Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
File: Chapter 6: Strategy and Strategic Management
Multiple Choice
1. A(n) ______________ is a comprehensive action plan that identifies long-term direction for
an organization.
a) competitive advantage
b) strategy
c) objective
d) idea
2. A ____________ is a clear and lofty sense of why a business exists.
a) mission
b) vision
c) strategic intent
d) logo
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
3. Microsoft promised to put a computer within an arm’s reach of every consumer in the world.
This could be considered a statement of __________.
a) strategic intent
b) strategy
c) competitive advantage
d) global positioning
4. The ability to outperform rivals is called a __________.
a) strategy
b) strategic intent
c) business plan
d) competitive advantage
5. Operating in successful ways that are difficult to imitate results in __________.
a) a strategy
b) a strategic intent
c) the vertical integration of a company
d) a sustainable competitive advantage
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
6. What are the three levels of strategy used in organizations?
a) Personal, competitive, and corporate
b) Competitive, corporate, and legal
c) Corporate, business, and functional
d) Business, functional, and competitive
7. A strategy that sets the long-term direction for an organization as a whole is called a
__________.
a) corporate strategy
b) financial strategy
c) functional strategy
d) business strategy
8. Which of these is an example of a strategic question at the corporate strategy level?
a) “What should our next product be?”
b) “How will we price our newest product?”
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
c) “Should we set up more sales offices?”
d) “In what industries and markets should we compete?”
9. A strategy that identifies how a division or business unit will compete in its product or service
domain is called a __________ strategy.
a) corporate
b) middle-management
c) business
d) bottom-level
10. A strategy that guides activities within a specific area of operations is called a(n)
____________ strategy.
a) business
b) functional
c) corporate
d) employee
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
11. Which of the following is an example of a strategic question at the business strategy level?
a) “How are we going to compete for customers in a competitive market?”
b) “What is our role in supporting engineering?”
c) “How many divisions should we have?”
d) “In what industries and markets should the corporation compete in?”
12. Which of the following is an example of a strategic question for a functional strategy?
a) “How can we best utilize the marketing department to support implementation of the business
strategy?”
b) “What kind of product or service mix should we have?”
c) “How are we going to compete for customers within this this industry and in this market?”
d) “In what industries and markets should the corporation compete in?”
13. A strategy for expanding an organization’s current operations is called a __________.
a) restructuring strategy
b) stability strategy
c) retrenchment strategy
d) growth strategy
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
14. All of the following are growth strategies EXCEPT:
a) concentration.
b) diversification.
c) vertical integration.
d) restructuring.
15. When a company expands in its existing markets, it is called growth through __________.
a) retrenchment
b) diversification
c) concentration
d) globalization
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
16. When a company expands by entering new business areas, it is called growth through
__________.
a) diversification
b) vertical integration
c) retrenchment
d) globalization
17. Orange International is expanding by acquiring suppliers and distributors. This is called
growth through __________.
a) diversification
b) vertical integration
c) retrenchment
d) globalization
18. The riskiest growth strategy is through __________.
a) vertical integration
b) unrelated diversification
c) related diversification
d) backward integration
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
19. Both Coca-Cola and PepsiCo have pursued __________ by purchasing some of their major
bottlers.
a) forward vertical integration
b) backward vertical integration
c) forward horizontal integration
d) backward horizontal integration
20. A strategy with the objective of correcting performance difficulties in a business through
radical changes to current operations is called a _________ strategy.
a) co-opetition
b) growth
c) status quo
d) retrenchment
21. Which of the following is NOT a retrenchment strategy?
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
a) Diversification
b) Liquidation
c) Restructuring
d) Divestiture
22. When a company closes and sells its assets in order to pay its debts, it is called __________.
a) divestiture
b) liquidation
c) diversification
d) restructuring
23. Which of the following statements is true about restructuring?
a) It occurs when a business closes and sells its assets to pay creditors.
b) It reduces the scale or mix of operations.
c) It is done by acquiring suppliers or distributors.
d) It involves expansion of an organization’s current operations.
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
24. When an organization reduces the size of its existing operations, it is called __________.
a) divestiture
b) liquidation
c) downsizing
d) diversification
25. The retrenchment strategy that involves selling off parts of an organization to refocus
attention on core business areas is called __________.
a) liquidation
b) downsizing
c) diversification
d) divestiture
26. __________ protects an insolvent firm from creditors during a period of reorganization to
restore profitability.
a) Divestiture
b) Downsizing
c) Backward integration
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
d) Chapter 11 bankruptcy
27. A __________ views the world as one market and uses standardized products and advertising
worldwide.
a) multidomestic strategy
b) globalization strategy
c) diversification strategy
d) transnational strategy
28. A __________ strategy customizes products and advertising to the culture of the local
markets into which they are sold.
a) multidomestic strategy
b) globalization strategy
c) diversification strategy
d) transnational strategy
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
29. Which of the following strategies integrates global operations without having a strong
national identity?
a) Multidomestic strategy
b) Globalization strategy
c) Diversification strategy
d) Transnational strategy
30. Two companies join together in partnership to pursue an area of mutual interest. This is
called a(n) __________.
a) acquisition
b) downsizing
c) strategic alliance
d) divestiture
31. __________ is the strategy of working with rivals on projects of mutual benefit.
a) Competition
b) Collusion
c) Co-opetition
d) Restructuring
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
32. Garden Tools Inc. uses the Internet to market their products and gain competitive advantage.
Garden Tools is employing a(n) __________.
a) communication strategy
b) co-opetition strategy
c) e-business strategy
d) multidomestic strategy
33. Which of the following web-based business models provides a meeting point sold by
subscription or supported by advertising?
a) Advertising model
b) Brokerage model
c) Community model
d) Freemium model
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
34. Identify the web-based business model that provides a free service while collecting
information on users and selling it to other businesses.
a) Advertising model
b) Infomediary model
c) Referral model
d) Freemium model
35. The __________ model of web-based business involves providing free listings from online
merchants for directing potential customers to them.
a) advertising
b) brokerage
c) referral
d) subscription
36. The electronic version of the basic retail strategy of selling directly to customers is known as
a __________.
a) C2B business strategy
b) B2C business strategy
c) B2G business strategy
d) B2B business strategy
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
37. Which of the following strategies uses information technology and the Internet to link
organizations vertically in supply chains?
a) B2C business strategies
b) P2P business strategies
c) B2G business strategies
d) B2B business strategies
38. Which of the following terms refers to the process of formulating and implementing
strategies to accomplish long-term goals and maintain a competitive advantage?
a) Strategic controlling
b) Strategic management
c) Globalization
d) Sustainability
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
39. Strategic management includes strategy __________ and strategy __________.
a) negotiation; implementation
b) implementation; direction
c) formulation; implementation
d) formulation; review
40. __________ is the process of crafting strategy to fit mission and strategic intent, objectives,
and environmental conditions.
a) Co-opetition
b) Liquidation
c) Strategy implementation
d) Strategy formulation
41. “S” in the term SWOT analysis refers to:
a) strengths.
b) standards.
c) social.
d) systems.