While 97% of large U.S. corporations now use nominating committees to identify
potential directors, this practice is not as common in Europe.
Answer:
Stakeholders are all constituencies that affect and are affected by the achievement of the
firm’s objectives.
Answer:
The first firm through a strategic window can occupy a propitious niche and discourage
competition (if the firm has the required internal strengths).
Answer:
A problem with the individual rights approach to ethics is the difficulty in defining
fundamental rights.
Answer:
The Z-value formula combines five ratios by weighting them according to their
importance to a corporation’s financial strength.
Answer:
The orientation of the functional strategy is dictated by its parent business unit’s
strategy.
Answer:
A study concerning social responsibility indicates that socially responsible firms are
more likely to be welcomed into another country.
Answer:
The transferring of profits from a foreign subsidiary to a corporation’s headquarters is
known as repatriation of profits.
Answer:
Equity financing is preferred for unrelated diversification while debt financing is
preferred for related diversification.
Answer:
Sustainability reflects business practices to manage the firm’s triple bottom line.
Answer:
Vertical integration is going backward on an industry’s value chain.
Answer:
A limitation of the BCG Growth Share Matrix is the questionable link between market
share and profitability.
Answer:
Job enlargement is the movement of workers through several jobs to increase variety.
Answer:
The matrix of change was designed to help managers decide how quickly change
should proceed, in what order changes should take place, whether to start at a new site,
and whether the proposed systems are stable and coherent.
Answer:
Most entrepreneurial ventures follow focus strategies.
Answer:
Flexible manufacturing permits the low-volume output of custom-tailored products at
relatively low unit costs through economies of scope.
Answer:
The first stage of corporate development is the simple structure.
Answer:
The most widely pursued corporate directional strategies are those designed to achieve
growth.
Answer:
Chandler proposed that the most appropriate CEO for a firm remains constant as the
company proceeds through its life cycle.
Answer:
According to Porter, a manufacturing firm’s support activities usually begin with
inbound logistics, go through an operations process in which a product is manufactured,
and continue on to outbound logistics and finally to service.
Answer:
Benchmarking involves openly learning how others do something better than one’s own
company so that one not only can imitate, but perhaps even improve on their current
techniques.
Answer:
ABC accounting allows accountants to charge costs more accurately than the traditional
method because it allocates overhead far more precisely.
Answer:
Fujitsu demonstrated a strategy to avoid when it imitated IBM’s strategy focused on
mainframes in 1990.
Answer:
A fragmented industry is dominated by a few large firms, each of which struggles to
differentiate its products from the competition.
Answer:
Even the most attractive strategic alternative might not be selected if it is contrary to the
needs and desires of important top managers.
Answer:
Downsizing refers to the planned elimination of positions or jobs; it is often used to
implement retrenchment strategies.
Answer:
There is no truth to the comment that “business ethics” is an oxymoron.
Answer:
Strategy formulation and strategy implementation should be considered as two sides of
the same coin.
Answer:
When a company uses the same marketing channel for two separate products, this is an
example of an economy of scope.
Answer:
A divisional structure has no functional or product categories and is appropriate for a
small, entrepreneur-dominated company with one or two product lines that operates in a
reasonably small, easily identifiable market niche.
Answer:
Research indicates that companies undertaking cost-cutting programs are four times
more likely than others to cut costs again, typically by reducing staff.
Answer:
In a TOWS Matrix, SO Strategies
A) are generated by thinking of ways in which a company or business unit could use its
strengths to take advantage of opportunities.
B) attempt to take advantage of opportunities by overcoming weaknesses.
C) are basically defensive and primarily act to minimize weaknesses and avoid threats.
D) consider a company’s or unit’s strengths as a way to avoid threats.
E) are ways to get strategists to think “out of the box.”
Answer:
An example of the promotion variable of the marketing mix is
A) advertising.
B) discounts.
C) location.
D) services.
E) quality.
Answer:
The most logical growth strategy for a corporation with current product lines with real
growth potential in a growing industry is
A) concentration.
B) conglomerate integration.
C) concentric diversification.
D) stability.
E) retrenchment.
Answer:
The continual process of measuring products, services, and practices against the
toughest competitors or those companies recognized as industry leaders is
A) total quality management.
B) benchmarking.
C) action planning.
D) reengineering.
E) management by objectives.
Answer:
When examining the corporate value chain of a particular product or service, which one
of the following is NOT one of the PRIMARY activities that usually occur?
A) operations
B) inbound and outbound logistics
C) auditing and accounting
D) marketing and sales
E) customer service
Answer:
Which of the following is NOT descriptive of intense rivalry among firms?
A) slow industry growth
B) high fixed costs
C) high exit barriers
D) few competitors or competitors that are roughly equal in size and power
E) product offerings that are highly differentiated
Answer:
All of the following are considered secondary stakeholders EXCEPT
A) governments.
B) suppliers.
C) competitors.
D) trade associations.
E) activists.
Answer:
Which of the following is NOT an offensive tactic?
A) frontal assault
B) flanking maneuver
C) guerilla warfare
D) raising structural barriers
E) encirclement
Answer:
Behavior substitution occurs when
A) a division or functional unit views itself as a separate entity and refuses to cooperate
with other divisions or units in order to keep its performance measures at a high level.
B) there is a failure to produce at or near full capacity.
C) individuals are placed into positions not suited to their abilities.
D) individuals focus more of their attention on those aspects which are measurable than
on those which are not.
E) managers concentrate too much on short-term performance objectives.
Answer:
The typical CEO pay package is composed of ________ long-term incentives.
A) 16%
B) 36%
C) 27%
D) 21%
E) 10%
Answer:
A study by Bain & Company revealed what percentage of companies using
benchmarking in some manner?
A) 10%
B) 30%
C) 50%
D) 65%
E) 90%
Answer:
Employees who report illegal or unethical behavior on the part of others are known as
A) stakeholders.
B) whistleblowers.
C) moral relativists.
D) retaliators.
E) outside directors.
Answer:
In the development of a SFAS matrix, the first step is to
A) enter the ratings of how the company’s management is responding to each of the
strategic factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term goals for the duration.
E) enter the weights for all of the internal factors.
Answer:
Research suggests that strategic management evolves through four sequential phases in
corporations. The first phase is
A) externally oriented planning.
B) basic financial planning.
C) internally oriented planning.
D) forecast-based planning.
E) strategic management.
Answer:
Which financial ratio measures the utilization of plant and equipment?
A) days of inventory
B) asset turnover
C) average collection period
D) fixed asset turnover
E) inventory turnover
Answer:
According to Hofstede’s cultural dimensions, which country scored among the lowest
on uncertainty avoidance?
A) Malaysia
B) Mexico
C) Austria
D) United States
E) Great Britain
Answer:
A disadvantage of vertical integration is that it
A) creates exit barriers.
B) improves coordination of activities.
C) decreases demand for the firm’s products and services.
D) creates entry barriers.
E) avoids time consuming tasks.
Answer:
A company or an industry whose product works well with a firm’s product and without
which the product would lose much of its value is considered to be a(n)
A) complementor.
B) oligopoly.
C) strategic group.
D) industry leader.
E) staggered company.
Answer:
The difference between the pre-strategy and post-strategy values for the business is
A) ROI.
B) EPS.
C) ROE.
D) EVA.
E) MVA.
Answer:
A graph showing time plotted against the dollar sales of a product as it moves from
introduction through growth and maturity to decline is called the
A) marketing position.
B) product life cycle.
C) market segmentation.
D) marketing mix.
E) marketing leverage.
Answer:
As societal values evolve, it is likely that the ________ responsibilities of today may
become the ________ responsibilities to tomorrow.
A) economic; ethical
B) legal; ethical
C) discretionary; ethical
D) discretionary; economic
E) legal; discretionary
Answer:
Other software companies could not compete with Microsoft based on the hesitation of
consumers to try a new software. Which of Porter’s forces does this reflect?
A) exit barriers
B) bargaining power of buyers
C) threat of substitutes
D) bargaining power of suppliers
E) rivalry among existing firms
Answer:
To adjust for general inflation in the United States, what index does the text suggest?
A) Dow-Jones Industrial Average
B) New York Stock Exchange Index
C) Wilshire 500 Equity Index
D) Consumer Price Index
E) NASDAQ Series
Answer:
The present value of the anticipated future stream of cash flows from the business plus
the value of the company if liquidated is referred to as
A) return on assets.
B) ROVA.
C) earnings per share.
D) shareholder value.
E) ROI.
Answer:
Which of the following is NOT identified as a key driver for strategic fit between
alliance partners?
A) The alliance must be important to both partners.
B) Joint activities must have added value for customers and the partners.
C) The alliance must be accepted by key stakeholders.
D) Partners contribute key strengths, but protect core competencies.
E) Partners must independently achieve their goals.
Answer:
According to the text, using a long-term performance evaluation system, a company
executive might be promised incentives such as
A) company cars.
B) company stock.
C) health insurance.
D) retirement plans.
E) vacations.
Answer:
Which of the following financial ratios is NOT a profitability ratio?
A) net profit margin
B) gross profit margin
C) asset turnover
D) ROE
E) ROI
Answer:
Which method of managing disparate cultures involves one organization’s domination
over another willing organization?
A) separation
B) deculturation
C) integration
D) assimilation
E) segmentation
Answer:
A recent trend in information systems strategy used by multinational corporations is
A) computerizing accounting.
B) automating customer service.
C) practicing follow-the-sun management.
D) replacing Fortran with Cobol in order to boost productivity.
E) replacing mainframe computers with robots.
Answer:
The percentage of directors of small, publicly held U.S. corporations which are
outsiders is approximately
A) 2 – 12%.
B) 20 – 40%.
C) 40 – 60%.
D) 60 – 80%.
E) 98 – 100%.
Answer:
Which strategy specifies the firm’s overall direction in terms of its general orientation
toward growth, the industries or markets in which it competes, and the manner in which
it coordinates activities and transfers resources among business units?
A) corporate
B) functional
C) divisional
D) organizational
E) business
Answer:
Which of the following is NOT a task of the board of directors in strategic
management?
A) to monitor
B) to implement
C) to influence
D) to initiate and determine
E) to evaluate
Answer:
Which approach to decision making is most useful when the environment is changing
rapidly and when it is important to build consensus and develop needed resources
before committing the entire corporation to a specific strategy?
A) planning mode
B) entrepreneurial mode
C) logical incrementalism
D) adaptive mode
E) strategic flexibility mode
Answer: