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Risk in strategic management is only the probability that the strategy will be effective. Answer: In dynamic environments, the CEO’s focus is on forces in the societal environment. Answer: FALSE One of the possible barriers to entry is product differentiation. […]

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: Law refers to […]

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: Which financial indicator is calculated by the ratio of market […]

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 […]

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. […]

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 […]

The concept that structure follows strategy was developed by Alfred Chandler. Answer: One of the most important categories of financial ratios are the liquidity ratios. Answer: TRUE A long-term contract is considered vertical integration. Answer: FALSE Any change in corporate […]

TQM is an operational philosophy committed to customer satisfaction and continuous improvement. Answer: Performance is the end result of activity. Answer: TRUE According to Schilit, unusually high goodwill gains related to recent acquisitions is a red flag, suggesting an underlying […]

Relationship-based countries tend to be less transparent and have a higher degree of corruption than do rule-based countries. Answer: An action plan states what actions are going to be taken, by whom, during what time frame, and with what expected […]

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 […]

“TQM” refers to A) Total Questioning Methods. B) Terrible Quantitative Management. C) Tremulous Qualitative Methodology. D) Total Quality Management. E) Total Quality Methods. Answer: The concept that suggests that unit production costs decline by some fixed percent each time the […]

Usually, the strategic planning staff is charged with supporting only top management in the strategic planning process. Answer: Society increasingly expects corporate boards to balance the economic goal of profitability with the social needs of society. Answer: TRUE ABC is […]

A code of ethics is a useful way to promote ethical behavior. Answer: The combined chair/CEO position is being increasingly criticized because of the potential for conflict of interest. Answer: TRUE A corporation uses environmental scanning to avoid strategic surprise. […]

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’ […]

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: Which of the […]

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. […]

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 […]

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: The corporate culture generally reflects the values of the founder(s) and the mission of the […]

The internal environment includes the variables that are within the short-run control of top management. Answer: 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 […]

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 […]

While 97% of large U.S. corporations now use nominating committees to identify potential directors, this practice is not as common in Europe. Answer: Stakeholders are all constituencies that affect and are affected by the achievement of the firm’s objectives. Answer: […]

Cultural norms and values seldom guide ethical behavior in business. Answer: Niches can grow and change over time. Answer: TRUE Punctuated equilibrium describes organizations as evolving through relatively long periods of stability punctuated by relatively short bursts of fundamental change. […]

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: The Z-value uses ________ ratios and weights […]

When using a network structure, many corporate activities are outsourced. Answer: Transformational leaders transform their organizations from market leaders in one industry to market leadership in another. Answer: FALSE Mintzberg’s entrepreneurial mode is sometimes referred to as “muddling through” since […]