Full Test Bank Ch.15 - Strategic Thinking For Small Business

Chapter 15 - Strategic Thinking for Small Business

True/False

1. While large firms are affected by a strategy, small businesses do not need a good strategy

Response: See section Introduction

Level: Easy

Learning Objective: Explain the need for a small business to have a (good) strategy

1. Small businesses that implement good strategy tend to have higher levels of performance and success

Response: See Module 15.1

Level: Easy

Learning Objective: Explain the need for a small business to have a (good) strategy

1. In small firms, strategy involves only the consideration of how to achieve firm’s profit

Response: See Module 15.1

Level: Easy

Learning Objective: Explain the need for a small business to have a (good) strategy

1. In small firms, preparation of strategic plans is typically a single person’s responsibility

Response: See Module 15.1

Level: Easy

Learning Objective: Explain the need for a small business to have a (good) strategy

1. There are pros and cons of having a single person responsible for formulating and implementing a strategy in a small firm

Response: See Module 15.1

Level: Easy

Learning Objective: Explain the need for a small business to have a (good) strategy

1. Operational decisions involve issues that need strategic-level thinking

Response: See Module 15.2

Level: Medium

Learning Objective: Describe what it means to think strategically in the small business context

1. The decision to change the ownership of the firm involves strategic thinking

Response: See Module 15.2

Level: Medium

Learning Objective: Describe what it means to think strategically in the small business context

1. The SWOT analysis is a diagnostic tool that considers a firm’s strengths and weaknesses along with the opportunities it faces

Response: See section 15.3

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. While conducting a SWOT analysis, threats are events or trends that may improve a firm’s competitiveness or performance

Response: See section 15.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In SWOT analysis, opportunities are events or trends that may undermine a firm’s competitiveness or performance

Response: See section 15.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In SWOT analysis, strengths and weaknesses are the external factors that occur outside organizational boundaries

Response: See section 15.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In SWOT analysis, high employee turnover rate and lack of capital are threats to a firm

Response: See section 15.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In a PESTLE analysis, growth rate, interest rate, and rate of employment are all elements included in the ecological segment

Response: See section 15.3.1.1

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In a PESTLE framework, population size and cultural preferences are elements of a social segment

Response: See section 15.3.1.1

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In strategic planning, PESTLE technique is about examining internal factors

Response: See section 15.3.1.1

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. PESTLE is also referred to as STEEP

Response: See section 15.3.1.1

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. Indirect competitors are rivals who provide the same product or service to the same target market

Response: See section 15.3.1.2

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. Tangible resources are those assets with physical presence whereas intangible resources do not have physical presence

Response: See section 15.3.2

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. Distinctive Capabilities are those capabilities that do not distinguish a firm from its rivals

Response: See section 15.3.2

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. The purpose of the SWOT is to understand how the firm’s strengths and weaknesses align with the opportunities and threats in its environment.

Response: See section 15.3.3

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. ABC Ltd. attempts to gain a competitive advantage by keeping its inventory costs as low as possible. We can say that ABC Ltd. is a differentiated player

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. Owners of XYZ Ltd. attempt to gain a competitive advantage by offering unique products to customers. We can say that ABC Ltd. is focusing on differentiated strategic orientation

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. A differentiated player offers products aimed at the average customer

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. A low-cost player offers products aimed at the average customer

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. A mass-market player caters to a specific market segment in its industry

Response: See section 15.4

Level: Easy

Learning Objective: Identify generic strategies for small business managers

Multiple Choice Questions

1. The following are all characteristics of a bad strategy except
2. High on fluff
3. Full of ambition
4. Emphasizes desire and ambition over anything else
5. Focus on what needs to be done to achieve goals

Response: See Module 15.1

Level: Easy

Learning Objective: Explain the need for a small business to have a (good) strategy

1. The decision to enter a new business is an example of
2. Operational decisions
3. Strategic decisions
4. Human resource planning
5. Development program

Response: See Module 15.2

Level: Medium

Learning Objective: Describe what it means to think strategically in the small business context

1. Which of the following is NOT part of the acronym SWOT?
2. Strengths
3. Technical
4. Weaknesses
5. Threat

Response: See section 15.3

Level: Easy

Learning Objective: SWOT Analysis

1. Resources that a company lacks and that put it at a disadvantage in the marketplace, are known as
2. Strengths
3. Threats
4. Opportunities
5. Weaknesses

Response: See section 15.3

Level: Easy

Learning Objective: SWOT Analysis

1. In SWOT analysis, experienced management is _________to the firm, while government (de)regulation is _________to the firm
2. External; internal
3. Internal; external
4. Strength; weakness
5. None of the above

Response: See section 15.3

Level: Medium

Learning Objective: SWOT Analysis

1. What does the acronym PESTLE represent:
2. Position, economy, supplier, threat, litigation, employee
3. Position, economy, social, threat, law, and ecological
4. Political, economic, social, technological, legal, and ecological
5. Political, errors, supplier, threat, legal, and environment

Response: See 15.3.1.1

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. In PESTLE analysis, elements such as stability of governments, change in trade restrictions and tariffs, and tax policies, are included in _______segment
2. Economic
3. Social
4. Technological
5. Political

Response: See 15.3.1.1

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. In PESTLE analysis, factors such as pollution levels, weather patterns, and natural disasters, are included in ________segment
2. Ecological
3. Social
4. Economic
5. Political

Response: See 15.3.1.1

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. In PESTLE analysis, factors such as internet usage growth, progress in mobile computing, and development of new-age construction materials, are included in ________segment
2. Ecological
3. Social
4. Economic
5. Technological

Response: See 15.3.1.1

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. Which of the following industry factors influence the profits earned by firms
2. Value of the product to customers
3. Intensity of competition
4. Power of suppliers
5. All of the above

Response: See 15.3.1.2

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. Capabilities that sets a firm apart from competitors are __________
2. Core competencies
3. Portfolio competencies
4. Distinctive capabilities
5. None of the above

Response: See section 15.3.2

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. Factors such as copyrights, patents, and brands are _______resources for a firm
2. Intangible
3. Financial
4. Tangible
5. Physical

Response: See section 15.3.2

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. George, owner of a small firm, examines strengths and weaknesses in the internal environment as well as the opportunities and threats in the external environment. George is conducting the __________ analysis.
2. Internal
3. SWOT
4. PESTLE
5. Industry

Response: See section 15.3.2

Level: Easy

Learning Objective: Explain how to conduct a SWOT analysis

1. While George at Radio Shack store was conducting a SWOT analysis, he concluded that their recent increase in sales can be attributed to a superior product quality. This information is an example of: 
2. Weakness
3. Leverage
4. Strength
5. Opportunity

Response: See section 15.3.2

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. While George at Radio Shack store was conducting a SWOT analysis, he concluded that the recent decrease in sales can be attributed to low customer service. This information would be categorized as a: 
2. Weakness
3. Leverage
4. Threat
5. Opportunity

Response: See section 15.3.2

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis

1. In SWOT analysis, which of the following is an example of Threats
2. Narrow product line
3. Weak management
4. Unfavorable government policies
5. Weak balance sheet

Response: See section 15.3.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. __________is a combination of a matching internal strength and an opportunity in the external environment of the firm
2. Vulnerability
3. Constraint
4. Peril
5. Leverage

Response: See section 15.3.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. If a firm identifies an external opportunity that it cannot pursue due to an internal weakness, this is considered a:
2. Vulnerability
3. Constraint
4. Peril
5. Leverage

Response: See section 15.3.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. ________focuses on internal weaknesses that can exacerbate the impact of external threats
2. Vulnerability
3. Constraint
4. Peril
5. Leverage

Response: See section 15.3.3

Level: Medium

Learning Objective: Explain how to conduct a SWOT analysis and what to do with it

1. Which of the following strategies help a firm to obtain competitive advantage by offering unique products to customers?
2. Low-cost strategy
3. Differentiation strategy
4. Stuck-in-the-middle strategy
5. Broad strategy

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. John, owner of a shoe store, attempts to gain a competitive advantage by selling shoes at a price below those of its competitors. John is pursuing a _________strategy. 
2. Low-cost strategy
3. Diversification
4. Broad-based approach
5. Differentiation

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. When a firm gains competitive advantage by offering unique products or services with features that buyers value and are willing to pay a premium price for, it is using a _______strategy
2. Low-cost
3. Niche
4. Differentiation
5. Broad

Response: See section 15.4

Level: Medium

Learning Objective: Identify generic strategies for small business managers

1. _________is a competitive strategy based on low overall costs and satisfying a broad market
2. Low-cost
3. Niche
4. Differentiation
5. Broad low-cost

Response: See section 15.4

Level: Easy

Learning Objective: Identify generic strategies for small business managers

1. When a firm does not offer unique features that convince customers to buy its products or its costs are too high to gain competitive advantage, it is said to be
2. Stuck-in-the-middle
3. Using a best-cost strategy
4. Emphasizing a focus strategy
5. Pursuing a niche strategy

Response: See section 15.4

Level: Easy

Learning Objective: Identify generic strategies for small business managers

1. When a firm can incorporate points of differentiation into its product offerings at a lower cost than competitors, then it may have a
2. Stuck-in-the-middle
3. Best-cost strategy
4. Focus strategy
5. Niche strategy

Response: See section 15.4

Level: Easy

Learning Objective: Identify generic strategies for small business managers