Test Bank for Concepts in Strategic Management and Business Policy: Globalization, Innovation and Sustainability, 15th Edition

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1Strategic Management and Business Policy, 15e(Wheelen et al.)Chapter 1Basic Concepts in Strategic Management1) The emphasis of strategic management is onA) long-term performance.B) first line managers.C) the short-run performance of the corporation.D) an examination of the organization's internal environment.E) an investigation of competitor actions.Answer: ADifficulty: EasyLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge2) Research suggests that strategic management evolves through four sequential phases incorporations. The first phase isA) externally oriented planning.B) basic financial planning.C) internally oriented planning.D) forecast-based planning.E) strategic management.Answer: BDifficulty: EasyLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge3) The time horizon involved with regard to basic financial planning is usuallyA) one year.B) one quarter.C) three to five years.D) less than one month.E) five to ten years.Answer: ADifficulty: EasyLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge4) A difference between basic financial planning and forecast-based planning isA) the time horizon is shorter in forecast-based planning.B) forecast-based planning incorporates environmental data and extrapolates current trends.C) basic financial planning utilizes consultants with sophisticated techniques.D) basic financial planning utilizes scenarios and contingency strategies.E) basic financial planning relies heavily on input from lower levels in the organization.Answer: BDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Analytical thinking

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25) Top-down planning that emphasizes formal strategy formulation and leaves theimplementation issues to lower management levels is known asA) forecast-based planning.B) externally oriented planning.C) strategic management.D) basic financial planning.E) none of the aboveAnswer: BDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge6) In the final phase of strategic management, strategic information is available toA) people throughout the organization.B) the top management responsible for decision-making.C) middle management.D) operational personnel.E) only those responsible for implementing the strategy.Answer: ADifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge7) In a survey of 50 corporations, which of the following was rated as one of the three topbenefits of strategic management?A) clearer sense of strategic vision for the firmB) higher levels of employee motivationC) higher levels of job satisfactionD) improved productivityE) lower employee turnoverAnswer: ADifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge8) When an organization is evaluating its strategic position, which isnotone of the strategicquestions that an organization generally may ask itself?A) Where is the organization now?B) Are we on target to hit our financial objectives next year?C) If no changes are made, where will the organization be in one year?D) If the evaluation is negative, what specific actions should management take?E) If no changes are made, where will the organization be in 10 years?Answer: BDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Analytical thinking

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39) Research of the planning practices of companies in the oil industry concludes that the realvalue of modern strategic planning is more in the ________ that is part of a future-orientedplanning process than in any resulting written strategic plan.A) planningB) strategic thinking and organizational learningC) resulting written strategic planD) formality of the processE) improved communication within the organizationAnswer: BDifficulty: DifficultLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge10) Strategic planning within a small organizationA) may be informal and irregular.B) must be elaborate to allow for future growth.C) should always be formalized and explicitly stated.D) should be done by the president only.E) is unnecessary and a waste of time.Answer: ADifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge11) Strategic planning in a multidivisional corporationA) should be informal to allow complete understanding by the many participants.B) should be instigated only from the main corporate office.C) should be accomplished quickly to decrease the likelihood of it becoming outdated.D) should encourage a clear delineation between top management and lower-level managers.E) should be a formalized and sophisticated system.Answer: EDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge12) Strategic management is the set of managerial decisions that determines the short-termperformance of a corporation.Answer: FALSEDifficulty: EasyLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge

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413) In the externally oriented planning phase, plans are developed by heavily involving the inputof managers from lower levels.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge14) General Electric led the transition from strategic planning to strategic management duringthe 1980s.Answer: TRUEDifficulty: EasyLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge15) One of the benefits of strategic management is a clearer sense of strategic vision for the firm.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Analytical thinking16) To be effective, strategic management must be a formal process.Answer: FALSEDifficulty: DifficultLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Analytical thinking17) What are the benefits of strategic management?Answer: The three most highly rated benefits of strategic management are:1. Clearer sense of strategic vision for the organization2. Sharper focus on what is strategically important3. Improved understanding of a rapidly changing environmentDifficulty: ModerateLearning Obj.: 1.1: Discuss the benefits of strategic managementAACSB: Application of knowledge18) The integrated internationalization of markets and corporations is calledA) normalization.B) economic integration.C) globalization.D) nationalization.E) regionalization.Answer: CDifficulty: EasyLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge

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519) The term used to describe new products, services, methods, and organizational approachesthat allow businesses to achieve extraordinary returns isA) ROI.B) innovation.C) competitive advantage.D) sustainability.E) profit maximization.Answer: BDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge20) The free trade area composed of Argentina, Brazil, Uruguay, Venezuela, and Paraguay iscalledA) EU.B) ASEAN.C) NAFTA.D) Mercosur.E) ABUP.Answer: DDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge21) Members of the European Union (EU) include all of the following EXCEPTA) Ireland.B) Great Britain.C) Belgium.D) France.E) Slovakia.Answer: BDifficulty: EasyLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge

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622) Canada, the United States, and Mexico are affiliated economically under which tradealliance?A) ASEANB) MercosurC) EUD) NAFTAE) CAFTAAnswer: DDifficulty: EasyLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge23) The currency used to integrate the monetary systems of the European Union (EU) is calledtheA) peso.B) dollar.C) euro.D) franc.E) pound.Answer: CDifficulty: EasyLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge24) The triple bottom line refers to which of the following?A) water, air, and oilB) footprints, finance, and environmentC) physical environment, traditional profit/loss, and airD) traditional profit/loss, social responsibility, and environmental responsibilityE) social responsibility, people, and ethicsAnswer: DDifficulty: DifficultLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge

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725) One of the benefits of globalization isA) economies of scale.B) decreased outsourcing.C) increased union negotiations.D) increased taxes.E) additional human resource training.Answer: ADifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic management26) Knowing a company is mindful of its impact on the environment seldom changes consumerbuying habits.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic management27) Globalization is the integrated internationalization of markets and corporations.Answer: TRUEDifficulty: EasyLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge28) As more industries become global, strategic management is becoming less important inpositioning a company for long-term competitive advantage.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Analytical thinking29) Business sustainability reflects business practices to manage the firm's triple bottom line.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge30) One member of the European Union (EU) is Chile.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge

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831) The goal of NAFTA is complete economic integration among Canada, the United States, andMexico.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge32) Climate change has become a growing concern for businesses to include in their corporatestrategies.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge33) Boston Consulting Group (BCG) found that innovation is a top 3 priority for three-quartersof the companies in the 2014 BCG global innovation survey.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge34) A Gallup study reported that companies that focused on business sustainability had 3.9 timesthe EPS growth rates as compared to organizations that did not focus on business sustainability.Answer: TRUEDifficulty: DifficultLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge35) Define globalization and identify the role of strategic management in globalization.Answer: Globalization is the internationalization of markets and corporations. It has changed theway that modern corporations do business. As more industries become global, strategicmanagement is becoming an increasingly important way to keep track of internationaldevelopments and position the company for long-term competitive advantage.Difficulty: EasyLearning Obj.: 1.2: Explain how globalization, innovation, and environmental sustainabilityinfluence strategic managementAACSB: Application of knowledge

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936) Which theory proposes that once an organization is successfully established in a particularenvironmental niche, it is unable to adapt to changing conditions?A) population ecologyB) institutionC) citizenshipD) strategic choiceE) organizational learningAnswer: ADifficulty: ModerateLearning Obj.: 1.3: Discuss the differences between the theories of organizationsAACSB: Application of knowledge37) The theory that proposes organizations can and do adapt to changing conditions by imitatingother successful organizations is known asA) population ecology.B) institution theory.C) citizenship theory.D) strategic theory.E) sample theory.Answer: BDifficulty: ModerateLearning Obj.: 1.3: Discuss the differences between the theories of organizationsAACSB: Application of knowledge38) The ability of an organization to reshape its environment is described byA) population ecology theory.B) institution theory.C) the strategic choice perspective.D) organizational learning theory.E) organizational citizenship theory.Answer: CDifficulty: ModerateLearning Obj.: 1.3: Discuss the differences between the theories of organizationsAACSB: Application of knowledge39) Population ecology is a theory that proposes organizations can and do adapt to change byimitating other successful organizations.Answer: FALSEDifficulty: EasyLearning Obj.: 1.3: Discuss the differences between the theories of organizationsAACSB: Application of knowledge

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1040) The ability of a corporation to shift from one dominant strategy to another is calledA) strategy implementation.B) chaos formulation.C) contingency management.D) logical incrementalism.E) strategic flexibility.Answer: EDifficulty: ModerateLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge41) An organization skilled at creating, acquiring, and transferring knowledge, and at modifyingits behavior to reflect new knowledge and insights is a(n)A) learning organization.B) strategically managed corporation.C) innovative organization.D) hypercompetitive competitor.E) entrepreneurial firm.Answer: ADifficulty: EasyLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge42) All of the following reflect activities of a learning organization EXCEPTA) experimenting with new approaches.B) learning from its own experiences and past history.C) solving problems systematically.D) alienating competitors in the industry.E) transferring knowledge quickly and efficiently throughout the organization.Answer: DDifficulty: ModerateLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge43) According to Alfred Chandler,A) high-tech industries cannot be defined by "paths of learning" if they want to evolve.B) companies spring from an individual entrepreneur's knowledge, which is composedexclusively of technical skills.C) once a corporation has built its learning base to the point where it has become a core companyin its industry, entrepreneurial start-ups are rarely able to successfully enter.D) learned capabilities derive from organizational strengths.E) organizational knowledge can seldom be a competitive advantage.Answer: CDifficulty: DifficultLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge

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1144) According to organizational learning theory, an organization uses knowledge to improve thefit between itself and its environment.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge45) Strategic flexibility is the ability to shift from one dominant strategy to another.Answer: TRUEDifficulty: EasyLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge46) One tenet of the learning organization is to maintain stability.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge47) What are the four main activities of a learning organization?Answer: The four main activities of a learning organization are solving problems systematically,experimenting with new approaches, learning from their experiences and history as well as fromthe experiences of others, and transferring knowledge quickly and efficiently throughout theorganization.Difficulty: ModerateLearning Obj.: 1.4: Discuss the activities where learning organizations excelAACSB: Application of knowledge48) Strategic management is that set of managerial decisions and actions that determine the long-run performance of a corporation. Which one of the following isnotone of the basic elements ofthe strategic management process?A) strategy formulationB) strategy implementationC) statistical process controlD) evaluation and controlE) environmental scanningAnswer: CDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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1249) The monitoring, evaluating, and disseminating of information from the external and internalenvironments to key people within the corporation is referred to asA) environmental scanning.B) external scanning.C) internal scanning.D) strategy formulation.E) strategy implementation.Answer: ADifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge50) The S in SWOT stands forA) strategies.B) scanning.C) strengths.D) societal.E) sociocultural.Answer: CDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge51) The T in SWOT stands forA) trust.B) technical.C) terminal.D) threats.E) task.Answer: DDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge52) The variables structure, culture, and resources pertain to theA) external environment.B) internal environment.C) sociocultural forces.D) task environment.E) societal environment.Answer: BDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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1353) The task environmentA) includes those elements or groups within an organization's industry.B) encompasses the physical working areas of the organization.C) is an accounting of the many jobs within an organization.D) is an advisory committee to top-management.E) includes general forces that only indirectly affect an organization's activities.Answer: ADifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge54) Which one of the following is included in the firm's societal environment?A) competitorsB) economic forcesC) resourcesD) governmentsE) special interest groupsAnswer: BDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge55) Which one of the following is included in the firm's task environment?A) technological factorsB) sociocultural factorsC) cultureD) stockholdersE) political-legal forcesAnswer: DDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge56) The Strategic Management Model presents the following process for strategy formulation:A) Objectives – Policies – Strategies – Mission.B) Mission – Policies – Strategies – Objectives.C) Policies – Mission – Strategies – Objectives.D) Policies – Strategies – Objectives – Mission.E) Mission – Objectives – Strategies – Policies.Answer: EDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking

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1457) The development of long-range plans for the effective management of environmentalopportunities and threats in light of corporate strengths and weaknesses is known asA) strategy formulation.B) strategy implementation.C) strategy control.D) strategic analysis.E) strategy evaluation.Answer: ADifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge58) The corporate mission is best described by which one of the following?A) a description of the activities carried out by the organizationB) the purpose or reason for the corporation's existenceC) a description of top management's responsibilitiesD) a statement of corporate objectivesE) a statement of what the organization would like to becomeAnswer: BDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge59) Which one of the following is an example of a mission with a narrow scope?A) transportation (vs. railroads)B) computers (vs. office equipment)C) health care (vs. hospitals)D) real estate (vs. apartments)E) telecommunications (vs. television)Answer: BDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking60) The organization's corporate mission statementA) should have a different mission statement for each subsidiary division.B) should be less formally stated to allow for growth.C) should contain explicit descriptions of their competitive advantages.D) should state what the organization would like to become.E) should describe the organization's SWOT.Answer: CDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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1561) Which of the following is an example of a mission statement?A) diversify product line to appeal to more peopleB) increase sales by ten percent over last yearC) pay highest salaries to keep high quality employeesD) develop and sell quality appliances worldwideE) divide a sales region into a group of sales districtsAnswer: DDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge62) A goal differs from an objective because itA) is open-ended.B) is quantified.C) specifies measurable results.D) is clearly specified.E) provides a time horizon.Answer: ADifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking63) Which of the following is an example of an objective?A) to diversify product line to appeal to more peopleB) to increase sales by ten percent over last yearC) to pay highest salaries to keep high quality employeesD) to develop and sell quality appliances worldwideE) to divide a sales region into a group of sales districtsAnswer: BDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge64) Which of the following is an example of a corporate strategy?A) diversify product line to appeal to more peopleB) imitate products of competitorsC) pay highest salaries to keep high quality employeesD) develop and sell quality appliances worldwideE) divide a sales region into a group of sales districtsAnswer: ADifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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1665) The type of strategy, which describes a company's overall direction in terms of its generalattitude toward growth and the management of its various businesses isA) functional.B) operational.C) business.D) product.E) corporate.Answer: EDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge66) The type of strategy, which emphasizes the improvement of the competitive position of acorporation's products or services in a particular industry or market segment served by a businessunit isA) functional.B) operational.C) business.D) environmental.E) corporate.Answer: CDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge67) The type of strategy, which achieves corporate and business unit objectives and strategies bymaximizing resource productivity isA) functional.B) operational.C) business.D) product.E) corporate.Answer: ADifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge68) A large business has three levels in its hierarchy of strategy:A) Corporate – Business – Functional.B) Environmental – Corporate – Functional.C) Environmental – Enterprise – Corporate.D) Business – Divisional – Functional.E) Industry – Corporate – Divisional.Answer: ADifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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1769) As defined in this course, a policy isA) the purpose or reason for a corporation's existence.B) a statement of activities or steps needed to accomplish a single-use plan.C) a broad guideline for making decisions that links the formulation of strategy with itsimplementation.D) a comprehensive master plan stating how a corporation will achieve its mission andobjectives.E) a statement of a corporation's programs in dollar terms.Answer: CDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking70) Which of the following is an example of a policy?A) Diversify product line to appeal to more people.B) Increase sales by ten percent over last year.C) Only acquire companies of 75 employees or more; 75 percent must be engineers.D) Develop and sell quality appliances worldwide.E) Diversify from retailing into delivery.Answer: CDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge71) The process by which strategies and policies are put into action through the development ofprograms, budgets, and procedures isA) strategy formulation.B) strategy control.C) strategy implementation.D) strategy development.E) strategy evaluation.Answer: CDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge72) Which of the following isnota part of strategy implementation?A) performance evaluationB) budgetsC) programs and tacticsD) proceduresE) operational planningAnswer: ADifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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1873) Which of the following is an example of a program?A) diversify product line to appeal to more peopleB) increase sales by ten percent over last yearC) must be "number one" wherever we competeD) develop and sell quality appliances worldwideE) reduce final assembly time to three days by having suppliers build plan sectionsAnswer: EDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge74) A program or tactic isA) a detailed cost statement in terms of dollars.B) a system of sequential steps.C) a statement of the activities needed to support a strategy.D) the process by which strategies and policies are put into action.E) none of the aboveAnswer: CDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge75) A budget is a statement of a corporation's programs in dollar terms. Which isnottrue of thebudgetary function?A) It is used in planning and control.B) It serves as a detailed plan of strategy in action.C) Only one budget is necessary to capture all programs.D) It details the impact on the firm's future financial situation.E) It is used as a means of measuring success based on certain criteria.Answer: CDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking76) FedEx stipulates specific employee behaviors including how a driver dresses to how keys areheld when approaching a customer's door. This is an example of aA) program.B) budget.C) procedure.D) policy.E) control.Answer: CDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking

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1977) As a part of the strategic management process, evaluation and control is concerned with allof the following, EXCEPTA) generating feedback to decision makers.B) monitoring corporate activities and performance.C) stimulating a review of the corporation's strategic management.D) pinpointing problem areas.E) determining top management benefits packages.Answer: EDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge78) A set of sequential steps or techniques that describe in detail how a particular task or job is tobe done is referred to asA) a standard operating procedure.B) a systems operating procedure.C) a standard operating program.D) a standard outside procedure.E) a systems operating plan.Answer: ADifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge79) A hierarchy of strategy emphasizes the need for the three levels of strategy to complementand support one another.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its components80) The internal environment includes the variables within the organization itself that are withinthe short-run control of top management.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge81) A broad mission statement may limit the scope of a firm's activities in terms of the productor service offered.Answer: FALSEDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Analytical thinking

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2082) An example of an objective is "increased profitability," while an example of a goal is "toincrease the firm's profitability in 2017 by 15 percent over 2016."Answer: FALSEDifficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge83) A strategy maximizes competitive advantage and minimizes competitive disadvantage.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge84) Corporate strategy occurs at the business unit or product level.Answer: FALSEDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge85) A functional strategy may include competitive or cooperative strategies.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge86) Hierarchy of strategy is a nesting of one strategy within another so that they complement andsupport one another.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge87) A budget is a statement of a corporation's programs in terms of dollars.Answer: TRUEDifficulty: EasyLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge88) Performance results are monitored at the strategy formulation phase of the strategicmanagement process.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge

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2189) Briefly describe the four basic elements of strategic management.Answer: Strategic management consists of four basic elements. Environmental scanning is themonitoring, evaluating, and disseminating of information from the external and internalenvironments to key people within the corporation. Strategy formulation is the development oflong-range plans for effective management of environmental opportunities and threats, in light ofcorporate strengths and weaknesses. Strategy implementation is the process by which strategiesand policies are put into action through the development of programs, budgets, and procedures.Evaluation and control is the process in which corporate activities and performance results aremonitored so that actual performance can be compared with desired performance.Difficulty: DifficultLearning Obj.: 1.5: Describe the basic model of strategic management and its componentsAACSB: Application of knowledge90) Research done by Henry Mintzberg suggests that strategy formulationA) is typically an irregular and a discontinuous process.B) should be followed unswervingly to ensure success of the plan.C) is a process to which organizations find they must make significant yearly changes.D) should be reviewed after a specific interval of time to make sure it is still applicable.E) is merely a checklist of actions following a logical process.Answer: ADifficulty: ModerateLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Analytical thinking91) The phenomenon that describes corporations as evolving through relatively long periods ofstability punctuated by relatively short bursts of fundamental change (revolutionary change) isknown asA) revolution.B) equilibrium.C) punctuated equilibrium.D) logical incrementalism.E) discontinuity.Answer: CDifficulty: ModerateLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Application of knowledge

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2292) Which of the following isnotone of the four triggering events listed in the text that is thestimulus for a strategic change?A) intervention by the organization's bankB) annual strategic planning conferenceC) threat of a takeoverD) new CEOE) awareness by management of decreased profitabilityAnswer: BDifficulty: ModerateLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Application of knowledge93) The existence of a performance gapA) should cause management to question their objectives, strategies, and policies.B) is not an indicator of problems if it only happens once.C) is only the concern of top management because they set the original strategies.D) should cause management to look only within the organization to determine the problem.E) should signal the immediate need for a layoff.Answer: ADifficulty: ModerateLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Analytical thinking94) Which of the following statements isnottrue of a strategic inflection point?A) The term was coined by Andy Grove, past CEO of Intel Corporation.B) This represents what happens to a business when a major change takes place due to theintroduction of new technology.C) This represents what happens to a business when a major change takes place due to a changein customers' values or a change in what customers prefer.D) This represents what happens to a business when a major change takes place due to adifferent regulatory environment.E) A new CEO is an example of a strategic inflection point.Answer: EDifficulty: DifficultLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Application of knowledge95) Henry Mintzberg discovered that strategic formulation is a regular, continuous process.Answer: FALSEDifficulty: ModerateLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Application of knowledge

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2396) Punctuated equilibrium describes organizations as evolving through relatively long periodsof stability punctuated by relatively short bursts of fundamental change.Answer: TRUEDifficulty: DifficultLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Application of knowledge97) What is a triggering event? List some possible examples.Answer: A triggering event is something that acts as a stimulus for a change in strategy. Somepossible triggering events are a new CEO, an external intervention, a threat of a change inownership, a performance gap, and a strategic inflection point.Difficulty: DifficultLearning Obj.: 1.6: Identify some common triggering events that act as stimuli for strategicchangeAACSB: Application of knowledge98) Which of the following isnota characteristic of strategic decisions as mentioned in the text?A) directiveB) consequentialC) rareD) continuousE) require commitment of substantial resourcesAnswer: DDifficulty: EasyLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge99) According to Mintzberg, the entrepreneurial mode of strategy formulationA) is characterized by reactive solutions to existing problems.B) assumes major responsibilities for strategy formulation.C) is focused on opportunities; problems are secondary.D) includes the proactive search for new opportunities and reactive solutions to existingproblems.E) assumes the environment is unresponsive to input.Answer: CDifficulty: ModerateLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Analytical thinking

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24100) According to Henry Mintzberg, the three most typical approaches to strategic decision-making areA) entrepreneurial, adaptive, and planning.B) entrepreneurial, logical incrementalism, and planning.C) logical incrementalism, strategic planning, and systematic scanning.D) environmental scanning, formulation, and implementation.E) directive, rare, and consequential.Answer: ADifficulty: EasyLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge101) Amazon.com, founded by Jeff Bezos and reflecting his vision, is an example of whichmode of strategic decision-making?A) adaptiveB) entrepreneurialC) logical incrementalismD) planningE) customer relationship managementAnswer: BDifficulty: DifficultLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Analytical thinking102) What characterizes the planning mode of strategy formulation?A) Top management believes that the environment is a force to be used and controlled.B) It assumes the environment is too complex to be completely comprehended.C) It involves the systematic gathering of appropriate information for situation analysis, thegeneration of feasible alternative strategies, and the rational selection of the most appropriatestrategy.D) Rather than utilizing a proactive search for new opportunities, it only has the opportunity forreactive behavior.E) It is based on vision and large-picture strategy.Answer: CDifficulty: ModerateLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Analytical thinking

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25103) IBM under CEO Louis Gerstner and his strategic decision to invest in services in 1993, isan example of which mode of strategic decision-making?A) adaptiveB) entrepreneurialC) logical incrementalismD) planningE) muddling throughAnswer: DDifficulty: DifficultLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge104) The mode of strategic decision-making typical of most universities, many large hospitals, alarge number of governmental agencies, and a surprising number of large corporations isA) adaptive.B) entrepreneurial.C) logical incrementalism.D) planning.E) none of the aboveAnswer: ADifficulty: DifficultLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge105) The mode of strategy formulation used when top management has a reasonably clear ideaof the corporation's mission and objectives, but chooses to develop a series of tentative or partialstrategies instead of developing full-blown strategies is calledA) planning mode.B) logical incrementalism.C) entrepreneurial mode.D) adaptive mode.E) strategic mode.Answer: BDifficulty: ModerateLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge

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26106) Which approach to decision-making is most useful when the environment is changingrapidly and when it is important to build consensus and develop needed resources beforecommitting the entire corporation to a specific strategy?A) planning modeB) entrepreneurial modeC) logical incrementalismD) adaptive modeE) strategic flexibility modeAnswer: CDifficulty: DifficultLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Analytical thinking107) A strategic decision is rare, consequential, and directive.Answer: TRUEDifficulty: ModerateLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge108) Mintzberg's entrepreneurial mode is sometimes referred to as "muddling through" since thisdecision-making mode tends to be more reactive than proactive in the search for newopportunities.Answer: FALSEDifficulty: DifficultLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge109) Logical incrementalism is a useful decision-making mode when the environment is rapidlychanging and when it is important to build consensus to a specific strategy.Answer: TRUEDifficulty: DifficultLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Analytical thinking

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27110) What is a strategic decision and what are its three characteristics?Answer: A strategic decision deals with the long-run future of an entire organization. There arethree characteristics of a strategic decision:1.Rare: Strategic decisions are unusual and typically have no precedent to follow.2.Consequential: Strategic decisions commit substantial resources and demand a great deal ofcommitment from people at all levels.3.Directive: Strategic decisions set precedents for lesser decisions and future actionsthroughout an organization.Strategic decisions are unusual and typically have no precedent to follow. They commitsubstantial resources and demand a great deal of commitment from people at all levels. And theyset precedents for lesser decisions and future actions throughout the organization.Difficulty: ModerateLearning Obj.: 1.7: Explain strategic decision-making modesAACSB: Application of knowledge111) A checklist of questions, by area or issue that enables a systematic analysis to be made ofvarious corporate functions and activities is referred to as a(n)A) scenario.B) portfolio.C) strategic audit.D) social responsibility audit.E) SOP.Answer: CDifficulty: EasyLearning Obj.: 1.8: Use the strategic audit as a method of analyzing corporate functions andactivitiesAACSB: Application of knowledge112) While the strategic audit is not an all-inclusive list, it presents many of the critical questionsneeded for a detailed strategic analysis of any business.Answer: TRUEDifficulty: EasyLearning Obj.: 1.8: Use the strategic audit as a method of analyzing corporate functions andactivitiesAACSB: Application of knowledge

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1Strategic Management and Business Policy, 15e(Wheelen et al.)Chapter 2Corporate Governance1) From the perspective of the public, the primary job of the board of directors isA) to lend credence to the decisions of the executive committee.B) dictated solely by legal requirements.C) to act as representatives for public identification.D) to closely monitor the actions of management.E) insulated from legal judgments because management actually makes the decisions.Answer: DDifficulty: ModerateLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Analytical thinking2) The relationship among the board of directors, top management, and shareholders is referredto asA) corporate synergy.B) corporate management.C) corporate governance.D) corporate strategy.E) corporate responsibility.Answer: CDifficulty: ModerateLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Application of knowledge3) The requirements of a board of directors vary significantly by country and by state; however,there is a developing consensus as to what the major responsibilities should be. Which of thefollowing isnotone of the responsibilities?A) effective board leadership including the processes, makeup and output of the boardB) strategy of the organizationC) risk vs. initiative and the overall risk profile of the organizationD) becoming directly involved in managerial decisionsE) sustainabilityAnswer: DDifficulty: DifficultLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Analytical thinking

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24) Which of the following statements isnottrue regarding the board of directors?A) The board is charged by law to act with due care.B) If a director or the board as a whole fails to act with due care and, as a result, the corporationis in some way harmed, the careless director or directors can be held personally liable for theharm done.C) Director liability insurance is often needed to attract people to become members of boards.D) Directors must be aware of the needs of various constituent groups to balance all theirinterests.E) More than half of all publicly traded companies in the United States are incorporated in NewYork, requiring that the corporation be managed in accordance with NY state laws.Answer: EDifficulty: ModerateLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Analytical thinking5) More than ________ of outside directors surveyed said that they had been named as part of alawsuit against the corporation.A) 40%B) 50%C) 60%D) 70%E) 80%Answer: ADifficulty: DifficultLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Application of knowledge6) A careless director or directors can be held personally liable for harm done to the corporationif they failed to act withA) codetermination.B) figurehead role.C) cumulative voting.D) accountability.E) due care.Answer: EDifficulty: ModerateLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Application of knowledge

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37) Which of the following isnota task of the board of directors in strategic management?A) to monitorB) to implementC) to influenceD) to initiate and determineE) to evaluateAnswer: BDifficulty: EasyLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Application of knowledge8) Catalyst-level boards of directors typicallyA) are less involved than active participation boards.B) take leading roles in establishing and modifying the company mission, objectives, andstrategy.C) are involved in a limited degree of key decision-making.D) are held to a greater degree of legal responsibility.E) experience more financial success than less involved boards.Answer: BDifficulty: ModerateLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Analytical thinking9) A highly involved board does all of the following EXCEPTA) tends to be very active.B) provides advice when necessary.C) keeps management alert.D) takes their tasks of initiating and determining strategy very seriously.E) manage the everyday operations of the organization.Answer: EDifficulty: ModerateLearning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporategovernanceAACSB: Analytical thinking

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