1) The term “environment” includes all of the following except
A) air
B) natural resources
C) water
D) firms
E) fauna
2) During what stage of strategic management are a firm’s specific internal strengths and weak-
nesses determined?
A) Evaluation
B) Feedback
C) Implementation
D) Goal-setting
E) Formulation
3) What percent of total sales are estimated to be completed online by 2016?
A) 60 percent
B) 85 percent
C) 15 percent
D) 7 percent
E) 20 percent
4) The one factor that has most significantly impacted the nature and core of buying and selling
in nearly all industries has been
A) customer and employee focus.
B) political borders.
C) the government.
D) the Internet.
E) corporate greed.
5) The first step in strategic planning is generally
A) developing a mission statement.
B) determining opportunities and threats.
C) making a profit.
D) establishing goals and objectives.
E) developing a vision statement
6) Usually, external opportunities and threats are
A) key functions in strategy implementation.
B) controlled by governments.
C) not as important as internal strengths and weaknesses.
D) uncontrollable by a single organization.
E) key functions in strategy exploitation.
7) Internal ________ are activities in an organization that are performed especially well.
A) management
B) factors
C) competencies
D) strengths
E) opportunities
8) ________ can best be described as short-term in nature.
A) Mission statements
B) Tenure
C) Strategies
D) Management
E) Annual objectives
9) Which of the following is not included in the strategic management model?
A) Establish long-term objectives.
B) Measure and evaluate performance.
C) Perform internal research to identify customers.
D) Implement strategies.
E) Develop mission and vision statements.
10) The act of strengthening employees’ sense of effectiveness by encouraging and rewarding them
to participate in decision-making and exercise initiative and imagination is referred to as
A) authoritarianism.
B) transformation.
C) empowerment.
D) delegation.
E) proaction.
11) The changes that occurred when Robert Iger took over the reigns at Disney, demonstrate which
current trend in organizations?
A) Increased structuring of strategic management
B) Increased decentralizing of strategic management
C) Increased emphasis on strategic planning
D) Increased central planning of the strategic management process
E) Increased formalization of the strategic management process
12) All of these are pitfalls an organization should avoid in strategic planning except
A) failing to involve key employees in all phases of planning.
B) being so formal in planning that flexibility and creativity are stifled.
C) too hastily moving from mission development to strategy formulation.
D) using strategic planning to gain control over decisions and resources.
E) using plans as a standard for measuring performance.
13)What is not a pitfall an organization should avoid in strategic planning?
A) Failing to communicate the plan to employees
B) Top managers not actively supporting the strategic planning process
C) Doing strategic planning only to satisfy accreditation or regulatory requirements
D) Involving all managers rather than delegating planning to a “planner”
14) Which of the following statements is false?
A) Strategic decisions require trade-offs.
B) No organization has unlimited resources.
C) Open-mindedness is an important guideline for effective strategic management.
D) Strategic management must become a self-perpetuating socialist mechanism.
E) Strategic management must be a self-reflective learning process.
15) Which of these business actions is (are) always considered to be unethical?
A) Dumping flawed products in a foreign market
B) Using nonunion labor in a union shop
C) Insider trading
D) Poor product or service safety
E) all of the above
16) Military strategy is based on an assumption of ________, whereas business strategy is based on
an assumption of ________.
A) cooperation; competition
B) conflict; cooperation
C) cooperation; conflict
D) conflict; competition
E) competition; conflict
17) Which of these basic questions should a vision statement answer?
A) Who are our employees?
B) What is our business?
C) Who are our competitors?
D) Why do we exist?
E) What do we want to become?
18) Who is referred to as “the father of modern management?”
A) Drucker
B) Smith
C) Deming
D) McGinnis
E) Peters
19) The mission statement answers which question?
A) What is our business?
B) What do we want to become?
C) How can we improve ourselves?
D) Who are our stakeholders?
E) How can we increase profitability?
20) Business Week reports that firms using mission statements have ________ percent higher
return on certain financial measures than those without such statements.
A) 15
B) 10
C) 54
D) 57
E) 30
21) What is needed before people can focus on specific strategy formulation activities when devel-
oping a mission statement?
A) Compromise
B) Negotiation
C) Eventual agreement
D) A and B
E) all of the above
22) A proactive environmental policy is likely to lead to A) higher cleanup costs. B) numerous liability suits. C) conservation of energy. D) reduced customer loyalty. E) higher medical costs. 23) What happened to the production rate of big-rig trucks as a result of new federal regulations on emissions? A) Production decreased by 40 percent B) Production increased by 40 percent C) The change had no impact on production D) Production increased by 50 percent E) Production decreased by 50 percent 24) Effective mission statements can vary in A) specificity. B) format. C) content. D) length. E) all of the above 25) Which question(s) are answered in an effective mission statement? A) What is our company philosophy or self-concept? B) Who are the firm’s customers? C) What technology will we employ to achieve our objectives? D) What is the purpose of our organization? E) all of the above
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Unit 3
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1)Long-term objectives are needed at which level(s) in an organization?
A) Functional
B) Divisional
C) Corporate
D) all of these
E) none of these
2) Financial objectives involve all of the following except
A) larger market share.
B) greater return on investment.
C) higher dividends.
D) a rising stock price.
E) growth in revenues.
3) All of the following are important factors in the Balanced Scorecard except
A) product quality.
B) business ethics.
C) stockholder equity.
D) customer service.
E) employee morale.
4) Which level of strategy is most likely not present in small firms?
A) Divisional
B) Operational
C) Functional
D) Corporate/company
E) All of these are present in small firms
5) Southwest Airlines selling tickets through Galileo is an example of which type of strategy?
A) Forward integration
B) Horizontal integration
C) Related diversification
D) Unrelated diversification
E) Backward integration
6) Which of these strategies is effective when the number of suppliers is small and the number of
competitors is large?
A) Backward integration
B) Concentric diversification
C) Horizontal diversification
D) Forward integration
E) Conglomerate diversification
7) What refers to a strategy of seeking ownership of or increased control over a firm’s competitors?
A) Forward integration
B) Horizontal integration
C) Concentric diversification
D) Conglomerate diversification
E) Backward integration
8) Which strategy seeks to increase market share of present products or services in present mar-
kets through greater marketing efforts?
A) Market development
B) Forward integration
C) Backward integration
D) Product development
E) Market penetration
9) All of the following situations are conducive to market development except
A) when an organization competes in a high-growth industry.
B) when an organization is very successful at what it does.
C) when an organization’s basic industry is becoming rapidly global in scope.
D) when an organization has excess production capacity.
E) when new untapped or unsaturated markets exist.
10) Adding new, unrelated products or services for present customers is called
A) forward integration.
B) backward integration.
C) unrelated diversification.
D) conglomerate diversification.
E) related diversification.
11) Bankruptcy
A) can be an effective type of retrenchment strategy.
B) should only be used for large firms.
C) should never be used as a strategy.
D) should be used only when one is legally forced to do so.
E) should only be used for small, private firms.
12) Which chapter of the bankruptcy code applies to municipalities?
A) Chapter 13
B) Chapter 8
C) Chapter 9
D) Chapter 7
E) Chapter 12
13) According to Porter, which strategy offers products or services to a small range of customers at
the lowest price available on the market?
A) Low-cost focus
B) Low-cost
C) Best-value focus
D) Best-value
E) Differentiation
14 )Mergers and acquisitions are created for all of the following reasons except to
A) gain new technology.
B) smooth out seasonal trends in sales.
C) gain economies of scale.
D) reduce tax obligations.
E) increase its number of employees.
15) What was the largest acquisition completed in 2007?
A) Porsche acquiring Volkswagon
B) AT&T acquiring BellSouth Corp
C) CVS acquiring Caremark Rx
D) Johnson & Johnson acquiring Pjizen Consumer Healthcare
E) Linde acquiring BOC Grou
16) According to journalists’ findings, what is a serious obstacle for many small business owners?
A) A lack of experience in networking
B) An excess of employees and managerial staff
C) A lack of business ethics
D) A lack of strategic-management knowledge
E) Having too many suppliers
17) The match an organization makes between its internal resources and skills and the opportuni-
ties and risks created by its external factors can be defined as
A) strategy.
B) an opportunity.
C) concept formulation.
D) SWOT.
E) input.
18) Which section of the SWOT Matrix involves matching internal strengths with external opportu-
nities?
A) The WT cell
B) The SW cell
C) The SO cell
D) The ST cell
E) The WO cell
19) What are two external dimensions of the SPACE Matrix?
A) Industry strength and competitive advantage
B) Financial strength and industry strength
C) Competitive advantage and financial strength
D) Environmental stability and competitive advantage
E) Environmental stability and industry strength
20) In the SPACE analysis, what does a (+6, +3) strategy profile portray?
A) A weak industry
B) A weak financial position
C) A stable environment
D) An unstable environment
E) A strong industry
21) For what type of company is the BCG Matrix ideal for analyzing?
A) Companies with annual sales of less than $1 million
B) Companies with annual sales greater than $1 million
C) All companies
D) Companies with more than one division
E) Large companies
22) In the BCG Matrix, which element represents the industry growth rate in sales, measured in
percentage terms?
A) Third quadrant
B) x-axis
C) First quadrant
D) y-axis
E) Second quadrant
23) Which strategy would be most appropriate for a company classified as a Dog?
A) Forward integration
B) Retrenchment
C) Market penetration
D) Market development
E) Product development
24) Although Quadrant ________ companies are growing, according to the Grand Strategy Matrix,
they are unable to compete effectively, and they need to determine why the firm’s current ap-
proach is ineffective and how the company can best change to improve its competitiveness.
A) III
B) II
C) I
D) IV
E) V
25) The act of oversight and direction for an organization is referred to as
A) governance.
B) organizational direction.
C) centralized control.
D) corporate lawmaking.
E) establishing norms.
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UNIT 4
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1) Which of these is true about strategy implementation?
A) It is primarily an operational process.
B) It is positioning forces before the action.
C) It requires intuitive skills.
D) It focuses on effectiveness.
E) It is primarily an intellectual process.
2) How are objectives in the areas of profitability, growth and market share commonly estab-
lished?
A) Product
B) Geographic location
C) Business segment
D) Customer groups
E) all of the above
3) What are guidelines, methods, procedures, rules, forms and administrative practices known as?
A) Strategies
B) Policies
C) Long-term objectives
D) Annual objectives
E) Goals
4) Which of the following issues may not require a management policy?
A) To establish a high- or low-safety stock of inventory
B) To offer numerous or few employee benefits
C) To increase motivation
D) To promote from within to or to hire from the outside
E) To discourage insider trading
5) A disagreement between two or more parties on one or more issues is called a(n)
A) compromise.
B) integrated solution.
C) conflict.
D) avoidance.
E) diffusion.
6) Which approach for managing and resolving conflict involves exchanging members of conflict-
ing parties of that each can gain an appreciation of the others point of view?
A) Confrontation
B) Resistance
C) Avoidance
D) Diffusion
E) Compliance
7) Which organizational structure has ambiguous roles for senior executives as a major disadvan-
tage?
A) Matrix
B) Process
C) Divisional
D) Functional
E) Strategic business unit (SBU)
8) When developing an organizational chart, you should
A) Have division presidents report to a chief operating officer.
B) Make sure that the chief financial officer is not at the same level as the chief operating officer.
C) Recommend dual titles for executives.
D) Use the title “president” for the top person.
E) Have the controller or treasurer report directly to the president.
9) What action involves reconfiguring or redesigning work, jobs and processes for the purpose of
improving costs, quality, service and speed?
A) Downsizing
B) Benchmarking
C) Restructuring
D) Delayering
E) Reengineering
10) Which pay strategy is not a form of incentive compensation?
A) Bonus system
B) Gain sharing
C) Hourly wage
D) Profit sharing
E) All of these are forms of incentive compensation.
11) A concern in matching managers with strategy is that jobs have relatively ________ responsi-
bilities, while people are ________ in their development.
A) dull; exciting
B) static; dynamic
C) exciting; dull
D) quick; slow
E) dynamic; static
12) Matching of which factors would allow factories to produce desirable levels without extra
shifts, overtime or subcontracting?
A) Segments and demand
B) Competition and positioning
C) Markets and competitors
D) Customer behavior and positioning
E) Supply and demand
13) Which of these is not a correct step in product positioning?
A) Select key criteria that effectively differentiate products or services in the industry.
B) Plot major competitors’ products or services in the resultant matrix.
C) Look for a hole or vacant niche
D) Identify areas in the positioning map where the company’s products or services could be most
competitive in the given target market.
E) Develop a marketing plan to position the company’s products and services appropriately.
14) A benefit of using projected balance sheets and income statements is that
A) it is useful in analyzing past performance.
B) insurance needs can be computed.
C) money can be put aside to pay future income taxes.
D) an organization can compute projected financial ratios under various scenarios.
E) all of the above
15) In preparing projected statements, to project cost of goods sold and the expense items in the
income statement, which of these methods is recommended?
A) Determining the net worth method
B) Outstanding shares method
C) What a firm earns method
D) Price-earnings ratio met
E) Percentage-of-sales method
16) Which element in the projected income statement cannot be forecasted using the percentage-
of-sales method?
A) Selling expense
B) Cost of goods sold
C) Interest expense
D) Administrative expense
E) All of these items are forecasted using the percentage-of-sales method.
17) If a firm incurs a loss during a particular year, or if the firm had positive net income but paid
out dividends more than the net income, its retained earnings for that year will most likely be
A) a low positive number.
B) zero.
C) a large positive number.
D) a negative number.
E) Can not be determined from this information.
18) The Financial Accounting Standard Board (FASB) Rule 142 deals with
A) improving marketing policies.
B) illegal inflation of financial projections.
C) hacking issues in MIS.
D) goodwill.
E) how firms conduct R & D.
19) Which of the following is not a major approach to R&D?
A) To be an innovative imitator
B) To be a low-cost producer by mass-producing products similar to but less expensive than prod-
ucts recently introduced
C) To be a liquidator
D) To be a pioneer
E) All of the above are major approaches to R&D.
20) What is happening to strategy evaluation with the passage of time?
A) An unnecessary activity
B) Much simpler
C) Very convenient
D) Less important
E) Increasingly difficult
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