Test Bank Answers Ch10 Strategy And Strategic Management - Management Canada 5e | Complete Test Bank by John R. Schermerhorn Jr. DOCX document preview.
CHAPTER 10
STRATEGY AND STRATEGIC MANAGEMENT
Question type: True/False
1) Competitive advantage is the ability to do something so well that one outperforms competitors.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
2) Typical sources of competitive advantage include cost and quality, knowledge and speed, barriers to entry, and financial resources.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
3) Sustainable competitive advantage is the ability to do something so well that one outperforms competitors.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
4) If sustainable competitive advantage is the organization’s strategy, then a well-formulated goal is the instrument to achieve that strategy.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
5) Strategic intent refers to an organization focusing its energies on a unifying and compelling target.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
6) The purpose of corporate strategy is to guide activities within one specific area of operations.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
7) Corporate strategy focuses on the strategic question: “In what industries and markets should we compete?”
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
8) Business-level strategy answers the question: “How can we best utilize resources to implement our business strategy?”
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
9) In single-product enterprises, business strategies are distinct from corporate strategies.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
10) In a large conglomerate, while the enterprise as a whole will have a corporate strategy, each strategic business unit (SBU) will have its own business strategy.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
11) Functional strategy addresses the question: “How are we going to compete for customers within this industry and market?”
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
12) The core of strategic management is looking ahead, understanding the environment and the organization, effectively positioning the organization for competitive advantage, and then achieving that goal.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
13) The correct sequence of a strategic management process is to first create a strategy, secondly to assess one’s competitive position and lastly to implement the strategy and evaluate the results.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
14) As part of the strategic management process, strategy formulation involves identifying and analyzing the existing mission, objectives and strategies; analyzing the industry and external environment as well as organizational resources and capabilities; and revising the mission and objectives and selecting new strategies.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
15) The strategic management process begins with an analysis of mission, values, and objectives.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
16) Stakeholders are individuals and groups who will in some capacity be affected by the strategic accomplishments of the organization.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
17) An effective mission statement should describe the organization’s underlying philosophy and clearly identify the domain in which the organization intends to operate.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
18) Core values are broad beliefs about what is or is not appropriate behaviour.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
19) Without core values an organization cannot nurture a clear and strong organizational culture.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
20) The presence of strong core values helps build a clear organizational identity.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
21) Operating objectives are shorter-term targets against which actual performance results can be measured as indicators of progress and continuous improvement.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
22) A business can use a SWOT analysis to assess its sustainability, wealth, operations, and technology.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
23) A SWOT analysis involves an assessment of organizational strengths and weaknesses and environmental opportunities and threats.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
24) An effective SWOT analysis can be completed once every five years.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Comprehension
Difficulty: Medium
AACSB: Analytic
25) One of the goals of a SWOT analysis is to identify what an organization does very well when compared to its competitors.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
26) Emergence of new competitors and resource scarcities are environmental threats.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
27) In a hypercompetition situation, a firm faces only a few competitors.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
28) The less attractive the industry structure, the harder it will be to make good strategic choices.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
29) From the perspective of Porter’s five forces model, an attractive industry is one in which intense rivalry already exists among competitors, there are substantial threats in terms of new competitors and substitute products, and suppliers and buyers are very powerful in bargaining over prices and quality.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
30) From the perspective of Porter’s five forces model, an unattractive industry is one with less intense competition, few threats from new entrants or substitutes, and low bargaining power among suppliers and buyers.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
31) Portfolio planning seeks the best mix of investments among alternative business opportunities, in addition to helping allocate scare resources among competing uses.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
32) The BCG Matrix is based on market growth rate and market share.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
33) Using the BCG Matrix is not an essential tool to building an effective corporate, business unit or functional strategy.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
34) A “Cash Cow” on the BCG Matrix is a high market share business in a low-growth market.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
35) A “Question Mark” on the BCG Matrix is a low market share business in a high-growth market.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
36) A “Dog” on the BCG Matrix is a high market share business in a high-growth market.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
37) A “Star” on the BCG Matrix is a high market share business in a low-growth market.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
38) According to the BCG Matrix the appropriate strategy for a “Dog” is to retrench.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
39) A growth strategy involves expansion of an organization’s current operations.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
40) A diversification strategy involves growth through expansion within the same business area.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
41) Related diversification involves growth by acquiring new businesses or entering business areas that are related to what the organization already does.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
42) Unrelated diversification involves growth by acquiring new businesses or entering business areas that are different from what the organization already does.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
43) The acquisition of an organization’s key supplier is diversification through forward vertical integration.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
44) Over the past number of years sales to Vantage Enterprises have made up almost 45% of total sales for Prentice Industries. To secure this revenue stream Prentice Industries has begun the process of purchasing a 55% share in Vantage Enterprises. This move is an example of a forward vertical integration.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
45) Terms such as “acquisition,” “merger,” “diversification,” and “global expansion” signal an underlying growth strategy.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
46) A stability strategy maintains current operations without substantial change.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
47) Bankruptcy under Canadian law protects a firm from creditors while management reorganizes to restore solvency.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
48) Restructuring by divestiture is often followed by organizations that are focused and not complex.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Medium
AACSB: Analytic
49) A restructuring strategy is used where changes in the scale and/or mix of operations are implemented in order to gain both short-term efficiencies and time to prepare new strategies for improving future performance.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
50) Restructuring by turnaround often occurs along with a change in top management.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
51) A globalization strategy adopts standardized products and advertising for use worldwide.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
52) A multidomestic strategy tries to customize products and their advertising as much as possible to fit the local needs of different countries or regions.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
53) The transnational strategy focuses on working with rivals on projects of mutual benefit.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
54) A strategic alliance that involves the development of preferred supplier relationships to guarantee a smooth and timely flow of quality materials among partners is known as an outsourcing alliance.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
55) A strategic alliance that involves firms joining together for sales and distribution of products or services is known as a distribution alliance.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
56) In a distribution alliance, firms join together to sell and distribute products or services.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
57) Co-opetition is the strategy of working with competitors on mutually beneficial projects.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
58) Porter’s four competitive strategies are: differentiation, cost leadership, focused cost differentiation and focused cost leadership.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
59) The strategic objective of the differentiation strategy is to attract customers who stay loyal to the firm’s products and lose interest in those of its competitors.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
60) It is advisable to combine a cost leadership strategy with a differentiation strategy to get better results.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
61) Organizations pursuing a cost leadership strategy seek a competitive advantage by directing the organization’s resources and attention toward minimizing costs to operate more efficiently than the competition.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
62) The objective of a focus strategy is to target organizational resources and expertise toward a particular customer group, geographical region, product or service line.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
63) Organizations pursuing a focused differentiation strategy seek a competitive advantage by concentrating on one special market segment and trying to be the lowest cost provider in that segment.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
64) Organizations pursuing a focused cost leadership strategy seek a competitive advantage by concentrating on one special market segment and trying to offer customers in that segment a unique product.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
65) “You can compete on price, or you can compete on product, but you can’t compete on both,” is a marketer’s statement that Porter believes is generally true.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
66) The strategic planning pitfall known as “failures of process” occurs when inadequate attention is paid to the analysis of mission and purpose, core values and corporate culture, organizational strengths and weaknesses, and environmental opportunities and threats.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
67) Goal replacement is the tendency to get so bogged down in details that the planning process becomes an end in itself instead of a means to an end.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
68) Corporate governance refers to the system of control and performance monitoring of top management that is maintained by the board of directors, or the board of trustees and other major stakeholder representatives.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Comprehension
Difficulty: Medium
AACSB: Analytic
69) Board members are increasingly expected to exercise control and take active roles in ensuring that strategic management of an enterprise is successful; and as a result, top management feels more performance accountability to the board and other stakeholders.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
70) Inside directors are chosen from the ranks of top management.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
71) A strategic leader needs to reduce the sense of urgency so as to achieve the best results.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
72) The critical tasks of strategic leadership include: (a) being a guardian of trade-offs by ensuring that the organization’s resources are allocated in ways consistent with the strategy, and (b) creating a sense of urgency by not allowing the organization and its members to grow slow and complacent.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
73) Effective strategic leadership can occur without the leader being a teacher of the strategy or being a great communicator to ensure that everyone understands the strategy.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
74) Because of the complex challenges faced by contemporary organizations, strategic management must be viewed as a leadership responsibility held solely by the company CEO.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
Question type: Multiple Choice
75) According to the text, the major opportunities for developing competitive advantage have traditionally included all of the following except
a) cost and quality.
b) knowledge and timing.
c) barriers to entry.
d) financial resources.
e) social progress.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
76) Which of the following best describes the differences between competitive advantage and sustainable competitive advantage?
a) Competitive advantage is how an organization can use its resources in a way that outperforms the competition, while sustainable competitive advantage is how an organization can maintain that position.
b) Competitive advantage is how an organization uses its technology, knowledge and financial resources to outperform the competition, while sustainable competitive advantage is how an organization can maintain that position.
c) Both competitive advantage and sustainable competitive advantage describe how an organization use resources in a way that outperforms the competition and its ability to maintain that position and grow from it.
d) Competitive advantage is how an organization can use its resources in a way that outperforms the competition, while sustainable competitive advantage is how an organization can maintain that position by making it difficult and costly for other organizations to copy or imitate.
e) There is no significant difference between the two concepts.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
77) Which of the following best describes the term “sustainable competitive advantage”?
a) Sustainable competitive advantage is the ability to outperform rivals in ways that are difficult or costly to imitate.
b) It is the ability to formulate technology to gain market exposure.
c) Sustainable competitive advantage is the ability to focus organizational energies on a unifying and compelling goal.
d) It is the ability to formulate strategies efficiently to accomplish long-term goals.
e) The ability to identify the setbacks in the organizational procedure and work toward correcting them describes sustainable competitive advantage.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
78) Which of the following situational descriptions does not describe one of the four major opportunities for developing sustainable competitive advantage that are identified in the text?
a) Sustainable competitive advantage occurs where strategy drives an emphasis on operating and/or product or service quality.
b) Sustainable competitive advantage occurs where strategy drives an emphasis on innovation and speed of delivery to market for new ideas.
c) Sustainable competitive advantage occurs where strategy drives an emphasis on securing high quality human resources.
d) Sustainable competitive advantage occurs where strategy drives an emphasis on creating a market stronghold that is protected from entry by others.
e) Sustainable competitive advantage occurs where strategy drives an emphasis on investments and/or loss sustainment that competitors can’t match.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
79) Which of the following best describes a strategy?
a) It is a comprehensive plan guiding resource allocation to achieve long-term organization goals.
b) The strategy of an organization is the same as the mission of the organization.
c) Strategy is the document that expresses the organization’s reason for existence in society.
d) It is the predominant value system of the organization as a whole.
e) An organization’s strategy is a special strength that gives an organization a competitive advantage.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
80) A ___ is a plan for using resources consistent with ___.
a) strategy; strategic intent
b) vision; strategic intent
c) budget; transformational leadership
d) strategy; transformational leadership
e) strategy; visionary leadership
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
81) ___ refers to an organization focusing its energies on a unifying and compelling corporate target.
a) Strategic thinking
b) The operational plan
c) The functional plan
d) Strategic intent
e) Objective advantage
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
82) Which of the following correctly identifies the different levels of strategy that can exist in a business?
a) corporate strategy, business strategy, and functional strategy
b) institutional strategy, corporate strategy, and business strategy
c) growth strategy, retrenchment strategy, and stability strategy
d) corporate strategy, divisional strategy, and work group strategy
e) top-level strategy, middle-level strategy, and lower-level strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
83) ___ focuses on the strategic question: “In what industries and markets should we compete?”
a) Environmental strategy
b) Functional strategy
c) Competitive strategy
d) Business strategy
e) Corporate strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
84) ___ focuses on the strategic question: “How can we best serve the needs of the homeless population?”
a) Environmental strategy
b) Functional strategy
c) Competitive strategy
d) Business strategy
e) Corporate strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
85) Decisions related to choices about product and service mix, facilities locations, and new technologies are part of the ___ level strategy of an organization.
a) branding
b) marketing
c) corporate
d) functional
e) business
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
86) The term ___ is often used to describe a business firm that is part of a larger enterprise.
a) supplier alliance
b) strategic business unit
c) joint venture
d) Cash Cow
e) co-opetitor
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
87) ___ addresses the question: “How are we going to compete for customers within this industry and market?”
a) Environmental strategy
b) Functional strategy
c) Operating strategy
d) Business strategy
e) Corporate strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
88) Healthy Home Inc. is a newly established organization which manufactures home appliances. The company is in the process of selecting the locations for its production facilities and appropriate manufacturing technology. This information indicates that the company is developing its ___ strategy.
a) contingency level
b) competitive level
c) business-level
d) marketing-level
e) tactical level
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
89) The difference between a corporate-level strategy and a business-level strategy is that
a) a corporate-level strategy sets long-term direction for the total enterprise and the latter is concerned with how a division or strategic business unit will compete in its product or service domain.
b) the former focuses on how a division will compete in its product or service domain and a business-level strategy is concerned with guiding the use of organizational resources to implement business strategies.
c) a business-level strategy is involved in crafting strategies to guide the allocation of resources, and a corporate-level strategy is concerned with formulating and implementing strategies.
d) the former adopts standardized products and advertising for use worldwide and the latter seeks efficiencies of global operations with attention to local markets.
e) a corporate-level strategy makes decisions regarding facilities locations, and new technologies and the latter customizes products and advertising to best fit local needs.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
90) The difference between a corporate-level strategy and a functional-level strategy is that
a) a corporate-level strategy focuses on how a strategic business unit will compete in its product domain and a functional-level strategy sets long-term direction for the total enterprise.
b) the former sets long-term direction for the total enterprise and a functional-level strategy guides activity within one specific area of operations.
c) the former is concerned with formulating and implementing strategies while the latter is involved in crafting strategies to guide the allocation of resources.
d) a functional-level strategy seeks efficiencies of global operations with attention to local markets and a corporate-level strategy adopts standardized products and advertising for use worldwide.
e) the former makes decisions regarding facilities locations, and new technologies and a functional-level strategy customizes products and advertising to best fit local needs.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
91) ___ guides the use of resources to implement business strategy.
a) Competitive strategy
b) Corporate strategy
c) Objective formulation
d) Business strategy
e) Functional strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
92) ___ focuses on activities within a specific area of operations such as marketing, manufacturing, finance, and human resources.
a) Environmental strategy
b) Operating strategy
c) Functional strategy
d) Business strategy
e) Corporate strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
93) Questions such as “How can we best utilize resources within a specific area of operations to implement our business strategy?” are typically asked while discussing the ___ strategy.
a) branding
b) divisional
c) corporate
d) functional
e) business
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
94) The entire process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage is referred to as
a) strategic analysis.
b) strategy formulation.
c) strategy implementation.
d) strategic management.
e) strategic outsourcing.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
95) Which of the following is the first step in the process of strategic management?
a) strategic analysis
b) strategy formulation
c) strategy implementation
d) strategic marketing
e) strategic outsourcing
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
96) Which of the following is the last step in the process of strategic management?
a) strategic analysis
b) strategy formulation
c) strategy implementation
d) strategic marketing
e) strategic outsourcing
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
97) Strategy analysis is ___.
a) the process used to analyze the organization, existing strategies, the organizational environment, and the organization’s competitive position and strategies
b) the method by which strategies guide resource allocation
c) the same as goal development
d) also called corporate-level strategy
e) a form of functional strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
98) Strategy formulation is ___.
a) a set of processes used to create new strategies by evaluating existing strategies and changes in the organizational environment
b) the process of revising objectives and setting new corporate, business and/or functional-level strategies
c) the same as goal development
d) also called corporate-level strategy
e) a form of functional strategy
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
99) Miranda Corp. changes its business strategy from a focused differentiation strategy to a focused cost leadership one, as this new strategy works better for the organization. Which of the following steps in the process of strategic management ideally includes this action?
a) strategy analysis
b) strategy formulation
c) strategy assessment
d) strategy identification
e) strategy outsourcing
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
100) ___ is the process of setting strategies in motion and then evaluating results and making adjustments as needed.
a) Strategic analysis
b) Strategy formulation
c) Strategy implementation
d) Strategic crafting
e) Strategic outsourcing
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
101) A(n) ___ expresses an organization’s reason for existence in society.
a) statement of purpose
b) mission statement
c) cash flow statement
d) net worth statement
e) operating objective
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
102) Michael Hammer recommends that an organization’s mission statement should address certain questions, including which of the following?
a) What are we moving to?
b) What is our dream?
c) What kind of difference do we want to make in the world?
d) all of the above
e) none of the above
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
103) A clear and viable mission statement will garner the support and respect from all of the following stakeholders except
a) customers.
b) community.
c) employees.
d) government.
e) shareholders
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
104) As part of the strategic planning process, a ___ is concerned with assessing the interests of each group of stakeholders as well as the organization’s record in responding to them.
a) mission and domain analysis
b) corporate culture analysis
c) competitor analysis
d) strategic constituencies analysis
e) business portfolio planning analysis
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
105) ___ are broad beliefs about what is or is not appropriate behaviour.
a) Corporate subcultures
b) Core values
c) Diversified values
d) Functional values
e) Marketing values
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Ethics
106) Which of the following statements accurately describe the benefits associated with strong core values?
a) Strong core values give character to an organization.
b) Strong core values back up the mission statement.
c) Strong core values help guide members’ behaviour in meaningful and consistent ways.
d) a and b
e) a, b, and c
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
107) Organizational culture refers to ___.
a) a culture in which corporations dominate other social institutions
b) the predominant value system for an organization as a whole
c) the process by which managerial values are transferred to society as a whole
d) the value system of top management
e) a term used by academicians to describe a capitalist society
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
108) Organizational culture accomplishes all of the following except
a) it determines the strategy to be pursued.
b) it shapes the values of managers and other organization members.
c) it points people in common directions.
d) it helps build institutional identity.
e) it backs up the mission statement.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
109) ___ direct activities toward key and specific performance results.
a) Corporate objectives
b) Official objectives
c) Strategic objectives
d) Operating objectives
e) Planning objectives
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
110) ___ are shorter-term targets against which actual performance results can be measured as indicators of progress and continuous improvement.
a) Corporate objectives
b) Official objectives
c) Strategic objectives
d) Planning objectives
e) Operating objectives
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
111) Syntagmatic, an educational consultancy firm, is particular about recruiting qualified professionals, in order to provide more value to its global clients. Syntagmatic strives to maintain its high standards while at the same time providing its employees with a clear and strong organizational culture. Which of the following operating objectives is the primary focus of Syntagmatic?
a) social responsibility
b) cost efficiency
c) market share
d) human capacity
e) financial health
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
112) Which of the following is not a typical organizational operating objective?
a) Sustainability
b) Cash flow
c) Product quality
d) Market share
e) Innovation
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
113) A ___ begins with the systematic evaluation of the organization’s resources and capabilities and focuses on identifying the organization’s core competencies.
a) functional strategy
b) mission statement
c) flanking strategy
d) branding analysis
e) SWOT analysis
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
114) Which of the following is an advantage of a SWOT analysis?
a) It deliberates on the optimum use of organizational resources.
b) It gives an organization a competitive advantage.
c) It is an external analysis of environmental opportunities and threats.
d) It analysis the external factors that give way to organizational weaknesses.
e) It defines specific objectives that an organization must accomplish.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
115) In conducting a SWOT analysis, the presence of manufacturing efficiencies, a skilled workforce, a good market share, strong financing, and a superior reputation would be identified as a company’s ___.
a) strategies
b) strengths
c) weakness
d) opportunities
e) threats
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
116) In conducting a SWOT analysis, issues regarding outdated facilities, inadequate research and development, obsolete technologies, weak management, and past planning failures would be addressed in analyzing the company’s ___.
a) strategies
b) strengths
c) weaknesses
d) opportunities
e) threats
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
117) In conducting a SWOT analysis, a company’s ___ can be examined by asking questions about possible new markets, the growth of existing markets, the emergence of new technologies, and the weaknesses of market rivals.
a) strategies
b) strengths
c) weakness
d) opportunities
e) threats
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
118) A SWOT analysis should be completed
a) for the organization as a whole and for each strategic business unit.
b) for the organization as a whole only.
c) at least annually for the organization as a whole and for each strategic business unit.
d) every five years for the organization as a whole and for each strategic business unit.
e) whenever top management decides it is appropriate, and whichever portion of the organization it deems necessary.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
119) In a SWOT analysis, industry environmental factors include the organization’s ___.
a) resource suppliers
b) competitors
c) customers
d) all of the above
e) none of the above
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
120) In doing a SWOT analysis, the examination of threats within both the industry and macro environments should address all of the following elements except
a) new competitors.
b) abundance of resources.
c) changing market tastes.
d) new regulations.
e) substitute products.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
121) Any special strength that gives an organization a competitive advantage is referred to as its ___.
a) core competency
b) productivity
c) co-opetition ability
d) emotional intelligence
e) monopolistic power
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
122) Powerston Inc. is the market leader of car batteries primarily because of its unique distribution system. The distribution system that has given the company an advantage over its competitors is an example of the company’s ___.
a) co-opetition strategy
b) core competency
c) technical skill
d) emotional intelligence
e) monopolistic power
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
123) Which of the following is true about oligopoly?
a) There are several direct competitors.
b) It ensures that there is no competition for resources.
c) There are only a few competitors.
d) It is seen most often in the fast foods industry.
e) There are many substitute products.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
124) Which of the following is not an example of an oligopoly?
a) Canada Post
b) Air Canada
c) Ford Motor Company
d) Shaw Cable
e) All of the above are oligopoly examples
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
125) The ideal condition for an organization to operate in is a(n)
a) oligopoly.
b) monopoly.
c) hypercompetition.
d) non-competitive industry.
e) attractive industry.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
126) In the food industry, where there are direct competitors, rivalry takes the form of
a) hypercompetition.
b) monopoly.
c) oligopoly.
d) non-competitive industry.
e) attractive industry.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
127) Which of the following is not an example of a hypercompetition industry?
a) Retail grocers
b) Cell phone industry
c) Fast food restaurants
d) eCommerce
e) All of the above are hypercompetition industries
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
128) From the perspective of Porter’s five forces model, a(n) ___ is one in which intense rivalry already exists among competitors, there are substantial threats in terms of new competitors and substitute products, and suppliers and buyers are very powerful in bargaining over prices and quality.
a) attractive industry
b) unattractive industry
c) competitive industry
d) non-competitive industry
e) normal industry
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
129) From the perspective of Porter’s five forces model, a(n) ___ is one with less intense competition, few threats from new entrants or substitutes, and low bargaining power among suppliers and buyers.
a) attractive industry
b) unattractive industry
c) competitive industry
d) non-competitive industry
e) normal industry
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
130) According to Porter, which of the following is one of the five forces that affect industry competition?
a) bargaining power of intermediaries
b) market share
c) market growth rate
d) substitute products
e) workplace diversity
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
131) If there are many competitors and the barriers to entry are low, the
a) industry is attractive.
b) industry is unattractive.
c) customers have low bargaining power.
d) industry is mature.
e) industry is not mature.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
132) Which of the following increases the attractiveness of a market?
a) low barriers to entry
b) many competitors
c) many substitute products
d) high power of suppliers
e) few substitute products
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
133) ___ decreases the attractiveness of the market.
a) Few competitors
b) High barriers to entry
c) Few substitute products
d) High bargaining power of customers
e) Low bargaining power of suppliers
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
134) A _______ analyzes business opportunities according to market growth rate and market share.
a) Flanking strategy
b) BCG Matrix
c) Five Forces analysis
d) Strategy formulation
e) Logistics plan
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
135) The BCG portfolio planning model uses an analysis of ___ and ___ to analyze business opportunities.
a) investment alternatives; rates of return
b) product alternatives; forecasted profitability
c) market growth rate; costs of operation
d) market growth rate; market share
e) market share; customer needs
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
136) Businesses or products with high market shares in high-growth markets are referred to as ___ in the BCG Matrix.
a) Cash Cows
b) Stars
c) Question Marks
d) Dogs
e) Apples
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
137) In a BCG Matrix the Stars typically
a) produce large profits through substantial penetration of expanding markets.
b) produce low profits and limited cash flow, and little upside potential.
c) may not generate much profit at the moment, however it has upside potential to do so.
d) produce little if any profit and have low potential for future improvement.
e) generate high profit for a short span of time and then become inactive.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
138) The preferred strategy for Stars is growth because they
a) produce large profits and a strong cash flow, with little upside potential.
b) may not generate much profit at the moment, however it has upside potential.
c) produce large profits and a strong cash flow for only a short span of time and must be nurtured.
d) are not only high performers in the present, they offer similar potential for the future.
e) produce little if any profit and must be supported so that they perform better.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
139) Businesses or products with high market shares in low-growth markets are referred to as ___ in the BCG Matrix.
a) Cash Cows
b) Stars
c) Question Marks
d) Dogs
e) Apples
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
140) The preferred strategy for Cash Cows is stability or modest growth because
a) they produce large profits and a strong cash flow, with little upside potential.
b) they may not generate much profit at the moment, however they have upside potential.
c) the markets offer great growth opportunity given that they are new to the market.
d) they are not only high performers in the present, they offer similar potential for the future.
e) they produce little if any profit and must be supported so that they perform better.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
141) When comparing Stars and Cash Cows which of the following is true?
a) Both Stars and Cash Cows have a high market share and produce large profits.
b) Both Stars and Cash Cows have a high market share and operate in high growth markets.
c) Both Stars and Cash Cows call for a growth strategy.
d) Both Stars and Cash Cows have a high market share and only Stars operate in a high growth market.
e) Both Stars and Cash Cows have a high market share while only Cash Cows produce large profits.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
142) Businesses or products with low market shares in high-growth markets are referred to as ___ in the BCG Matrix.
a) Cash Cows
b) Stars
c) Question Marks
d) Dogs
e) Apples
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
143) The preferred strategy for Question Marks is to grow or retrench because
a) they produce large profits and a strong cash flow, with little upside potential.
b) they may not generate much profit at the moment, however they have an upside potential.
c) the markets offer great growth opportunity, given that they are new to the market.
d) they are not only high performers in the present, they also offer similar potential for the future.
e) they produce little if any profit and must be supported so that they perform better.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
144) Businesses or products with low market shares in low-growth markets are referred to as ___ in the BCG Matrix.
a) Cash Cows
b) Stars
c) Question Marks
d) Dogs
e) Apples
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
145) The preferred strategy for Dogs is retrenchment because
a) they produce large profits and a strong cash flow, and the upside potential is there.
b) they may not generate much profit at the moment, and the upside potential is there.
c) the markets offer great growth opportunity given that they are new to the market.
d) they are not only high performers in the present, they also offer similar potential for the future.
e) they produce little if any profit, and they have low potential for future improvement.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
146) Which of the following accurately describes the preferred strategy for the Boston Consulting Group’s (BCG Matrix) business opportunities?
a) The preferred strategy for Stars is growth through resource investment.
b) The preferred strategy for Dogs is retrenchment by divestiture.
c) The preferred strategy for promising questions marks is growth, while the preferred strategy for less promising Question Marks is restructuring or divestiture.
d) all of the above
e) none of the above
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
147) When one hears terms like “acquisition,” “merger,” and “global expansion,” the underlying master strategy is one of ___.
a) growth
b) retrenchment
c) downsizing
d) turnaround
e) restructuring
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
148) A ___ strategy involves growth through expansion within the same business area.
a) concentration
b) diversification
c) related diversification
d) unrelated diversification
e) vertical integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
149) Vintop Inc., a successful designer brand, has several outlets in the U.S. To push sales growth, Vintop has decided to focus more on its primary business and open up its branches in ten different countries. The approach taken by Vintop is an example of growth through ___.
a) strategic alliance
b) vertical integration
c) liquidation
d) diversification
e) concentration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
150) Food Lord, a fast food chain, is expanding its operations in several states in the country. Which of the following is this an example of?
a) growth through concentration
b) diversification
c) vertical integration
d) retrenchment
e) divestiture
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
151) Which of the following is a defining characteristic of growth through diversification?
a) It involves extending business within the same business area.
b) It involves acquisition of or investment in new and different business areas.
c) It involves decreasing the size of operations.
d) It involves selling company assets to pay creditors.
e) It involves fixing specific performance problems.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
152) A ___ strategy involves growth through the acquisition of or investment in new and sometimes different business areas.
a) concentration
b) diversification
c) related diversification
d) unrelated diversification
e) vertical integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
153) Enigma Breweries, a distillery company, bought Suave Clothing, a premium men’s fashion boutique chain. By entering a different business area, Enigma Breweries plans to grow and expand its business and profits. Which type of growth strategy has Enigma Breweries adopted?
a) growth through concentration
b) growth through diversification
c) market development strategy
d) market penetration strategy
e) product development strategy
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
154) ___ involves growth by acquiring new businesses or entering business areas that are related to what the organization already does.
a) Concentration
b) Related diversification
c) Unrelated diversification
d) Forward integration
e) Vertical integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
155) ___ involves growth by acquiring new businesses or entering business areas that are different from what the organization already does.
a) Concentration
b) Related diversification
c) Unrelated diversification
d) Backward integration
e) Vertical integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
156) Growth through ___ typically occurs by acquiring suppliers or distributors.
a) strategic alliance
b) vertical integration
c) liquidation
d) divestiture
e) concentration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
157) Bella Dairy Products produces a variety of premium ice creams. The company has recently acquired two large dairy farms in the area. This strategic action falls under the category of ___.
a) growth through concentration
b) vertical integration
c) retrenchment
d) divestiture
e) franchising
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
158) ___ occurs when a business acquires one of its suppliers.
a) Backward integration
b) Inside-out integration
c) Forward integration
d) Outside-in integration
e) Horizontal integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
159) Kiri Ltd., manufacturers a unique skin therapy cream that it sells to high-end retailers. One of its key customers has threatened to take its business to one of Kiri’s competitors because of rumors that the suppliers for one of the key ingredients in Kiri’s cream may begin selling to other manufacturers. Which of the following would be the best strategy for Kiri Ltd.?
a) Backward integration
b) Inside-out integration
c) Forward integration
d) Outside-in integration
e) Horizontal integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
160) ___ occurs when business acquires distributors.
a) Backward integration
b) Inside-out integration
c) Forward integration
d) Outside-in integration
e) Horizontal integration
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
161) A ___ strategy is used when an organization seeks to maintain current operations without substantial changes.
a) stability
b) renewal
c) combinational
d) growth
e) operational
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
162) A ___ seeks to correct weaknesses by making changes to the current ways of operating.
a) restructuring strategy
b) related diversification strategy
c) unrelated diversification strategy
d) backward integration strategy
e) forward integration strategy
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
163) Liquidation, restructuring, downsizing, rightsizing, and divestiture are examples of which organizational strategy?
a) competition
b) restabilization
c) growth
d) restructuring
e) stability
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
164) ___ involves closing operations and selling assets to pay creditors.
a) Strategic alliances
b) Divestiture
c) Turnaround
d) Diversification
e) Liquidation
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
165) Restructuring by downsizing primarily involves
a) decreasing the size of operations.
b) working with rivals on projects of mutual benefit.
c) customizing products and advertising to best fit local needs.
d) joining in partnership to pursue an area of mutual interest.
e) adopting standardized products and advertising for use worldwide.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
166) Which of the following best describes restructuring by divestiture?
a) selling off parts of the organization to refocus on core competencies.
b) working with rivals on projects of mutual benefit.
c) customizing products and advertising to best fit local needs.
d) joining in partnership to pursue an area of mutual interest.
e) adopting standardized products and advertising for use worldwide.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
167) Which of the following strategies primarily tries to fix specific performance problems?
a) downsizing
b) turnaround
c) multidomestic
d) divestiture
e) co-opetition
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
168) A(n) ___ views the world as one large market, trying as much as possible to standardize products and their advertising for use everywhere.
a) globalization strategy
b) domestic strategy
c) multidomestic strategy
d) transnational strategy
e) consolidation strategy
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
169) A globalization strategy reflects a(n) ___ that assumes everyone everywhere wants the same thing that one has developed and sold successfully at home.
a) region centered view
b) ethnocentric view
c) polycentric view
d) geocentric view
e) concentric view
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Synthesis
Difficulty: Hard
AACSB: Analytic
170) A(n) ___ tries to customize products and their advertising as much as possible to fit the local needs of different countries or regions.
a) globalization strategy
b) domestic strategy
c) multidomestic strategy
d) transnational strategy
e) crosscultural strategy
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
171) A multidomestic strategy reflects a(n) ___ that that shows respect for both market diversity and the capabilities of locals to best interpret their strategic implications.
a) paleocentric view
b) ethnocentric view
c) polycentric view
d) geocentric view
e) concentric view
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Synthesis
Difficulty: Hard
AACSB: Analytic
172) Fresh Nest, a retail grocer, provides a wide variety of products to its customers. In order to keep up with the varying demand in fruits and vegetables the store stocks products according to the needs and tastes of their community. Based on this information, which of the following strategies has been adopted by Fresh Nest?
a) transnational strategy
b) downsizing strategy
c) turnaround strategy
d) co-opetition strategy
e) multidomestic strategy
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
173) Which of the following is a describes a characteristic of the transnational strategy?
a) Organizations will work with rivals on projects of mutual benefit.
b) An organization seeks efficiencies of global operations with attention to local markets.
c) It tries to fix specific performance problems within the organization.
d) A transnational strategy involves expansion of the organization’s current operations.
e) The firm will analyze business opportunities according to market growth rate.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
174) A(n) ___ seeks balance among efficiencies in global operations and responsiveness to local markets.
a) globalization strategy
b) domestic strategy
c) multidomestic strategy
d) transnational strategy
e) crosscultural strategy
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: EAsy
AACSB: Analytic
175) A transnational strategy reflects a(n) ___ that respects diversity and values talents around the world.
a) monocentric view
b) ethnocentric view
c) polycentric view
d) geocentric view
e) concentric view
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
176) A(n) ______ occur(s) when two or more organizations join together in partnership to pursue an area of mutual interest.
a) Vertical integration
b) Horizontal integration
c) Strategic alliances
d) Strategic contracts
e) Organizational collusion
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
177) A strategic alliance that involves a firm contracting to purchase important services from another organization is known as a(n) ___.
a) collaborative alliance
b) entrepreneurial alliance
c) outsourcing alliance
d) supplier alliance
e) distribution alliance
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
178) Compsolute has entered into a partnership with Double Edge Finances. The terms of the agreement state that Compsolute would purchase the services of Double Edge’s finance team for a period of five years. This is an example of a(n) ___ alliance.
a) supplier
b) distribution
c) outsourcing
d) co-opetition
e) equity strategic
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
179) In a(n) ___ alliance, firms typically join together to sell and deliver products or services.
a) supplier
b) distribution
c) contracting
d) vertical
e) outsourcing
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
180) The strategy of working with rivals on projects of mutual benefit is referred to as ___.
a) downsizing
b) turnaround
c) divestiture
d) vertical integration
e) co-opetition
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
181) Michael Porter’s competitive strategies model identifies four fundamental strategies. Which of the following correctly describes these strategies?
a) introduction, growth, maturity, and decline
b) Stars, Cash Cows, Dogs, and Question Marks
c) growth, differentiation, incremental, and emergent
d) differentiation, cost leadership, focused differentiation, and focused cost leadership
e) growth, retrenchment, vertical integration, and stability
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
182) Michael Porter’s competitive strategies framework bases business-level strategic decisions on which two main considerations?
a) market scope and source of competitive advantage
b) market scope and product reliability
c) market scope and market share
d) source of competitive advantage and stability
e) source of competitive advantage and vertical integration
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
183) Businesses pursuing a ___ seek a competitive advantage by directing the organization’s resources and attention toward distinguishing its products from those of the competition.
a) differentiation strategy
b) cost leadership strategy
c) focused diversification strategy
d) focused cost leadership strategy
e) emergent strategy
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
184) Watercandy sells a range of premium confectionery products. Although the company’s products are priced a little higher than those of its competitors, its customers are ready to pay for its unique flavours. Watercandy uses the ___ strategy to gain an advantage over its competitors.
a) cost leadership
b) stuck-in-the-middle
c) focused cost leadership
d) differentiation
e) co-opetition
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
185) Telkon, a mobile phone company, has recently launched a device which, apart from all the regular mobile phone features, also has an e-reader and a USB port. None of the other mobile device makers have such a product. According to this information, which of the following business-level strategies is being used by Telkon?
a) co-opetition strategy
b) cost leadership strategy
c) focus strategy
d) differentiation strategy
e) turnaround strategy
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
186) Which of the following strategies allows organizations to make profits while selling products or services at prices that their competitors cannot profitably match?
a) cost leadership strategy
b) stuck-in-the-middle strategy
c) focused differentiation strategy
d) differentiation strategy
e) co-opetition strategy
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
187) Businesses pursuing a ___ seek a competitive advantage by directing the organization’s resources and attention toward minimizing costs to operate more efficiently than the competition.
a) differentiation strategy
b) cost leadership strategy
c) focused differentiation strategy
d) focused cost reduction strategy
e) emergent strategy
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Comprehension
Difficulty: Medium
AACSB: Analytic
188) Aries is a new company in the laundry detergent market, which already has many competitors. Researchers at Aries have devised a new, cost-efficient formula for manufacturing detergents that has made it possible for the company to charge less than its competitors and still make a profit. The strategy used by Aries is that of ___.
a) cost leadership
b) stuck-in-the-middle
c) focused differentiation
d) differentiation
e) co-opetition
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
189) A ___ strategy typically concentrates attention on a special market segment in the form of a niche customer group, geographical region, or product or service line.
a) co-opetition
b) downsizing
c) turnaround
d) focus
e) transnational
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
190) Businesses pursuing a ___ seek a competitive advantage by concentrating on one special market segment and trying to offer customers in that segment a unique product.
a) differentiation strategy
b) cost leadership strategy
c) focused differentiation strategy
d) focused cost leadership strategy
e) restructuring strategy
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
191) Which of the following is a defining characteristic of a focused differentiation strategy?
a) It offers a unique product to a special market segment.
b) It seeks the lowest costs of operations within a special market segment.
c) It analyzes business opportunities according to market growth rate.
d) It focuses on substantial penetration of expanding markets.
e) It involves decreasing the size of operations.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
192) Businesses pursuing a ___ seek a competitive advantage by concentrating on one special market segment and trying to be the lowest cost provider in that segment.
a) differentiation strategy
b) cost leadership strategy
c) focused differentiation strategy
d) focused cost leadership strategy
e) retrenchment strategy
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
193) Which of the following is a defining characteristic of a focused cost leadership?
a) It offers a regular product to a common market segment.
b) It seeks the lowest costs of operations within a special market segment.
c) It analyzes business opportunities according to market growth rate.
d) It focuses on substantial penetration of expanding markets.
e) It involves decreasing the size of operations.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
194) Paying inadequate attention to the analysis of mission and purpose, core values and corporate culture, organizational strengths and weaknesses, and environmental opportunities and threats constitutes a strategic planning pitfall known as ___.
a) failures of substance
b) failures of process
c) emergent strategies
d) failures of corporate governance
e) failures of strategic leadership
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
195) Verticone, a software firm, suffered a significant loss as a result of poor market analysis and weak strategy selection. This is an example of ___.
a) representativeness bias
b) failure of substance
c) goal displacement
d) congruence bias
e) endowment effect
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
196) Poor handling of the ways that various aspects of strategic planning are accomplished constitute a strategic planning pitfall known as ___.
a) failures of substance
b) failures of process
c) incrementalism
d) failures of corporate governance
e) failures of strategic leadership
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
197) Failures of process in strategic planning include ___.
a) the lack of participation error
b) inadequate resource allocation
c) goal displacement
d) a and b
e) a and c
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
198) A lack of participation error is most likely to occur when
a) the planning process becomes an end in itself.
b) the performance of top management is not monitored.
c) key persons are not included in the strategic planning.
d) there is lack of efficiency in vertical communication.
e) the cost leadership strategy and the differentiation strategy are used simultaneously.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
199) ___ is the failure to include key persons in the strategic planning effort.
a) Corporate governance
b) Goal displacement
c) The lack of participation error
d) The lack of substance error
e) Conflict avoidance
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Medium
AACSB: Analytic
200) The tendency to get so bogged down in details that the planning process becomes an end in itself instead of a means to an end is known as ___.
a) corporate governance
b) goal displacement
c) lack of participation error
d) lack of substance error
e) conflict avoidance
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
201) Process failure where the planning process becomes an end in itself, rather than a means to an end is referred to as ___.
a) lack of participation error
b) goal displacement
c) failures of substance
d) divestiture
e) downsizing
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
202) ___ is evidenced by an organization’s top management ensure that corporate, business and functional strategies are well implemented and that any strategies that are not working are either scrapped or modified in a timely manner.
a) Corporate governance
b) Strategic control
c) Strategic leadership
d) Corporate performance auditing
e) Corporate performance review
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
203) ___ is the system of control and performance monitoring of top management that is maintained by boards of directors and other major stakeholder representatives.
a) Corporate governance
b) Stakeholder oversight
c) Top management oversight
d) Corporate performance auditing
e) Corporate performance review
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
204) ___ are formally charged with ensuring that an organization operates in the best interests of its owners and/or the representative public.
a) Strategic leaders
b) Boards of directors
c) Executive teams
d) Investment advisers
e) Management committees
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
205) In corporate governance, controversies often arise over the roles of ___ and ___.
a) Managers; non-management employees
b) Internal customers; external customers
c) Inside directors; outside directors
d) Customers; suppliers
e) Stakeholders; stockholders
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Comprehension
Difficulty: Easy
AACSB: Analytic
206) Which of the following statements about corporate governance is incorrect?
a) Boards may be too compliant in endorsing or confirming the strategic initiatives of top management.
b) Board members are increasingly expected to exercise control and take active roles in ensuring that strategic management of an enterprise is successful.
c) Outside directors may be selected because they are friends of top management or at least are sympathetic to top management.
d) Top management probably feels more performance accountability to boards of directors and other stakeholders in today’s environment.
e) Top management performance accountability to a board of directors relates only to financial concerns.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
207) ___ is the capability to inspire people to engage successfully in a process of continuous change, performance enhancement, and implementation of organizational strategies.
a) Strategic conceptualization
b) Scientific management
c) Strategic leadership
d) Motivational speaking
e) Groupthink
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
208) Because the challenges faced by contemporary organizations are so complex, strategic management is increasingly viewed as ___.
a) a professional planner’s responsibility
b) a team leadership responsibility
c) the chief executive officer’s only responsibility
d) the board chairperson’s responsibility
e) every middle manager’s most important responsibility
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
209) Which of the following is not one of the critical tasks of strategic leadership?
a) Being a guardian of trade-offs by ensuring that the organization’s resources are allocated in ways consistent with the strategy
b) Creating a sense of urgency by not allowing the organization and its members to grow slow and complacent
c) Ensuring that top management understands the strategy so that they can direct their subordinates in carrying it out
d) Being a teacher by conveying the strategy and making it a cause
e) Being a great communicator to ensure that everyone understands the strategy and how it makes their organization different from others
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
210) Which of the following examples best captures the function of a strategic leader?
a) Vincent ensures the optimum allocation and consistent use of resources in his firm.
b) Joseph refrains from pressurizing his subordinates and allows them to be complacent.
c) Madeleine allows her employees to carve their own paths rather than acting as a teacher.
d) Lilliana limits her interactions with her subordinates and disapproves the questioning of her orders.
e) Bertille trusts her subordinates and does not cross-check their work.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
Question type: Essay
211) Explain how competitive advantage, strategy, and the strategic management process are interrelated.
Learning Objective 10.1: Discuss the process and importance of strategic management.
Section Reference 10.1: Strategic Management
Bloom’s: Analysis
Difficulty: Medium
AACSB: Reflective Thinking
212) Core values are broad beliefs about what is or is not appropriate behaviour. How can a leader assist in establishing core values in an organization?
One important way that leaders influence the social system in their organizations is through the values they bring to the organization. These values can be conveyed in a number of ways. For instance, they can be communicated directly through public statements, memoranda, and e-mails. Highly visible decisions are also an effective way to communicate a value. For example, a CEO could overturn the decision of a subordinate in favour of a customer in an effort to communicate the importance of customer satisfaction: “The customer is always right.”
Leaders can also influence value systems through the way they administer rewards. The organization’s individuals that demonstrate the desired attitudes and behaviour can be rewarded with good-paying jobs.
The presence of strong core values helps build organizational identity, giving a sense of character to the organization in the eyes of its employees and external stakeholders. Core values also back up the mission by helping guide the behaviour of organization members in meaningful and consistent ways. If leaders are responsive to the values of key stakeholders when making and communicating decisions, the decisions are more likely to be perceived as ethical by those stakeholders.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Reflective Thinking
213) What is SWOT analysis? Discuss the types of issues and questions that should be addressed when conducting a SWOT analysis.
What are our strengths? Manufacturing efficiency? Skilled workforce? Good market share? Strong financing? Superior reputation?
What are our weaknesses? Outdated facilities? Inadequate research and development? Obsolete technologies? Weak management? Past planning failures?
The questions typically asked in analyzing the industry and environment are:
What are our opportunities? Possible new markets? Strong economy? Weak market rivals? Emerging technologies? Growth of existing market?
What are our threats? New competitors? Shortage of resources? Changing market tastes? New regulations? Substitute products?
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
214) Labyrinth Ltd. is a heavy-metal manufacturer with a solid reputation and a significant market share. Their most recent financial statements for reported a noticeable decline in revenues from the previous years. Management has determined that the most likely cause was the entry of new competitors into the market. As well it was discovered that these competitors are operating with a more skilled labour pool and advanced technology.
Prepare a SWOT analysis for Labyrinth Ltd. Your answer will include at least one item in each of the four categories.
Weakness: antiquated technology
Opportunity: acquire newer technology in order to maintain their current strengths and possibly build upon them
Threat: increased competition that already has new technology
Student answers may vary somewhat, however the above represent the minimum expected.
Learning Objective 10.2: Identify the essential elements in strategic analysis.
Section Reference 10.2: Essentials of Strategic Analysis
Bloom’s: Application
Difficulty: Medium
AACSB: Reflective Thinking
215) Discuss the challenges facing businesses in the global world and the impact on corporate strategy development and implementation.
A firm pursuing a globalization strategy tends to view the world as one large market. It makes most decisions from the corporate headquarters and tries as much as possible to standardize products and advertising for use everywhere. The latest Gillette razors from Procter & Gamble, for example, are likely to be sold and advertised similarly around the world.
Firms using a multidomestic strategy try to customize products and advertising as much as possible to fit local references in different countries or regions. McDonald’s is a good example. Although you can get your standard fries and Big Mac in most locations, you can have a McVeggie in India, a McArabia Kofta in Saudi Arabia, and a Croque McDo in France.
A third approach is the transnational strategy where a firm tries to operate without a strong national identity and blend seamlessly with the global economy. Ford is an example. Its Global Performance strategy draws upon design, manufacturing, and distribution expertise all over the world to build five core car platforms with common parts and components. These platforms are then modified to meet regional tastes.
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Synthesis
Difficulty: Hard
AACSB: Analytic
216) What is the BCG Matrix? What are the recommended strategies for dealing with Stars, Question Marks, Dogs, and Cash Cows?
Learning Objective 10.3: Explain alternative corporate strategies.
Section Reference 10.3: Corporate-Level Strategy Formulation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
217) What are the terms on which Porter based his model for choosing competitive strategies? What are the three competitive strategies cited by Porter? For each of the three strategies provide an example. Your examples should not include any that are from your textbook.
A differentiation strategy seeks competitive advantage through uniqueness. A cost leadership strategy seeks competitive advantage by operating with lower costs than competitors. A focus strategy concentrates attention on a special market segment in the form of a niche customer group, geographical region, or product or service line.
Examples: Student examples will vary
Cost Leadership – Costco
Product differentiation – Lululemon
Focus – Couture fashion
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Application
Difficulty: Medium
AACSB: Analytic
218) Briefly describe the two key factors that Michael Porter uses as the basis for formulating strategy. Explain how these factors combine to create different competitive strategies.
Differentiation strategy––where the organization’s resources and attention are directed toward distinguishing its products from those of the competition.
Cost leadership strategy––where the organization’s resources and attention are directed toward minimizing costs to operate more efficiently than the competition.
Focused differentiation strategy––where the organization concentrates on one special market segment and tries to offer customers in that segment a unique product.
Focused cost leadership strategy––where the organization concentrates on one special market segment and tries to be the lowest cost provider in that segment.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Analysis
Difficulty: Medium
AACSB: Analytic
219) Porter suggests that competitive strategies are based on what he calls the factors that determine competition or, in other words, based on an analysis of the competitive environment. Describe one competitive strategy and illustrate how this strategy has been applied to an organization or market.
Cost Leadership – With a cost leadership strategy, the idea is to gain a competitive edge by achieving a cost advantage. In other words, you must reduce your costs as much as possible. This gives the company an advantage over its rivals and also over its suppliers and clients.
The classic example is Wal-Mart’s mass purchasing. Another example is IBM and Boeing. They are cost leaders who have chosen to use their lower costs not to reduce prices but to generate higher returns which have subsequently been invested in marketing, R&D and manufacturing as a means of maintaining and strengthening their position.
Differentiation – The aim of the differentiation strategy is to ensure that either the company in general or certain specific elements (such as its products, customer care, quality, etc.) are perceived to be unique by both clients and suppliers. As one might suppose, this kind of strategy means that the company involved must have certain capacities and skills (i.e., technology, marketing, etc.) that enable it to achieve, maintain, and develop a certain degree of differentiation.
Example: Marriott International. Marriott International has the Ritz-Carlton brand name, directed at the luxury segment of the market. Although J.W.Marriott Hotels might be regarded as being in the same category, Ritz-Carlton hotels tend to be deluxe properties that are a cut above Marriott International. Most operate under the name Ritz-Carlton, although some have their own individual names.
Differentiation can also be achieved by means of the brand image and packaging, a position particularly suited to mature markets in which the products are often physically indistinguishable. For example, the cola drinks with Pepsi Cola and supermarkets' own brands and the fashion clothing industry with Gap and Banana Republic which design casual clothes aimed primarily at the same customer demographics.
Focus – Organizations pursuing focus strategies concentrate on a special market segment—niche customer group, geographical region, or product or service line. The objective is to serve the needs of the segment better than anyone else. Competitive advantage is achieved by combining focus with either differentiation or cost leadership.
Example: A good example of differentiation focus is that of Porsche, the German sports car manufacturer. It focuses on the performance car segment of the automobile market and does not produce cars for other segments of the market. Its cars are sold on the basis of brand name based upon consumer perceptions that its products are technically superior to those of competitors, are better designed, have superior performance and are more reliable than those of their competitors.
Learning Objective 10.4: Explain alternative business-level strategies.
Section Reference 10.4: Business-Level Strategy Formulation
Bloom’s: Synthesis
Difficulty: Hard
AACSB: Reflective Thinking
220) List and briefly describe the key responsibilities of strategic leadership.
A strategic leader has to maintain strategic control. This means that the CEO and other top managers should always be in touch with the strategy, how well it is being implemented, whether the strategy is generating performance success or failure, and the need for the strategy to be tweaked or changed.
A strategic leader has to be the guardian of trade-offs. It is the leader’s job to make sure that the organization’s resources are allocated in ways consistent with the strategy. This requires the discipline to sort through many competing ideas and alternatives, to stay on course, and not to get sidetracked.
A strategic leader needs to create a sense of urgency. The leader can’t allow the organization and its members to grow slow and complacent. Even when doing well, the leader keeps the focus on getting better and being alert to conditions that require adjustments to the strategy.
A strategic leader needs to make sure that everyone understands the strategy. Unless strategies are understood, the daily tasks and contributions of people lose context and purpose. Everyone might work very hard, but without alignment to strategy the impact is dispersed and fails to advance common goals.
A strategic leader needs to be a teacher. It is the leader’s job to teach the strategy and make it a “cause.” In order for strategy to work, it must become an ever-present commitment throughout the organization. This means that a strategic leader must be a great communicator. Everyone must understand the strategy and how it makes their organization different from others.
Learning Objective 10.5: Describe the foundations of strategy implementation.
Section Reference 10.5: Strategy Implementation
Bloom’s: Knowledge
Difficulty: Easy
AACSB: Analytic
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