Chapter 1: The Strategic Management Process
Chapter 1
The Strategic Management Process
TRUE/FALSE QUESTIONS
1. Strategic management includes a process by which organizations analyze and learn
from their internal and external environments.
2. External stakeholders are groups or individuals outside the organization that have a
particular interest in and a major impact on the organization.
3. Strategic management begins with the creation and execution of strategies, followed
by the definition of goals that can be met by following these strategies.
4. Enactment is the process of influencing the environment through strategic actions.
5. Adaptation is the process associated with attempting to control the environment to
make it less hostile and more conducive to organizational success.
6. Environmental determinism is the view that good management is associated with
determining which strategy will best fit the environment and then carrying it out.
7. Unless an internal capability or resource is costly or difficult to imitate by
competitors, the capability or resource is unlikely to lead to a sustainable competitive
advantage.
8. Stakeholder analysis includes identifying and prioritizing key stakeholders.
9. Strategic thinking deals with the rigid and systematic parts of the strategic
management process.
MULTIPLE CHOICE QUESTIONS
10. Strategic management includes the following:
A. Establishment of strategic direction
B. Implementation of strategies
C. Analysis of the internal environment
D. Strategic restructuring
E. All of these are true
11. Domain direction and navigation pertain to which aspect of the strategic management
process?
A. Corporate strategy formulation
B. Human resources strategy formulation
C. Strategy implementation
D. Business strategy formulation
E. Functional strategy formulation
12. Which of the following is not a stakeholder of an organization?
A. Employees
B. Stockholders
C. Customers
D. Competitors
E. These are all stakeholders. None of the above answers is correct.
13. Which of the following is not a major activity of the strategic management process?
A. Analysis of the internal and external environments
B. Establishment of strategic direction
C. Formulation of strategies
D. Production scheduling
E. Implementation of strategies
14. An organization’s environment typically:
A. Consists only of employees and managers
B. Includes all groups and individuals that are significantly influenced by or have
a major impact on the organization
C. Includes only stockholders
D. Consists only of competitors, suppliers, and customers
E. Reflects only owners, customers, and competitors
15. Which of the following is a part of an organization’s broad environment?
Chapter 1: The Strategic Management Process
A. Society
B. Employees
C. Managers
D. Stockholders
E. Board of directors
16. All of the following are members of an organization’s task environment except:
A. Activist groups
B. Managers
C. Suppliers
D. Financial intermediaries
E. Local communities
17. Opportunities:
A. Allow a firm to take advantage of organizational strengths, overcome
weaknesses, or neutralize threats
B. Are the same for all firms in an industry
C. Are related only to new customers and new markets
D. Are a firm’s resources and capabilities
E. None of these
18. Threats:
A. Come only from the broad environment
B. Typically cannot be overcome
C. Can stand in the way of organizational competitiveness and stakeholder
satisfaction
D. Are generally the result of moving too slowly against competitors
E. None of these
19. In a SWOT analysis, a strength:
A. Leads to overconfidence on the part of top managers
B. Cannot be duplicated by competitors
C. Is a condition in the broad or task environment that can allow a firm to
overcome organizational weaknesses
D. Is an internal capability or resource that may lead to a competitive advantage
E. Both C and D are correct
20. In a SWOT analysis, an organizational weakness can be:
Chapter 1: The Strategic Management Process
A. Something an organization does not do well
B. An important resource that an organization does not possess
C. Either deliberate or emergent
D. A sustainable competitive advantage
E. Both A and B are correct
21. Strategy formulation involves which of the following?
A. Corporate-level, business-level, and division-level strategy formulation
B. Functional-level, employee-level, and customer-level strategy formulation
C. Corporate-level, business-level, and functional-level strategy formulation
D. Domain navigation, market orientation, and customer definition strategy
formulation
E. Domain navigation, functional-level formulation, and corporate-level
formulation
22. Corporate strategy formulation deals primarily with:
A. How firms compete in the business areas they have selected
B. High-level financial analysis
C. The details of functional area strategies
D. The selection of business areas in which the firm will compete
E. All of the above
23. Corporate-level decisions are typically made by:
A. Low-level employees
B. The CEO and/or board of directors
C. Functional managers
D. Department heads
E. Stockholders
24. Business-level strategy formulation pertains to:
A. Domain direction and navigation
B. Domain definition
C. Domain recognition
D. Domain precondition
E. Organizational inertia
25. Regarding strategy implementation and strategic control:
A. Strategy implementation is more important than strategic control
Chapter 1: The Strategic Management Process
B. Strategy implementation refers to the details of strategy execution whereas
strategic control refers to ongoing evaluation of and adjustments to strategy
C. Strategic control is more important than strategy implementation
D. Strategy implementation refers primarily to domain definition whereas
strategic control refers primarily to domain navigation
E. None of these
26. What is the most logical relationship between a sustainable competitive advantage
and an organizational strength?
A. A sustainable competitive advantage is a strength that is difficult for
competitors to imitate
B. A strength cannot be duplicated while a sustainable competitive advantage is
easily copied
C. Every strength leads to a sustainable competitive advantage
D. Every sustainable competitive advantage leads to a strength
E. There is no relationship between these two concepts
27. The industrial organization economics perspective suggests that:
A. Firm strategies are more important than industry structure in determining
financial performance
B. The performance of an industry is dependent on the conduct of the firms it
contains, which is dependent on the structure of the industry
C. Stakeholder determinism will drive the strategic management process in
successful firms
D. Firm structure leads to the creation of resources that, in turn determine
performance
E. All of the above
28. Enactment is the process of:
A. Responding to the environment
B. Evaluating the environment
C. Influencing the environment
D. Retreating from the environment
E. Ignoring the environment
29. Adaptation is the process of:
A. Responding to the environment
B. Evaluating the environment
C. Influencing the environment
Chapter 1: The Strategic Management Process
D. Retreating from the environment
E. Ignoring the environment
30. According to the resource-based view of the firm:
A. Strategies are neither deliberate nor emergent
B. Competitors may all develop the same competitive strength
C. The environment offers significant challenges to be overcome
D. Organizations are bundles of resources
E. None of these
31. According to the resource-based view of the firm:
A. Organizational resources include physical resources such as plants
B. The characteristics of resources firms possess influences their financial
performance
C. Organizational resources include knowledge
D. Organizational resources include organizational culture
E. All of these
32. Managing for stakeholders means:
A. More resources are allocated to satisfy stakeholders than would be necessary
merely to retain their participation in the productive activities of the firm
B. Stakeholders such as customers and suppliers manage portions of the firm
C. Firms that treat their stakeholders well will have higher risk but also higher
returns
D. Firms should treat their stakeholders well because it is the right thing to do
even if it means losing money
E. Both A and C are true
33. The advantages of managing for stakeholders include:
A. Fewer negative responses from stakeholders such as legal suits or boycotts
B. Stakeholders often reciprocate
C. An excellent reputation
D. Increased strategic flexibility
E: All of these
34. Which of the following is not an element of stakeholder analysis?
A. Identifying stakeholders
B. Financially motivating stakeholders
Chapter 1: The Strategic Management Process
C. Prioritizing stakeholders
D. Assessing stakeholder needs and collecting ideas from stakeholders
E. Integrating knowledge about stakeholders into the strategic management
process
35. All of the following are associated with the global business environment except:
A. Increasing interdependencies between countries
B. Reduced competition among firms
C. Reduced global stability
D. High levels of technological innovation
E. Increased flow of knowledge, goods and services across international borders
36. Entrepreneurship:
A. Can occur both within firms and independently of them
B. That occurs within firms is sometimes called intrapraneurship
C. Is a process that may lead to the creation of new value
D. Involves recognizing or creating an opportunity, assembling resources to
pursue it, and managing those resources to bring the new venture into being
E. All of the above
37. The characteristics of strategic thinking include all of the following except:
A. A systems perspective
B. Allows the organization to seize unanticipated opportunities
C. It involves hypothesis testing
D. It is based on consideration of the future and does not consider the past at all
E. These are all characteristics of strategic thinking; there is no exception
ESSAY QUESTIONS
38. What is strategic management? Describe the strategic management process in a
company with which you are familiar?
39. Define strengths, weaknesses, opportunities, and threats. How do strengths become
sources of sustainable competitive advantage?
Chapter 1: The Strategic Management Process
40. What is the resource-based view of the firm? What categories of resources does a
firm possess?
41. What does it mean to “manage for stakeholders”? What are some of the advantages
that accrue to a firm that uses this approach?
42. What is strategic thinking? What are its characteristics?