MGT603 Question

MGT603 Question # 1 Which statement is CORRECT about strategic-management
process?
Select correct option:
It occurs once a year

It is a continuous process
It applies mostly to large business
It applies mostly to small businesses
RF; handout P#1 Strategic management is a on-going process which is in existence

through out the life of organization
MGT603 Question # 2 Which of the following period strategic management was

considered to be cure for all problems?
Mid 1950s to mid 1960s

RF; handout P#3 In 1960; s and 70 it was consider to be panacea for

problems MGT603 Question # 3 The mission statement answers which of the
following Question?
What is our business? How can we improve ourselves?

What do we want to become?
Who are our stakeholders? RF; (Strategic management Fred R David international
edition page#9)
MGT603 Question # 4
Intuition is based on all of the following factors EXCEPT:
Past experiences
Judgments
Uncertainties
Feelings
RF; handout P#5 Intuition rests on:

1. Past experiences
2. Judgment
3. Feelings
MGT603 Question # 5
Internal analysis involves gathering and analyzing the information about all areas
of a firm EXPECT:
Research and development
Management information system
Marketing
Competitors
MGT603 Question # 6
A desired future state that the organization attempts to realize. Identify the term
relevant to the given statement.
Goal
Strategy
Policy
Procedure
books.google.com.pk/books?id=FG2ZNPjdrnYC&pg=PA160&lpg=PA160&dq=A+desire
d+future+state+that+the+organization+attempts+to+realize%94.+Identify+the+term+rele
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OozK35Dg&sa=X&oi=book_result&ct=result&resnum=9&ved=0CDMQ6AEwCA#v=one
page&q&f=false
MGT603 Question # 7 Selling includes all of the following marketing activities

EXCEPT:
Advertising
Pricing
Sales promotion
Customer relations
www.bls.gov/oco/ocos020.htm
MGT603 Question # 8
Which of the following is not a pitfall an organization should avoid in strategic
planning?
Failing to involve key employees in all phases of planning
Involving all managers rather than delegating planning to a planner
Top managers not actively supporting the strategic planning process
Doing strategic planning only to satisfy accreditation or regulatory requirements
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+an+organization+should+avoid+in+strategic+planning&cd=6&hl=en&ct=clnk&gl=pk&cli
ent=firefox-a
MGT603 Question # 9 Which management function includes breaking tasks into

jobs, combining jobs to form departments and delegating authority?
Motivating
Staffing
Organizing
Planning
RF;
The organizing function of management can be viewed as consisting of three sequential
activities: breaking tasks down into jobs (work specialization), combining jobs to form
departments (departmentalization), and delegating authority. Breaking tasks down into
jobs requires development of job descriptions and job
MGT603 Question # 10
Which category of ratios measures how effectively a firm can maintain its
economic position in the growth of the economy and industry?
Liquidity
Leverage
Activity
Growth
RF; Growth ratios measure the firm's ability to maintain its economic position in the
growth of the economy and industry.
MGT603 Question # 11 Corporate social policy should be designed and articulated

during which phase of strategic management?
Implementation
Formulation
Evaluation
Management
RF;
Corporate social policy should be designed and articulated during strategy formulation,
set and administered during strategy implementation
MGT603 Question # 12 Following are the examples of the sectors that are more
technologically oriented EXCEPT:
Textile
Pharmaceutical
Telecommunications
Beverages
For the past four years the ABC Corporation has been planning to expand its
operations in order to reach out to the world market. Essentially, the ABC
Corporation desires to do what?
Become an online business
Become a brick-n-mortar business
Embrace globalization
Become a click-n-mortar business
Which of the following is the first step in the controlling function of management?
Take corrective actions
Restrict breaks employees take
Evaluate expense reports
Establish performance standards
Which of the following marketing entity is NOT an intermediary?
Brokers
Agents
Producer
Vendors
All of the following fall under Pricing decisions EXCEPT:
Discounts
Credit terms
Markups
Dealer relations
Rational: dealer relation is including the selling decision
Which of the following is best identified as a statement that presents a firm's big
picture statement, describing a desired end-state, general in scope, and not
restrictive?
Corporate philosophy statement
Company creed
Vision statement
Mission statement
A vision statement is sometimes called a big picture of your company in the future but
its so much more than that.
Which of the following are the five forces that affect the level of competition in an
industry?
Threat of entrants; power of buyers; power of suppliers; threat of substitutes;
competitive rivalry
Threat of buyers; power of entry; power of substitutes; threat of suppliers; threat of
recession
Threat of recession; power of buyers; power of suppliers; threat of management failure;
competitive rivalry
Threat of entry; power of buyers; power of suppliers; threat of substitutes; government
action
Five forces -- the bargaining power of customers, the bargaining power of suppliers, the
threat of new entrants, and the threat of substitute products -- combine with other
variables to influence a fifth force, the level of competition in an industry
Identify the stages of strategic management process in a precise sequence.
Strategy evaluation, strategy formulation & strategy implementation
Strategy evaluation, strategy implementation & strategy formulation
Strategy formulation, strategy implementation & strategy evaluation
Strategy implementation, strategy evaluation & strategy formulation
1. Strategy Formulation
2. Strategy Implementations
3. Strategy Evaluation
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Question # 20
Which of the following is not a key MGT603 Question that can reveal internal
strengths and weaknesses of the marketing department?
Does the firm have an effective sales organization?
Are markets segmented effectively?
Are the firms products and services priced appropriately?
Does the firm have good liquidity?
Thanks for ZUBAIR BROTHER AND ANIQA TO RESOLVE
Which of the following can be the weakness of an organization?
Price war
Poor location of business
Increased trade barriers
Innovative substitute product
MGT603 Question#22 Developing a vision and a mission statement is

important because of the following reasons EXCEPT:
Selectcorrectoption:
Theyareusefulforlargefirmsonly
Theyestablishorganizationalculture
Theyarethebasisforallocatingresources
Theytranslateobjectivesintoworkstructure
MGT603 Question#23 Departmentalization can be done on the basis of many

factors EXCEPT:
Functions
Number of employees
Strategic business units
Divisions
The most common forms of departmentalization are functional, divisional, strategic
business unit, and matrix.
MGT603 Question#24
Assigning rating 3 to an internal factor in IFE matrix indicates what?
Major weakness
Minor weakness
Minor strength
Major strength a minor strength (rating 5 - 3),
MGT603 Question#25
Whichofthefollowingcanbeconsideredoneofthefactorsofexternalopportunitiesandt
hreatsofanorganization?
Production/operations
Research&development
Competitivetrends
Managementinformationsystem
External opportunities and external threats refer to economic, social, cultural,

demographic, environmental, political, legal, governmental, technological, and
competitive trends and events that could significantly benefit or harm an organization in
the future.
MGT603 Question#26
Ethnicbalanceisaffectedduetowhichofthefollowing?
Changeinethnicvalues
Awarenessofethnicnorms
Migrationofthepeopletowardsdifferentareas
Introductionofnewlawsrelatingtoethnicity
ref, Ethnic balance changes due to the migration of the people from different areas to
different areas. This affects the ethical behavior very much.
MGT603 Question#27
Buyerscanexercisehighbargainingpowerovertheirsuppliersunderwhichoneofthefo
llowingconditions?
When there are many good substitutes of raw material
There are few buyers in the market
Theyhavefewsupplierstochoosefrom
Thereisahighconcentrationofsuppliers
if vendors are less in the market and the organizations that have to purchase from those
vendors are more then the demand for those suppliers will be more as the firms have to
purchase from that less suppliers. The reverse is the case if suppliers are more and
buyers are less.
MGT603 Question#28
Which of the following groups represents the stakeholders of a company?
Theownersofthecompany
Thepeoplewhopurchasesthesharesofthecompany
The people who have aspecial stake or claim on the company
Arethepeoplewhoareinthemanagementacompany?
Second, a mission statement needs to be broad to effectively reconcile differences
among and appeal to an organization's diverse stakeholders, the individuals and groups
of persons who have a special stake or claim on the company.
MGT603 Question#29
In which of the following phase of strategic management, annual objectives are
especially important?
Formulation
Evaluation
Implementation
Management
Strategy implementation requires a firm to establish annual objectives, devise policies,

motivating employees and allocate resources so that formulated strategies can be
executed.
MGT603 Question#30
Which of the following arise when a company can take advantage of conditions in
its environment to formulate and implement strategies that enable it to become
more profitable?
Strengths
Opportunities
Weaknesses
Threats
MGT603
Question#31 Local,state,andnationalelections,worldoil,currency,andlabormarkets,
numberofpatents,specialtariffsaretheexamplesofwhichoneofthefollowing?
Economicforces Social,culturaland,demographicforces
Political,governmental,andlegalforces
Competitiveforces
Some Political, Governmental, and Legal Variables Local, state, and national elections
MGT603 Question#32
Which group would be classified as astakeholder?
Communities
Banks
Suppliers
Allofthegivenoptions
Stakeholders include employees; managers; stockholders; boards of directors;
customers; suppliers; distributors; creditors; governments (local, state, federal, and
foreign); unions; competitors;
MGT603 Question#33
Which of the following statementis referred, Price fluctuation?
Decreas einprices
Increaseinprices
Fluctuationinthepricesofaparticularcommodity
Fluctuation in general price level
Price fluctuation refers to general price fluctuation.
MGT603 Question#34
Whichofthefollowingistheprocessofinfluencingpeopleto accomplishspecificobject
ives?
Staffing
Motivating
Controlling
Organizing
Motivating ,Influencing people to accomplish specific objectives

MGT603 Question#35
Defensive strategies include all of the following EXCEPT:
Retrenchment
Acquisition
Divestiture
Liquidation
Defensive Strategies In addition to integrative, intensive, and diversification strategies,
organizations also could pursue retrenchment, divestiture, or liquidation.
MGT603 Question#36
Effectivemissionstatementsdonthaveoneofthefollowing features:
Generaterangeoffeasiblestrategicalternatives
Reconcileinterestsamongdiversestakeholders
Whatdoesthefirmwanttobecome
Providecriteriaforselectingstrategies
Page #17 under the head of Effective mission statements should b

MGT603 Question#37
Whatisthefirststepinthecomprehensivestrategic-managementmodel?
Performingexternalaudits
Developingvisionandmissionstatements
Performinginternalaudits
Measuringandevaluatingperformance
Page #29 under the head of Comprehensivestrategic-managementmodel
MGT603 Question#38
Different types of consumers are created due to new trends, which inturn require
which type of products?
Differentproducts
Differentservices
Differentstrategies
Allofthegivenoptions
MGT603 Question#39
A system of several rites connected with a single occasion or event is known as:
Myth
Ceremonial
Saga
Legend
Ceremonial A system of several rites connected with a single occasion or even
MGT603 Question#40
In Competitive Profile Matrix, therating 4 indicates what?
Major weakness
Majors trength
Minor strength
Minor weakness
ref. or a major strength (rating 5 ,4)
Which of the following environment includes all those factors which affect the
organization and itself affected by the organization?
External environment
Social environment
Task environment
Internal environment
Task environment includes all those factors which affect the organization and itself
affected by the organization MGT603 Question # 42
Of the following, which one would NOT be considered one of the components of a
mission statement?
The target market for XYZ is oil and gas producers as well as producers of chemicals
XYZ shall hire only those individuals who have with sufficient educational levels
so as to be of benefit to our customers
The customers of XYZ shall include global and local consumers of gas and oil products
and domestic users of nontoxic chemicals
The technologies utilized by XYZ shall focus upon development of alternative sources of
gas and oil so as to remain competitive within the industry
Which of the followings deals with the management of inputs, transformations
and outputs that vary across industries and markets?
Marketing
Finance
Operation
Distribution
ref. Production/operations management deals with inputs, transformations, and outputs
that vary across industries and markets.
Which of the following statement applies to Vision Statement?
Describes the purpose of existence of an organization

Identify the customers of the organization The key measure or measures of the
organizations success Depict the values of an organization
Which of the following is NOT included in the strategic management model?
Measure and evaluate performance.

Perform internal research to identify customers.
Establish long-term objectives.
Develop mission and vision statements.
What is the range for a firms total weighted score in an External Factor
Evaluation Matrix?
0 to 5
0 to 4
1 to 5
1 to 4
ref. total weighted score for the organization, Highest possible weighted score for the
organization is 4.0; the lowest, 1.0. Average = 2.5
All of the following are the broad categories of External forces EXCEPT:
Economic forces
Socio economic forces
Technological forces
Competitive forces
ref. External forces can be divided into five broad categories: Economic forces; Social,
cultural, demographic, and environmental forces; Political, governmental, and legal
forces; Technological forces; and Competitive forces.
Which of the following statements is NOT correct about a mission statement?

It contains the definition of the company's business
It is called the picture
Which one of the followings best describes this statement; The conditions that a
company must satisfy in order to be able to enter an industry?
Economies of scale
Barriers to entry
Differentiation
Competitive environment
Ref:http://highered.mcgraw-
hill.com/sites/0073054224/student_view0/chapter4/multiple_choice_q uiz.html
Which one of the following area can be the weakness of a firm?
Changing lifestyle
High oil prices
Ineffective Marketing
Increasing pollution
ref. can allow an organization to avoid substantial losses by revealing weak products
and ineffective marketing approaches before large-scale production begins.
A planned activity aimed at discovery of new knowledge with the hope of
developing new or improved products and services and translation of its findings
into a plan or design of new or improved products and services is known as:
Select correct option: Marketing
Research and development
Production Management
information system
Non-financial benefits of strategic management includes all of the following
EXCEPT:
Select correct option: Better awareness of external threats
Enhanced awareness of threats
Reduced resistance to change
Increase in sales
Non-Financial benefits: Increased employee productivity Improved understanding of

competitors strategies Greater awareness of external threats Understanding of
performance reward relationships Better problem-avoidance Lesser resistance to
change
Which one of the following is NOT a basic mission of a competitive intelligence
program?
To provide a general understanding of an industry
To provide a general understanding of a companys competitors
To identify industry executives who could be hired by the firm
To identify potential moves a competitor might make that would endanger a firm P#43
In adapting to change an organization must monitor which of the following?
Ongoing processes
Internal and external events
Timely changes
All of the given options
Adapting to change Organizational survival depends on: Continuous monitoring of
internal and external facto Well-timed changes Effective adaptation calls for a long-run
focus Incremental rise in degree of change
Which of these is the allocation and reallocation of capital and resources to
projects, products, assets and divisions of an organization? Select correct option:
Investment decision
Financing decisions
Restructuring decisions
Strategic decision
The investment decision, also called capital budgeting, is the allocation and reallocation
of capital and resources to projects, products, assets, and divisions of an organization.
Assessment of competitive rivalry does NOT include an understanding of which
of the following?
Mergers and acquisition in industry
Market growth rates
Exit barriers and operational efficiency of competitor
The management structure of an organization
Which one of the following dimensions is NOT a recommended component of a
mission statement?
Self-concept
Markets
Strategies
Customers
ref. Components of a Mission Statement 1. Customers: 2. Products or services: 3.
Markets: 4. Technology: 5. Concern for survival, growth, and profitability: 6. Philosophy:
7. Self-concept: 8. Concern for public image: 9. Concern for employees:
Rehman industries are analyzing the technological forces for the firm which may
provide it opportunities and threats for which of the following stage/s of strategic
management process?
Strategy formulation
Strategy implementation
Strategy evaluation
All of the given options
ref.Technological forces represent major opportunities and threats that must be
considered in formulating strategies.
The organizations that conduct business operations across national borders are
known as which of the following?
Domestic firms
Multinational corporations
Parent companies
Franchises
A Good mission statement identifies the utility of a firm's products to its
customers;
which of the following represents this statement?
Select Correct option:
Organizations philosophy
Customer orientation
Social policy
Declaration of attitude
ref. A Customer Orientation, Good mission statements identify the utility of a firm's
products to its customers.
During which stage of strategic management, firms specific internal strengths
and weaknesses are determined?
Formulation
Implementation
Evaluation
Feedback
RF; (Strategic management Fred R David international edition page#14)
All of the following are included in the five functions of the management process
EXCEPT: Select correct option:
Planning
Organizing
Leading
Delegating
ref. Planning
Organizing
Leading
Controlling
Which of the following step in the strategic development process involves
mobilizing employees and managers to put strategies into action?
Formulating strategy
Strategy evaluation
Implementing strategy
Strategy planning
Strategy implementation is often called the action stage of strategic management.
Implementing means mobilizing employees and managers in order to put formulated
strategies into action. It is often considered to be most difficult stage of strategic
management. It requires personal discipline, commitment and
Which of the following are the factors that concern the nature and direction of the
economy in which a firm operates?
Technological
Ecological
Social
Economic
Political variables have a significant effect on which one of the following?
Formulation and implementation of strategy
Formulation and Evaluation of a strategy
Implementation and evaluation of a strategy
Formulation, implementation and evaluation of a strategy
ref. The increasing global interdependence among economies, markets, governments,
and organizations makes it imperative that firms consider the possible impact of political
variables on the formulation and implementation of competitive strategies.
MGT603 Question #66

Which one variable falls under the category of the Social, Cultural, Demographic,
and Environmental Variable?
Propensity of people to spend
Buying habits Level of disposable income
Income differences by region
ref. Trust in government Attitudes toward government Attitudes toward work Buying
habits Ethical concerns Attitudes toward saving Sex roles Attitudes toward investing
MGT603 Question #67
Which of the following statement is TRUE about a Vision statement of
a company? Select correct option:
It concentrates on future
It defines the customers
It identify critical processes
It informs about the desired level of performance
ref. A vision statement is sometimes called a picture of your company in the future but
its so much more than that.
MGT603 Question #68

All of the following statements are true about a firms mission statement EXPECT:
A mission statement does not directly contribute positively to financial performance.
A mission statement directly contributes positively to financial performance.
A mission statement should not provide useful criteria for selecting among alternative
strategies.
Primary reason to develop a mission statement is not to attract the customers
(zh,vuzs)
Reference:
A business mission should provide useful criteria for selecting among alternative
strategies. A clear mission statement provides a dynamic in orientation, allowing
judgments about the most promising growth directions and those considered
less promising.
http://www.hamariweb.com/articles/article.aspx?id=2144
http://management4best.blogspot.com/2010/03/vision-versus-mission.html
http://www.zainbooks.com/books/management/strategic-
management_6_characteristics-of-a-mission-statement.htm
MGT603 Question #69

Which of the following is NOT a component of external environment analysis?
Customer satisfaction feedback
Global impacts
Legal issues within the industry
Competitive position of rival companies
MGT603 Question #70

The general conditions for competition that influence business firms, which
provide similar products and services is known:
Remote environment
International environment
External environment
Industry environment
MGT603 Question #71

Which of the following is the best example for achieving long-term objectives?
Strengths
Strategies
Policies
Opportunities
to design strategies to achieve long-term objectives, and to develop policies to achieve

annual objectives. MGT603 Question #72 Which type of trend can be exemplified by
the increase in average level of education in a society?
Social
Economic
Cultural
Technological
Key Social, Cultural, Demographic, and Environmental Variables Attitudes toward

investing Racial equality Use of birth control Average level of education
Principles of conduct that guide decision-making are known as: Select correct
option:
Human rights
Business ethics
The constitution
Social responsibility
Business ethics can be defined as principles of conduct within organizations that guide
decision making and behavior. MGT603 Question # 74
Various job titles of a strategist may includes all of the following EXCEPT:
Owner
Foreman
Chancellor
Chief executive officer
Where an organization takes into account the effect of its strategic decisions on
the society, the firm is taking care of which of these?

Corporate governance
Business policy
Business ethics
Social policy
The words social policy embrace managerial philosophy and thinking at the highest
levels of an organization. For this reason, social policy affects the development of a
business mission statement. Social issues mandate that strategists consider not only
what the organization owes its various stakeholders but also what responsibilities the
firm has to consumers, environmentalists, minorities, communities, and other groups.
Which of the following can be best described as short-term in nature?
Mission statements
Annual objectives
Strategies
Vision statement
Annual objectives are short-term milestones that organizations must achieve to reach
long-term objectives
Which of the following are developed in strategyimplementation phase of
strategic management?
Vision and mission

Annual objectives
Strengths and weaknesses
Opportunities and threats
Strategy implementation requires a firm to establish annual objectives, devise policies,

motivating employees and allocate resources so that formulated strategies can be
executed. MGT603 Question # 80
The social factors that affect a firm involve all of the following EXCEPT:

Attitudes of people in the external environment
Lifestyles of people
Per capita income
Values and beliefs of persons outside the firm

P#49 demonstrate the strategic management model
Which of the following is not a strategy-implementation activity?
Long term goals and objectives

Developing strategy supportive culture
Redirecting marketing efforts
Developing and utilizing information system
All of these are pitfalls an organization should avoid in strategic
planning EXCEPT:

Using plans as a standard for measuring performance.
Using strategic planning to gain control over decisions and resources
Being so formal in planning that flexibility and creativity are stifled
1. Using strategic planning to gain control over decisions and resources 2. Doing
strategic planning only to satisfy accreditation or regulatory requirements 3. Too hastily
moving from mission development to strategy formulation 4. Failing to communicate the
plan to employees, who continue working in the dark 5. Top managers making many
intuitive decisions that conflict with the formal plan 6. Top managers not actively
supporting the strategic-planning process 7. Failing to use plans as a standard for
measuring performance 8. Delegating planning to a "planner" rather than involving all
managers 9. Failing to involve key employees in all phases of planning 10. Failing to
create a collaborative climate supportive of change 11. Viewing planning to be
unnecessary or unimportant 12. Becoming so engrossed in current problems that
insufficient or no planning is done 13. Being so formal in planning that flexibility and
creativity are stifled.
For industries and firms that depend heavily on government contracts or
subsidies, political forecasts can be the most important part of an external audit.
Test marketing is commonly applied by which of the following companies? Select
correct option: Industrial goods companies Consumer goods companies Public sector
companies Private sector companies
Test marketing is used more frequently by consumer goods companies than by
industrial goods companies
Which of the following identified that strategic management encourages forward
thinking, favorable attitudes towards change and discipline to the management of
business?
Greeley
Greenly
Greenley
Greenwich Greenly stated that strategic management offers the following benefits: 1. It
allows for identification, prioritization, and exploitation of opportunities. 2. It provides an
objective view of management problems. 3. It represents a framework for improved
coordination and control of activities. 4. It minimizes the effects of adverse conditions
and changes.
During which stage of strategic management, firms specific internal strengths
and weaknesses are determined?
Formulation
Implementation
Evaluation
Feedback
Which statement is CORRECT about strategic-management process?
It occurs once a year

Which of the following is the first step in the controlling function of management?
Take corrective actions

Restrict breaks employees take
Evaluate expense reports
Establish performance standards
Controlling consists of four basic steps: 1. Establishing performance standards 2.

Measuring individual and organizational performance 3. Comparing actual performance
to planned performance standards 4. Taking corrective actions MGT603 Question #90
What marketing function includes test marketing?
Select correct option: selling products/services

pricing
customer analysis
product/service planning
Product and Service Planning Product and service planning includes activities such
as test marketing;
MGT603 Question #91

Opportunity analysis is one of the basic functions of :
Select correct option: Marketing

Management
Computer information systems
Production/operations
Marketing: Marketing can be described as the process of defining, anticipating, creating,

and fulfilling customers needs and wants for products and services.There are seven
basic functions of marketing: (1) Customer analysis, (2) Selling products/services, (3)
Product and service planning, (4) Pricing, (5) Distribution,(6) Marketing research,
and (7) Opportunity analysis.
MGT603 Question #92

Which component of a mission statement addresses the firms distinctive
competence or major competitive advantage?

Technology
Philosophy
Customers
Self-concept
Components and corresponding MGT603 Questions that a mission statement should

answer are given here. Self-concept: What is the firms distinctive competence or
major competitive advantage?
MGT603 Question #93

Which of the following are the guidelines of decision making?
Select correct option Laws
Rules
Polices
Goals Broadly defined, policy refers to specific guidelines, methods, procedures, rules,
forms, and administrative practices established to support and encourage work toward
stated goals.
MGT603 Question #94

Which of the following best describes this statement; a Systematic and ethical
process for gathering and analyzing information about the competitions
activities and general business trends to further a business own goals?
Select correct option
External assessment
Industry analysis
Competitive intelligence program
Business ethics
Competitive Intelligence Programs Systematic and ethical process for gathering and
analyzing information about the competitions activities and general business trends to
further a business own goals.
MGT603 Question #95

Choose the economic variable from the list.
Select correct option Attitudes toward business

Attitudes toward product quality
Population changes by race
Stock market trends
Key Economic Variables to Be Monitored Unemployment trends Worker productivity
levels Value of the dollar in world markets Stock market trends Foreign countries'
economic conditions
In the process of developing a mission statement, which of the following is
CORRECT?
To involve as few managers as possible

To involve as many managers as possible
To involve upper-level management only
To involve the board of directors only
The Process of Developing a Mission Statement
A clear mission is needed before alternative strategies can be formulated and
implemented.
Mission is important to have as broad a range of participation as possible among
managers in developing the mission.
What refers to a strategy of seeking ownership of or increased control over a
firms competitors?
Conglomerate diversification
Backward integration
Horizontal integration
Concentric diversification
Allow a firm to gain control over:

Distributors (forward integration)
Suppliers (backward integration)
Competitors (horizontal integration)
Which of the following is the greatest advantage of international operations?
Reduced tariffs and taxes

Access to global business practices
Gaining new customers
Less-intense competition
All of the specified approaches could be used to determine R&D budget
allocation EXCEPT:
Financing as many projects as possible
Using percentage-of-sales method
Budgeting irrelative to competitors
Deciding how many successful new products are needed
Four approaches to determining R&D budget allocations commonly are used:
(1) Financing as many project proposals as possible,
(2) Using a percentage-of-sales method,
(3) Budgeting about the same amount that competitors spend for R&D, or
(4) Deciding how many successful new products are needed and working backward to
estimate therequired R&D investment.

Financial ratios are helpful in analyzing the relationship among which of the
following?
All assets and liabilities
Profits and costs
All functional areas of business
Sales and profitability
Ref: Page no. 51 Financial ratio analysis exemplifies the complexity of relationships
among the functional areas of business.
MGT603 Strategic Management Solved MCQs

Chapter 1 to 12 Solved By Roshni
www.vuzs.info
Mission statements
Annual objectives
Strategies
Vision statement
Which of the following are the factors that concern the nature and direction of the economy
in which a firm operates? Technological
Ecological
Social
Economic
Which one of the followings best describes this statement; The conditions that a company
must satisfy in order to be able to enter an industry? Economies of scale
Barriers to entry Differentiation Competitive environment
During which stage of strategic management, firms specific internal strengths and
weaknesses are determined?
Formulation
Implementation
Evaluation
Feedback
Which of the following arise when a company can take advantage of conditions in its
environment to formulate and implement strategies that enable it to become more profitable?
Strengths
Opportunities
Weaknesses
Threats
for more contents visit
http://groups.google.com/group/vuZs
Which statement is CORRECT about strategic-management process? It occurs once a year
Ethnic balance is affected due to which of the following? Change in ethnic values
Awareness of ethnic norms
Migration of the people towards different areas
Introduction of new laws relating to ethnicity
The organizations that conduct business operations across national borders are known as
which of the following? Domestic firms
Multinational corporations
Parent companies
Franchises
Which of the following is the greatest advantage of international operations? Reduced tariffs
and taxes
Access to global business practices
Gaining new customers
Less-intense competition
Which of the following are developed in strategy implementation phase of strategic
management?
Vision and mission
Annual objectives
Strengths and weaknesses
Opportunities and threats
Which of the following is not a strategy-implementation activity?
Long term goals and objectives
Developing strategy supportive culture
Redirecting marketing efforts
Developing and utilizing information system
Strategy implementation includes developing strategy supportive culture, creating an effective
organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing
information system and linking employee compensation to organizational performance.
Where an organization takes into account the effect of its strategic decisions on the society,
the firm is taking care of which of these?Corporate governance
Business policy
Business ethics
Social policy
Which of the following is best identified as a statement that presents a firm's big picture
statement, describing a desired end-state, general in scope, and not restrictive?
Corporate philosophy statement
Company creed
Vision statement
Mission statement
While preparing an External Factor Evaluation matrix, a total score of 0.8 indicates what?
Firm is taking advantages of strengths and avoiding threats
Firm is not taking advantages of opportunities and is avoiding threats
Firm is not taking advantages of opportunities and is not avoiding threats
Firm is taking advantage of opportunities and is avoiding the threats
External forces directly affects all of the following EXCEPT:
Question # 3 of 10 Total M - 1
External forces directly affects all of the following EXCEPT:
Market segmentation strategies

Types of products/services offered
Management structure of organization
Choice of businesses to acquire or sell
The social factors that affect a firm involve all of the following EXCEPT:
Attitudes of people in the external environment
Lifestyles of people
Per capita income
Values and beliefs of persons outside the firm
Which type of trend can be exemplified by the increase in average level of education in a
society?
Social
Economic
Cultural
Technological
A Good mission statement identifies the utility of a firm's products to its customers; which
of the following represents this statement?
Social policy
Which of the following can be the weakness of an organization?
Price war
Poor location of business
Increased trade barriers
Innovative substitute product
Which one of the followings best describes this statement; The conditions that a company must satisfy
in order to be able to enter an industry?
Economies of scale
Barriers to entry
Differentiation
Competitive environment
Which one variable falls under the category of the Social, Cultural, Demographic, and
Environmental Variable?
Propensity of people to spend
Buying habits
Level of disposable income
Income differences by region
Which one of the following is NOT a basic mission of a competitive intelligence program?
To provide a general understanding of an industry
To provide a general understanding of a companys competitors
To identify industry executives who could be hired by the firm
To identify potential moves a competitor might make that would endanger a firm

Which of the following statement is TRUE about a Vision statement of a company?

It concentrates on future
Which of the following is NOT a component of external environment analysis?

Customer satisfaction feedback
Global impacts
Legal issues within the industry
Competitive position of rival companies
Which of the following is the best example for achieving long-term objectives?
Strengths
Strategies
Policies
Opportunities
society?
Social
Economic
Cultural
Technological
Principles of conduct that guide decision-making are known as:
Human rights
Business ethics
The constitution
A Good mission statement identifies the utility of a firm's products to its customers; which
of the following represents this statement?
Social policy
Which one of the following is NOT a key external force?
Ozone reduction sure page no 28
Company management
Energy conservation
Which of the following groups represents the stakeholders of a company?
The owners of the company
The people who purchases the shares of the company
The people who have a special stake or claim on the company Are the people who are in the
management a company
society?
Social
Economic
Cultural
Technological
Which of the following statement is TRUE about a Vision statement of a company?
It concentrates on future page no 7
Intuition is based on all of the following factors EXCEPT:
Past experiences
Judgments
Uncertainties
Feelings
What are historical narratives describing the unique accomplishments of a group and its
leaders, usually in heroic terms?
Rites
Sagas page no 51
Stories
Myths
Strategic management is the art and science of formulating, implementing and evaluating
cross-functional decisions which is usually done by all of the following EXCEPT:
Chairman of the company
Board of directors
Marketing officer
Identify the term that is known as a mean of providing guidance to actions and procedures,
including how resources are to be allocated and how tasks assigned to the organization
might be accomplished.
Aspirations
Objectives
Policies
Goals
Policies
Policies are the means by which annual objectives will be achieved. Policies include guidelines, rules,
and procedures established to support efforts to achieve stated objectives. Policies are guides to decision
making and address repetitive or recurring situations.
Various job titles of a strategist may includes all of the following EXCEPT:
Owner
Foreman
Chancellor

Question # 5 of 15 ( Total M - 1
Mission statements
Annual objectives
Strategies
Vision statement
Question # 9 of 15 ( Start time: 05:47:07 PM ) Total M - 1

All of these are pitfalls an organization should avoid in strategic planning EXCEPT:
Using plans as a standard for measuring performance.

Using strategic planning to gain control over decisions and resources
Being so formal in planning that flexibility and creativity are stifled
Question # 15 of 15 ( Start time: 05:51:57 PM ) Total M - 1

Which of the following identified that strategic management encourages forward thinking,
favorable attitudes towards change and discipline to the management of business?
Greeley
Greenly
Greenley
Greenwich
. Above-average returns are:
a. higher profits than the firm earned last year.
b. higher profits than the industry average over the last 10 years.
c. profits in excess of what an investor expects to earn from a historical pattern of performance of the firm.
d. profits in excess of what an investor expects to earn from other investments with a similar level of risk.
Answer: d. profits in excess of what an investor expects to earn from other investments with a similar level
of risk.
3. The strategic management process is

a. a set of activities that will assure a temporary advantage and average returns for the firm.
b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies,
independent of the conditions in its external environment.
c. a process directed by top-management with input from other stakeholders that seeks to achieve above-
average returns for investors through effective use of the organization's resources.
d. the full set of commitments, decisions, and actions required for the firm to achieve above-average
returns and strategic competitiveness.
Answer: d. the full set of commitments, decisions, and actions required for the firm to achieve above-
average returns and strategic competitiveness.
All of the following are assumptions of the industrial organization (I/O) model EXCEPT
a. Organizational decision makers are rational and committed to acting in the firm's best interests.
b. Resources to implement strategies are firm-specific and attached to firms over the long-term.
c. The external environment is assumed to impose pressures and constraints that determine the
strategies that result in above-average returns.
d. Firms in given industries, or given industry segments, are assumed to control similar strategically
relevant resources.
Answer: b. Resources to implement strategies are firm-specific and attached to firms over the long-term.
All of the following are assumptions of the resource-based model EXCEPT

a. Each firm is a unique collection of resources and capabilities.
b. The industry's structural characteristics have little impact on a firm's performance over time.
c. Capabilities are highly mobile across firms.
d. Differences in resources and capabilities are the basis of competitive advantage.
Answer: c. Capabilities are highly mobile across firms.
In the resource-based model, which of the following factors would be considered a key to
organizational success?
a. uniq1ue market niche
b. weak competition
c. economies of scale
d. skilled employees
Answer: d. skilled employees
All of the following are resources of an organization EXCEPT

a. an hourly production employee's ability to catch subtle quality defects in products.
b. oil drilling rights in a promising region.
c. weak competitors in the industry.
d. a charity's endowment of $400 million.
Answer: c. weak competitors in the industry.
The resource-based model of the firm argues that
a. all resources have the potential to be the basis of sustained competitive advantage.
b. all capabilities can be a source of sustainable competitive advantage.
c. the key to competitive success is the structure of the industry in which the firm competes.
d. resources and capabilities that are valuable, rare, costly to imitate, and non-substitutable form the
basis of a firm's core competencies.
Answer: d. resources and capabilities that are valuable, rare, costly to imitate, and non-substitutable form
the basis of a firm's core competencies.
The goal of the organization's ____ is to capture the hearts and minds of employees, challenge
them, and evoke their emotions and dreams.
a. vision
b. mission
c. culture
d. strategy
Answer: a. vision
A firm's mission
a. is a statement of a firm's business in which it intends to compete and the customers which it intends to
serve.
b. is an internally-focused affirmation of the organization's financial, social, and ethical goals.
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
Answer: a. is a statement of a firm's business in which it intends to compete and the customers which it
intends to serve.
The environmental segments that comprise the general environment typically will NOT include
a. demographic factors.
b. sociocultural factors.
c. substitute products or services.
d. technological factors.
Answer: c. substitute products or services.
An analysis of the economic segment of the external environment would include all of the
following EXCEPT
a. interest rates.
b. international trade.
c. the strength of the U.S. dollar.
d. the move toward a contingent workforce.
Answer: d. the move toward a contingent workforce.
Product differentiation refers to the:

a. ability of the buyers of a product to negotiate a lower price.
b. response of incumbent firms to new entrants.
c. belief by customers that a product is unique.
d. fact that as more of a product is produced the cheaper it becomes per unit.
Answer: c. belief by customers that a product is unique.
Which of the following is NOT an entry barrier to an industry?

a. expected competitor retaliation
b. economies of scale
c. customer product loyalty
d. bargaining power of suppliers1
Answer: d. bargaining power of suppliers
Switching costs refer to the:

a. cost to a producer to exchange equipment in a facility when new technologies emerge.
b. cost of changing the firm's strategic group.
c. one-time costs suppliers incur when selling to a different customer.
d. one-time costs customers incur when buying from a different supplier.
Answer: d. one-time costs customers incur when buying from a different supplier.
New entrants to an industry are more likely when (i.e., entry barriers are low when...)
a. it is difficult to gain access to distribution channels.
b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
Answer: c. product differentiation in the industry is low.
Suppliers are powerful when:

a. satisfactory substitutes are available.
b. they sell a commodity product.
c. they offer a credible threat of forward integration.
d. they are in a highly fragmented industry.
Answer: c. they offer a credible threat of forward integration.
The highest amount a firm can charge for its products is most directly affected by
a. expected retaliation from competitors.
b. the cost of substitute products.
c. variable costs of production.
d. customers' high switching costs.
Answer: b. the cost of substitute products.
All of the following are forces that create high rivalry within an industry EXCEPT
a. numerous or equally balanced competitors.
b. high fixed costs.
c. fast industry growth.
d. high storage costs.
Answer: c. fast industry growth.
According to the five factors model, an attractive industry would have all of the following
characteristics EXCEPT:
a. low barriers to entry.
b. suppliers with low bargaining power.
c. a moderate degree of rivalry among competitors.
d. few good product substitutes.
Answer: a. low barriers to entry.
Internal analysis enables a firm to determine what the firm

a. can do.
b. should do.
c. will do.
d. might do.
Answer: a. can do.
An external analysis enables a firm to determine what the firm

a. can do.
b. should do.
c. will do.
d. might do.
Answer: d. might do.
____ is/are the source of a firm's ____, which is/are the source of the firm's ____.
a. Resources, capabilities, core competencies
b. Capabilities, resources, core competencies
c. Capabilities, resources, above average returns
d. Core competencies, resources, competitive advantage
Answer: a. Resources, capabilities, core competencies
In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of
capabilities that are
a. rare.
b. causally ambiguous.
c. socially complex.
d. valuable.
Answer: d. valuable.
Compared to tangible resources, intangible resources are

a. of less strategic value to the firm.
b. not the focus of strategic analysis.
c. a more potent source of competitive advantage.
d. more likely to be reflected on the firm's balance sheet.
Answer: c. a more potent source of competitive advantage.
Which of the following is a true statement about capabilities?

a. Capabilities emerge over time through complex interactions of tangible and intangible resources.
b. Valuable capabilities are based almost entirely on tangible resources.
c. Capabilities based on human capital are more vulnerable to obsolescence than other intangible
capabilities because of the tendency for employee knowledge to become outdated.
d. The link between firm financial performance and capabilities is dependent on whether the capabilities
are based on tangible or intangible resources.
Answer: a. Capabilities emerge over time through complex interactions of tangible and intangible
resources.
To be a core competency, a capability must satisfy all of the following criteria EXCEPT:
a. be technologically innovative.
b. be hard for competing firms to duplicate.
c. be without good substitutes.
d. be valuable to customers.
Answer: a. be technologically innovative.
Capabilities that other firms cannot develop easily are classified as

a. costly to imitate.
b. rare.
c. valuable.
d. nonsubstitutable.
Answer: a. costly to imitate.
Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT
a. lack of scientific transference.
b. social complexity.
c. unique historical conditions.
d. causal ambiguity.
Answer: a. lack of scientific transference.
Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for
years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent.
It has observed as much of the firm's internal functioning and technology as it can legally, yet
Gamma cannot understand why ABC has a competitive advantage over it. The source of ABC's
success is
a. impregnable.
b. causally ambiguous.
c. rationally obscure.
d. elusive.
Answer: b. causally ambiguous.
Firms that achieve competitive parity can expect to:

a. earn below-average returns.
b. earn average returns.
c. earn above-average returns.
d. initially earn above-average returns, declining to average returns.
Answer: b. earn average returns.
Business-level strategies detail commitments and actions taken to provide value to customers
and gain competitive advantage by exploiting core competencies in
a. the selection of industries in which the firm will compete.
b. specific product markets.
c. primary value chain activities.
d. particular geographic locations.
Answer: b. specific product markets.
The three dimensions of a firm's relationships with customers include all the following EXCEPT
a. exclusiveness.
b. affiliation.
c. richness.
d. reach.
Answer: a. exclusiveness.
The effectiveness of any of the generic business-level strategies is contingent upon

a. customer needs and competitors' strategies.
b. the match between the opportunities and threats in its external market and the strengths and
weaknesses of its internal environment.
c. the trends in the general consumer base and the robustness of the global and industry economy.
d. the firm's competitive scope and its competitive advantage.
Answer: b. the match between the opportunities and threats in its external market and the strengths and
weaknesses of its internal environment.
Business-level strategies are concerned specifically with:

a. creating differences between the firm's position and its rivals.
b. selecting the industries in which the firm will compete.
c. how functional areas will be organized within the firm.
d. how a business with multiple physical locations will operate one of those locations.
Answer: a. creating differences between the firm's position and its rivals.
A cost leadership strategy targets the industry's ____ customers.

a. most typical
b. poorest
c. least educated
d. most frugal
Answer: a. most typical
When the costs of supplies increase in an industry, the low-cost leader

a. may continue competing with rivals on the basis of product features.
b. will lose customers as a result of price increases.
c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins.
d. may be the only firm able to pay the higher prices and continue to earn average or above- average
returns.
Answer: d. may be the only firm able to pay the higher prices and continue to earn average or above-
average returns.
When a product's unique attributes provide value to customers, the firm is implementing
a. a differentiation strategy.
b. a cost leadership strategy.
c. an integrated cost leadership/differentiation strategy.
d. a single-product strategy.
Answer: a. a differentiation strategy.
A company pursuing a differentiation or focused differentiation strategy would

a. have highly efficient systems linking suppliers' products with the firm's production processes.
b. use economies of scale.
c. have strong capabilities in basic research.
d. make investments in easy-to-use manufacturing technologies.
Answer: c. have strong capabilities in basic research.
T or F? A firm using a differentiation strategy can charge a premium price.

Answer: T
A differentiation strategy can be effective in controlling the power of substitutes in an industry

because
a. customers have low switching costs.
b. substitute products are lower quality.
c. a differentiating firm can always lower prices.
d. customers develop brand loyalty.
Answer: d. customers develop brand loyalty.
The typical risks of a differentiation strategy do NOT include which of the following?
a. Customers may find the price differential between the low-cost product and the differentiated product
too large.
b. Customers' experience with other products may narrow customers' perception of the value of a
product's differentiated features.
c. Counterfeit goods are widely available and acceptable to customers.
d. Suppliers of raw materials erode the firm's profit margin with price increases.
Answer: d. Suppliers of raw materials erode the firm's profit margin with price increases.
Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other
strategies.
a. business-level
b. corporate-level
c. acquisition
d. international
Answer: a. business-level
Multimarket competition occurs when firms

a. sell different products to the same customer.
b. have a high level of awareness of their competitors' strategic intent.
c. simultaneously enter into an attack strategy.
d. compete against each other in several geographic or product markets.
Answer: d. compete against each other in several geographic or product markets.
Competitive dynamics refers to the

a. circumstances where competitors are aware of the degree of their mutual interdependence resulting
from market commonality and resource similarity.
b. set of competitive actions and competitive responses the firm takes to build or defend its competitive
advantages and to improve its market position.
c. total set of actions and responses taken by all firms competing within a market.
d. ongoing set of competitive actions and competitive responses between competitors as they maneuver
for advantageous market position.
Answer: c. total set of actions and responses taken by all firms competing within a market.
Firms with few competitive resources are more likely

a. to not respond to competitive actions.
b. respond quickly to competitive actions.
c. delay responding to competitive actions.
d. respond to strategic actions, but not to tactical actions.
Answer: c. delay responding to competitive actions.
Which of the following would be an example of a strategic action?

a. a "two movies for the price of one" campaign by Blockbuster Video
b. use of product coupons by a local grocer
c. entry into the European market by Home Depot
d. fare increases by Southwest Airlines
Answer: c. entry into the European market by Home Depot
The chief disadvantage of being a first mover is the

a. high degree of risk.
b. high level of competition in the new marketplace.
c. inability to earn above-average returns unless the production process is very efficient.
d. difficulty of obtaining new customers.
Answer: a. high degree of risk.
On the whole there are more competitive responses to

a. strategic actions than to tactical actions.
b. tactical actions than to strategic actions.
c. buyer pressures than to supplier pressures.
d. the demands of the top management team than to industry structural pressures.
Answer: b. tactical actions than to strategic actions.
Competitors are more likely to respond to competitive actions that are taken by
a. differentiators.
b. larger companies.
c. first movers.
d. market leaders.
Answer: d. market leaders.
Ninety percent of Wm. Wrigley Company's total revenue comes from chewing gum. This is an
example of
a. market commonality.
b. standard-cycle markets.
c. economies of scale.
d. market dependence.
Answer: d. market dependence.
All competitive advantages do not accrue to large sized firms. A major advantage of smaller firms
is that they
a. are more likely to have organizational slack.
b. can launch competitive actions more quickly.
c. have more loyal and diverse workforces.
d. can wait for larger firms to make mistakes in introducing innovative products.
Answer: b. can launch competitive actions more quickly.
MGT603 Strategic Management Solved MCQs from Book by

David (chap 9)
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CHAPTER 9
Strategy Review, Evaluation and Control
True/False
The Nature of Strategy Evaluation
1. Most strategists believe that an organizations well being depends on evaluation of the
strategic-management process.
Ans: T Page: 337
2. Adequate, timely feedback is important to effective strategy evaluation.
Ans: T Page: 337
3. Too much emphasis on evaluating strategies may be expensive and counter productive.
Ans: T Page: 337
4. Strategy evaluation should have a long-run focus and avoid a short-run focus.
Ans: F Page: 327
5. According to Richard Rumelt, consonance and consistency are based on a firms external
assessment.
Ans: F Page: 337
6. According to Rumelt, consistency and feasibility are largely based on a firms internal
assessment.
Ans: T Page: 337
7. Consistency, distinctiveness, advantage and feasibility are Richard Rumelts four criteria for
evaluating a strategy.
Ans: F Page: 337
8. Strategy evaluation is becoming increasingly easier with the passage of time, given the
technological advances.
Ans: F Page: 337
9. The decreasing time span for which planning can be done with any degree of certainty is a
reason strategy evaluation is more difficult today.
Ans: T Page: 337
10. Strategies may be inconsistent if policy problems and issues continue to be brought to the top
for resolution.
Ans: T Page: 338
11. Competitive advantages normally are the result of superiority in one of three areas: feasibility,
consistency, or consonance.
Ans: F Page: 338
12. Regardless of the size of the organization, a certain amount of management by wandering
around at all levels is essential to effective strategy evaluation.
Ans: T Page: 339
13. Because large companies have more at stake, it is more important for large organizations to
conduct strategy evaluation than small companies.
Ans: F Page: 339
14. The end of the fiscal year is the best time to do strategy evaluation.
Ans: F Page: 339
A Strategy-Evaluation Framework
15. Changes in the organizations management, marketing, finance, R&D and CIS strengths and
weaknesses should all be the focus of a revised EFE matrix in strategy evaluation.
Ans: F Page: 340
16. In strategy evaluation, a revised IFE matrix should indicate how effective a firms strategies
have been in response to key opportunities and threats.
Ans: F Page: 340
17. Strengths, weaknesses, opportunities and threats should continually be monitored for change
because it is not really a question of whether these factors will change but rather when they will
change and in what ways.
Ans: T Page: 341
18. When taking corrective action, you need to compare expected results to actual results.
Ans: F Page: 342
19. Criteria for evaluating strategies should be measurable and easily verifiable.
Ans: T Page: 343
20. Specific financial ratios are rarely used criteria to evaluate strategies.
Ans: F Page: 343
21. Measuring organizational performance includes comparing expected results to actual results,
investigating deviations from plans, evaluating individual performance and examining progress
being made toward meeting stated objectives.
Ans: T Page: 343
22. Intuitive judgments are almost always involved in deriving quantitative criteria.
Ans: T Page: 343
23. Most quantitative evaluation criteria are geared to long-term objectives rather than annual
objectives.
Ans: F Page: 343
24. Measuring organizational performance requires making changes to reposition a firm

competitively for the future.
Ans: F Page: 344
25. Taking corrective actions does not necessarily mean that existing strategies will be
abandoned, or even that new strategies must be formulated.
Ans: T Page: 344
26. Corrective action in strategy evaluation is necessary to keep an organization on track toward
achieving stated objectives.
Ans: T Page: 344
27. Alvin Toffler argues that environments are becoming so dynamic and complex that they
threaten people and organizations with future shock in his thought-provoking books entitled
Future Shock and The Third Wave.
Ans: T Page: 344
28. Future shock occurs when the type and speed of changes overpower an individual or
organizations ability and capacity to adapt.
Ans: T Page: 344
29. According to research, participation in strategy-evaluation activities is one of the best ways to
overcome individuals resistance to change.
Ans: T Page: 344-345
The Balanced Scorecard

30. The basic form of a Balanced Scorecard is the same for all organizations and industries.
Ans: F Page: 346
31. The Balanced Scorecard Approach deals with the question, How satisfied are the firms
customers.
Ans: T Page: 346
Published Sources of Strategy-Evaluation Information

32. Each year, Fortune publishes strategy evaluation research on both the United States and other
countries.
Ans: T Page: 346
Characteristics of an Effective Evaluation System
33. Strategy-evaluation activities must be meaningful, i.e., they should specifically relate to a
firms objectives.
Ans: T Page: 349
34. Timely approximate information generally more desirable as a basis for strategy evaluation
than accurate information that does not depict the present.
Ans: T Page: 349
35. The test of an effective evaluation system is its usefulness and complexity.
Ans: F Page: 349
36. Small organizations require a more elaborate and detailed strategy-evaluation system because
they are still evolving.
Ans: F Page: 349
37. There is no one ideal strategy-evaluation system for all organizations.

Ans: T Page: 349
Contingency Planning
38. Contingency plans are alternative plans that can be put into effect if certain key events do not
occur as expected.
Ans: T Page: 350
39. Organizations should prepare contingency plans just for unfavorable events.
Ans: F Page: 350
40. Strategies should try to cover all bases by planning for all possible contingencies.
Ans: F Page: 350
41. Contingency plans should be as simple as possible.

Ans: T Page: 350
42. Alternative strategies not selected for implementation should be discarded, as they have a
tendency to contaminate the contingency plans.
Ans: F Page: 350
43. Identifying both beneficial and unfavorable events that could possibly derail the strategy or
strategies is the first step of effective contingency planning.
Ans: T Page: 351
Auditing
44. Independent auditors, government auditors and IRS auditors are the three groups of people
who perform audits.
Ans: F Page: 352
45. Independent auditors are basically CPAs who provide their services to organizations for a fee.
Ans: T Page: 352
46. Public accounting firms usually avoid strategy evaluation services.

Ans: F Page: 352
47. Two government agenciesIRS and GAOemploy government auditors responsible for
making sure organizations comply with federal laws, statutes and policies.
Ans: T Page: 352
48. Moving environmental affairs from the line side of the organization to the staff side is required
when instituting an environmental audit.
Ans: F Page: 353
49. The strategic management process should be completely open because participation and
openness enhance understanding, commitment, and communication within the firm.
Ans T: Page 354
50. Increased education and diversity of the workforce at all levels are reasons why the top-down
approach should be favored in organizations.
Ans: F Page: 354
Multiple Choice
The Nature of Strategy Evaluation
51. Which of these is/are a basic activity of strategy evaluation?

a. Reviewing the underlying internal and external factors that represent the bases of current strategies
b. Measuring organizational performance
c. Taking corrective actions
d. All of the above.
e. Both b and c
Ans: d Page: 336
52. The purpose of strategy evaluation is to

a. increase the budget annually.
b. alert management to problems or potential problems.
c. make budget changes.
d. evaluate employees performance.
e. improve R&D programs.
Ans: b Page: 336
53. What is the cornerstone of effective strategy evaluation?

a. Adequate and timely feedback
b. Quality and quantity of managers
c. Smaller ratio of top- to lower-level management
d. Evaluation preceding implementation stage
e. Taking corrective actions
Ans: a Page: 337
54. All of these are Richard Rumelts criteria to evaluate a strategy except:
a. advantage.
b. consistency.
c. feasibility.
d. distinctiveness.
e. consonance.
Ans: d Page: 337
55. What is happening to strategy evaluation with the passage of time?

a. increasingly difficult
b. much simpler
c. very convenient
d. an unnecessary activity
e. less important
Ans: a Page: 337
56. All of the following are reasons strategy evaluation is more difficult today except:
a. a dramatic increase in the environments complexity.
b. the increasing number of variables.
c. the increase in the number of both domestic and world events affecting organizations.
d. the decreasing difficulty of predicting the future with accuracy.
e. the rapid rate of obsolescence of even the best plans.
Ans: d Page: 337
57. Which of the following is not a reason for the increasing difficulty of evaluating strategies?
a. Product life cycles are longer today than ever.
b. Domestic and world economies are less stable than ever.
c. Product development cycles are longer than ever.
d. Technological advancement is more rapid.
e. Change is occurring more frequently than ever.
Ans: a Page: 337
58. What is important because organizations face dynamic environments in which key external
and internal factors often change quickly and dramatically?
a. Strategy formulation
b. Strategy evaluation
c. Strategy simplification
d. Strategy modification
e. Strategy implementation
Ans: b Page: 337
59. A final broad test of strategy is its
a. advantage.
b. feasibility.
c. consonance.
d. consistency.
e. distinctiveness.
Ans: b Page: 338
60. Competitive advantage normally is the result of superiority in resources, skills and
a. employees.
b. position.
c. consistency.
d. feasibility.
e. governance.
Ans: b Page: 338
61. What term refers to the need for strategists to examine sets of trends, as well as individual
trends in evaluating strategies?
a. Consistency
b. Consonance
c. Synergy
d. Feasibility
e. Advantage
Ans: b Page 338
62. In evaluating strategies, which one of Rumelts criteria for evaluating strategies, refers to the
need for strategists to examine sets of trends?
a. consistency
b. consonance
c. feasibility
d. advantage
e. empowerment
Ans: b Page: 338
63. If success for one organizational department means failure for another department, then
strategies may be
a. synergistic.
b. advantageous.
c. inconsonant
d. failures.
e. inconsistent.
Ans: e Page: 338
64. When empowered employees are held accountable for and pressured to achieve specific goals
and are given wide latitude in their actions to achieve them, there can be
a. increased productivity.
b. dysfunctional behavior.
c. decreased number of complaints.
d. decreased turnover.
e. increased number of litigations.
Ans: b Page: 339
65. Strategy-evaluation activities should be performed

a. on a periodic basis.
b. at the onset of a problem.
c. on a continuous basis.
d. upon completion of major projects.
e. every two years.
Ans: c Page: 339
A Strategy-Evaluation Framework
66. Corrective actions are not needed when

a. changes have occurred in the firms internal strategic position.
b. external and internal factors have not significantly changed.
c. the firm is not progressing satisfactorily toward achieving stated objectives.
d. competitive factors are on the rise.
e. the industry is slowing down.
Ans: b Page: 340
67. When you discover major changes have occurred in the firms internal strategic position while
conducting strategy evaluation, you should
a. continue on the present strategic course.
b. immediately discontinue all aspects of the present strategic course.
c. take corrective actions.
d. add additional funds to the present strategic plan.
e. copy the actions of major competitors.
Ans: c Page: 340
68. Changes in the organizations management, marketing, finance/accounting, R&D and CIS
strengths and weaknesses should be the focus of a revised
a. mission.
b. IFE matrix.
c. vision.
d. EFE matrix.
e. EPM matrix.
Ans: b Page: 340
69. A revised __________ should indicate how effective a firms strategies have been in response
to key opportunities and threats.
a. IFE matrix
b. mission
c. EFE matrix
d. vision
e. CPM matrix
Ans: c Page: 340
70. Which of the following is not included in measuring organizational performance?

a. Comparing results to competitors expectations.
b. Examining progress being made toward meeting stated objectives.
c. Investigating deviations from plans.
d. Evaluating individual performance.
e. Comparing expected results to actual results.
Ans: a Page: 342-343
71. Ineffectiveness and/or inefficiencies indicate the need for

a. layoffs.
b. consultants.
c. some form of correction action.
d. reductions in pay.
e. more synergy.
Ans: c Page: 343
72. What is the basis for quantitative financial evaluation?

a. Reduction in costs
b. The EPS/EBIT Analysis
c. Capital Asset Pricing Model
d. Financial ratios
e. Present value analysis
Ans: d Page: 343
73. Which of these is not a key financial ratio?

a. Market share
b. Production quality
c. Earnings per share
d. Asset growth
e. Return on equity
Ans: b Page: 343
74. Strategy evaluation is based on

a. empirical data.
b. qualitative criteria.
c. objective data.
d. qualitative and quantitative criteria.
e. intuition.
Ans: d Page: 343
75. Financial ratios are used to compare a firms performance over different time periods,
compare the firms performance to industry averages, and compare a firms performance with
a. overall business standards.
b. the performance of international firms.
c. the performance of suppliers.
d. non-financial ratios.
e. the performance of competitors.
Ans: e Page: 343
76. Most quantitative criteria are geared to objectives rather than objectives.
a. top-management; employee
b. short-term; annual
c. annual; long-term
d. environmental; community
e. profit; social
Ans: c Page: 343
77. What corrective actions should a firm take during strategy evaluation?
a. Revising the business mission
b. Issuing stock
c. Revising objectives
d. Selling a division
e. All of the above
Ans: e Page: 344
78. What occurs when the nature, types and speed of changes overpower an individuals or
organizations ability and capacity to adapt?
a. Corporate downfall
b. Corrective actions
c. Future shock
d. Corporate agility
e. Measuring performance
Ans: c Page: 344
79. Corrective actions should

a. strengthen an organizations competitive position in its industry.
b. streamline asset holdings.
c. reduce the staff size.
d. involve abandoning existing strategies.
e. all of the above.
Ans: a Page: 344
80. What is the best way to overcome individuals resistance to change in strategy evaluation?
a. Participation
b. Command-and-control
c. Laissez-faire system
d. Rational argument
e. Emotional reactions
Ans: a Page: 344
81. An organizations ability to adapt successfully to changing circumstances refers to its

a. corporate agility.
b. future shock.
c. dynamism.
d. revision power.
e. liquidity.
Ans: a Page: 344
82. Corrective action should do all of the following except:

a. capitalize upon internal strengths.
b. avoid external opportunities.
c. avoid external threats.
d. improve internal weaknesses.
e. strengthen an organizations competitive position.
Ans: b Page: 345
The Balanced Scorecard
83. Which of the following is not a component of the Balanced Scorecard?

a. Social responsibility
b. Financial performance
c. Customer knowledge
d. Internal business processes
e. Learning and growth
Ans: a Page: 346
84. What aims to balance long term with short term concerns, financial with non-financial
concerns, and internal with external concerns.
a. Contingency planning
b. The Balanced Scorecard approach
c. Taking corrective action
d. Measuring performance
e. reviewing Bases of Strategy
Ans: b Page: 346
Published Sources of Strategy-Evaluation Information

85. In the important publication used to evaluate a firms strategy, the Fortune 50 includes all of
the following except:
a. the top retailers.
b. the top transportation companies.
c. the top utilities.
d. the top banks.
e. the top hospitals.
Ans: e Page: 346
86. Which of these is not a key attribute in Fortunes strategy evaluation research on
Americas Most Admired Companies?
a. Quality of management
b. Innovation
c. Long-term investment value
d. Amount of physical resources
e. Use of corporate assets
Ans: d Page: 346-347
Characteristics of an Effective Evaluation System
87. What is not a characteristic of an effective evaluation system?

a. Economical
b. Timely
c. Information-oriented
d. Meaningful
e. Provide a true picture of what is happening
Ans: c Page: 349
88. Controls need to be _________ rather than__________.

a. action oriented; information oriented
b. cultural; political
c. qualitative; quantitative
d. measurable; timely
e. universal; diverse
Ans: a Page: 349
89. The strategy-evaluation process should foster

a. mutual understanding.
b. implementation.
c. corporate culture.
d. profit centers.
e. contingency plans.
Ans: a Page: 349
90. What factor determines the final design of a firms strategy-evaluation and control system?
a. Opportunities
b. Threats
c. External characteristics
d. The organizations characteristics
e. The competitions characteristics
Ans: d Page: 349
91. Familiarity with local environments usually makes gathering and evaluating information much
easier for organizations than for ones.
a. non-profit; for-profit
b. for-profit; non-profit
c. large; small
d. small; large
e. foreign; domestic
Ans: d Page: 349
Contingency Planning
92. What activity is defined as having alternative plans that can be put into effect if certain key
events do not occur as expected?
a. Corporate agility
b. Scenario planning
c. Strategy evaluation
d. Contingency planning
e. Forecasting
Ans: d Page: 350
93. Which of the following statements about contingency plans is not true?
a. Contingency plans should be as simple as possible.
b. Only high-priority areas require the insurance of contingency plans.
c. Contingency plans should be developed for favorable and unfavorable events.
d. Develop contingency plans for all contingent events.
e. Contingency plans minimize the impact of potential threats.
Ans: d Page: 350
94. What permits quick response to change, prevents panic in crisis situations, and makes
managers more adaptable.
a. Auditing
b. Implementing a balanced scorecard
c. Contingency planning
d. Taking corrective actions
e. Measuring performance
Ans: c Page: 351
Auditing
95. What term refers to a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between these assertions and established criteria, and communicating the
results to interested users?
a. Auditing
b. Innovation
c. R&D
d. Strategic Management
e. Accounting
Ans: a Page: 352
96. Which type of auditors are specifically responsible for safeguarding the assets of a company?
a. Independent auditors
b. Government auditors
c. Internal auditors
d. External auditors
e. Research auditors
Ans: c Page: 352
The Environmental Audit

97. Product design, manufacturing, transportation, customer use, packaging, product disposal
and corporate rewards should reflect considerations to develop constructive relations with
employees, consumers, suppliers and distributors.
a. profit
b. union
c. top-management
d. environmental
e. customer
Ans: d Page: 352
Twenty-First-Century Challenges in Strategic Management
98. Most strategy literature advocates that strategic management is

a. more of a science than an art.
b. more of an art than a science.
c. based on analysis rather than research.
d. based on intuition rather than analysis.
e. based on creativity rather than intuition.
Ans: a Page: 353
99. All of the following are reasons to be completely open with the strategy process except:
a. managers, employees and other stakeholders can readily contribute to the process.
b. investors, creditors and other stakeholders have greater basis for supporting a firm that is open.
c. visibility promotes democracy whereas secrecy promotes autocracy.
d. participation and openness enhances understanding, commitment and communication within the firm.
e. openness limits rival firms from imitating or duplicating the firms strategies.
Ans: e Page: 354
100. Which of the following is not a reason why some firms prefer to conduct strategic-planning
in secret?
a. Dissemination of a firms strategies may translate into competitive intelligence for rival firms.
b. It enhances understanding, commitment and communication within the firm.
c. It limits criticism, second-guessing and hindsight.
d. Participants in a visible strategy process become more attractive to rival firms, who may lure them
away.
e. Secrecy limits rival firms from imitating or duplicating the firms strategies.
Ans: b Page: 354
Essay Questions
101 Explain why strategy evaluation can be a complex and sensitive undertaking.
Strategy can be a complex and sensitive undertaking because too much emphasis on evaluating
strategies may be expensive and counterproductive. No one likes to be evaluated too closely! The more
managers attempt to evaluate the behavior of others, the less control they have. Yet too little or no
evaluation can create even worse problems. Strategy evaluation is essential to ensure stated objectives
are being achieved.
Page: 337
102 Discuss some of the reasons why strategy evaluation is becoming increasingly difficult with
the passage of time.
Possible answers include: Domestic and world economies were more stable in years past; Product life
cycles were longer; product development cycles were longer; technological advancement was slower;
change occurred less frequently; there were fewer competitors; foreign companies were weak; and there
were more regulated industries. Other reasons include: 1) A dramatic increase in the environments
complexity; 2) The increasing difficulty of predicting the future with accuracy; 3) The increasing number of
variables; 4) The rapid rate of obsolescence of even the best plans; 5) The increase in the number of both
domestic and world events affecting organizations; and 6) The decreasing time span for which planning
can be done with any degree of certainty.
Page: 337
103 Compare and contrast two of Rumelts four criteria for evaluating strategies.
Rumelts four criteria for evaluating strategies are consistency, consonance, feasibility and advantage.
Students should take their answers from Table 9-1 on page 338, which provides descriptions of each.
Page: 338
104 Describe each of the activities that comprise strategy evaluation.
The activities that comprise strategy evaluation are: (1) reviewing bases of an organizations strategy, (2)
measuring organizational performance and (3) taking corrective actions. Please refer to pages 340-342
for descriptions of each activity.
Page: 340-342
105 What are the most commonly used quantitative criteria to evaluate strategies? Give several
examples of these criteria.
Quantitative criteria commonly used to evaluate strategies are financial ratios, which strategists use to
make three critical comparisons: (1) comparing the firms performance over different time periods, (2)
comparing the firms performance to that of competitors and (3) comparing the firms performance to
industry averages. Some particularly useful key financial ratios used as criteria for strategy evaluation
are: (1) ROI, (2) ROE, (3) profit margin, (4) market share, (5) debt to equity, (6) earnings per share, (7)
sales growth and (8) asset growth.
Page: 342-343
106 Discuss the different perspectives and concerns of the Balanced Scorecard.
The Balanced Scorecard is a process that allows firms to evaluate strategies from four perspectives:
financial performance, customer knowledge, internal business processes, and learning and growth. It
aims to balance long-term concerns with short-term concerns, financial with non-financial concerns, and
internal with external concerns.
Page: 346
107 Identify some important guidelines for effective strategic management, as presented in the
chapter.
Please refer to the entire discussion on pages 349 under Characteristics of an Effective Evaluation
System.
Page: 349
108. Describe the seven-step process of effective contingency planning in strategy evaluation.
The suggested seven-step process of effective contingency planning is as follows:
(1) Identify both beneficial and unfavorable events that could possibly derail the strategy or strategies;
(2) specify trigger points and calculate about when contingent events are likely to occur;
(3) assess the impact of each contingent event;
(4) develop contingency plans; (
5) assess the counter impact of each contingency plan;
(6) determine early warning signals for key contingent events and monitor them; and
(7) for contingent events with reliable early warning signals, develop advance action plans to take
advantage of the available lead time.
Page: 351-352
109. Individuals who perform audits can be divided into three groups. Identify these three groups
and give an example of each.
People who perform audits can be divided into three groups:
independent auditors, government auditors and internal auditors. An example of an independent
auditor is the CPAs at Arthur Andersen public accounting firm. The GAO and IRS are examples of
government auditors. Employees within an organization who are responsible for safeguarding company
assets, for assessing the efficiency of company operations and for ensuring the generally accepted
business procedures are examples of internal auditors.
Page: 352
110 Discuss the three challenges that strategists face today.

The three challenges that strategists face today are 1) deciding whether the process of strategic
management should be more of an art or a science; 2) deciding whether strategies should be visible or
hidden from stakeholders; or 3) deciding whether the process should be more top-down or bottom-up in
the firm.
Page: 353-355

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MGT603 Question # 1 Which statement is CORRECT about strategic-management

Select correct option:

It occurs once a year

RF; handout P#1 Strategic management is a on-going process which is in existence

MGT603 Question # 2 Which of the following period strategic management was

Select correct option:

Mid 1950s to mid 1960s

RF; handout P#3 In 1960; s and 70 it was consider to be panacea for

Select correct option:

What is our business? How can we improve ourselves?

Select correct option:

RF; handout P#5 Intuition rests on:

MGT603 Question # 7 Selling includes all of the following marketing activities

MGT603 Question # 9 Which management function includes breaking tasks into

MGT603 Question # 11 Corporate social policy should be designed and articulated

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Thanks for ZUBAIR BROTHER AND ANIQA TO RESOLVE

MGT603 Question#22 Developing a vision and a mission statement is

MGT603 Question#23 Departmentalization can be done on the basis of many

External opportunities and external threats refer to economic, social, cultural,

Strategy implementation requires a firm to establish annual objectives, devise policies,

Motivating ,Influencing people to accomplish specific objectives

Page #17 under the head of Effective mission statements should b

Select correct option:

Select correct option:

Describes the purpose of existence of an organization

Select correct option:

Measure and evaluate performance.

Select correct option:

Non-Financial benefits: Increased employee productivity Improved understanding of

MGT603 Question #66

MGT603 Question #68

MGT603 Question #69

MGT603 Question #70

MGT603 Question #71

to design strategies to achieve long-term objectives, and to develop policies to achieve

Select correct option:

Key Social, Cultural, Demographic, and Environmental Variables Attitudes toward

Select correct option:

Select correct option:

Select correct option:

Select correct option:

Vision and mission

Strategy implementation requires a firm to establish annual objectives, devise policies,

Select correct option:

Select correct option:

P#49 demonstrate the strategic management model

Select correct option:

Long term goals and objectives

Select correct option:

Select correct option:

Select correct option:

It occurs once a year

Select correct option:

Take corrective actions

Controlling consists of four basic steps: 1. Establishing performance standards 2.

Select correct option: selling products/services

MGT603 Question #91

Select correct option: Marketing

Marketing: Marketing can be described as the process of defining, anticipating, creating,

MGT603 Question #92

Select correct option:

Components and corresponding MGT603 Questions that a mission statement should