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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) Companies rely on a mission statement to determine where it is going in the future, how
it will get there, and whether or not goals are achieved.
⊚ true
⊚ false
2) To create a sustainable competitive advantage, an international company should try to
develop competencies that are valuable, common, difficult to imitate, and readily substitutable.
⊚ true
⊚ false
3) Strategic plans promote consistency of action among the firm’s managers worldwide and
encourage them to consider the ramifications of their actions in the firm’s other geographic and
functional areas.
⊚ true
⊚ false
4) The ultimate managers of strategic planning and strategy making for a company are the
members of the executive board.
⊚ true
⊚ false
5) Scenarios are forecasts that extrapolate from past data to make predictions.
⊚ true
⊚ false
6) The first step in the process of strategic planning is to define the company’s business and
mission.
⊚ true
⊚ false
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7) When making a strategic plan, a company must set corporate objectives before
quantifying goals.
⊚ true
⊚ false
8) Knowledge that an individual has but that is difficult to express clearly in words, pictures,
or formulas, and therefore difficult to transmit to others, is called explicit knowledge.
⊚ true
⊚ false
9) A broad statement that defines the purpose for a company’s existence is the mission
statement.
⊚ true
⊚ false
10) Most managers prefer objectives that are qualified but not quantified.
⊚ true
⊚ false
11) Companies pursuing a home replication strategy typically centralize product development
functions in their home country and then transfer innovations to foreign markets to capture
additional value.
⊚ true
⊚ false
12) A multidomestic strategy tends to be used when a company confronts pressures for local
adaptation rather than cost-effectiveness.
⊚ true
⊚ false
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13) A company would select a global strategy when it faces strong pressures for reducing
costs and limited pressure to adapt products for local markets.
⊚ true
⊚ false
14) Historically, companies tend to standardize more aspects of marketing than
manufacturing.
⊚ true
⊚ false
15) Companies use a contingency plan as a guideline for marketing media placement.
⊚ true
⊚ false
16) Tactical plans are more detailed than strategic plans.
⊚ true
⊚ false
17) Procedures are broad guidelines issued by upper management for the purpose of assisting
lower-level managers in handling nonrecurring problems.
⊚ true
⊚ false
18) An advantage of bottom-up planning is that the people responsible for attaining the goals
are formulating them.
⊚ true
⊚ false
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19) Repetition of the bottom-up or top-down planning process until all differences are
reconciled is called sequential planning.
⊚ true
⊚ false
20) Many managers have moved toward less-structured formats when doing strategic
planning based on the ineffectiveness of five-year forecasts.
⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
21) International strategy can be described as
A) a forecast about the company’s future and how to achieve it.
B) a vision for what the company will become in the future.
C) the basis for a company’s mission.
D) a plan that guides the way firms makes choices about developing and deploying
resources.
22) To be effective, a company’s international strategy mustbe
A) the same as the leaders of the industry.
B) consistent among all the functions and activities of the company.
C) the same as the company’s domestic strategy.
D) externally consistent among the company’s products and regional units.
23) A company’s ability to achieve and maintain a unique and valuable competitive position
both within a nation and globally, generating higher rates of profit than its competitors, is known
as
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A) international strategy.
B) competitive advantage.
C) resource leverage.
D) comparative advantage.
24) Jefferson Materials Corp. has developed a fire-resistant fabric that no one else has been
able to replicate. It is used throughout the world in firefighting equipment and supplies. Since it
is the only company making the product, customers are willing to pay a premium for the fabric.
In this scenario, the fire-resistant fabric has helped the company develop a(n)
A) economy of scale.
B) competitive advantage.
C) purchasing power parity.
D) comparative advantage.
25) Regarding a sustainable competitive advantage, the company must have skills or
competencies that
A) reflect the lowest price possible.
B) are easily replicated.
C) are difficult to imitate or substitute for.
D) can be copyrighted or patented.
26) Milo Millworks Inc. has maintained a sustainable competitive advantage for its framing
style. In order to accomplish this, the framing style must be
A) priced low.
B) easy to obtain.
C) easy to imitate.
D) difficult to substitute for.
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27) To create a competitive advantage that is sustainable over time, the international
company should try to develop competencies that
A) create value for customers and for which they are willing to pay.
B) are easy to imitate or substitute for.
C) are expensive to develop and maintain.
D) imitate those of market leaders.
28) Managers of international companies that are attempting to develop a competitive
advantage face a formidable challenge because
A) time, talent, and money are scarce.
B) there are an abundance of resources.
C) there are few or no alternative ways to use the company’s scarce resources.
D) the company’s mission is constantly changing.
29) The process by which an organization determines where it is going in the future, how it
will get there, and how it will assess whether and to what extent it has achieved its goals is
known as
A) value chain analysis.
B) scenario analysis.
C) strategic planning.
D) international strategy.
30) International firms have found it necessary to institute formal global planning
A) to eliminate the practice of informal planning.
B) to provide top management with a means to identify threats and opportunities
worldwide.
C) to promote different courses of action among the firm’s managers worldwide.
D) to serve as an input for scenario building.
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31) According to a survey by Bain & Company, since 1993 the management tool most
commonly used among global executives is
A) value chain analysis.
B) industry and competitor analysis.
C) strategic planning.
D) environmental analysis.
32) The firm’s ultimate manager of strategic planning is the firm’s
A) vice president for planning.
B) chief operating officer.
C) chief executive officer.
D) board of directors.
33) The strategic planning process provides a formal structure in which managers will
A) establish a corporate level team to prepare the strategic plan.
B) define the company’s business and mission.
C) formulate scenarios.
D) implement strategy.
34) During the meeting, David mentioned two possibilities for the future of the new product
line. It could do well initially but then be undercut by competitor challenges or supplier pricing
changes. Or, it could fail immediately if marketing promotions aren’t effective in the European
market. What is David using in his strategy formulation?
A) policies
B) procedures
C) contingencies
D) scenarios
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35) Why is scenario analyses an important tool for managers?
A) The objective of the process is to forecast the future.
B) The scenario building team identifies the driving forces and “critical certainties” in a
decision and prioritizes them.
C) By anticipating the future and recognizing the warning signs of turbulence ahead,
managers can develop more effective strategies.
D) The process extrapolates from past data to build scenarios for guiding decision
making.
36) During the strategic planning discussion, committee members reviewed the current
systems in place in the company’s manufacturing plant to determine if it could handle the
anticipated increased capacity should the company go through with the foreign investment.
Which step in the strategic planning process does this reflect?
A) quantify goals
B) analyze the company’s internal environment
C) define the company’s business and mission
D) set corporate objectives
37) Jenna reported to the management team that their proposed investment in Great Britain
could be affected by the Brexit announcement. Which aspect of strategic planning does this
demonstrate?
A) Analyze the company’s external environments.
B) Analyze the company’s internal environments.
C) Define the company’s business and mission.
D) Set corporate objectives.
38) The strategic planning report presented at the meeting included two goals the company
wished to achieve: (1) expand into profitable, related businesses and (2) select markets to enter
that have not experienced their products. Which part of the strategic planning process does this
demonstrate?
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A) set corporate objectives
B) implement strategies.
C) analyze external environments
D) quantify the objectives
39) When managers are analyzing the corporate controllable variables, the three key
questions they must address about their business include
A) who are the company’s target customers?
B) what will be the costs that the company will incur in delivering value to its target
customers?
C) how much will the company be able to charge?
D) where should the company’s production facilities be located?
40) An assessment conducted on the chain of interlinked activities of an organization or set of
interconnected organizations, intended to determine where and to what extent value is added to
the final product or service is known as
A) economic value added.
B) internal analysis.
C) value chain analysis.
D) SWOT analysis.
41) Value chain analysis focuses primarily on what question?
A) Who are the company’s target customers?
B) What does the customer value and how much is the customer willing to pay for this
value?
C) How will this customer value be created?
D) What is the best way for the company to enter a market?
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42) What is the goal of value chain analysis?
A) to enable managers to identify which set of activities it will do itself and which it
will outsource
B) to enable managers to identify whether to enter foreign markets or remain with
domestic markets
C) to enable managers to identify the true value of the company’s stock
D) to enable managers to identify the underlying values and belief of the company and
its culture
43) The practices that organizations and their managers use for identifying, creating,
acquiring, developing, dispersing, and exploiting competitively valuable knowledge is known as
A) competitive advantage.
B) international strategy.
C) value analysis.
D) knowledge management.
44) Knowledge that an individual has but that is difficult to express clearly in words, pictures,
or formulae, and therefore difficult to transmit to others is known as
A) explicit.
B) implicit.
C) tacit.
D) intangible.
45) Knowledge that is easy for an individual to express clearly in words, pictures, or formulas
is known as
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A) explicit.
B) implicit.
C) tacit.
D) intangible.
46) When the international company’s planning committee has completed the internal audit
aspect of strategic planning, it is ready to examine
A) external variables.
B) internal production standards.
C) the company’s mission and vision.
D) the company’s international strategy.
47) A broad statement that defines the organization’s purpose and scope is known as a
A) strategic plan.
B) mission statement.
C) vision statement.
D) value chain.
48) A description of the company’s desired future position if it can acquire the necessary
competencies and successfully implement its strategy is known as a
A) strategic plan.
B) mission statement.
C) vision statement.
D) values statement.
49) A clear, concise description of the fundamental beliefs and priorities expected of the
organization’s members, reflecting how they are to behave with each other and with the
company’s customers, suppliers, and other members of the global community is known as a
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A) strategic plan.
B) mission statement.
C) vision statement.
D) values statement.
50) Stanton Construction Corporation was recently acquired by another company. With this
merger, the newly formed company created a description of the businesses’ desired future
position. What type of statement did it create?
A) values statement
B) vision statement
C) strategic statement
D) mission statement
51) Which aspect of strategic planning helps a company maintain itself within the boundaries
of the mission and vision statements?
A) analyzing the internal environment
B) implementing tactical plans
C) setting corporate objectives
D) analyzing the external environment
52) To set corporate objectives, management must first
A) select a viable market segment.
B) quantify them.
C) define the firm’s mission.
D) research the market.
53) To develop a strategy for reaching corporate objectives, management must first try to
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A) select a viable market segment.
B) quantify them.
C) define the firm’s mission.
D) develop scenarios.
54) In terms of quantifying objectives and goals, most top managers
A) prefer nonquantifiable, directional goals.
B) prefer nonquantifiable, but verifiable goals.
C) prefer verifiable objectives.
D) have no preference as to quantifiable and nonquantifiable goals.
55) Action plans to enable organizations to reach their objectives are known as
A) competitive strategies.
B) policies.
C) procedures.
D) strategic scenarios.
56) When developing and assessing strategic alternatives, companies competing in
international markets confront which two opposing goals?
A) Reduce investment and increase profits.
B) Reduce complexity and improve effectiveness.
C) Standardize policies and reduce complexity.
D) Reduce costs and adapt to local markets.
57) High-Rise Boots Corp. plans to expand into the European market where it finds weak
pressure to respond to local demands and cost reductions are not necessary. Which competitive
strategy should the company use based on these factors?
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A) multidomestic strategy
B) transnational strategy
C) differentiation strategy
D) home replication strategy
58) Companies pursuing a home replication strategy
A) usually have low operating costs and high efficiency.
B) limit availability of local customization.
C) have loose headquarters control over product strategy.
D) have local subsidiaries that develop unique country-level capabilities.
59) When there is strong pressure for a company to adapt its products or services for local
markets, it should probably rely on a
A) home replication strategy.
B) multidomestic strategy.
C) transitional strategy.
D) global strategy.
60) Companies pursuing a multidomestic strategy typically have
A) low operating costs and high efficiency.
B) centralized decision making and quick response to changes in local competition.
C) tight headquarters control over product strategy.
D) high levels of local market customization.
61) When a company faces strong pressures for reducing costs and limited pressure to adapt
products for local markets, it should consider using a
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A) global strategy.
B) multidomestic strategy.
C) transnational strategy.
D) differentiation strategy.
62) Companies pursuing a global strategy typically have
A) low operating costs and high efficiency.
B) decentralized decision making and quick response to changes in local competition.
C) low levels of transportation and tariff costs.
D) high levels of local market customization.
63) Lexon Corp. produces high-nutrition breakfast products. As it enters into foreign markets,
it faces strong pressures for both reducing costs and adapting products for local markets. Based
on this, the company should use a
A) global strategy.
B) multidomestic strategy.
C) transnational strategy.
D) home replication strategy.
64) Companies pursuing a transnational strategy usually
A) have less decentralized manufacturing operations.
B) have simple organizational structures and processes within and across regions.
C) locate most of their activities in developing countries.
D) have international subsidiaries develop and share knowledge with company
operations worldwide.
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65) Historically, more aspects of ________ have been standardized and coordinated
worldwide by companies than has been the case for other value chain activities such as
________.
A) research and development; manufacturing
B) marketing; manufacturing
C) manufacturing; marketing
D) marketing; research and development
66) Multiple, plausible stories that managers consider for what might happen in the future are
known as
A) vision statements.
B) contingency plans.
C) scenarios.
D) strategies.
67) Scenarios are used by managers to
A) control the critical elements of the external forces.
B) brainstorm various plausible stories about the future.
C) prepare budgets.
D) understand historical events.
68) Scenarios allow a business to
A) project possible outcomes of business decisions.
B) extrapolate from past data to make predictions.
C) create a company’s vision statement.
D) analyze competitor actions and functions.
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69) In his book, The Art of the Long View, Peter Schwartz identified the process of
constructing multiple stories of what could happen next as an important step for companies to
take. What was the author referring to?
A) scenarios
B) a vision statement
C) a mission statement
D) sales forecasting
70) According to the text, what is the primary value of scenario planning efforts?
A) the transformation in strategic thinking that results
B) the strategic plans that are created
C) the ability to control external forces that impact the firm
D) the ability to eliminate uncertainty that arises
71) Plans for the best- or worst-case scenarios or for critical events that could have a severe
impact on the firm are known as
A) scenario plans.
B) strategic plans.
C) contingency plans.
D) tactical plans.
72) Timmerman Holding Corp. created a business recovery center 20 miles from its
headquarters where employees could work if anything should happen to their main office. This
would allow the company to continue doing business without interruption in the wake of a
critical event. The business recovery center is an example of a
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A) scenario.
B) mission statement.
C) tactical plan.
D) contingency plan.
73) Tactical plans are also known as
A) strategic plans.
B) operational plans.
C) global plans.
D) contingency plans.
74) A strategic plan is used by a company to
A) guarantee how the firm’s goals will be met.
B) present sales forecasts and budgets.
C) create a firm’s vision statement.
D) analyze a contingency plan.
75) What part of the strategic plan provides managers with an estimate of future revenue to
be received and the units to be sold, and also serves as the basis for planning in the other
functional areas?
A) sales forecast
B) budget
C) marketing plan
D) contingency plan
76) An itemized projection of revenues and expenses for a future time period is a
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A) sales forecast.
B) budget.
C) marketing plan.
D) strategic plan.
77) Following the merger of Hintz Corp. and Minor Holdings Corp., the new company issued
a list of broad guidelines that managers should use when dealing with problems. These were
viewed as general guides that were left to the interpretation of managers. These guidelines are an
example of
A) procedures.
B) policies.
C) contingency plans.
D) a vision statement.
78) A company would create proceduresin order to
A) specify how certain activities will be carried out.
B) assure that all scenarios will be the same.
C) provide input for strategic plans.
D) demonstrate general guidelines for common activities.
79) Performance measures are done to assess
A) the time the company takes to acculturate new employees.
B) if the strategy and its implementation are proceeding successfully.
C) assumptions about how the strategic lists affect the business.
D) whether the strategic forecasts are precise.
80) A company would rely on triple-bottom-line accounting to
A) assess the value of marketing promotions.
B) balance imports and exports.
C) measure the company’s strategic performance.
D) examine economies of scale procedures.
81) What are two important differentiators of strategic plans?
A) the size of the company and the plan’s time horizon
B) what nation and culture the company is from and the organizational structure of the
company
C) the company’s organizational structure and the company’s competitive strategy
D) the level of the organization for which it is made and the plan’s time horizon
82) The time horizon of a strategic plan will vary according to
A) the size of the company and the size of its industry.
B) the age of the firm and the stability of its market.
C) the geographic scope of the company.
D) the diversity of a company’s operations.
83) What is a disadvantage of top-down planning?
A) It restricts initiative at lower levels of the organization.
B) It is highly sensitive to differences in local conditions.
C) It reduces the need for consultation, especially in an international company.
D) It has corporate headquarters develop and provide guidelines.
84) What is a disadvantage of bottom-up planning?