Test Bank Chapter 6 Strategy Grand Design

Management, 9e (Kinicki)

Chapter 6 Strategic Management: How Exceptional Managers Realize a Grand Design

1) Mel's Diner is a popular café that specializes in home-cooked meals, friendly service, and a menu that contains vegan and vegetarian dishes (menu items that no other restaurant in the area offers). Mel's Diner is engaging in strategic positioning by offering the unique menu items of vegan and vegetarian dishes.

2) Executive Office Supply, a small family-owned company, sells high-priced desks, some as expensive as $10,000, to executives in its area. Very few companies have chosen to market this product, and Executive Office Supply has enjoyed record profits over the last 25 years. As their financial planner, you would advise Executive Office Supply to not utilize strategic planning.

3) The first three steps in the strategic-management process are establishing the mission and the values statement, assessing the current reality, and formulating the grand strategy.

4) Ray is interested in rewriting the vision statement for his antique shops, and he wants his employees and his business to grow. Therefore, the vision for Ray's stores should be positive and inspiring, and it should stretch the company and his employees to achieve objectives that they believe are not possible.

5) When Nordstrom's says, "Leave it better than we found it. We work hard to be a company that our employees and our customers can be proud of. For us, that means doing our best to support the many people and communities we serve. It also means respecting the environment by reducing our impact and conserving resources where we can. We strive to make people feel good and show that Nordstrom is a company that cares." They are sharing their mission.

6) The Internet has fueled rivalries among all kinds of companies.

7) Hanson Steel sees the new trade tariffs as an organizational threat.

8) Fascinating Fez, a 125-year-old hat and cap manufacturer, markets very high-quality stylish headwear, many of which cost more than $1,000 each, to fashionistas globally, always maintaining its reputation of superior value in its narrow market. Fascinating Fez is using a cost-focus strategy.

9) Reflection is a key activity in developing your ability to think more strategically.

10) Because all work ultimately entails some human interaction, effort, or involvement, Bossidy and Charan believe that focusing on organization synergy is the most important process in strategy execution.

11) ________ focus(es) on developing a comprehensive program for long-term success.

A) Strategic planning

B) Mission and vision statements

C) Organizational diversity

D) TQM

E) A synergy agenda

12) Four Seasons Lawn and Landscaping provides customers with quality and value, treats others as they want to be treated, and practices open communications with all stakeholders. These are part of their

A) values statement.

B) vision statement.

C) mission statement.

D) strategic formulation.

E) reality assessment.

13) Which managers would be at Level 2: Business-Level Strategy?

A) finance managers

B) human resource managers

C) retail unit managers

D) operations managers

E) marketing managers

14) The three key principles of ________ are the creation of a unique and valuable position, trade-offs in competing, and creating a "fit" among activities.

A) company diversity

B) an increased MBO

C) a strong employee morale

D) an environment with few or no competitors

E) strategic positioning

15) According to Harvard Business School professor Michael Porter, strategic positioning means ________ to achieve sustainable competitive advantage.

A) aggressive growth

B) distinctive positioning

C) collaborative planning

D) strategic alliances

E) retrenchment

16) What are the three sources of a unique and valuable strategic position?

A) few needs, many customers; broad needs, few customers; broad needs, many customers

B) low-cost products; huge market needs; unique products

C) many needs, few customers; little need, many customers; narrow needs, few customers

D) poor products available; few products available; no products available

E) bad economy; strong economy; stable economy

17) Cooper Technologies is a technology company that offers many IT services in Chicago. The company's services and products include computer training, support, monitoring, repair, network design, virus removal, and software upgrades. It even sells refurbished computers. The source of Cooper Technologies' strategic position is

A) low-profit margin and many customers.

B) broad needs and few customers.

C) broad needs and many customers.

D) high-profit margin and many customers.

E) high-profit margin and few customers.

18) With small businesses in very competitive industries, small differences in performance may affect that company's survival. In this case, it is worth the effort for the company's managers to implement

A) organizational diversity.

B) a synergy agenda.

C) MBO.

D) TQM.

E) strategic planning.

19) A local dance studio offers many services: tap and ballet lessons to young children (under age 10), additional jazz and hip hop lessons to preteens, competitive dance for teenagers, and ballroom dance for adults. We can say that the studio has achieved ________ because the studio's activities interact and reinforce one another.

A) an effective defensive strategy

B) a blue ocean strategy

C) diversification

D) contingency

E) fit

20) Spotlight Movies has conducted market research about to where to open their next theater. They want to stay-focused on their mission to only open in markets with less than 200,000 people. Their strategy is

A) few needs, many customers.

B) broad needs, few customers.

C) broad needs, many customers.

D) few needs, few customers.

E) broad needs, some trade-offs.

21) ________ requires a manger to visit an earlier step in the strategic-management process in order to revise actions if necessary.

A) The organizational mission

B) Strategy formulation

C) The current reality assessment

D) The feedback loop

E) The planning process

22) In order, the steps of the strategic-management process are

A) establish the mission and vision statements, assess the current reality, conduct a trend analysis, and maintain the feedback loop.

B) establish the mission statement, maintain strategic control, formulate the grand strategy, and implement the strategy.

C) establish the mission, vision, and values statements; assess the current reality; formulate the grand strategy; implement the strategy; and maintain strategic control.

D) establish the vision and values statements, develop a mission statement, formulate the grand strategy, implement the strategy, and maintain the feedback loop.

E) determine the strategy; carry out the strategic plans; and establish the mission, vision, and values statements.

23) The second step in the strategic-management process is a(n) ________, where managers look at where the organization stands, and then determine what is working and what could be different to maximize efficiency and effectiveness in achieving the organization's mission.

A) organizational vision statement

B) company synergy assessment

C) current reality assessment

D) ethical and diversity evaluation

E) grand strategy

24) An organization's vision statement needs to describe

A) the organization's purpose or reason for being.

B) what the company will market and its business plan.

C) the organization's purpose or reason for being and its strategic intent.

D) the organization's ethical and diversity standards.

E) what the company wants to become and where it wants to go strategically.

25) "Who are our customers? What are our major products or services? In what geographic areas do we compete?" A good ________ will answer these questions.

A) vision statement

B) code of ethics

C) mission statement

D) value pact

E) management belief statement

26) Carlos has written his mission, vision, and value statements. He has completed his organizational assessment. What is his next step?

A) strategy implementation

B) conduct a feedback loop

C) maintain strategic control

D) formulate functional strategies

E) assess strategic thinking

27) Growth, stability, and defensive strategies are common

A) leadership strategies.

B) cost-leadership strategies.

C) types of differentiation plans.

D) stabilization strategies.

E) grand strategies.

28) PC's & More has shifted to sales and service of laptops and PCs, where it has the potential to triple the number of its customers. The company is no longer offering repairs on older types of office equipment because the demand for service on this equipment is low, and profits in that part of the business have dropped significantly. PC's & More is implementing a ________ strategy.

A) growth

B) cutting-edge

C) stability

D) defensive

E) diverse

29) Global Market has decided to increase its market share by hiring a marketing rep to visit businesses in the area and invite their employees to shop at Global Market and attend monthly health events that take place at Global Market stores. Each of the individual stores has hired two new employees to handle the anticipated increase in customer traffic. Global Market is using a ________ strategy.

A) cutting-edge

B) stability

C) defensive

D) growth

E) diverse

30) A+ Enterprises has a reputation of reliability and a winning customer service, qualities that helped to build this highly respected name brand over the last 15 years. Speaking at a recent business conference, Benjamin, the CEO of A+, told his audience, "We have built our reputation by changing little over the last several years, but consistently helping customers with great, caring service and a reliable product." Which type of strategy does A+ Enterprises use?

A) defensive strategy

B) merger approach

C) retrenchment strategy

D) growth strategy

E) stability strategy

31) Over the course of 40 years, Frank grew his company to six package shipping stores. With his retirement approaching and the increased competition, he decided to reduce the number of locations to two. Frank's reduction of effort represents a

A) merger approach.

B) fixed plan.

C) defensive strategy.

D) growth strategy.

E) stability strategy.

32) ________ is another term for a defensive strategy.

A) A retrenchment strategy

B) A fixed plan

C) The aggressive approach

D) A growth strategy

E) A stability strategy

33) Strategy formulation is the process of

A) gaining information about competition and then selecting which information to react to.

B) choosing among different strategies and altering them to best fit the organization's needs.

C) strategically controlling your employees' actions.

D) selecting the employees who best fit the organization.

E) developing a strong diversity plan.

34) Edmond, the CEO of Hartman Manufacturing, said to his new vice president of accounting, "In the past I had resistance to new ideas by employees who felt that our plans threatened their influence or their jobs. So when you tell your collections department that we just hired a collection agency to handle bad debt, you may have to sell your collections manager and his supervisors on using the agency. You also have to emphasize the fact that nobody is going to be laid off." Selling middle and supervisory managers on changes to overcome their resistance is often a necessary part of

A) reality assessment.

B) strategy formulation.

C) strategic control.

D) operational control.

E) strategy implementation.

35) ________ is(are) included in strategic control.

A) Implementing MBO

B) A strong employee diversity and synergy agenda

C) Seldom making adjustments to a strategy

D) Monitoring the execution of strategy and making adjustments, if necessary,

E) Developing a diversity plan

36) Bryan Barry suggests that to keep a strategic plan on track, organizations should

A) engage people, keep it simple, stay focused, and keep moving.

B) engage people, keep people happy, provide fun activities, and provide good benefits.

C) provide fun activities, provide good benefits, and keep it simple.

D) engage people, keep it simple, stay focused, and offer a good benefits package.

E) aggressively compete, cut costs, focus on customer service, and engage people.

37) Lester, a chef and owner of Green Lantern, a popular restaurant, is always visiting his competitors to observe how they are doing things in their restaurants. He told one of his managers, "I eat dinner at a lot of restaurants because I want to know what is going on. I am always concerned that one of our competitors will surprise us with a new service or menu item, like ours but better." In which activity is Lester engaging?

A) assessing current reality

B) environmental planning

C) TQM

D) corporate spying

E) management by observation

38) Armando, CEO of a successful medical supply company, is constantly reading press releases, ads, and news articles about his competition. He regularly checks information about new competitive products and visits trade shows to study his competition. Armando is involved in

A) analyzing strengths.

B) identifying weaknesses.

C) describing threats.

D) managing by observation.

E) evaluating opportunities.

39) Vicky keeps a close eye on her company's internal and external environment to discover possible opportunities for new products and to discern possible threats from the competition. In which activity is Vicky engaged?

A) the synergistic approach

B) SWOT analysis

C) corporate spying

D) management by observation

E) competitive intelligence

40) A SWOT analysis is a(n)

A) search for the strengths, weaknesses, opportunities, and threats influencing an organization's competition.

B) diversity and synergy method used in vertical integration.

C) search for the strengths, weaknesses, opportunities, and threats affecting an organization.

D) analysis of strategies, ways to improve, output methods, and threats influencing a company.

E) inexpensive method of implementing a forecast.

41) Many customers shop at All Natural because of the employees' extensive product knowledge. In a SWOT analysis, the employees' high levels of product knowledge are an example of the company's

A) strengths.

B) threats.

C) weaknesses.

D) opportunities.

E) intelligence.

42) Tito knows that one of the reasons people do not return to his electronics store is because of the slow service. How would a SWOT analysis classify the slow service at Tito's electronic store?

A) as a strength

B) as a threat

C) as a weakness

D) as an opportunity

E) as intelligence

43) True Taste's Restaurant and Catering serves delicious vegetarian and vegan dishes. So, when the local community became interested in eating a healthier diet, True Taste's benefited. In a SWOT analysis, the changing community attitudes are an example of a(n) ________ for True Taste's Restaurant.

A) strength

B) threat

C) weakness

D) opportunity

E) intelligence

44) The owners of Everything Outdoors, a family-owned garden center in a rural community, are concerned over the news that a large retailer with a garden center is building a new store on the other side of town. According to a SWOT analysis, this new retailer is a(n) ________ to Everything Outdoors.

A) strength

B) threat

C) weakness

D) opportunity

E) intelligence

45) In a SWOT analysis, organizational strengths are

A) external opportunities that a company can take advantage of.

B) environmental factors that the organization may exploit for competitive advantage.

C) MBO skills that should be emphasized.

D) skills and capabilities that give a company advantages in executing its strategies.

E) means that give a specific industry an advantage in a down economy.

46) Organizational opportunities in a SWOT analysis are

A) environmental factors that the organization may exploit for a competitive advantage.

B) weaknesses within the organizational hierarchy.

C) MBO skills and opportunities that should be emphasized.

D) skills and capabilities that give an industry advantages in executing its strategies.

E) problems that a specific industry needs to correct.

47) A forecast is a(n)

A) glimpse of what just happened.

B) execution of strategy and adjustments.

C) projection for the future.

D) analysis of the past.

E) plan for implementing strategic plans.

48) Contingency planning is also known as

A) organizational opportunities.

B) scenario goal-setting and plans.

C) a trend analysis.

D) scenario planning and scenario analysis.

E) strategic planning.

49) The basic assumption that the picture of the present can be projected into the future is the basis of a

A) strategic goal.

B) business plan.

C) vision statement.

D) SWOT analysis.

E) trend analysis.

50) Sales this year at Stars and Stripes Consignment have been high, and based on several factors, Stars and Stripes projects next year's sales to also be good. However, even with a forecast of continued strong sales, Starts and Stripes Consignment needs to develop a plan in case sales drop unexpectedly. ________ is the type of planning for alternative future conditions.

A) Background planning

B) Trend analysis

C) A vision plan

D) Contingency planning

E) A managerial pact

51) ________ is the process by which a company compares its performance with that of high-performing organizations.

A) Trend analysis

B) Synergy

C) Contingency planning

D) Forecasting

E) Benchmarking

52) Michael Porter proposed that business-level strategies originate with the primary competitive forces in the firm's environment; these forces are the

A) threats of new entrants and the bargaining power of buyers and suppliers.

B) threats of substitute products and the services and competitive rivalries.

C) threats of new entrants and substitute products or services, the bargaining power of suppliers and buyers, and competitive rivalries.

D) threats of government paperwork and tax increases, the bargaining power of suppliers, and competitive rivalries.

E) bargaining power of suppliers.

53) Chris and his family have developed a successful business selling a liquid spray fertilizer to farmers. The fertilizer consists of rich, organic, composted material. Recently, Organic Seed, a national seed company, has been marketing a powdered chemical fertilizer to its customers; Organic's fertilizer is less expensive than Chris's product. Organic's efforts are an example of the ________ in Porter's model for industry analysis.

A) buyers' negotiating influence

B) rivalry among competitors

C) threats of substitute products and services

D) power of the suppliers

E) threats of new ideas

54) Porter's competitive strategies of cost leadership and differentiation focus on ________ markets, while the cost-focus and focused-differentiation strategies focus on ________ markets.

A) narrow; wide

B) specific; broad

C) growth; specific

D) diverse; narrow

E) wide; narrow

55) When organizations endeavor (1) to keep their costs (and hence the prices of their products or services) below those of competitors and (2) to target a wide market, they are utilizing a ________ strategy.

A) focused-differentiation

B) differentiation

C) cost-leadership

D) reinventing

E) cost-focus

56) World Grocer sells high-quality products and grocery items that are unique to its highly populated area; in addition, it offers delivery for customers who are unable to leave their home and a number of regular workshops regarding healthy eating. By offering these types of products and services, World Grocer is pursuing a ________ strategy.

A) cost-savings

B) cost-focus

C) value-focused

D) differentiation

E) focused-differentiation

57) Ski Safety sells emergency safety and rescue products to ski patrols and rescue workers at prices that are below those of its competitors, which offer a larger line of more expensive products and focus on broader markets. Ski Safety is pursuing a ________ strategy.

A) cost-focus

B) cost-leadership

C) differentiation

D) narrow

E) focused-differentiation

58) The Platinum Platform, in Dubuque, Iowa, sells high-quality, unique bedding that is a real value to upscale homes in the area. No other company in its local area markets bedding of such quality and value. By offering this type of product, The Platinum Platform is utilizing a ________ strategy.

A) cost-leadership strategy

B) focused-differentiation

C) cost-focus

D) uniquely focused

E) differentiation

59) Delux Technologies makes and sells only one product, a high-quality processor for mainframe computers. Delux was recently approached by Imagination Station, a large computer manufacturer, about purchasing their company. Imagination Station is engaging in

A) unrelated diversification.

B) focused-differentiation.

C) related diversification.

D) vertical integration.

E) differentiation.

60) Value Products is an organization that operates several companies that market food products, restaurant equipment, and paper and plastic products, and it even has a division that counsels restaurant owners, helping them launch new restaurants successfully. Value Products is pursuing a ________ strategy.

A) single-product

B) diversification

C) focused-differentiation strategy

D) differentiation

E) multiproduct

61) In 2003, Myspace launched a social networking website offering an interactive, user-submitted network of friends, personal profiles, blogs, groups, photos, music, and videos. Myspace was the largest social networking site in the world, from 2005 to 2009. Recently, it was purchased by Specific Media, an online platform where music fans can interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. Which of the following describes Specific Media's strategy?

A) stability

B) diversification

C) growth

D) defensive

E) multiproduct

62) The BCG matrix is a means of evaluating strategic business units on the basis of their

A) business costs and share of the market.

B) differentiation and profitability.

C) business growth rates and share of the market.

D) BCG ratio.

E) product quality and profitability.

63) In the BCG matrix, ________ are organizations that have slow growth but high market share, with income that often finances stars and question marks.

A) sleeping giants

B) dogs

C) cash cows

D) turtles

E) sleepers

64) In the BCG matrix, ________ are companies that have high growth and high market share, and are definite keepers.

A) sleeping giants

B) stars

C) cash cows

D) turtles

E) sleepers

65) Global CEOs desire ________ even more than profit growth, stimulating innovation, customer loyalty, and finding qualified employees.

A) an ethical workplace

B) organization diversity

C) an increased usage of MBO

D) happy employees

E) excellence in execution

66) Effective execution requires managers to build a foundation for execution within which three core processes found in any business?

A) leading, planning, and recruiting

B) people, strategy, and operations

C) diversity, people, and profitability

D) people, planning, and leading

E) leading, synergy, and diversity

67) A company's overall ability to execute is a function of effectively executing according to three processes, but Bossidy and Charan believe that the ________ process is the most important.

A) operations

B) leading

C) people

D) planning

E) strategy

68) In order to avoid failure, organizations need to consider

A) the jobs of the future.

B) the path for people to follow.

C) who is going to get it done.

D) where an organization wants to go.

E) the how of execution.

69) Joelle wants to broaden her functional knowledge. Which of the following activities should she engage in?

A) attending a business conference

B) reading a business article

C) writing a reflection journal

D) wearing a blue hat

E) studying the company's annual report

70) In Dr. De Bono's Six Thinking Hats, who wears the blue hat?

A) the person serving as the fact gatherer

B) the person discussing emotions

C) the person serving as the control function

D) the person exploring new ideas

E) the person playing devil's advocate

71) Grandma's Bakery wants to begin selling gluten-free products and vegan products. The C-Suite executives have made the decision and are now wanting the change implemented. Whose planning will move this from the decision level into production?

A) senior-level managers

B) functional managers

C) acquisition managers

D) small-business managers

E) strategic managers

72) Why is the feedback loop important?

A) It translates lower-level plans.

B) It determines the organization's long-term goals for the next one to five years.

C) It looks at what is working and what could be different to maximize efficiency.

D) It monitors progress so that corrective action can take place.

E) It describe how the company contributes to the world.

73) Which of the following is NOT part VRIO?

A) value

B) rarity

C) imitability

D) organization

E) resource

74) In 2009 and 2010, Toyota had to recall millions of automobiles due to uncontrollable acceleration. This recall forced upper-level management to rethink many things. For example, Toyota had become too focused on profits. As a business coach, where would you recommend Toyota begin?

A) Step 1: Establish the mission, vision, and values statements.

B) Step 2: Assess the current reality.

C) Step 3: Formulate the grand strategy.

D) Step 4: Implement the strategy.

E) Step 5: Maintain strategic control.

75) Many stores today have changed how customers shop. You can go online to buy your groceries, have a store clerk pick them out for you and then either drive up and pick them up or have them delivered. Besides groceries, you can do this with electronics, clothing, shoes, and even pharmaceuticals. How would you describe this change in business practices?

A) strategic formulation

B) strategic implementation

C) strategic assessment

D) strategic culture

E) strategic neutrality

76) You have been asked by a new a hair salon, Twist & Braid, to identify whether or not they should expand the business either by opening a new salon or expanding the current salon to offer new services. As a first step, you interview the owner and clients as they come in for their appointments. You also visit a few other local businesses and conduct interviews of people as they pass by. You also review Yelp and Facebook for reviews of the salon. Which of the following best describes the process you are implementing?

A) re-envisioning

B) branding

C) VRIO

D) MBO

E) SWOT

77) In a staff meeting, Mark is employing Dr. De Bono's Six Thinking Hats. Doug expresses all the positives about being open on Thanksgiving. Rashmi presents the data from the last three years on sales from that day. Rafael explains why staying open late on Thanksgiving will not be in the employees or client's best interests. Sophie explores using the Internet only and not having the brick and mortar stores open. Which color hat would Rafael wear?

A) black

B) red

C) yellow

D) green

E) blue

78) You are the CEO of a major corporation. You have been tasked by the board of directors to turn the company around as they just let the last CEO go for a difference in opinion. Being new, where would you focus your attention first?

A) finding qualified employees

B) stimulating innovation

C) customer loyalty

D) profit growth

E) execution

79) This question contains two parts; be sure to answer both.

First, list the three sources from which strategic position emerges, providing an example of a company with each strategic position. (You will be providing three examples.)

Second, select either McDonald's or Apple Computer and discuss the company's strategic position.

80) Explain whether strategic management works as well for small companies as it does for large organizations, providing an example of how a small company can offer personal connections as a source of competitive advantage.

81) Imagine that you are the CEO of Smiley's, a chain of family-style restaurants. You are interested in implementing the strategic-management process in your restaurants. Discuss the strategic-management process and explain how you would execute each of the steps and the feedback loop of the strategic-management process in your restaurant chain.

82) This question has two parts; be sure to answer both.

First, describe each of the three common grand strategies.

Next, provide an example of how a company (real or hypothetical) might execute each strategy.

83) Evaluate the following business idea using the VRIO framework: Your parents want to open a mobile pet-grooming company and they have asked you for your opinion about whether they should invest in the concept. They investigated the opportunity and found a vehicle that contains all the necessary equipment. Conduct a VRIO analysis and state your recommendation to your parents.

84) You are the executive chef at an exclusive restaurant in Manhattan, New York. You want to know how your restaurant compares to others in the area. Describe how you would use benchmarking.

85) Utilizing the four elements of a SWOT analysis, develop a SWOT for a fast-food restaurant or diner.

86) Define and describe a trend analysis. How would a department store like Macy's or JC Penney's use a trend analysis?

87) Imagine you are the CEO of Noodle Soup, a company that sells ramen noodles. Give an example of each of the five primary competitive forces in Noodle Soup's environment.

88) This question contains two parts; be sure to answer each.

First, describe Porter's four competitive strategies, giving examples of companies that use each of the strategies.

Next, suppose you are CEO of Simply Paper, a company that produces reams of copy paper. Which strategy would you use, and why?

89) Explain how a company would utilize a diversification strategy (including a vertical integration strategy). Provide an example of a company that uses the strategy.

90) Explain the difference between a cost-leadership strategy and a differentiation strategy. Provide an example of a company that uses each type of strategy.

91) This question contains multiple parts; be sure to answer all of them.

First, define and explain strategic control.

Next, summarize Bryan Barry's suggestions for keeping strategic planning on track.

Finally, suppose you are the owner of a dog-walking service with eight dog-walkers on staff. Explain how you would implement each of Barry's suggestions.