Exam 2

Question 1

Generic strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and integration.

Answer 1

FALSE

Question 2

A succesfull cost leadership strategy usually permeates the entire firm, as evidences by high efficiency, low overhead, limited perks, intolerance of waste, intensive screening of budget requests, wide spans of control, rewards linked to cost containment, and broad employee participation in cost control efforts.

Answer 2

TRUE

Question 3

First mover advantage refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.

Answer 3

TRUE

Question 4

Companies are choosing to outsource their functional operations more and more for two reasons; while it is more expensive, it allows the firm to focus on developing new business; and enables the firm to provide additional resources.

Answer 4

FALSE

Question 5

Long-term objectives benefits firms in all of the following ways except:

Answer 5

emphasize uncertainty

Question 6

Divestiture is often appropriate when retrenchment and liquidation have failed

Answer 6

FALSE

Question 7

Market penetration includes introducing present products into new geographic areas.

Answer 7

FALSE

Question 8

An example of a backward integration strategy is the use of websites by companies to sell products directly to customers.

Answer 8

FALSE

Question 9

Joint ventures are often used to pursue an opportunity that is not too complex, economical, or not risky for a single firm to pursue alone.

Answer 9

FALSE

Question 10

An acquisition occurs when two organizations of equal size unite to form one enterprise.

Answer 10

FALSE

Question 11

_______ strategies allow a firm to gain control over distributors, supplies, and/or competitors.

Answer 11

Integration

Question 12

The second stage of the strategy-formulation framework is the matching stage, followed by decision stage.

Answer 12

TRUE

Question 13

The Grand Strategy Matrix is based on two evaluative dimensions, market growth and competitive position.

Answer 13

TRUE

Question 14

The purpose of matching key factors is to generate feasible alternative strategies.

Answer 14

TRUE

Question 15

The ________ stage of strategy formulation includes a SWOT Matrix, a SPACE Matrix and a Grand Strategy Matrix.

Answer 15

matching

Question 16

Strategy analysis and choice largely involves using __________ information to make ________ decisions.

Answer 16

objective; subjective

Question 17

A limitation of the QSPM is that it does not require intuitive judgements and educated assumptions.

Answer 17

TRUE

Question 18

A limitation of the Quantitative Strategic Planning Matrix (QSPM) is that sets of strategies can be examined sequentially or simultaneously.

Answer 18

FALSE

Question 19

Some of BusinessWeek’s “principles of good governance’ include that three or more directors are current or former company executives, and the board meets regularly with management present and evaluates its own performance biennially.

Answer 19

FALSE

Question 20

Boards of directors are composed mostly outsiders who are becoming more involved in an organization’s strategic management.

Answer 20

TRUE

Question 21

An environment sustainability report discloses how the firm’s operations impact the natural environment.

Answer 21

TRUE

Question 22

Environmental strategies include all of the following except:

Answer 22

pursuing a focus strategy through green-product features.

Question 23

Strategy formulation is the managing of forces during the action, whereas strategy implementation is the positioning of forces before the action.

Answer 23

FALSE

Question 24

Objectives clarify what can and cannot be done in pursuit of an organizations policies.

Answer 24

FALSE

Question 25

Changing a firm's culture to fit a new strategy is usually more effective than changing a strategy to fit an existing culture.

Answer 25

TRUE

Question 26

Restructuring is concerned with all of the following except:

Answer 26

focus is on changing the way work is actually carried out.

Question 27

Management issues central to strategy implementation include all of the following except:

Answer 27

maintaining an existing organizational structure.

Question 28

Market segmentation allows a firm to operate with limited resource because mass production, mass distribution, and mass advertising are not required.

Answer 28

TRUE

Question 29

The most widely used technique for determining whether debt, stock, or a combination of debt and stock is the best alternative for raising capital to implement strategies is an EPS/EBIT analysis.

Answer 29

TRUE

Question 30

A good information system requires a firm to increase its costs.

Answer 30

FALSE

Question 31

The alternative bases for market segmentation include all of the following except:

Answer 31

democratic

Question 32

Three major R&D approaches for implementing strategies include all of the following except:

Answer 32

be the second firm to market new technological products, i.e., fast follower.

Question 33

Quantitative criteria used to evaluate strategies are financial ratios, which strategists use to make three critical comparisons of the firms performance: over time periods, to competitors, and to industry averages.

Answer 33

TRUE

Question 34

Consistency, competence, advantage, and facility are Richard Rumelt's four criteria for evaluating a strategy.

Answer 34

FALSE

Question 35

Strategy evaluation includes three basic activities: examining the underlying business of a firms strategy; comparing external results with internal results; and taking preventive actions to ensure that plans conform to performance.

Answer 35

FALSE

Question 36

Strategy evaluation is vital to an organization's well being for all of the following reasons except:

Answer 36

strategies often do affect long-term operating results until it is too soon to make needed changes.

Question 37

One indicator that Rumelt's consistency strategy-evaluation criterion is not met occurs when:

Answer 37

there is an organizational conflict and interdepartmental bickering.

Question 38

Which of these is a strategy aimed at producing products and services considered unique industry wide and directed at consumers who are relatively price insensitive?

Answer 38

Differentiation