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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
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
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
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.
61) An established customer base is an example of structural capital.
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.
63) The strategic planning process for small companies should begin with setting goals and
objectives.
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.
65) "What business am I in?" This is a question the entrepreneur needs to answer when creating
the mission statement.
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.
67) Key success factors are simply relationships between controllable factors and critical
elements that permit a firm to compete in its industry.
68) Most small business owners believe it is relatively unimportant to monitor their competitors'
activities.
69) One of the goals of competitive analysis is to improve a firm's reaction time to competitor's
actions.
70) It is possible for a small business owner to gather competitive data inexpensively, even data
on other companies' financial condition.
71) The competitive profile matrix matches the firm's core competencies with those of selected
competitors.
72) Setting seemingly impossibly high objectives, those outside the likely reach of employees,
helps managers to create and maintain a high motivation level.
73) Goals and objectives provide the direction for the small firm and are essential to the strategic
planning process.
74) Goals indicate how the small firm's resources will be allocated to specific ventures or
activities.
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.
76) Sound strategies increase the likelihood that business objectives will be achieved.
77) A strategy is a road map of action for fulfilling a firm's mission, goals and objectives.
78) Small firms pursuing a cost leadership strategy have an advantage in reaching customers
whose primary purchase criterion is high quality.
79) The best way to build a cost leadership competitive advantage is to focus entirely on
manufacturing costs.
80) A danger of cost leadership is that a company may misunderstand what processes actually
drive its true costs.
81) One key to building a successful differentiation strategy is to be better than competitors at
some characteristic that customers value.
82) To be successful, a differentiation strategy must create the perception of value in the
customer's eyes.
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.
84) A focus strategy recognizes that all markets are homogeneous.
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.
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.
87) Focus strategies, unlike Porter's other generic strategies, are without risk because they tend to
combine elements of all three strategies.
88) Offering lower prices is the best method for a small business to establish its competitive
edge.
89) The focal point of the entire strategic plan and the competitive strategy chosen is the
customer.
90) Small businesses have some competitive advantages over larger companies—being able to
respond quickly, having greater flexibility, being able to build and defend niches, etc.
91) The best conversion of strategic plans to operational plans is done by top management
without the help of the employees.
92) To be of any real value to the small business owner, strategic plans must be broken down
beyond operational plan level into projects with assigned responsibilities.
93) The secret to good control is the identification and tracking of key performance indicators.
94) The key to the balanced scorecard is identifying the key single measure for the specific
company being evaluated.
95) The balanced scorecard looks at the small business from the perspectives of the customer, the
company itself, innovation, and finances.
96) A balanced scorecard is a set of common measures for all companies.
97) The first step in creating a knowledge management program is to take an inventory of the
special knowledge a company possesses that gives it a competitive advantage.
98) Objectives are the broad, long-range attributes that a business seeks to accomplish.
99) A goal is the master plan that covers all of the major parts of the organization and ties them
together into a unified whole.
100) The key to a successful differentiation strategy is to build it on a distinctive competence—
something the small company is uniquely good at doing in comparison to its competitors.
101) A focus strategy is ideally suited to many small businesses, which often lack the resources
to reach a national market.
102) A company's intellectual capital is likely to be the source of its competitive advantage in the
marketplace.
103) One of the biggest pitfalls many entrepreneurs stumble into is failing to differentiate their
companies from the crowd of competitors.
104) Developing core competencies does not necessarily require a company to spend a great deal
of money.
105) A sound mission statement needs to be lengthy in order for it to be effective.
106) Owners of traditional travel agencies are facing threats from many sides, including the
Internet.
107) Tight cost control; trained, dependable, honest in-store managers can be success factor for a
restaurant.
108) In a competitive profile matrix, a major strength is given a ranking of 1.
109) A time frame for achieving objectives is important.
110) A differentiation strategy works well when buyers are sensitive to price changes, when
competing firms sell the same commodity products, and when companies can benefit from
economies of scale.
111) A strategic plan doesn't need to be put into action to be complete.
112) Early involvement of the total work force in the strategic management process is a luxury
that larger businesses cannot achieve.
113) Common bases for a focus strategy include superior customer service, special product
features, complete product lines, instantaneous parts availability, absolute product reliability,
supreme product quality, and extensive product knowledge.
114) One of the strategic management processes is to establish accurate control.
115) One of the strategic management processes is to translate strategic plans into unachievable
plans.
116) One of the strategic management processes is to develop a clear vision and translate it into a
meaningful mission statement.
117) Highly successful entrepreneurs are able to communicate their vision and their enthusiasm
about that vision to those around them.
118) A mission statement addresses the first question of any business venture: "Where do I see
myself to be?"
119) To be effective, a mission statement must become a natural part of the organization,
embodied in the minds, habits, attitudes, and decisions of everyone in the company every day.
120) The balanced scorecard is a set of measurements unique to a company that includes both
financial and operational measures and gives managers a quick yet comprehensive picture of the
company's total performance.
121) What is the importance of strategic management to small businesses? In your discussion,
explain how strategic planning is different for a small business.
122) Explain how vision and mission work together, providing direction for the small business.
In your discussion, identify at least five key questions a mission statement should answer.
123) Describe core competencies and the role they play in helping the company segment its
market and develop effective competitive strategies.
124) What is the importance of positioning for the small business?
125) Discuss the importance of knowing your firm's strengths and weaknesses and what
opportunities and threats exist in the external environment.
126) Why is it important for a business owner to monitor the competition? Explain how a
business owner could use a competitive profile matrix to do that. Include in the review what its
value is, what information it contains, and how a small business owner would create it.
127) Create three goals and objectives for the following small company:
An Internet database for small business exporters that offers to match domestic entrepreneurs to
foreign distributors, venture capitalists, and/or joint venture candidates. The company takes a
percentage fee for its service.
128) Michael Porter defines three basic strategies: cost leadership, differentiation, and focus.
Describe each, explain under what conditions each works, and what the pitfalls are of each one.
129) Explain the "balanced scorecard," reviewing its strengths and the five perspectives it takes
in evaluating a business.
