthecapitalnorhumantalentneededtosuccessfullymanagean
expandedorganization.
E.Whencompetitorsaresucceedingduetomanagerialexpertiseorhavingparticularresourcesan
organizationpossesses.
Diff:3
PageRef:173
87)Whichstrategyseekstoincreasemarketshareofpresentproductsorservicesinpresentmarketsthrough
greatermarketingefforts?
A.Marketdevelopment
B.Productdevelopment
C.Backwardintegration
E.Marketpenetration
Diff:2
PageRef:173
88)WhenadomesticcompanyfirstbeginstoexporttoIndia,itisanexampleof
A.forwardintegration.
B.horizontalintegration.
Page 13
C.backwardintegration.
D.marketdevelopment.
E.concentricdiversification.
Diff:2
PageRef:183
89)Whichstrategygenerallyentailslargeresearchanddevelopmentexpenditures?
A.Forwardintegration
B.Marketpenetration
C.Divestiture
D.Retrenchment
E.Productdevelopment
Diff:1
PageRef:174
90)Allofthefollowingsituationsareconducivetomarketdevelopmentexcept:
A.whenanorganizationhasexcessproductioncapacity.
B.whenanorganizationisverysuccessfulatwhatitdoes.
C.whenanorganizationcompetesinahighgrowthindustry.
D.whennewuntappedorunsaturatedmarketsexist.
E.whenanorganization'sbasicindustryisbecomingrapidlyglobalinscope.
Diff:2
PageRef:174
91)Whichstrategyisappropriatewhenanorganizationcompetesinanindustrycharacterizedbyrapid
technologicaldevelopments?
A.Productdevelopment
B.Marketpenetration
C.Retrenchment
D.Liquidation
Diff:2
PageRef:175
92)Addingnew,relatedproductsorservicesforpresentcustomersiscalled
A.forwardintegration.
B.backwardintegration.
C.relateddiversification.
D.unrelateddiversification.
E.conglomeratediversification.
Diff:1
PageRef:175176
93)Whichstrategyshouldanorganizationuseifitcompetesinanogrowthoraslowgrowthindustry?
Page 14
A.Unrelateddiversification
B.Retrenchment
C.Relateddiversification
D.Divestiture
Diff:2
PageRef:176
94)QualcommInc.'srecentexpansionbeyondcellphonesintodesktophardwareisanexampleof
A.unrelateddiversification.
B.forwardintegration.
C.divestiture.
D.backwardintegration.
E.retrenchment.
Diff:1
PageRef:177
95)Whichofthefollowingisnotanexampleofwhenanorganizationshoulduseanunrelateddiversification
strategy?
A.Whenexistingmarketsforanorganization'spresentproductsarenotyetsaturated.
B.Whenanorganization'spresentchannelsofdistributioncanbeusedtomarketthenewproductsto
currentcustomers.
C.Whenrevenuesderivedfromanorganization'scurrentproductsorserviceswouldincreasesignificantly
byaddingthenewunrelated,products.
D.Whenanorganizationcompetesinahighlycompetitiveand/oranogrowthindustry.
E.Whenthenewproductshavecountercyclicalsalespatternscomparedtoanorganization'spresent
products.
Diff:3
PageRef:177178
96)Manymorefirmshavefailedat________thanhavesucceededduetotheimmensechallengeofmanaging
businessesinmanyindustriesratherthaninasingleindustry.
A.unrelateddiversification
B.forwardintegration
C.relateddiversification
D.backwardintegration
E.relateddiversification
Diff:2
PageRef:177
97)SmithfieldFoodslayingoff1,800employees,closing6ofits40plants,andcuttingproductionby10percentin
2009ineffortstostoptheliquiditydrainonthefirmisanexampleof
A.backwardintegration.
B.forwardintegration.
C.liquidation.
D.divestiture.
Page 15
E.retrenchment.
Diff:2
PageRef:178
98)Whatkindofstrategyisretrenchment?
A.Anexpansionstrategy
B.Anoffensivestrategy
C.Aconglomeratestrategy
D.Anintensivestrategy
E.Aturnaroundorreorganizationstrategy
Diff:2
PageRef:178
99)Bankruptcy
A.shouldonlybeusedforlargefirms.
B.canbeaneffectivetypeofretrenchmentstrategy.
C.shouldbeusedonlywhenoneislegallyforcedtodoso.
D.shouldneverbeusedasastrategy.
E.shouldonlybeusedforsmall,privatefirms.
Diff:2
PageRef:179
100)Whichchapterofthebankruptcycodeappliestomunicipalities?
A.Chapter8
B.Chapter7
C.Chapter13
D.Chapter9
E.Chapter12
Diff:1
PageRef:179
101)TheFamilyFarmerBankruptcyActof1986createdwhichtypeofbankruptcy?
A.Chapter12
B.Chapter8
C.Chapter7
D.Chapter13
E.Chapter9
Diff:1
PageRef:179
102)Theformofbankruptcyinwhichalltheorganization'sassetsaresoldinpartsfortheirtangibleworthis
A.Chapter8.
B.Chapter9.
C.Chapter11.
D.Chapter7.
E.Chapter13.
Diff:2
PageRef:179
103)Retrenchmentwouldbeaneffectivestrategywhenanorganization
A.hasdecidedtocapitalizeonopportunities,maximizethreats,takeadvantageofstrengthsandovercome
weaknesses.
B.isoneofthestrongercompetitorsinagivenindustry.
C.isplaguedbyinefficiency,lowprofitability,pooremployeemoraleandpressurefromstockholdersto
Page 16
improve
performance.
D.doesnothaveaclearlydistinctivecompetenceandhasfailedtomeetitsobjectivesandgoals
consistentlyovertime.
E.hasshrunksoquicklythatmajorinternalreorganizationisneeded.
Diff:3
PageRef:179180
104)Whichtermreferstosellingadivisionofanorganization?
A.Horizontalintegration
B.Jointventure
C.Concentricdiversification
D.Divestiture
E.Liquidation
Diff:2
PageRef:180
105)Whichstrategyshouldbeimplementedwhenadivisionisresponsibleforanorganization'soverallpoor
performance?
A.Relateddiversification
C.Costleadership
E.Divestiture
Diff:2
PageRef:181
106)Sellingallofacompany'sassetsinpartsfortheirtangibleworthiscalled
A.jointventure.
B.concentricdiversification.
C.unrelatedintegration.
D.divestiture.
E.liquidation.
Diff:1
PageRef:181
107)Whichstrategywouldbeeffectivewhenthestockholdersofafirmcanminimizetheirlossesbysellingthe
organization'sassets?
A.Integration
B.Diversification
C.Differentiation
D.Costleadership
E.Liquidation
Diff:2
PageRef:183
Page 17
108)Underwhichstrategywouldyouofferproductsorservicestoawiderangeofcustomersatthelowestprice
availableonthemarket?
A.CostLeadershipLowCost
B.Differentiation
C.CostLeadershipBestValue
D.FocusBestValue
E.FocusLowCost
Diff:2
PageRef:183
109)AccordingtoPorter,whichstrategyoffersproductsorservicestoanichegroupofcustomersatthelowest
priceavailableonthemarket?
A.Differentiation
B.CostLeadershipLowCost
C.FocusBestValue
D.FocusLowCost
E.CostLeadershipBestValue
Diff:1
PageRef:183
110)Underwhichconditionwouldacostleadershipstrategybeespeciallyeffective?
A.Whentechnologicalchangeisfastpacedandcompetitionrevolvesaroundrapidlyevolvingproduct
features.
B.Whenfewrivalfirmsarefollowingasimilarapproach
C.Whentherearemanywaystodifferentiatetheproductorserviceandmanybuyersperceivethese
differencesashavingvalue.
D.Whenbuyerneedsandusesarediverse.
E.Whentheproductsofrivalsellersareessentiallyidenticalandsuppliesarereadilyavailablefromanyof
severaleagersellers.
Diff:2
PageRef:185
111)Underwhichconditionwouldadifferentiationstrategybeespeciallyeffective?
A.Whentechnologicalchangeisfastpacedandcompetitionrevolvesaroundrapidlyevolvingproduct
features.
B.Whenfew,ifany,otherrivalsareattemptingtospecializeinthesametargetsegment.
C.Whenthetargetmarketnicheislarge,profitableandgrowing.
D.Whentheindustryhasmanydifferentnichesandsegments,therebyallowingacompanytopicka
competitivelyattractivenichesuitedtoitsownresources.
E.Whenindustryleadersdonotconsiderthenichetobecrucialtotheirownsuccess.
Diff:3
PageRef:186
112)Whatoccurswhentwoormorecompaniesformatemporarypartnershiporconsortiumforthepurposeof
capitalizingonsomeopportunity?
Page 18
A.Liquidation
B.Ajointventure
D.Retrenchment
E.Divestiture
Diff:2
PageRef:188
113)Allofthefollowingarecooperativearrangementsexcept:
A.crosslicensingagreements.
B.jointbiddingconsortia.
C.marketingplans.
D.crossmanufacturingagreements.
E.R&Dpartnerships.
Diff:1
PageRef:188
114)Whichofthefollowingisnotareasonjointventuresfail?
A.Managerswhomustcollaboratedailyinoperatingtheventurearenotinvolvedinformingorshaping
theventure.
B.Theventuremaybenefitthepartneringcompaniesbutmaynotbenefitthecustomerswhothen
complainaboutpoorerserviceorcriticizethecompaniesinotherways.
C.Stakeholdersfrombothpartnersareequallysatisfied.
D.Theventuremaynotbesupportedequallybybothpartners.
E.Theventuremaybegintocompetemorewithoneofthepartnersthantheother.
Diff:2
PageRef:189
115)Whichstrategywouldbemostappropriatewhenthedistinctivecompetenciesoftwoormorefirms
complementeachotherespeciallywell?
A.Retrenchment
B.Divestiture
C.Integration
D.Conglomeratediversification
E.Jointventure
Diff:2
PageRef:190
116)Whentwoorganizationsofaboutequalsizeunitetoformoneenterprise,whichoftheseoccurs?
A.Merger
B.Divestiture
C.LBO
D.Acquisition
E.Hostiletakeover
Diff:1
PageRef:190
Page 19
117)Mergersandacquisitionsarecreatedforallofthefollowingreasonsexceptto:
A.smoothoutseasonaltrendsinsales.
B.reducetaxobligations.
C.gaineconomiesofscale.
D.gainnewtechnology.
E.increasethenumberofemployees.
Diff:2
PageRef:192
118)Thereareannuallymorethan10,000mergersintheUnitedStatesthattotalmorethan
A.$975billion.
B.$1trillion.
C.$3trillion.
D.$700billion.
E.$825billion.
Diff:2
PageRef:192
119)Whencompaniestakeoverfunctionaloperationsofotherfirms,suchashumanresources,information
systems,payroll,accounting,orcustomerservice,thisiscalled
A.outsourcing.
B.marketing.
C.licensing.
D.divestiture.
E.franchising.
Diff:1
PageRef:193
120)Accordingtojournalists'findings,whatisaseriousobstacleformanysmallbusinessowners?
A.Havingtoomanysuppliers
B.Alackofbusinessethics
C.Alackofstrategicmanagementknowledge
D.Anexcessofemployeesandmanagerialstaff
E.Alackofexperienceinnetworking
Diff:2
PageRef:196
128)DiscussMichaelPorter'sfivegenericstrategies.
Diff:2
PageRef:183
Topic:
129)Whatarethecharacteristicsofafirmthatissuccessfullypursuingacostleadershipstrategy?
Diff:2
PageRef:185
Topic:
130)Discussfourcommonproblemsthatcausejointventurestofail.
Diff:2
PageRef:189
Topic:
131)Nameatleastsixreasonsforperformingmergersoracquisitions.
Diff:2
PageRef:192
Topic:
1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) FALSE
6) FALSE
7) FALSE
8) TRUE
9) FALSE
10) FALSE
11) TRUE
12) TRUE
13) FALSE
14) FALSE
15) TRUE
16) TRUE
17) FALSE
18) FALSE
19) TRUE
20) FALSE
21) TRUE
22) TRUE
23) TRUE
24) TRUE
25) TRUE
26) FALSE
27) TRUE
28) FALSE
29) TRUE
30) TRUE
31) FALSE
32) FALSE
33) TRUE
34) FALSE
35) TRUE
36) TRUE
37) TRUE
38) FALSE
39) FALSE
40) FALSE
41) TRUE
42) FALSE
43) TRUE
44) TRUE
45) TRUE
46) FALSE
47) TRUE
48) FALSE
49) FALSE
50) TRUE
51) FALSE
52) FALSE
53) TRUE
54) TRUE
55) TRUE
56) FALSE
57) TRUE
58) TRUE
59) FALSE
60) TRUE
61) TRUE
62) TRUE
63) FALSE
64) FALSE
65) TRUE
66) FALSE
67) TRUE
68) TRUE
69) FALSE
70) D
71) B
72) B
73) D
74) D
75) A
76) C
77) E
78) D
79) A
80) A
81) C
82) C
83) B
84) A
85) B
86) A
87) E
88) D
89) E
90) C
91) A
92) C
93) C
94) A
95) A
96) E
97) E
98) E
99) B
100) D
101) A
102) D
103) C
104) D
105) E
106) E
107) E
108) A
109) D
110) E
111) A
112) B
113) C
114) C
115) E
116) A
117) E
118) D
119) A
120) C
Strategy Analysis and Choice

True/False
The Nature of Strategy Analysis and Choice
1. An organizations 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 Page: 216
2. The Toxics Release Inventory (TRI) is administered by the Environmental Protection Agency in the
United States.
Ans: T Page: 217
3. Sustainability is the idea that a business can meet its financial goals without hurting customers.
Ans: F Page: 218
A Comprehensive Strategy-Formulation Framework
4. The first stage of the strategy-formulation framework is the input stage, followed by the decision stage.
Ans: F Page: 219
5. Stage 2 in the strategy-formulation framework involves the Quantitative Strategic Planning Matrix.
Ans: F Page: 201
6. The Strengths-Weaknesses-Opportunities-Threats(SWOT) Matrix, the Strategic Position and Action
Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and
the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.
Ans: T Page: 219
The Input Stage
7. Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage
matrices.
Ans: T Page: 220
The Matching Stage
8. When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be
completed before the SPACE Matrix.
Ans: F Page: 220
9. The purpose of matching key factors is to generate feasible alternative strategies.
Ans: T Page: 220
10. Strengths-opportunities strategies are based on using a firms internal strengths to take advantage of
external opportunities and threats.

Ans: F Page: 221
11. A SWOT Matrix is composed of four cells for the four types of strategies it creates.
Ans: F Page: 221
12. One of the steps of the SWOT Matrix is to list the firms key external opportunities.
Ans: T Page: 221
13. The SWOT matrix is widely used as an organizational tool and, if used appropriately, does not have any
significant weaknesses.
Ans: F Page 224-225
14. The most important determinants of an organizations overall strategic position are considered to be the
two internal dimensions, financial strength (FS) and competitive advantage (CA), and the two external
dimensions, industry strength (IS) and environmental stability (ES).
Ans: T Page: 225
15. The four strategies of the SPACE Matrix are aggressive, conservative, offensive and defensive.
Ans: F Page: 225
16. 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: 226
17. Conservative strategies in a SPACE Matrix most often include product development, market
development, market penetration and concentric diversification.
Ans: T Page: 227
18. The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (1,4).
Ans: F Page: 228
19. A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (2,3).
Ans: F Page: 228
20. The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are (5,4).
Ans: T Page: 228
21. Relative market share position is given on the x-axis of the BCG Matrix.
Ans: T Page: 229
22. The midpoint on the x-axis of a BCG Matrix is typically set at 0.05.
Ans: F Page: 229
23. The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by
that business unit.
Ans: T Page: 230
24. In a BCG Matrix the pie slice indicates the proportion of corporate profits generated by that division.
Ans: T Page: 230
25. Star, question mark, cash cow and dogs are the four quadrants exhibited by the SPACE Matrix.
Ans: F Page: 231
26. Cash cows represent the organizations best long-run opportunities for growth and profitability.
Ans: F Page: 231
27. The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment
characteristics and needs of an organizations various divisions.
Ans: T Page: 231
28. Viewing businesses as star, cash cow, dog or question mark is an oversimplification.
Ans: T Page: 232
29. The BCG Matrix does not reflect whether or not various divisions or their industries are growing over
time.
Ans: T Page: 232
30. Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time.
Ans: T Page: 232
31. Both IE and BCG Matrices are called portfolio matrices.
Ans: T Page: 233
32. BCG Matrix requires more information about the divisions than the IE Matrix.
Ans: F Page: 233
33. On the x-axis of the IE Matrix, an internal factor evaluation score of 2.5 represents a weak internal
position.
Ans: F Page: 235
34. The IE Matrix can be divided into three major regions that have different strategy implications: grow and
build, hold and maintain and harvest or divest.
Ans: T Page: 235
35. The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth.
Ans: F Page: 237

36. According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily committed to a single
product, then concentric diversification may reduce the risks associated with a narrow product line.
Ans: T Page: 237
37. According to the Grand Strategy Matrix, Quadrant III organizations compete in rapid-growth industries
and have weak competitive positions.
Ans: F Page: 238
The Decision Stage
38. To objectively evaluate feasible alternative strategies identified in Stage 2, the QSPM uses input
information derived from Stage 1.
Ans: T Page: 240
39. Step 1 of a QSPM assigns weights to each key external and internal factor.
Ans: F Page: 241
40. Total attractiveness scores are defined as the sum of the attractiveness scores in a given column of the
QSPM and are computed in the second step of the QSPM.
Ans: F Page: 243
41. A positive feature of QSPM is that sets of strategies can be examined sequentially or simultaneously.
Ans: T Page: 244
42. One positive feature of QSPM is that it does not require intuitive judgments and educated assumptions.
Ans: F Page: 244
Cultural Aspects of Strategy Choice

43. Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and
heroines that describe a firm.
Ans: T Page: 244
44. Strategy changes may be highly effective and productive if a supportive culture does not exist.
Ans: F Page: 245
45. Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies
linkages.
Ans: T Page: 245
The Politics of Strategy Choice

46. Successful strategists minimize their own political exposure on issues that are highly controversial and
in circumstances where opposition from major power centers was likely.
Ans: T Page: 245
47. Focusing on Higher-Order Issues means it is often possible to achieve similar results using different
means or paths.
Ans: F Page: 246
48. Shifting focus from specific issues to more general ones may increase strategists options for gaining
organizational commitment.
Ans: T Page: 246
Governance Issues
49. Now averaging 18 members the trend in America is toward larger boards of directors.
Ans: F Page: 247
50. Boards of directors are composed mostly of outsiders who are becoming more involved in an
organizations strategic management.
Ans: T Page: 247
51. The Sarbanes-Oxley Act put an end to the country-club atmosphere of most boards and has shifted
power from CEOs to directors.
Ans: T Page: 250
Multiple Choice
The Nature of Strategy Analysis and Choice
52. Strategy analysis and choice largely involves making __________ decisions based on __________
information.
a. long-term; short-term
b. subjective; objective
c. short-term; long-term
d. subjective; short-term
e. objective; subjective
Ans: b Page: 216
A Comprehensive Strategy-Formulation Framework
53. Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies?
a. Input
b. Output
c. Decision
d. Throughput
e. Matching
Ans: e Page: 219
54. Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning Matrix?
a. Stage 1
b. Stage 2
c. Stage 3
d. Stage 4
e. Stage 5
Ans: c Page: 219
55. Which strategy formulation technique reveals the relative attractiveness of alternative strategies and thus
provides an objective basis for selecting specific strategies.
a. SWOT
b. SPACE
c. QSPM
d. IFE
e. CPM
Ans: c Page: 219
56. Each of the nine techniques included in the strategy formulation framework rely on the use of
a. strictly factual data.
b. luck.
c. financial formulas and statistics.
d. intuition and analysis.
e. synergy.
Ans: d Page: 219
The Input Stage
57. Which stage of the strategy formulation framework includes an Internal Factor Evaluation Matrix and a
Competitive Profile Matrix?
a. input
b. matching
c. decision
d. penetration
e. research
Ans: a Page: 219
58. Which stage of the strategy formulation framework contains the Internal-Factor Evaluation Matrix?
a. input stage
b. analysis stage
c. matching stage
d. decision stage
e. output stage
Ans: a Page: 219
The Matching Stage
59. The match an organization makes between its internal resources and skills and the opportunities and
risks created by its external factors can be defined as:
a. Input
b. Concept formulation
c. Strategy
d. SWOT
e. An opportunity
Ans: c Page: 220
60. Which section of the SWOT Matrix involves matching internal strengths with external opportunities?
a. The WT cell
b. The SW cell
c. The WO cell
d. The ST cell
e. The SO cell
Ans: e Page: 221
61. Which strategies aim at improving internal weaknesses by taking advantage of external opportunities?
a. SO
b. WO
c. SW
d. ST
e. WT
Ans: b Page: 221
62. Which strategies use a firms strengths to avoid or reduce the impact of external threats?
a. SW
b. WO
c. SO
d. ST
e. WT
Ans: d Page: 221
63. Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding
environmental threats.
a. SO
b. WO
c. SW
d. ST
e. WT
Ans: e Page: 221
64. How many cells are in a SWOT Matrix?
a. two
b. four
c. six
d. eight
e. nine
Ans: e Page: 221
65. Which of the following is not a step of a SWOT Matrix?
a. List the firms key external threats.
b. Match strengths with external opportunities and record the resultant SO strategies in the appropriate cell.
c. Match internal weaknesses with external threats and record the resultant WT strategies.
d. List the firms external weaknesses.
e. List the firms external opportunities.
Ans: d Page: 221-222
66. Which of these is not a SPACE Matrix quadrant?
a. Aggressive
b. Defensive
c. Competitive
d. Offensive
e. Conservative
Ans: d Page: 225
67. The two internal dimensions represented on the axes of the SPACE Matrix are
a. environmental stability and industry strength.
b. industry strength and internationalization.
c. internationalization and competitive advantage.
d. competitive advantage and financial strength.
e. financial strength and environmental stability.
Ans: d Page: 225
68. What are two external dimensions of the SPACE Matrix?
a. Environmental stability and industry strength
b. Environmental stability and competitive advantage
c. Industry strength and competitive advantage
d. Competitive advantage and financial strength
e. Financial strength and industry strength

Ans: a Page: 226
69. The two positive-rated dimensions on SPACE Matrix are
a. FS and CA.
b. CA and ES.
c. FS and IS.
d. IS and ES.
e. FS and ES.
Ans: c Page: 226
70. What type of strategies would you recommend when a firms SPACE Matrix directional vector has the
coordinates (-2, +3)?
a. Aggressive
b. Conservative
c. Competitive
d. Defensive
e. Integrative
Ans: b Page: 225
71. In the SPACE analysis, what does a (+6, +3) strategy profile portray?
a. A strong industry
b. An unstable environment
c. A stable environment
d. A weak industry
e. A weak financial position
Ans: a Page: 225
72. What is a weakness associated with a SWOT Matrix?
a. Viewing every business as a Star, Cash Cow, Dog, or Question Mark is an oversimplification
b. Many businesses fall right in the middle of the matrix
c. The matrix has no temporal qualities
d. Other variables besides relative market share position and industry growth rate in sales need to be considered
e. The matrix does not reflect whether or not various divisions or their industry are growing over time
Ans: c Page 225
73. For what type of company is the BCG Matrix ideal for analyzing?
a. Companies with more than one division
b. All companies
c. Companies with annual sales greater than $1 million
d. Companies with annual sales of less than $1 million
e. Large companies
Ans: a Page: 227
74. In the BCG Matrix, which element represents the industry growth rate in sales, measured in percentage
terms?
a. x-axis
b. y-axis
c. first quadrant
d. second quadrant
e. third quadrant
Ans: b Page: 229
75. How would a division with a low relative market share position in a high growth industry be described?
a. question mark
b. cash cow
c. star
d. stuck-in-the-middle
e. dog
Ans: a Page: 230
76. When a division of an organization has a high relative market share and is in a fast-growing industry, it is
called a
a. star
b. cash cow
c. cat
d. question mark
e. dog
Ans: a Page: 230
77. A division with a high relative market share position in a low-growth industry can be described as a
a. star
b. cash cow
c. question mark
d. dog
e. failure
Ans: b Page: 231
78. Which of these is an attractive strategy for a cash cow division?
a. Concentric diversification
b. Horizontal integration
c. Conglomerate diversification
d. Backward integration
e. Forward integration
Ans: a Page: 231
79. Most likely, what was a cash cow in the past?

a. dog
b. failure
c. question mark
d. cat
e. star
Ans: e Page: 231
80. An organization that has a low relative market share position and competes in a slow-growth industry is
referred to as a
a. dog.
b. question mark.
c. star.
d. cash cow.
e. cowboy.
Ans: a Page: 231
81. The BCG Matrix limitations include all of these except:
a. viewing every business as a star, cash cow, dog or question mark can be an oversimplification.
b. requiring at least three years worth of data.
c. not reflecting divisional or industry growth over time.
d. not allowing a company to be classified as somewhere in between two categories.
e. other variables such as size of market and competitive advantages are not considered.
Ans: b Page: 232
82. Which analytical tool consists of a nine-cell matrix?
a. Matching Matrix
b. Competitive Profile Matrix
c. SPACE Matrix
d. Grand Strategy Matrix
e. Internal-External Matrix
Ans: e Page 233
83. What analytical tool has four quadrants based on two dimensions: competitive position and market
growth?
a. Competitive Profile Matrix
b. Internal-External Matrix
c. SPACE Matrix
e. QSPM
Ans: d Page: 237
84. Firms located in which quadrant of the Grand Strategy Matrix are in an excellent strategic position?
a. I
b. II
c. III
d. IV
e. V
Ans: a Page: 237
85. According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market
growth and a strong competitive position?
a. Market penetration
b. Conglomerate diversification
c. Joint venture
d. Retrenchment
e. Liquidation
Ans: a Page: 237
86. For companies located in Quadrant III of the Grand Strategy Matrix, the first strategy recommended is
a. extensive cost and asset reduction.
b. asset expansion.
c. employee expansion.
d. immediate liquidation of assets.
e. divestiture.
Ans: a Page: 238
87. Although Quadrant _____ companies are growing, according to the Grand Strategy Matrix, they are
unable to compete effectively, and they need to determine why the firms current approach is ineffective and
how the company can best change to improve its competitiveness.
a. I
b. II
c. III
d. IV
e. V
Ans: b Page: 238
88. According to the Grand Strategy Matrix, organizations in which .quadrant have a strong competitive
position but are in a slow-growth industry,
a. I
b. II
c. III
d. IV
e. V
Ans: d Page: 238
The Decision Stage

89. Which matrix is included in the decision stage of the strategy formulation framework?
a. Internal Factor Evaluation Matrix
b. Quantitative Strategic Planning Matrix
c. BCG Business Portfolio Matrix
e. SPACE Matrix
Ans: b Page: 239
90. The top row of a QSPM consists of alternative strategies derived from all of these except:
a. Grand Strategy Matrix.
b. BCG Matrix.
c. Space Matrix.
d. CPM Matrix.
e. IE Matrix.
Ans: d Page: 240
91. Which analytical tool determines the relative attractiveness of various strategies based on the extent to
which key external and internal critical success factors are capitalized?
a. BCG Matrix
b. SPACE Matrix
c. TOWS Matrix
d. IE Matrix
e. QSPM
Ans: e Page: 241
92. Which of the following is the first step in developing QSPM?
a. Compute the Total Attractiveness Scores.
b. Examine the Stage 2 matrices and identify alternative strategies the organization should consider implementing.
c. Assign weights to each key external and internal factor.
d. Determine the Attractiveness Scores.
e. Make a list of the firms key external opportunities/threats and internal strengths/weaknesses in the left column of
the QSPM.
Ans: e Page: 241-243
93. What term is defined as the product of multiplying ratings by attractiveness scores in each row of the
QSPM?
a. Total attractiveness scores
b. Sum total attractiveness scores
c. Weighted scores
d. Total weighted scores
e. Factors
Ans: a Page: 243

94. What is the highest number of strategies that can be examined at one time with the QSPM?
a. 1
b. 2
c. 5
d. 10
e. There is no limit.
Ans: e Page: 244
95. Which of these is a limitation of QSPM?
a. Only a few strategies can be evaluated simultaneously.
b. The cost of doing the analysis
c. Intuitive judgments and educated guesses are required.
d. Sets of strategies must be examined in reverse order.
e. It requires equal participation from everyone.
Ans: c Page: 244
Cultural Aspects of Strategy Choice

96. What includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and
heroines that describe a firm?
a. Strategy
b. Culture
c.Mission
d. Objectives
e. QSPM
Ans: b Page: 244
The Politics of Strategy Choice
97. What tactic involves shifting focus from specific issues to more general ones?
a. Equifinality
b. Focus on higher-order issues
c. Generalization
d. Satisficing
e. None of the above
Ans: c Page: 246
98. Through which tactic is it possible to achieve similar results using different means or paths?
a. Generalization
b. Satisficing
c. Focus on higher-order issues
d. Equifinality
e. Specialization
Ans: d Page: 246
Governance Issues
99. The act of oversight and direction for an organization is referred to as
a. corporate lawmaking.
b. centralized control.
c. organizational direction.
d. establishing norms.
e. governance.
Ans: e Page: 226
100. Today, what are boards of directors composed mostly of?
a. outsiders
b. management
c. union
d. employees
e. stockholders
Ans: a Page: 247
101. All of the following are principles of good organizational governance, as established by Business Week,
except:
a. No directors do business with the company or accept consulting or legal fees from the firm.
b. The audit, compensation and nominating committees are made up solely of outside directors.
c. Each director owns a large equity stake in the company, excluding stock options.
d. At least two directors are current or former company executives.
e. The CEO is not also the Chairperson of the Board.
Ans: d Page: 247

STRAMA - Chapters 5 and 6

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

STRAMA - Chapters 5 and 6

Uploaded by

Copyright:

Available Formats

TRUE/FALSE.Write'T'ifthestatementistrueand'F'ifthestatementisfalse.

Strategy Analysis and Choice

external opportunities and threats.

Ans: F Page: 237

Cultural Aspects of Strategy Choice

The Politics of Strategy Choice

e. Financial strength and industry strength

79. Most likely, what was a cash cow in the past?

The Decision Stage

Ans: a Page: 243

Cultural Aspects of Strategy Choice

You might also like