Concepts in Strategic Management and Business Policy 14th Edition

Risk in strategic management is only the probability that the strategy will be effective. Answer: FALSE FALSE FALSE In dynamic environments, the CEO's focus is on forces in the societal environment. Answer: FALSE FALSE FALSE One of the possible barriers to entry is product differentiation. Answer: TRUE TRUE TRUE The gross domestic product (GDP) is used ONLY in the United States to

The confidence levels of executive leaders may blind them to information that is contrary to a decided course of action; this may help to understand why overconfident CEOs are more likely to conduct mergers and acquisitions. Answer: TRUE TRUE TRUE Law refers to formal codes that permit or forbid certain behaviors and may or

Once the best strategic alternative is selected, the broad guidelines for its implementation are then defined by A) trade-offs. B) policies. C) procedures. D) resource allocation. E) strategic options. Answer: B B B Which financial indicator is calculated by the ratio of market price per share to earnings per share? A) return on investment B) price/earnings ratio C) return on equity D) dividend yield

Which of the following is NOT descriptive of the threat of substitute products or services? A) Substitute products appear to be different, but satisfy the same need as another product. B) If the cost of switching is low, substitutes may have a strong effect on an industry. C) Identifying substitutes is relatively easy

Which of the following is NOT one of the steps followed in the benchmarking process? A) Develop tactical programs for closing performance gaps. B) Implement tactical programs, measure the results, and compare the results with those of the best-in-class company. C) Implement activity-based costing. D) Identify the area or process to be examined. E) Calculate the

A limitation of ROI as a measure of performance is that A) it is a single comprehensive figure examining only one facet of the firm. B) it provides disincentive to use existing assets efficiently. C) it provides an incentive to acquire new assets. D) it is very sensitive to depreciation policy. E) it does not

The concept that structure follows strategy was developed by Alfred Chandler. Answer: TRUE TRUE TRUE One of the most important categories of financial ratios are the liquidity ratios. Answer: TRUE TRUE TRUE A long-term contract is considered vertical integration. Answer: FALSE FALSE FALSE Any change in corporate strategy is very likely to require some sort of change in the way an organization

TQM is an operational philosophy committed to customer satisfaction and continuous improvement. Answer: TRUE TRUE TRUE Performance is the end result of activity. Answer: TRUE TRUE TRUE According to Schilit, unusually high goodwill gains related to recent acquisitions is a red flag, suggesting an underlying problem. Answer: TRUE TRUE TRUE Asking "What would Walt do" at Disney years after his death could

Relationship-based countries tend to be less transparent and have a higher degree of corruption than do rule-based countries. Answer: TRUE TRUE TRUE An action plan states what actions are going to be taken, by whom, during what time frame, and with what expected results. Answer: TRUE TRUE TRUE Henry Mintzberg discovered that strategic formulation is a regular, continuous

According to Porter, seeing clothing firms such as Under Armour enter the athletic shoe industry would reflect a A) medium bargaining power of suppliers. B) low threat of substitutes. C) medium bargaining power of buyers. D) high threat of potential entrants. E) low competitive intensity. Answer: A A A The monitoring, evaluating, and disseminating of information from the external and

"TQM" refers to A) Total Questioning Methods. B) Terrible Quantitative Management. C) Tremulous Qualitative Methodology. D) Total Quality Management. E) Total Quality Methods. Answer: D D D The concept that suggests that unit production costs decline by some fixed percent each time the total accumulated volume of production in units doubles is referred to as A) the experience curve. B) the

Usually, the strategic planning staff is charged with supporting only top management in the strategic planning process. Answer: FALSE FALSE FALSE Society increasingly expects corporate boards to balance the economic goal of profitability with the social needs of society. Answer: TRUE TRUE TRUE ABC is an accounting method for allocating direct and fixed costs to individual products. Answer: FALSE FALSE FALSE The

A code of ethics is a useful way to promote ethical behavior. Answer: TRUE TRUE TRUE The combined chair/CEO position is being increasingly criticized because of the potential for conflict of interest. Answer: TRUE TRUE TRUE A corporation uses environmental scanning to avoid strategic surprise. Answer: TRUE TRUE TRUE Outsourcing is the alternative to vertical integration. Answer: TRUE TRUE TRUE While an organization's culture can exert

Return on equity A) is the ratio of net profit after taxes to shareholders' equity. B) is a profitability ratio. C) is referred to by the acronym ROE. D) measures the rate of return on the book value of shareholders' total investment in the company. E) all of the above Answer: E E E Controls which measure variables that influence

Knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation's culture is called A) tacit knowledge. B) explicit knowledge. C) imitable knowledge. D) transferable knowledge. E) durable knowledge. Answer: A A A Which of the following is NOT a guideline proposed for successful downsizing? A) Contract out work that others can do

The kind of strategic alliance in which there is a partnership of similar companies in similar industries who pool their resources to gain a benefit that is too expensive to develop alone is the A) joint venture. B) licensing agreement. C) value-chain partnership. D) mutual service consortia. E) holding company. Answer: D D D A program or tactic is A)

As defined in this course, a policy is A) the purpose or reason for a corporation's existence. B) a statement of activities or steps needed to accomplish a single-use plan. C) a broad guideline for making decisions that links the formulation of strategy with its implementation. D) a comprehensive master plan stating how a

Booz & Company found that companies that are most successful at avoiding surprises had a well-defined system that integrated planning, budgeting, and business reviews. Answer: TRUE TRUE TRUE The corporate culture generally reflects the values of the founder(s) and the mission of the firm. Answer: TRUE TRUE TRUE Executive leadership is the directing of activities toward the accomplishment

The internal environment includes the variables that are within the short-run control of top management. Answer: FALSE FALSE FALSE One way to adjust for inflation for global operations outside the United States is to use the U.S. Consumer Price Index (CPI). Answer: FALSE FALSE FALSE When employees across the organization hold the same cultural values and norms, this

Suboptimization occurs when A) a division or functional unit views itself as a separate entity and refuses to cooperate with other divisions or units to the detriment of the organization as a whole. B) there is a failure to produce at or near full capacity. C) individuals are placed into positions not suited

While 97% of large U.S. corporations now use nominating committees to identify potential directors, this practice is not as common in Europe. Answer: TRUE TRUE TRUE Stakeholders are all constituencies that affect and are affected by the achievement of the firm's objectives. Answer: TRUE TRUE TRUE The first firm through a strategic window can occupy a propitious niche and

Cultural norms and values seldom guide ethical behavior in business. Answer: FALSE FALSE FALSE Niches can grow and change over time. Answer: TRUE TRUE TRUE Punctuated equilibrium describes organizations as evolving through relatively long periods of stability punctuated by relatively short bursts of fundamental change. Answer: TRUE TRUE TRUE A strategy's compatibility with the corporate culture has little likelihood of impacting its success.

One approach to better match executive rewards to the accomplishment of strategic objectives is A) return on investment. B) year-end bonuses. C) zero base budgeting. D) weighted-factor method. E) return on assets. Answer: D D D The Z-value uses ________ ratios and weights them according to their importance to a corporation's financial strength. A) 2 B) 3 C) 4 D) 5 E) 6 Answer: D D D According

When using a network structure, many corporate activities are outsourced. Answer: TRUE TRUE TRUE Transformational leaders transform their organizations from market leaders in one industry to market leadership in another. Answer: FALSE FALSE FALSE Mintzberg's entrepreneurial mode is sometimes referred to as "muddling through" since this decision- making mode tends to be more reactive than proactive in the