41) Small bookstores have a giant killer of a competitive advantage in their:
A) lower costs.
B) better locations.
C) customer service.
D) large selection.
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
42) When translating strategic plans into action plans, the small business owner should:
A) not delegate authority or responsibility at this point.
B) not assign priorities to the action plans, but manage the process from the conceptual level.
C) not adjust or change the plan but commit to implementing as it stands.
D) remember that no strategic plan is complete until it’s put into action.
Topic: The Strategic Management Process—Translate Strategic Plans
AACSB: Analytic Skills
43) A small business owner needs to remember that when it comes to employee involvement in
the strategic planning process:
A) involvement is a prerequisite for the achievement of total employee commitment.
B) his/her employees look to him/her for leadership and do not want to be involved.
C) the delegation of authority is not as important as communicating a clear vision.
D) employees do not need to be involved in the strategic process but do need to be involved in
the operational process.
Topic: The Strategic Management Process—Translate Strategic Plans
AACSB: Analytic Skills
44) The final step of the strategic planning process is:
A) establishing accurate controls.
B) translating the strategic plan into operational plans.
C) evaluating the competitive environment.
D) choosing a marketing strategy to pursue.
Topic: The Strategic Management Process—Establish Accurate Controls
AACSB: Analytic Skills
11
45) The ________ is (are) a set of measures unique to the company that gives managers a quick
and comprehensive view of how the business is doing and includes both financial and
operational factors.
A) core competencies
B) key success factors
C) balanced scorecard
D) action plan
Topic: The Strategic Management Process—Establish Accurate Controls
AACSB: Analytic Skills
46) It is important for the small business owner to remember that the strategic planning process
is:
A) an ongoing process that must be repeated.
B) a top management process completed only once every two years.
C) a process which involves all the employees once every five years.
D) one that should produce a detailed, elaborate plan for running the business over the next 3–5
years.
Topic: Conclusion
AACSB: Analytic Skills
47) In the creation of the balanced scorecard, the entrepreneur needs to:
A) assess competitor’s strengths and weaknesses and set measures against them.
B) establish goals for each critical factor of company performance.
C) think about the resource requirements necessary to implement the action plans.
D) do all of these.
Topic: The Strategic Management Process—Establish Accurate Controls
AACSB: Analytic Skills
48) Intellectual capital of a company is comprised of which components?
A) Talent and skills of its workforce
C) Experience of the people in the company
D) Customer base, reputation and goodwill
Topic: Introduction
AACSB: Analytic Skills
12
49) Small businesses have a natural advantage over large competitors when it comes to
developing a strategy for competitive advantage because small businesses have all these except:
A) fewer product lines.
B) better-defined customer base.
C) access to more capital.
D) specific geographic market area.
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
50) A company may have a powerful competitive advantage, but it is wasted unless:
A) the owner has communicated that advantage to workers.
B) the customers are recommending the company to their friends.
C) the workers communicate it to customers and potential customers.
D) All of the above
Topic: The Strategic Management Process, Develop Mission
AACSB: Analytic Skills
51) ________ is not a primary goal of a competitive intelligence program.
A) Avoiding surprises from existing competitors’ new strategies and tactics
B) Identifying potential new competitors
C) Improving reaction time to competitors’ actions
D) All these are primary goals of a competitive intelligence program.
Topic: The Strategic Management Process—Analyze the Competition
AACSB: Analytic Skills
52) The final step in creating a knowledge management program is:
A) to organize the essential knowledge and disseminate it throughout the company to those who
need it.
B) to take an inventory of the special knowledge a company possesses that gives it a competitive
advantage.
C) to continue to add to the knowledge base the company has assembled.
D) to create company goals and objectives.
Topic: Introduction
AACSB: Analytic Skills
13
53) Which strategy recognizes that not all markets are homogeneous?
A) Focus
B) Differentiation
C) Cost Leadership
D) Price sensitive
Topic: The Strategic Management Process
AACSB: Analytic Skills
54) A strategic plan should not:
A) be relatively small.
B) begin with extensive objective setting.
C) encourage participation by employees.
D) be informal and not structured.
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
55) Strategic management is a process that involves:
A) developing a vendor list.
B) developing a vision and mission statement.
C) developing goals and objectives.
D) Both B and C
Topic: Introduction
AACSB: Analytic Skills
56) Competitive advantage is:
A) to be easily duplicated by competitors.
B) to have a super idea.
C) the aggregation of factors that sets the small business apart from its competitors and gives it a
unique position in the market.
D) None of the above
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
14
57) ________ are a unique set of capabilities that a company develops in key areas, such as
superior quality, customer service, innovation, team-building, flexibility, speed, responsiveness,
and others that allow it to vault past competitors.
A) Core competencies
B) Focus strategy
C) Cost leadership strategy
D) None of the above
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
58) To be effective, core competencies should be ________ for competitors to duplicate, and
they must provide customers with a valuable perceived benefit.
A) easy
B) moderate
C) difficult
D) None of the above
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
59) The strategic management procedure for a small business should include the following
features.
A) Use a relatively short planning horizon
B) Encourage the participation of employees
C) Be informal and not overly structured
D) All of the above
Topic: Building a Competitive Advantage
AACSB: Analytic Skills
60) The idea behind strategic planning is to give the business owner a way to match his/her
company’s strengths and weaknesses to the opportunities and threats in the business
environment.
Topic: Introduction
AACSB: Analytic Skills
61) An established customer base is an example of structural capital.
Topic: Introduction
AACSB: Analytic Skills
15
62) Their narrower product lines, smaller customer bases and more limited geographic areas give
small companies a natural advantage over large businesses when preparing a strategic plan.
Topic: Building a Competitive Advantage
AACSB: Reflective Thinking
63) The strategic planning process for small companies should begin with setting goals and
objectives.
Topic: The Strategic Management Process, Step 1
AACSB: Analytic Skills
64) A well-conceived and defined vision can be a competitive weapon in the marketplace by
helping everyone understand and focus on the same target.
Topic: The Strategic Management Process, Step 1
AACSB: Analytic Skills
65) “What business am I in?” This is a question the entrepreneur needs to answer when creating
the mission statement.
Topic: The Strategic Management Process, Step 1
AACSB: Analytic Skills
66) After a company’s strengths and weakness are assessed, the strategic planning process should
identify opportunities and threats facing the company and should isolate the key factors for
success in the business.
Topic: The Strategic Management Process, Step 3
AACSB: Analytic Skills
67) Key success factors are simply relationships between controllable factors and critical
elements that permit a firm to compete in its industry.
Topic: The Strategic Management Process, Step 4
AACSB: Analytic Skills
16
68) Most small business owners believe it is relatively unimportant to monitor their competitors’
activities.
Topic: The Strategic Management Process, Step 5
AACSB: Analytic Skills
69) One of the goals of competitive analysis is to improve a firm’s reaction time to competitor’s
actions.
Topic: The Strategic Management Process, Step 5
AACSB: Analytic Skills
70) It is possible for a small business owner to gather competitive data inexpensively, even data
on other companies’ financial condition.
Topic: The Strategic Management Process, Step 5
AACSB: Analytic Skills
71) The competitive profile matrix matches the firm’s core competencies with those of selected
competitors.
Topic: The Strategic Management Process, Step 5
AACSB: Analytic Skills
72) Setting seemingly impossibly high objectives, those outside the likely reach of employees,
helps managers to create and maintain a high motivation level.
Topic: The Strategic Management Process, Step 6
AACSB: Analytic Skills
73) Goals and objectives provide the direction for the small firm and are essential to the strategic
planning process.
Topic: The Strategic Management Process, Step 6
AACSB: Analytic Skills
17
74) Goals indicate how the small firm’s resources will be allocated to specific ventures or
activities.
Topic: The Strategic Management Process, Step 6
AACSB: Analytic Skills
75) Before a business owner can build any strategies, he/she must have clear goals and objectives
in order to have an appropriate target to aim his/her strategies toward.
Topic: The Strategic Management Process, Step 6
AACSB: Analytic Skills
76) Sound strategies increase the likelihood that business objectives will be achieved.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
77) A strategy is a road map of action for fulfilling a firm’s mission, goals and objectives.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
78) Small firms pursuing a cost leadership strategy have an advantage in reaching customers
whose primary purchase criterion is high quality.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
79) The best way to build a cost leadership competitive advantage is to focus entirely on
manufacturing costs.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
80) A danger of cost leadership is that a company may misunderstand what processes actually
drive its true costs.
Topic: The Strategic Management Process, Step 7
18
81) One key to building a successful differentiation strategy is to be better than competitors at
some characteristic that customers value.
Topic: The Strategic Management Process, Step 7
82) To be successful, a differentiation strategy must create the perception of value in the
customer’s eyes.
Topic: The Strategic Management Process, Step 7
83) A differentiation strategy carries a risk with it, in that a firm may not adequately segment the
market and properly target those special needs.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
84) A focus strategy recognizes that all markets are homogeneous.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
85) A small business following a focus strategy attempts to serve its narrow target markets more
effectively and efficiently than competitors trying to appeal to the broad market.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
86) The focus strategy depends on creating value for the customer either by being the low cost
producer or by differentiating the product or service in a unique fashion, but doing it in a narrow
target segment.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
87) Focus strategies, unlike Porter’s other generic strategies, are without risk because they tend to
combine elements of all three strategies.
Topic: The Strategic Management Process, Step 7
AACSB: Analytic Skills
19