Chapter 7: Developing Strategy, Building Capacity, and Managing Risk

Test Bank

Multiple Choice

1. What are Kearns’s three approaches for formulating organizational strategy?

A. mission, vision, and values

B. programs, means, and ends

C. goals, objectives, and strategy

D. analytical, incremental, and visioning

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Understanding Strategy

Difficulty Level: Easy

2. Bryson defines a process that helps to determine organizational “what, why, and how” as ______.

A. managing risk

B. capacity building

C. strategic planning

D. operational planning

Learning Objective: 7-1: Define strategy, strategic planning, and strategic management.

Cognitive Domain: Knowledge

Answer Location: Understanding Strategy

Difficulty Level: Easy

3. What action is necessary to implement a strategic plan?

A. analytical planning

B. operational planning

C. strategic management

D. long-range management

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: The Strategic Planning Process

Difficulty Level: Easy

4. ______ are functions an organization is required to perform per its charter.

A. Values

B. Missions

C. Visions

D. Mandates

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Defining Mission, Vision, and Values

Difficulty Level: Easy

5. The gradual evolution away from the organization’s purpose into ancillary activities is called ______.

A. mission creep

B. spiraling failure

C. mission devolution

D. program decentralization

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Defining Mission, Vision, and Values

Difficulty Level: Easy

6. The vision statement is ______.

A. a description of an ideal future

B. a written document that summarizes fund-raising goals

C. no longer considered necessary for strategic planning

D. how the chief executive officer envisions subordinates should act

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Defining Mission, Vision, and Values

Difficulty Level: Easy

7. What tool is used to identify expectations of clients?

A. portfolio analysis

B. stakeholder analysis

C. client value planning

D. organizational strategy

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Developing Strategies

Difficulty Level: Easy

8. ______ are areas in which organizations need to take action.

A. Mixed maps

B. Strategic issues

C. Core competencies

D. Competitive positions

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Developing Strategies

Difficulty Level: Easy

9. ______ are directions the organization will pursue.

A. Goals

B. Missions

C. Strategies

D. Evaluations

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Setting Goals

Difficulty Level: Easy

10. Which of La Piana’s three levels of strategies is addressed first?

A. operational

B. programmatic

C. retrenchment

D. organizational

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Developing Strategies

Difficulty Level: Easy

11. What are specific, quantified targets that represent steps toward accomplishing goals?

A. values

B. missions

C. activities

D. objectives

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Setting Objectives

Difficulty Level: Easy

12. One benefit of strategic planning is it helps to build common understanding about the organizational mission. This benefit is sacrificed if ______.

A. it is poorly written

B. only one person writes the actual document

C. too many stakeholders have access to the document

D. it remains a document available only to a select few in management

Learning Objective: 7-3: Explain the pros and cons of strategic planning.

Cognitive Domain: Knowledge

Answer Location: Benefits and Limitations of Strategic Planning

Difficulty Level: Easy

13. The detailed work of producing an operational plan is primarily done by the ______.

A. staff

B. volunteers.

C. board members

D. the chief executive officer

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Developing an Operational Plan

Difficulty Level: Easy

14. What technique is used by business firms to determine if their services are in line with the strategies and goals?

A. external audit

B. portfolio analysis

C. balanced scorecard

D. stakeholder analysis

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Portfolio Analysis

Difficulty Level: Easy

15. Leaders of nonprofit organizations can use the Bell, Masaoka, and Zimmerman matrix map to identify program ______.

A. goals

B. missions

C. strategies

D. objectives

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Portfolio Analysis

Difficulty Level: Easy

16. MacMillan’s portfolio analysis model helps planners recognize program patterns in relationship to organizational ______.

A. goals

B. missions

C. strategies

D. objectives

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Comprehension

Answer Location: Portfolio Analysis

Difficulty Level: Medium

17. One criticism of strategic planning is that it does not always produce ______.

A. goals

B. strategy

C. increased revenue

D. improved programs

Learning Objective: 7-3: Explain the pros and cons of strategic planning.

Cognitive Domain: Knowledge

Answer Location: Benefits and Limitations of Strategic Planning

Difficulty Level: Medium

18. Strategic planning may not make sense for an organization that ______.

A. is performing well

B. is in a state of crisis

C. has fewer than 50 employees

D. has been in existence for a long period of time

Learning Objective: 7-3: Explain the pros and cons of strategic planning.

Cognitive Domain: Knowledge

Answer Location: Benefits and Limitations of Strategic Planning

Difficulty Level: Medium

19. Strategic planning is not a substitute for ______.

A. leadership

B. consulting

C. accountability

D. organizational meetings

Learning Objective: 7-3: Explain the pros and cons of strategic planning.

Cognitive Domain: Knowledge

Answer Location: Benefits and Limitations of Strategic Planning

Difficulty Level: Medium

20. One benefit of strategic planning is it ______.

A. is a panacea for all organizational problems

B. provides a basis for rational decision-making

C. reinforces the chief executive officer’s power

D. relieves the board members of planning responsibilities

Learning Objective: 7-3: Explain the pros and cons of strategic planning.

Cognitive Domain: Knowledge

Answer Location: Benefits and Limitations of Strategic Planning

Difficulty Level: Medium

21. The board of directors of a nonprofit organization is holding a public listening session to associate with others sharing similar interests. The board is attempting to build capacity by ______.

A. developing collaborations

B. recruiting additional staff

C. looking for ways to reorganize

D. assessing organizational performance

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Application

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Medium

22. A grant writer wrote a grant application that was rejected because it focused on obtaining funds to cover operating costs. This is an example of grantmakers ______.

A. focusing on sustainability

B. concerns about the organization’s mission

C. applying traditional grant application processes

D. concerns about the organization’s bookkeeping

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Comprehension

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Medium

23. Volunteers are what part of a nonprofit’s system capacity?

A. middle

B. exterior

C. internal

D. external

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

24. A nonprofit chief executive officer (CEO) is holding a meeting with volunteers to solicit their ideas for organizational improvement. The CEO is applying which type of capacity as described by Letts?

A. internal

B. adaptive

C. program

D. expansion

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

25. Who created a numerical organizational capacity assessment tool?

A. Michael Worth

B. Harvard University

C. Independent Sector

D. McKinsey & Company

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

26. A nonprofit board of directors is studying how the organization’s culture impacts capacity building. The board of directors is applying the ______.

A. SWOT Analysis

B. Harvard Policy Model

C. Boston Consulting Group Portfolio Analysis

D. McKinsey & Company’s Capacity Framework

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

27. The Rubicon Program expanded its already successful programs by ______.

A. reorganizing its structure

B. assessing its clients’ needs

C. reducing the size of its paid staff

D. reducing the size of its volunteer workforce

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

28. Farmers Animal Farm reached its maximum animal capacity and the board needs to decide whether to expand building capacity or to close the nonprofit. Farmers Animal Farm has reached which stage of the nonprofit lifecycle?

A. ground and grow

B. review and renew

C. imagine and inspire

D. produce and sustain

Learning Objective: 7-7: Identify capacity building appropriate to an organization’s point in its life cycle.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

29. The Cat Shack nonprofit organization’s operating fund has decreased greatly. According to Brothers and Sherman, the Cat Shack would be at what stage of the life cycle arc?

A. low

B. high

C. middle

D. sustained

Learning Objective: 7-7: Identify capacity building appropriate to an organization’s point in its life cycle.

Cognitive Domain: Knowledge

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Easy

30. Older nonprofit organizations are less likely than younger organizations to focus on ______.

A. building relationships

B. ignoring strategic plans

C. reducing bureaucratic practices

D. applying organizational assessment tools

Learning Objective: 7-7: Identify capacity building appropriate to an organization’s point in its life cycle.

Cognitive Domain: Comprehension

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Medium

True/False

1. Strategic plans detail how the operational plan will be achieved.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Setting Objectives

Difficulty Level: Easy

2. Strategic planning is focused on the day-to-day operations of the nonprofit.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Strategic Planning and Strategic Management

Difficulty Level: Easy

3. Strategic management is an integrated approach that links strategy to implementation.

Learning Objective: 7-1: Define strategy, strategic planning, and strategic management.

Cognitive Domain: Knowledge

Answer Location: Strategic Planning and Strategic Management

Difficulty Level: Easy

4. The SWOT exercise is used to identify an organization’s strengths, weaknesses, opposition, and trends.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Assessing the Situation

Difficulty Level: Easy

5. The mission statement explains the reason an organization exists.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Defining Mission, Vision, and Values

Difficulty Level: Easy

6. Values are the principles an organization holds most important.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Defining Mission, Vision, and Values

Difficulty Level: Easy

7. Strategies are the directions an organization will pursue with respect to strategic issues.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Setting Goals

Difficulty Level: Easy

8. A characteristic of a good objective is that it is specific.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Setting Objectives

Difficulty Level: Easy

9. Once a strategic plan is written, it should be used to stimulate wider discussion throughout the organization.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Writing the Strategic Plan

Difficulty Level: Easy

10. Chief executive officers may not allow clients to read the strategic plan.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Knowledge

Answer Location: Writing the Strategic Plan

Difficulty Level: Easy

11. A portfolio analysis is a technique used to determine if program strategies are in line with organizational goals.

Learning Objective: 7-4: Explain various approaches to developing an organization’s strategy.

Cognitive Domain: Knowledge

Answer Location: Developing Strategies

Difficulty Level: Easy

12. An organization’s capacity elements may not be both visible and invisible.

Learning Objective: 7-5: Define organizational capacity.

Cognitive Domain: Knowledge

Answer Location: Strategic Planning and Strategic Management

Difficulty Level: Easy

Short Answer

1. Differentiate “strategic planning” and “long-range planning.”

Learning Objective: 7-1: Define strategy, strategic planning, and strategic management.

Cognitive Domain: Comprehension

Answer Location: Strategic Planning and Strategic Management

Difficulty Level: Medium

2. Explain how strategic management links strategy with implementation.

Learning Objective: 7-1: Define strategy, strategic planning, and strategic management.

Cognitive Domain: Comprehension

Answer Location: Strategic Planning and Strategic Management

Difficulty Level: Medium

3. Construct a basic, generic strategic planning model to a nonprofit organization that you are familiar with.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Application

Answer Location: Writing the Strategic Plan

Difficulty Level: Medium

4. Explain the three basic elements that effective planning begins with.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Comprehension

Answer Location: Planning to Plan

Difficulty Level: Medium

5. Explain how an organization determines its core competencies.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Comprehension

Answer Location: Assessing the Situation

Difficulty Level: Medium

6. Define the four types of strategic issues, as defined by Bryson. Give an example of each.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Comprehension

Answer Location: Identifying Strategic Issues

Difficulty Level: Medium

7. Select a nonprofit organization you are familiar with. Prepare a PEST analysis of your organization.

Learning Objective: 7-2: Describe the key steps in the strategic planning process.

Cognitive Domain: Application

Answer Location: Assessing the Situation

Difficulty Level: Medium

8. Compare and contrast capacity building activities applied by younger and older nonprofit organizations.

Learning Objective: 7-7: Identify capacity building appropriate to an organization’s point in its life cycle.

Cognitive Domain: Analysis

Answer Location: Capacity and Organizational Life Cycles

Difficulty Level: Hard

9. Examine the differences between internal and external capacity building environments.

Learning Objective: 7-6: Describe models for capacity building.

Cognitive Domain: Comprehension

Answer Location: Defining and Understanding Capacity

Difficulty Level: Medium

10. List and explain the four most common risks that concern nonprofit organizations.

Learning Objective: 7-8: Identify types of risk facing nonprofit organizations.

Cognitive Domain: Comprehension

Answer Location: Managing Risk

Difficulty Level: Medium