The concept that structure follows strategy was developed by Alfred Chandler.
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One of the most important categories of financial ratios are the liquidity ratios.
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A long-term contract is considered vertical integration.
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Any change in corporate strategy is very likely to require some sort of change in the
way an organization is structured and in the kind of skills needed in particular positions.
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Business strategy focuses on improving the competitive position of a company’s or
business unit’s products or services within the specific industry or market segment that
the company or business unit serves.
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Collusion is the active cooperation of firms within an industry to reduce output and
raise prices in order to get around the normal economic law of supply and demand.
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Archie Carroll proposes that managers in companies have four responsibilities:
economic, legal, ethical, and discretionary.
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European multinational corporations seldom use people with an international
orientation to staff their management positions.
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The societal environment includes the economic, technological, political-legal, and
sociocultural forces.
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An example of an economic variable in the societal environment is interest rates.
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Operating cash flow is also known as free cash flow.
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Approximately 68% of the top executives of the 100 largest U.S. companies hold the
dual designation of chairman and CEO.
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Using concurrent engineering, Chrysler Corporation was able to reduce its product
development cycle from 60 to 36 months.
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The role of the board of directors in the strategic management of the corporation is
likely to be less active in the future.
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Industry analysis was popularized by Michael Porter.
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A company’s capability in product R&D can be measured by consistent reductions in
unit manufacturing costs and by the number of product defects.
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One company that has successfully found a propitious niche is Frank J. Zamboni &
Company, the manufacturer of the machines that smooth the ice at ice skating rinks.
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Common-size statements are income statements and balance sheets in which the dollar
figures have been converted into percentages.
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SWOT is an acronym that stands for Strategy, Weaknesses, Opportunities, and Threats.
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When the Kellogg Company changed to a push strategy, they spent more money on
consumer advertising designed to build brand awareness so that shoppers will ask for
the products.
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A company may have some stakeholders of which it is only marginally aware.
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Competencies are the organization’s assets and are the basic building blocks of the
organization.
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According to organizational learning theory, an organization uses knowledge to
improve the fit between itself and its environment.
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Governments can do little to erect barriers to entry in an industry.
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Firms in trouble seldom choose outsiders to lead them.
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Behavior controls specify how something is to be done through policies, rules, standard
operating procedures, and orders from a superior.
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Tacit knowledge is harder than explicit knowledge for competitors to imitate.
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In multipoint competition, large multi-business corporations compete against other
large multi-business firms in a number of markets.
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Pioneered in the automobile industry, the matrix structure was developed to combine
the flexibility of the functional structure with the stability of the product formulation.
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Corporate culture does not necessarily have to support the strategy of the firm.
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A licensing arrangement is an agreement in which the licensing firm grants rights to
another firm in another country or market to produce and/or sell a product.
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The first step in stakeholder analysis is identifying those who have only an indirect
stake in the corporation.
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According to Schilit, forensic accounting is a search for hidden weaknesses in a
company’s performance.
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Secondary stakeholders have a direct connection with the corporation and have
sufficient bargaining to directly affect corporate activities.
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A benefit of the increased disclosure requirements of the Sarbanes-Oxley Act has been
more reliable corporate financial statements.
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The establishment of its own sales company with offices in other countries to eliminate
the middlemen and to better control marketing occurs in which stage of international
development?
A) I
B) II
C) III
D) IV
E) V
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During Stage II of the organizational life cycle, the structure most likely to be
implemented is
A) entrepreneur-dominated.
B) functional management.
C) decentralization into profit or investment centers.
D) structural surgery.
E) dismemberment of structure.
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When an organization is evaluating its strategic position, which is NOT one of the
strategic questions that an organization may ask itself?
A) Where is the organization now?
B) Are we a socially responsible firm?
C) If no changes are made, where will the organization be in one year?
D) If the evaluation is negative, what specific actions should management take?
E) If no changes are made, where will the organization be in 10 years?
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The corporate mission is best described by which one of the following?
A) a description of the activities carried out by the organization
B) the purpose or reason for the corporation’s existence
C) a description of top management’s responsibilities
D) a statement of corporate objectives
E) a statement of what the organization would like to become
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A linked set of value-creating activities beginning with basic materials provided by
suppliers and ending with distributors getting the final product into the hands of the
ultimate consumer is called a
A) value chain.
B) continuum of sustainability.
C) strategic capability.
D) fully integrated activity set.
E) strategic group.
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Which type of control specifies what is to be accomplished by focusing on the end
result of behaviors through the use of objectives and performance targets or milestones?
A) tactical control
B) strategic control
C) output control
D) functional control
E) behavior control
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Which statement below is NOT true of strategy implementation?
A) It is the process by which strategies and policies are put into action through the
development of programs/tactics, budgets, and procedures.
B) Implementation is often considered after strategy has been formulated.
C) Strategy implementation is the sum total of the activities and choices required for the
execution of a strategic plan.
D) Strategy implementation should be kept separate and distinct from that of strategic
management.
E) Strategy formulation and strategy implementation are two sides of the same coin.
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The technique recommended by the text to organize an analysis of external strategic
factors is called
A) IFAS.
B) EFAS.
C) SFAS.
D) SWOT.
E) the issues priority matrix.
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What term describes when activities originally intended to help managers attain
corporate objectives become ends in themselves or are adapted to meet ends other than
those for which they were intended?
A) economic rationality
B) minimal acceptable behavior
C) goal displacement
D) closed system thinking
E) Machiavellianism
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When a board of directors is involved to a limited degree in the performance or review
of selected key decisions, indicators, or programs of management, the degree of
involvement is referred to as
A) rubber stamp.
B) nominal participation.
C) active participation.
D) minimal review.
E) phantom.
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Which type of structure enables a corporation to decentralize decision making to the
local subsidiaries?
A) geographic-area structure
B) product-group structure
C) network structure
D) matrix structure
E) functional structure
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A.C. Nielsen is an example of an outside organization providing a firm with
competitive intelligence.
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According to Mintzberg, the entrepreneurial mode of strategy formulation
A) is characterized by reactive solutions to existing problems.
B) assumes major responsibilities for strategy formulation.
C) is focused on opportunities; problems are secondary.
D) includes the proactive search for new opportunities and reactive solutions to existing
problems.
E) assumes the environment is unresponsive to input.
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What percentage of the 100 largest companies listed in 2011 had boards of directors
with at least one woman member?
A) 4%
B) 20%
C) 50%
D) 82%
E) 96%
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The German company SAP AG originated the concept of ERP with its
A) activity-based costing.
B) transfer pricing.
C) spreadsheet software.
D) R/3 software system.
E) transnational software integrator.
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According to Carroll, the responsibilities defined by government in laws for
management to obey are
A) legal responsibilities.
B) ethical responsibilities.
C) financial responsibilities.
D) economic responsibilities.
E) discretionary responsibilities.
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Corporations will emphasize output controls when they are following a strategy of
A) concentric diversification.
B) conglomerate diversification.
C) retrenchment.
D) divestment.
E) vertical integration.
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The organization’s corporate mission statement
A) should have a different mission statement for each subsidiary division.
B) should be less formally stated to allow for growth.
C) should set the organization apart from its competitors.
D) should state what the organization would like to become.
E) should describe the organization’s SWOT.
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Which structure is often called a virtual organization?
A) strategic business units
B) functional structure
C) divisional structure
D) network structure
E) matrix structure
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Over ________ of large companies use trend extrapolation for forecasting.
A) 20%
B) 30%
C) 40%
D) 50%
E) 70%
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Which strategy might be the most likely when management realizes that the current
industry is unattractive and that the firm lacks outstanding skills that it could easily
transfer to related products or services in other industries?
A) concentration
B) horizontal growth
C) concentric diversification
D) vertical growth
E) conglomerate diversification
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A study of 79 MNCs revealed that international transfer pricing from one country unit
to another is primarily used to
A) evaluate performance.
B) minimize taxes.
C) increase profits.
D) improve communication.
E) all of the above
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In addition to Porter’s Five Forces, another force added in the text is
A) bargaining power of unions.
B) other stakeholders.
C) threat of prospects.
D) threat of shareholders.
E) bargaining strength of employees.
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When GE offered its CEO 250,000 performance share units tied to performance targets
achieved over five years, it was using which method of matching rewards to the
accomplishment of strategic objectives?
A) strategic-funds method
B) segmentation method
C) long-term evaluation method
D) individual evaluation method
E) weighted-factor method
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All of the following reflect characteristics of a successful integration manager EXCEPT
A) a deep knowledge of the acquiring company.
B) a flexible management style.
C) an ability to work in cross-functional project teams.
D) a propensity to hire likeminded people.
E) a willingness to work independently.
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The phenomenon that describes corporations as evolving through relatively long
periods of stability punctuated by relatively short bursts of fundamental change is
known as
A) revolution.
B) equilibrium.
C) punctuated equilibrium.
D) logical incrementalism.
E) discontinuity.
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Which two basic statements provide most of the financial data needed for analysis?
A) statement of retained earnings and income statement
B) sources and uses of working capital and the balance sheet
C) non-operating gains and losses and statement of financial position
D) historical income statement and balance sheet
E) statement of financial position and statement of owner’s equity
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According to Hofstede, which cultural dimension describes the extent to which a
society accepts an unequal distribution of power in organizations?
A) uncertainty avoidance
B) masculinity-femininity
C) power distance
D) individualism-collectivism
E) long-term orientation
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Which of the following is NOT a characteristic of strategic decisions as mentioned in
the text?
A) directive
B) consequential
C) rare
D) continuous
E) require commitment of substantial resources
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When there are highly automated assembly lines making one mass-produced product
using little human labor, this setup is called
A) dedicated transfer lines.
B) connected line batch flow.
C) connected job flow.
D) mass batch lines.
E) mass job flow.
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Under what circumstances does a DIRECT interlocking directorate exist?
A) when both management and the board establish corporate strategic management
B) when a corporation’s employees are included on its board
C) occurs when two firms share a director or when an executive of one firm sits on the
board of a second firm
D) when all board members are also employed by the corporation
E) when two corporations have directors who serve on the board of a third firm
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A company may use which of the following trade promotions to “pull” their products
through the distribution system?
A) discounts
B) in-store special offers
C) advertising allowances
D) coupons
E) consumer advertising
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Which structure simultaneously combines functional and product forms at the same
level of the organization?
A) strategic business units
B) functional structure
C) network structure
D) divisional structure
E) matrix structure
Answer: