Entrepreneurship and Effective Small Business Management, 11e (Scarborough)
Chapter 4 Strategic Management and the Entrepreneur
1) The strategic management process:
A) is especially difficult for the small business because of its limited resources.
B) divides mass markets into smaller, less homogeneous units.
C) provides the small business owner with the tools for managing the uncontrollable elements in
the external business environment.
D) helps a small business develop the game plan that guides it in creating its mission, vision,
goals, and objectives.
Topic: Introduction
AACSB: Analytic Skills
2) The primary output of the strategic management process should be:
A) a matching of its strengths and weaknesses to the opportunities and threats in the
environment.
B) an enticement to outside investors and lenders to put money into the business.
C) a complete explanation of the company’s product or service.
D) a description of the company’s competitive situation.
Topic: Introduction
AACSB: Analytic Skills
3) A small business’s “aggregation of factors that sets it apart from its competitors” is its:
A) strategic plan.
B) competitive advantage.
C) vision.
D) competitive strategy.
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
4) The strategic planning process for small businesses is:
A) market-focused.
B) the same as it is for a large company.
C) generally done by top management with little or no participation by employees.
D) product-focused and similar to that for large companies.
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
1
5) How is the strategic planning process for small companies different from that for large
companies?
A) The planning horizon should cover at least five years into the future.
B) The process should begin with setting objectives and conclude with competitive analysis.
C) The process should be informal and not overly structured—”a shirtsleeve approach.”
D) It should be conducted by top management and provided to lower management.
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
6) ________ focuses everyone’s attention and efforts on the same target market. It is an
expression of what the owner believes in.
A) The mission statement
B) The company vision
C) The strategic plan
D) The operational plan
Topic: The Strategic Management Process
AACSB: Analytic Skills
7) Which of the following is true about successful entrepreneurs and their vision?
A) It is created independently of their market or their customers.
B) It includes their understanding of the competition and their key market segments.
C) They are able to communicate it and their enthusiasm for it to all those around them.
D) They create it in cooperation with their employees.
Topic: The Strategic Management Process—Develop a Clear Meaningful Mission
AACSB: Analytic Skills
8) Answering the question “What business am I in?” defines the company’s:
A) mission.
B) assessment of its own strengths and weaknesses.
C) external opportunities and threats.
D) goals and objectives.
Topic: The Strategic Management Process—Develop a Clear Meaningful Mission
AACSB: Analytic Skills
2
9) Which of the following best expresses the relationship of a company vision to its mission?
A) The company vision comes from the company mission.
B) The mission statement is the written expression of the company vision.
C) The company mission statement is the verbal expression of the written vision.
D) There is no relationship between the two.
Topic: The Strategic Management Process—Develop a Clear Meaningful Mission
AACSB: Analytic Skills
10) A mission statement should answer which of the following questions?
A) What are the needs and wants of the target customers?
B) How will we finance our growth and expansion?
C) Who are our competitors?
D) How much money will we make?
Topic: The Strategic Management Process—Develop a Clear Meaningful Mission
AACSB: Analytic Skills
11) Once the vision and mission are established, the entrepreneur needs to:
A) select the target market.
B) conduct market research.
C) choose a competitive strategy.
D) assess the firm’s strengths and weaknesses.
Topic: The Strategic Management Process
AACSB: Analytic Skills
12) ________ are positive internal factors that contribute towards accomplishing the company’s
objectives.
A) Strengths
B) Weaknesses
C) Opportunities
D) Threats
Topic: The Strategic Management Process
AACSB: Analytic Skills
3
13) ________ are negative internal factors that inhibit the accomplishment of a firm’s objectives.
A) Strengths
B) Weaknesses
C) Opportunities
D) Threats
Topic: The Strategic Management Process
AACSB: Analytic Skills
14) When the small business owner assesses her company’s strengths and weaknesses, she is
dealing with the ________ business environment.
A) macro
B) external
C) competitive
D) internal
Topic: The Strategic Management Process
AACSB: Reflective Thinking
15) ________ are negative external forces that inhibit the firm’s ability to achieve its objectives.
A) Strengths
B) Weaknesses
C) Opportunities
D) Threats
Topic: The Strategic Management Process—Scan the Business
AACSB: Analytic Skills
16) Corey notices a “backlash” against health food among people who eat out. He decides to
open a restaurant that stresses “good home cooking,” heavy with gravies, breads, oils, etc. Corey
has identified and is trying to capitalize on a(n) ________ in the market environment.
A) strength
B) weakness
C) threat
D) opportunity
Topic: The Strategic Management Process—Scan the Business
AACSB: Reflective Thinking
4
17) Every business is characterized by a set of controllable variables called ________ that
determines the relative success (or lack of it) of market participants.
A) distinctive competencies
B) key success factors
C) opportunities and threats
D) competitive edge
Topic: The Strategic Management Process—Identify the Business
AACSB: Reflective Thinking
18) These are products of the interaction of various forces, trends, and events that are outside the
control of the small business.
A) Distinctive competencies
B) key success factors
C) Opportunities and threats
D) Strengths and weaknesses
Topic: The Strategic Management Process—Scan the Business
AACSB: Analytic Skills
19) A small firm’s ability to identify and manipulate the ________ in its business determines its
ability to compete effectively.
A) key success factors
B) corporate vision and mission
C) opportunities and threats
D) market environment
Topic: The Strategic Management Process—Identify the Business
AACSB: Analytic Skills
20) ________ are relationships between a controllable variable—plant size, quality, packaging—
and a critical factor influencing the firm’s ability to compete in the marketplace.
A) Core competencies
B) Competitive advantages
C) Key success factors
D) Goals and objectives
Topic: The Strategic Management Process—Identify the Business
AACSB: Reflective Thinking
5
21) A small business owner would conduct a competitive analysis in order to:
A) influence customers’ perceptions of the company and products’ image.
B) avoid surprises from existing competitors and to identify potential new competitors.
C) divide the market into smaller, homogeneous units.
D) scan the environment for weaknesses and strengths on which to capitalize.
Topic: The Strategic Management Process—Analyze the Competition
AACSB: Analytic Skills
22) Joan is seeking to answer a series of questions such as: How do competitor’s cost structures
compare to ours, what new competitors are entering the industry, what do our customers say
about competitors, etc. By asking these questions, Joan is:
A) conducting a SWOT analysis.
B) identifying her company’s key success factors.
C) formulating strategic options for her company.
D) performing a competitive analysis.
Topic: The Strategic Management Process—Analyze the Competition
AACSB: Analytic Skills
23) Purchasing rival companies’ products, taking them apart, and analyzing them is:
A) industrial espionage.
B) illegal due to federal regulation.
C) benchmarking.
D) cataloguing.
Topic: The Strategic Management Process—Analyze the Competition
AACSB: Analytic Skills
24) The information-gathering process in competitive analysis:
A) is an expensive process that only established small companies can afford.
B) can be relatively inexpensive and easy for the small business owner to conduct.
C) is closely regulated by various federal laws.
D) is a process that requires expert help but is relatively inexpensive.
Topic: The Strategic Management Process—Analyze the Competition
AACSB: Analytic Skills
6
25) A competitive profile matrix:
A) identifies a firm’s core competencies.
B) permits the small business owner to divide a mass market into smaller, more manageable
segments.
C) compares the firm’s and its competitors’ key success factors.
D) creates a road map of action for the entrepreneur in order to fulfill his/her company’s mission,
goals, and objectives.
Topic: The Strategic Management Process—Analyze the Competition
AACSB: Analytic Skills
26) ________ are the broad, long-range attributes the small business seeks to accomplish;
________ are the specific, measurable milestones the company wants to achieve.
A) Goals; objectives
B) Goals; strategies
C) Objectives; goals
D) Strategies; goals
Topic: The Strategic Management Process—Create Company Goals and Objectives
AACSB: Analytic Skills
27) ________ are specific measurable targets to be accomplished in a defined time period.
A) Core competencies
B) Objectives
C) Goals
D) Key success factors
Topic: The Strategic Management Process—Create Company Goals and Objectives
AACSB: Analytic Skills
28) The small firm‘s “master plan” is its:
A) objectives.
B) goals.
C) competitive edge.
D) strategy.
Topic: The Strategic Management Process
AACSB: Analytic Skills
7
29) The focal point of a firm’s strategy is:
A) the firm’s goals and objectives.
B) the firm’s key success factors.
C) the customer.
D) the firm’s strengths and weaknesses.
Topic: The Strategic Management Process
AACSB: Analytic Skills
30) Small firms pursuing a cost leadership strategy have an advantage in reaching customers
whose primary purchase criterion is:
A) quality.
B) constant innovation.
C) price.
D) customer service.
Topic: The Strategic Management Process
AACSB: Analytic Skills
31) Cost leadership has several inherent dangers such as:
A) choosing to distinguish the product that does not boost its performance.
B) an overfocus on the physical characteristics of the product.
C) the identified niche is not large enough to be profitable.
D) an overfocus on costs to the elimination of other strategies.
Topic: The Strategic Management Process
AACSB: Analytic Skills
32) A small company following a ________ strategy seeks to build customer loyalty by
positioning its goods and services in a unique fashion.
A) differentiation
B) cost leadership
C) focus
D) niche
Topic: The Strategic Management Process
AACSB: Analytic Skills
8
33) A differentiation strategy:
A) seeks to find and defend an identifiable market niche.
B) is built on a company’s distinctive competence.
C) must create the perception of value in the customer’s eyes through the lowest possible price.
D) focuses solely on making the physical characteristics of the product as unique as possible.
Topic: The Strategic Management Process
AACSB: Analytic Skills
34) Tyson Foods’ practice of adding value to its chicken products by deboning, skinning, bite-
sizing, or pre-cooking them is an example of a:
A) cost leadership strategy.
B) differentiation strategy.
C) focus strategy.
D) concentration strategy.
Topic: The Strategic Management Process
AACSB: Reflective Thinking
35) Which of the following is a danger in choosing a differentiation strategy?
A) Charging a price so high that the company prices itself out of the market
B) Choosing a basis for price leadership that is essentially unimportant to the customer
C) Choosing a market that is not large enough to be profitable
D) An overfocus on overhead costs
Topic: The Strategic Management Process
AACSB: Analytic Skills
36) Rather than attempting to serve the total market, the small firm pursuing a ________ strategy
specializes in serving a specific target segment.
A) cost leadership
B) differentiation
C) focus
D) head-to-head
Topic: The Strategic Management Process
AACSB: Analytic Skills
9
37) A ________ strategy tends to be ideally suited to the small business.
A) differentiation
B) focus
C) cost leadership
D) product quality
Topic: The Strategic Management Process
AACSB: Analytic Skills
38) The principle behind a ________ strategy is to select one or more market segments, identify
customers’ special needs, and approach them with a good or service designed to excel in meeting
these needs.
A) cost-leadership
B) differentiation
C) focus
D) concentration
Topic: The Strategic Management Process
AACSB: Analytic Skills
39) An effective strategic plan does which of the following?
A) Identifies a complete set of success factors—financial, operating, and marketing, that yield a
competitive advantage for the company
B) Focuses on one generic strategy to the exclusion of all other strategies
C) Always seeks a high profile in the specific markets chosen
D) Is always cost based
Topic: The Strategic Management Process
AACSB: Analytic Skills
40) The most successful strategic plans make the ________ focal.
A) competitive analysis
B) customer
C) product
D) control process
Topic: The Strategic Management Process
AACSB: Analytic Skills
10