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The ISO 14000 family of standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance. Divestiture would be an appropriate strategy when a […]

First mover advantages refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms. A best-value strategy offers products or services to a wide range of customers […]

Without reasonable assumptions, the strategy-formulation process could not proceed effectively. Effective strategy formulation can usually guarantee successful strategy implementation. Answer: FALSE JIT significantly increases the costs of implementing strategies. Answer: FALSE Social responsibility refers to actions an organization takes that […]

Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated. Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of […]

U.S. firms are not being challenged in the computer industry. At Google the culture is very rigid, while in contrast the culture at Proctor & Gamble is very informal. Answer: FALSE Although bankruptcy can be an effective type of retrenchment […]

Segmentation often reveals that large, random fluctuations in demand actually consist of several small, predictable, and manageable patterns. In practice, critical technology decisions are too often delegated to lower organizational levels or are made without an understanding of their strategic […]

For calendar 2013, companies in the S&P 500 are expected to pay at least $300 billion in dividends. When an acquisition or merger is not desired by both parties, it can be called a takeover or hostile takeover. Answer: TRUE […]

One of the steps of the SWOT Matrix is to list the firm’s key external opportunities. Many organizations mistakenly spend more time and effort on the implementation of a plan, than on the formulation of the plan itself. Answer: FALSE […]

Research shows strategic management in small firms is more formal than in large firms. One of the dangers of remaining a local competitor is that more aggressive companies will use their global growth to capture economies of scale and learning. […]

In Mexico, business associates usually entertain each other at their homes. After decades of debate and struggle, firms have finally definitively determined the appropriate social policies. Answer: FALSE Significant barriers to entry are not always sufficient to keep some new […]

When performing projected financial analysis, the balance sheet should be prepared before the income statement. A mission statement is a declaration of an organization’s financial status. Answer: FALSE A cost/benefit analysis is an appraisal of the costs, benefits, and risks […]

Joint ventures and partnerships between domestic and foreign firms are becoming the exception rather than the rule. The process of strategic management is facilitated immensely in firms that have an effective information system. Answer: TRUE Divestiture is selling all of […]

A mission statement is usually just a simple statement of specific details. Strategic-management must be a self-reflective learning process that familiarizes managers and employees in the organization with key strategic issues and feasible alternatives for resolving those issues. Answer: TRUE […]

Remaining solely domestic is an increasingly safer strategy for U.S. companies. Linear regression is based on the assumption that the future will be different from the past. Answer: FALSE Most quantitative evaluation criteria are geared to long-term objectives rather than […]

The work and family issue is strictly a women’s issue. TFDonalds currently owns more than 50 percent of its restaurants. Answer: TRUE Financial ratios are not applicable to nonprofit organizations. Answer: FALSE While it is socially responsible to be a […]

Trying to achieve optimal results with an unpopular strategy is always better than achieving satisfactory results with a popular strategy. A rational change strategy means giving orders and enforcing those orders. Answer: FALSE Organizational change today should be viewed as […]

Test marketing is used more frequently by industrial companies than consumer goods companies. Product development is a strategy that seeks increased sales by improving or modifying present products or services. Answer: TRUE Limiting an organization’s expenditures is the primary purpose […]

Criteria for evaluating strategies should be measurable and easily verifiable. For the strategic planning process to be effective, organizations must continually strengthen the “good ethics is good business” policy. Answer: TRUE The only certain thing about the future of any […]

A leveraged buyout occurs when a firm’s management and other private investors use borrowed funds to buy out the firm’s shareholders. The percentage-of-sales method should be used for projecting the cost of goods sold and the expense items in the […]

An area on a perceptual map where there is a cluster of ideal points indicates a market segment. Stock issuances are always better than debt for raising capital. Answer: FALSE Newspaper companies in the United States provide a good example […]

Since a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously. Japan is providing incentives for its elderly to work until ages 65-75. Answer: TRUE Objectives should be measurable, challenging, reasonable, consistent, and […]

Market penetration, market development, and product development are intensive strategies. The controlling function of management is synonymous with strategy formulation. Answer: FALSE According to research, the most successful new product companies use a research and development strategy that ties internal […]

Formulation, implementation, and evaluation of strategy activities occur at three hierarchical levels in a large organization: corporate, divisional or strategic business unit, and functional. A low value of the dollar means lower exports and higher imports. Answer: FALSE All the […]

Regardless of the size of the organization, a certain amount of “management by wandering around” at all levels is essential to effective strategy evaluation. A conservative rule of thumb for measuring the value of a firm is to establish a […]

Market penetration can be defined as the subdividing of a market into distinct subsets of customers according to needs and buying habits. Optimizing for tomorrow the trends of today is the purpose of strategic management. Answer: FALSE European firms are […]

Orphan drugs offer pharmaceutical companies no economic incentive for profitable development and distribution. Organizing is the cornerstone of effective strategy formulation. Answer: FALSE Selling a division or part of an organization is called divestiture. Answer: TRUE Like the United States, […]

The purpose of organizing is to achieve coordinated effort by defining task and authority relationships. The SWOT matrix, if used appropriately, does not have any limitations. Answer: FALSE Segmenting industrial markets is generally simpler and easier than segmenting consumer markets. […]

It is okay for firms to create expectations that exceed the service the firm can or will offer if it will attract customers. Stakeholders of an organization include stockholders, customers and creditors, but not competitors. Answer: FALSE While vision and […]

In the context of conflict management and resolution, ignoring the problem in the hopes that the conflict will resolve itself is classified as a defusion technique. In the face of a deepening global recession, countries worldwide are resorting to protectionism […]

Objectives provide direction and allow for organizational synergy. A vision statement identifies the scope of a firm’s operations in product and market terms. Answer: FALSE Strategies clarify what can and cannot be done in pursuit of an organization’s objectives. Answer: […]

R&D policies can enhance strategy implementation efforts to emphasize product or process improvements. Freund argues that key external factors must not be hierarchical. Answer: FALSE Six Sigma is generally equally successful in retail firms and manufacturing firms. Answer: FALSE Whereas […]

Increased efficiency, quality, productivity, and job satisfaction can come from cross-training workers. A mission statement should be broad enough to reconcile differences among an organization’s various stakeholders. Answer: TRUE Chapter 13 bankruptcy is similar to Chapter 11, but available only […]

According to Drucker, the most important time for a company to develop mission and vision statements is when the company is experiencing financial difficulty. Contingency plans should be as simple as possible. Answer: TRUE A form of customer analysis is […]

Five major categories of external variables are: 1. economic forces, 2. social, cultural, demographic, and natural environment forces, 3. political, governmental, and legal forces, 4. technological forces and 5. demographic forces. U.S. households are making more and more purchases online. […]

“If it ain’t broke, don’t fix it” refers to managing by crisis. Moving jobs overseas is not considered to be an unethical business practice. Answer: FALSE Small organizations require a more elaborate and detailed strategy-evaluation system because they are still […]

A mission statement should be broad in scope, since concrete specification could be the base for rallying opposition. One positive feature of QSPM is that it does not require intuitive judgments and educated assumptions. Answer: FALSE The trend toward an […]

Horizontal consistency is more important than vertical consistency in developing annual objectives. Strategy implementation affects top and middle managers but not lower-level employees. Answer: FALSE Total attractiveness scores are defined as the sum of the attractiveness scores in a given […]

Recruitment, promotion, and mentoring are ways to alter an organization’s culture. Well-run organizations are able to completely avoid conflict. Answer: FALSE Cooperative arrangements and joint ventures are being used increasingly. Answer: TRUE Weaknesses of competitors in foreign lands are often […]

It is most effective to conduct strategy evaluation annually, at the end of the fiscal year. Business ethics can be defined as principles of conduct within organizations that guide decision making and behavior. Answer: TRUE The firm should pursue conservative […]

Financial ratios are rarely used as criteria to evaluate strategies. Market commonality is the extent to which the type and amount of a firm’s internal resources are comparable to a rival. Answer: FALSE Political issues and stances do matter for […]

Annual objectives are especially important in strategy formulation. The Sarbanes-Oxley Act has eliminated the problem of firms inflating their financial projections, so stakeholders need not worry about the financial projections of different companies. Answer: FALSE ESOPs work well even in […]

While forecasts might not be perfect, they are never wildly inaccurate. The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. Answer: TRUE Integrating ethical decision making into the performance appraisal process […]

By 2075, the United States will have no racial or ethnic majority. Consistency, distinctiveness, advantage, and feasibility are Richard Rumelt’s four criteria for evaluating a strategy. Answer: FALSE[/cpmembership] Commitment and understanding are the most important benefits of strategic management. Answer: […]

A growing trend is for franchisers to buy out their part of the business from their franchisees. Application of the strategic-management process is typically more formal in larger and well-established organizations. Answer: TRUE Major competitors’ strengths may represent key threats. […]

In most respects, business strategy is very different than military strategy. ISO 14001 is a technical standard and as such replaces technical requirements embodied in statutes or regulations. Answer: FALSE Mission statements are sometimes difficult to derive because top management […]

According to the Convention on the International Trade in Endangered Species (CITES), more than 25,000 elephants are killed each year for their ivory-even though international trade in ivory has been outlawed since 1989. Most producers today sell their goods directly […]

Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices. Four common approaches to determine R&D budget allocations are: 1. finance as many project proposals as possible; 2. use a percentage-of-sales method; 3. […]

A new wave of ethics issues has accentuated the need for strategists to develop a clear code of business ethics. A low value of the dollar benefits the U.S. economy in many ways. Answer: TRUE Avon Products is being investigated […]

Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm. A primary reason why most domestic firms are engaging in global operations is that growth in demand for goods and services […]

Cash Cows represent the organization’s best long-run opportunities for growth and profitability. Major competitors’ weaknesses can represent internal opportunities. Answer: FALSE Strategies may be inconsistent if policy problems and issues continue to be brought to the top for resolution. Answer: […]

Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, and improved cash flow. A potential advantage to initiating, continuing, or expanding international operations is that foreign operations can absorb excess capacity, reduce […]

Mass communication and high technology have led to highly individualized and distinct patterns of consumption in diverse cultures worldwide. With market segmentation, a firm can better operate with limited resources. Answer: TRUE One of the ways in which the Internet […]

Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs. The most common type of financial budget is the capital budget. Answer: FALSE According to Peter Drucker, developing a clear business […]

Conservative strategies in a SPACE Matrix most often include product development, market development, market penetration, and related diversification. Alternative strategies don’t come out of the blue; they are derived from the firm’s vision, mission, and objectives. Answer: TRUE While there […]

A clear mission statement describes the values and priorities of an organization. Corporate social policy should be designed and articulated during strategy formulation. Answer: TRUE The quantity or number of units of product that a firm must sell to break […]

Most firms warn managers and employees that reporting an ethical violation by others, also known as whistle-blowing, could cause them to be discharged. Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages. Answer: TRUE In […]

Believing it will make it easier for investors to compare firms across countries and make it easier to raise capital globally, most large accounting firms and multinational firms favor the switch to IFRS. A cost leadership strategy can be especially […]

According to Rumelt, consistency and feasibility are largely based on a firm’s internal assessment. A mission statement can sometimes be called a statement of philosophy. Answer: TRUE Too much emphasis on evaluating strategies may be expensive and counterproductive. Answer: TRUE […]

A chief executive officer is located in the divisional level of a large firm. The United States leads the world in promoting women and minorities into mid- and top-level managerial positions in business. Answer: TRUE In some foreign countries, paying […]

Quantitative forecasts become less accurate as historical relationships become less stable. Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward. Answer: TRUE […]

Trade barriers are one of the unique and diverse risks that face multinational corporations. A recent Wall Street Journal article reported that 80 percent of all firms sampled had no restrictions on relationships between a supervisor and a subordinate. Answer: […]

Sustainability refers to the extent that an organization’s operations and actions protect, mend, and preserve rather than harm or destroy the natural environment. Investors are now looking closely at Africa in the wake of low interest rates and slow growth […]

In the three Nordic countries of Denmark, Sweden, and Finland about 70 percent of all employees are in unions. The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is […]

It is possible to obtain insurance from the U.S. government ‘s OPIC to eliminate all risks associated with doing business internationally. Labor markets have become steadily more international with more and more countries around the world welcoming foreign investment and […]

Adequate and timely feedback is important to effective strategy evaluation. Strategic management is an attempt to organize qualitative and quantitative information in a way that allows effective decisions to be made under conditions of uncertainty. Answer: TRUE Strengths and weaknesses […]

Both IE and BCG Matrices are called portfolio matrices. A strategy of seeking ownership or increased control of a firm’s suppliers is backward integration. Answer: TRUE Linkages between a firm’s culture and strategies often determine success. Answer: TRUE Competitive intelligence […]

When measuring organizational performance, you need to compare expected results to actual results. Foreign banks currently operate and compete in most parts of the United States. Answer: FALSE Political forecasts can be the most important part of an external audit […]

Market development includes introducing present products into new geographic areas. Identifying an organization’s existing vision, mission, objectives, and strategies is the final step for the strategic management process. Answer: FALSE A sense of self-concept is one of the nine components […]

When attachments to a culture are severed in an organization’s attempt to change direction, employees and managers often experience deep feelings of grief. The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth. Answer: FALSE […]