28.
The strategy that explains the methods that a division or an organization will use to
compete against its rivals in the industry is a _______-level strategy.
A.
functional
B.
departmental
C.
corporate
D.
business
At the business level, the managers of each division create a business-level plan that
details (1) the long-term divisional goals that will allow the division to meet corporate
goals and (2) the division’s business-level strategy and structure necessary to achieve
divisional goals. Business-level strategy outlines the specific methods a division, a
business unit, or an organization will use to compete effectively against its rivals in an
industry.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
29.
The organizational strategy that specifies the activities of managers at the departmental
level of the organization is a _____________-level strategy.
A.
functional
B.
business
C.
corporate
D.
divisional
Functional-level strategy is a plan of action that managers of individual functions (such as
manufacturing or marketing) can take to improve the ability of each function to perform its
task-specific activities in ways that add value to an organization’s goods and services and
thereby increase the value customers receive.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
30.
A plan that is updated and changed every year to take into consideration how the
organization’s external and internal environments have changed is known as a
______________ plan.
A.
standing
B.
short-term
C.
rolling
D.
single-use
A rolling plan is a plan that is updated and amended every year to take account of
changing conditions in the external environment.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
31.
Frame Corporation updates its five-year plan annually to take into account changing
conditions within the organization and in the organization’s external environment. Which of
the following best explains this plan implemented by Frame Corporation?
A.
Standing plan
B.
Short-term plan
C.
Rolling plan
D.
Single-use plan
A rolling plan is a plan that is updated and amended every year to take account of
changing conditions in the external environment.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
32.
The tool that is used in situations when programmed decision making is appropriate is a
________ plan.
A.
standing
B.
scenario
C.
rolling
D.
single-use
Standing plans are used in situations in which programmed decision making is
appropriate.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
33.
A general guide to action for the managers of an organization is known as a ________.
A.
rolling plan
B.
rule
C.
policy
D.
standard operating procedure
A policy is a general guide to action in an organization.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
34.
A formal, written guide to action for employees in an organization is known as a ________.
A.
policy
B.
rule
C.
standard operating procedure
D.
rolling plan
A rule is a formal, written guide to action in an organization.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
35.
A written set of instructions which describes the series of actions that a manager should
take in a specific situation is known as a ________.
A.
policy
B.
standing operating procedure
C.
scenario plan
D.
rolling plan
A standing operating procedure is a written instruction describing the exact series of
actions that should be followed in a specific situation.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
36.
A company has a requirement that any manager who receives a gift from any of the
company’s customers worth more than $25 must report this gift to the company’s human
resources department. This is an example of a ________.
A.
tactical plan
B.
rolling plan
C.
policy
D.
rule
A rule is a formal, written guide to action in an organization.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
37.
To determine an organization’s mission, managers must first define its ________.
A.
vision
B.
strategy
C.
tactics
D.
business
To determine an organization’s mission—the overriding reason it exists to provide
customers with goods or services they value—managers must first define its business so
that they can identify what kind of value customers are receiving.
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
38.
The ability of the CEO and top managers to convey to their subordinates a compelling
vision of what they want the organization to achieve is known as ________ leadership.
A.
qualitative
B.
strategic
C.
autocratic
D.
tactical
The ability of the CEO and top managers to convey a compelling vision of what they want
the organization to achieve to their subordinates is known as strategic leadership.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
39.
Managers at Dimensions, Inc., analyze the current situation of their organization and then
develop plans to help their organization accomplish its mission and achieve its goals. This
is known as ________.
A.
synergy planning
B.
strategy formulation
C.
functional planning
D.
SWOT analysis
In strategy formulation, managers work to develop the set of strategies that will allow an
organization to accomplish its mission and achieve its goals. Strategy formulation begins
with managers systematically analyzing the factors or forces inside an organization and
outside in the global environment that affect the organization’s ability to meet its goals
now and in the future.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
40.
A group of managers at Power Explosives analyzes both the internal strengths and
weaknesses of their organization as well as the opportunities and threats of the external
environment. Which of the following planning exercises does this indicate?
A.
Mission analysis
B.
SWOT analysis
C.
Functional analysis
D.
Diversification
SWOT analysis is a planning exercise in which managers identify internal organizational
strengths (S) and weaknesses (W) and external environmental opportunities (O) and
threats (T).
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
41.
While managers at ABC Manufacturing were conducting a SWOT analysis, they concluded
that their product line is obsolete and narrow. Their product line would be categorized as
a(n) ________.
A.
strength
B.
weakness
C.
opportunity
D.
threat
SWOT analysis is a planning exercise in which managers identify internal organizational
strengths (S) and weaknesses (W) and external environmental opportunities (O) and
threats (T). Based on a SWOT analysis, managers at the different levels of the
organization select the corporate, business, and functional strategies to best position the
organization to achieve its mission and goals. An obsolete, narrow product line is an
internal, negative factor, and therefore a potential weakness.
Refer to Table 6.1
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
42.
Ace Real Estate conducted a SWOT analysis, and their managers believe that this year’s
local market growth will be slower than in the past. The predicted slow market growth is
a(n) ________.
A.
strength
B.
weakness
C.
opportunity
D.
threat
SWOT analysis is a planning exercise in which managers identify internal organizational
strengths (S) and weaknesses (W) and external environmental opportunities (O) and
threats (T). Based on a SWOT analysis, managers at the different levels of the
organization select the corporate, business, and functional strategies to best position the
organization to achieve its mission and goals. Slower market growth is an external,
negative factor, and therefore a potential threat.
Refer to Table 6.1
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
43.
Arrow Corp. attempts to gain a competitive advantage by driving down its production costs
per unit below those of its competitors. Arrow is pursuing a(n) _______ strategy.
A.
focused differentiation
B.
low-cost
C.
related diversification
D.
unrelated diversification
With a low-cost strategy, managers try to gain a competitive advantage by focusing the
energy of all the organization’s departments or functions on driving the company’s costs
down below the costs of its industry rivals.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
44.
BIC, makers of ballpoint pens and razors, concentrates on making its products less
expensive than its rivals. BIC is pursuing a _______ strategy.
A.
focused differentiation
B.
diversification
C.
differentiation
D.
low-cost
With a low-cost strategy, managers try to gain a competitive advantage by focusing the
energy of all the organization’s departments or functions on driving the company’s costs
down below the costs of its industry rivals. BIC pursues a low-cost strategy; it offers
customers razor blades priced lower than Gillette’s and ballpoint pens less expensive than
those offered by Cross or Waterman.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
45.
An organization attempts to succeed by distinguishing its products from those of the
competition; this is a(n) _______ strategy.
A.
differentiation
B.
low-cost
C.
related diversification
D.
unrelated diversification
With a differentiation strategy, managers try to gain a competitive advantage by focusing
all the energies of the organization’s departments or functions on distinguishing the
organization’s products from those of competitors on one or more important dimensions,
such as product design, quality, or after-sales service and support.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
46.
An advantage of the differentiation strategy is ________.
A.
less expensive new products
B.
higher level of employee skills
C.
reduced turnover of employees
D.
greater barriers to entry
Differentiation makes industry entry difficult because new companies have no brand name
to help them compete and customers do not perceive other products to be close
substitutes, so this also allows for premium pricing and results in high profits.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
47.
Coca-Cola spends an enormous amount of money on advertising to distinguish, and create
a unique image for, their products. Coca-Cola is pursuing a ________ strategy.
A.
diversification
B.
focused low-cost
C.
differentiation
D.
low-cost
With a differentiation strategy, managers try to gain a competitive advantage by focusing
all the energies of the organization’s departments or functions on distinguishing the
organization’s products from those of competitors on one or more important dimensions,
such as product design, quality, or after-sales service and support. Coca-Cola pursues a
strategy of differentiation. It spends enormous amounts of money on advertising to
differentiate, and create a unique image for, its products.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
48.
BMW produces cars exclusively for high-income customers. BMW is pursuing a ________
strategy.
A.
focused differentiation
B.
focused low-cost
C.
diversification
D.
low-cost
Focused differentiation strategy helps organizations serve just one or a few segments of
the market and aim to make their organization the most differentiated company serving
that segment. BMW, for example, pursues a focused differentiation strategy, producing
cars exclusively for higher-income customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
49.
The Stonehedge Bayonet Company aims at a market of hunters, and they try to keep
prices lower than competition. Stonehedge is pursuing a ________ strategy.
A.
low-cost
B.
differentiation
C.
focused low-cost
D.
focused differentiation
Companies pursuing a focused low-cost strategy serve one or a few segments of the
overall market and aim to make their organization the lowest-cost company serving that
segment.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-02 Differentiate between the main types of strategies, and explain how they give an organization a
competitive advantage that may lead to superior performance.
Topic: Strategic Planning
50.
Concentration on a single industry, vertical integration, diversification, and international
expansion are principal strategies of a ________ level of an organization.
A.
functional
B.
department
C.
corporate
D.
business
The principal corporate-level strategies that managers use to help a company grow and
keep it at the top of its industry, or to help it retrench and reorganize to stop its decline,
are (1) concentration on a single industry, (2) vertical integration, (3) diversification, and
(4) international expansion.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy