Strategic Management: A Competitive Advantage Approach, 16e (David)

Chapter 1 The Nature of Strategic Management

1) The goal of strategic management is to

1. A) achieve competitive advantage.

2. B) maintain competitive advantage.
3. C) achieve and maintain competitive advantage.
4. D) eliminate competitive advantage.
5. E) eliminate and abolish competitive advantage.

Answer: C
2) Strategic management focuses on integrating management, ________, and
information systems to achieve organizational success.

1. A) marketing
2. B) finance and accounting
3. C) production and operations
4. D) research and development
5. E) all of the above

Answer: E
3) What can be defined as the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an organization to achieve its
objectives?

1. A) Strategy formulation
2. B) Strategy evaluation
3. C) Strategy implementation
4. D) Strategic management
5. E) Strategic leading

Answer: D
4) In recent years, the speedy flow of information through technology has

1. A) made it harder for people worldwide to see how others work and live.
2. B) strengthened national boundaries and made countries more self-contained.
3. C) created a borderless world with global competitors, customers, and citizens.
4. D) ensured that the United States is unrivaled by other companies in all
industries.
5. E) made the real flow of financial activity align with political boundaries between
countries.
Answer: C
5) The strategic-management process is becoming more widely used by

1. A) small firms.
2. B) nonprofit institutions.
3. C) governmental organizations.
4. D) multinational conglomerates.
5. E) all of the above

Answer: E
6) An organization should take a(n) ________ approach in its industry.

1. A) adversarial rather than a collegial

2. B) collegial rather than an adversarial
3. C) reactive rather than a proactive
4. D) proactive rather than a reactive
5. E) cooperative rather than a competitive

Answer: D

7) The strategic-management process represents a(n) ________, ________, and

________ approach for determining an enterprise's future direction.

1. A) logical; systematic; subjective

2. B) intuitive; disorganized; subjective
3. C) logical; systematic; objective
4. D) intuitive; disorganized; objective
5. E) inconsistent; systematic; subjective

Answer: C

8) The strategic-management process

1. A) occurs once a year.

2. B) is a semiannual process.
3. C) is a continuous process.
4. D) applies mostly to companies with sales greater than $100 million.
5. E) applies mostly to small businesses.

Answer: C
24) Sometimes ________ is used to refer to strategic formulation, implementation and
evaluation, with ________ referring only to strategic formulation.

1. A) strategic planning; strategic management

2. B) strategic planning; strategic processing
3. C) strategic management; strategic planning
4. D) strategic management; strategic processing
5. E) strategic implementation; strategic focus

Answer: C

25) During what stage of strategic management are a firm's specific internal strengths
and weaknesses determined?

1. A) Formulation
2. B) Implementation
3. C) Evaluation
4. D) Feedback
5. E) Goal-setting

Answer: A

26) An important activity in ________ is taking corrective action.

1. A) strategy evaluation
2. B) strategy implementation
3. C) strategy formulation
4. D) strategy leadership
5. E) all of the above

Answer: A

27) What step in the strategic management process involves mobilizing employees and
managers to put strategies into action?

1. A) Strategy formulation
2. B) Strategy evaluation
3. C) Strategy implementation
4. D) Strategic advantage
5. E) Competitive advantage

Answer: C
28) What types of skills are especially critical for successful strategy implementation?

1. A) Interpersonal
2. B) Marketing
3. C) Technical
4. D) Conceptual
5. E) Visionary

Answer: A

29) With which phase of strategic management is most strongly associated with
"action"?

1. A) Strategy formulation
2. B) Strategy implementation
3. C) Strategy evaluation
4. D) Competing advantages
5. E) Measuring performance

Answer: B

30) ________ is NOT a strategy-implementation activity.

1. A) Taking corrective actions

2. B) Establishing annual objectives
3. C) Devising policies
4. D) Allocating resources
5. E) Motivating employees

Answer: A
Diff: 2

31) Strategy evaluation is necessary because

1. A) internal and external factors are constantly changing.

2. B) the SEC requires strategy evaluation.
3. C) success today is a guarantee of success tomorrow.
4. D) the IRS requires strategy evaluation.
5. E) firms have limited resources.

Answer: A
32) In which phase of strategic management are annual objectives are especially
important?

1. A) Reduction
2. B) Formulation
3. C) Implementation
4. D) Evaluation
5. E) Policy

Answer: C

33) In which phase of strategic management are long-term objectives especially

important?

1. A) Formulation
2. B) Control
3. C) Evaluation
4. D) Implementation
5. E) Management

Answer: A

42) Which statement best describes intuition?

1. A) It alone should be used in decision-making.

2. B) It represents a minor factor in decision-making integrated with analysis.
3. C) It should be coupled with analysis in decision-making.
4. D) It is better than analysis in decision-making.
5. E) It is management by ignorance.

Answer: C

49) Which individuals are most responsible for the success and failure of an
organization?

1. A) Strategists
2. B) Financial planners
3. C) Personnel directors
4. D) Stakeholders
5. E) Human resource managers

Answer: A
50) What are enduring statements of purpose that distinguish one business from other
similar firms?

1. A) Policies
2. B) Mission statements
3. C) Objectives
4. D) Rules
5. E) Employee conduct guidelines

Answer: B

51) An organization's vision statement

1. A) is a constant reminder to its employees of why the organization exists.

2. B) broadly charts the future direction of an organization.
3. C) addresses the basic question: "What is our business?"
4. D) answers the question: "What do we want to become?"
5. E) none of the above

Answer: D

52) Generally, external opportunities and threats are

1. A) uncontrollable by a single organization.

2. B) unable to have a significant impact on an organization.
3. C) not worth monitoring and evaluating.
4. D) key functions in strategy implementation.
5. E) key functions in strategy exploitation.

Answer: A

53) Specific results an organization seeks to achieve in pursuing its basic mission are

1. A) strategies.
2. B) rules.
3. C) objectives.
4. D) policies.
5. E) tenets.

Answer: C
54) Internal ________ are controllable activities in an organization that are performed
especially well.

1. A) opportunities
2. B) incompetencies
3. C) strengths
4. D) objectives
5. E) factors

Answer: C

55) What are the means by which long-term objectives will be achieved?

1. A) Strategies
2. B) Strengths
3. C) Weaknesses
4. D) Policies
5. E) Opportunities

Answer: A

56) Long-term objectives should be all of the following EXCEPT

1. A) measurable.
2. B) continually changing.
3. C) reasonable.
4. D) challenging.
5. E) consistent.

Answer: B

57) What are guides to decision making that address repetitive or recurring situations
called?

1. A) Strategies
2. B) Rules
3. C) Policies
4. D) Objectives
5. E) Goals

Answer: C
58) The act of strengthening employees' sense of effectiveness by encouraging and
rewarding them for participating in decision-making and exercising initiative and
imagination is referred to as

1. A) authoritarianism.
2. B) proaction.
3. C) empowerment.
4. D) transformation.
5. E) delegation.

Answer: C

74) Which of the following is often considered to be the first step in strategic planning?

1. A) Developing a vision statement

2. B) Establishing goals and objectives
3. C) Making a profit
4. D) Developing a mission statement
5. E) Determining opportunities and threats

Answer: A

75) Which of the following is part of the Strategic-Management Model?

1. A) Measure and evaluate performance

2. B) Develop mission and vision statements
3. C) Establish long-term objectives
4. D) Implement strategies
5. E) All of the above

Answer: E

78) Strategic management enables an organization to ________, instead of just

responding to threats in its business environment.

1. A) be proactive
2. B) be immune to threats
3. C) avoid responsibility for shaping its future
4. D) relinquish control over its destiny
5. E) be reactive

Answer: A
79) How do line managers become "owners" of the strategy?

1. A) By attending top manager meetings

2. B) By executing plans formulated by other people
3. C) By involvement in the strategic-management process
4. D) By becoming a shareholder of the firm
5. E) By buying off top managers

Answer: C

80) Annually, ________ businesses in the United States fail.

1. A) exactly 100
2. B) less than 1,000
3. C) about 10,000
4. D) more than 100,000
5. E) almost 10 million

Answer: D

81) Organizations using strategic management are generally ________ than those that
do not.

1. A) more profitable
2. B) more complex
3. C) less profitable
4. D) less successful
5. E) less complex

Answer: A

82) According to Greenley, strategic management offers all of the following benefits
EXCEPT

1. A) increased discipline.
2. B) enhanced communication.
3. C) increased synergy.
4. D) increased resistance to change.
5. E) more effective allocation of time and resources.

Answer: D
83) There is a dramatic shift in mass retailing to

1. A) "trading up" and taking customers from more exclusive stores.

2. B) selling only the most expensive merchandise.
3. C) opening dramatically larger supercenters.
4. D) operating stores with less square footage.
5. E) cutting back on their online presence.

Answer: D

84) Anything that a firm does especially well compared to rival firms is referred to as

1. A) competitive advantage.
2. B) comparative disadvantage.
3. C) opportunity cost.
4. D) unsustainable advantage.
5. E) an external opportunity.

Answer: A

85) In mass retailing, big-box companies like Walmart, Best Buy, and Sears are

1. A) gaining competitive advantage over smaller stores.

2. B) participating in a dramatic shift to becoming bigger.
3. C) increasing the square-footage of their retail locations.
4. D) finding that less brick and mortar is better.
5. E) noticing a sharp decline in online purchases.

Answer: D

86) The fact that Apple has no manufacturing facilities of its own

1. A) has caused it to build up massive debt on its balance sheet.

2. B) has enabled it to remain financially lean.
3. C) has been problematic for Apple in terms of debt.
4. D) illustrates that having more fixed assets than rival firms can provide major
competitive advantages in a global recession.
5. E) means that it is in the same position as Sony.

Answer: B
87) The Internet has transferred power from ________ to ________.

1. A) businesses; individuals
2. B) governments; businesses
3. C) individuals; businesses
4. D) businesses; governments
5. E) individuals; governments

Answer: A

102) Which of the following is NOT a reason given for poor or no strategic planning in
an organization?

1. A) Planning is viewed as a waste of time

2. B) Content with current success
3. C) Too busy "firefighting" to plan ahead
4. D) No monetary rewards for planning
5. E) Trust of management makes it unnecessary

Answer: E

106) All of these are pitfalls an organization should avoid in strategic planning EXCEPT

1. A) using plans as a standard for measuring performance.

2. B) using strategic planning to gain control over decisions and resources.
3. C) failing to involve key employees in all phases of planning.
4. D) too hastily moving from mission development to strategy formulation.
5. E) being so formal in planning that flexibility and creativity are stifled.

Answer: A

107) Which of the following is NOT a pitfall an organization should avoid in strategic
planning?

1. A) Failing to communicate the plan to employees

2. B) Involving all managers rather than delegating planning to a "planner"
3. C) Top managers not actively supporting the strategic-planning process
4. D) Doing strategic planning only to satisfy accreditation or regulatory
requirements
5. E) Failing to create a collaborative climate supportive of change

Answer: B
111) Terms such as objectives, mission, strengths, and weaknesses were first
formulated to address problems

1. A) on the battlefield.
2. B) in the boardroom.
3. C) on the trading floor.
4. D) in the military hierarchy.
5. E) in interpersonal relationships.

Answer: A

112) According to Webster's New World Dictionary, ________ is "the science of

planning and directing large-scale military operations, of maneuvering forces into the
most advantageous position prior to actual engagement with the enemy."

1. A) competitive advantage
2. B) war
3. C) strategy
4. D) formulation
5. E) business

Answer: C

113) Business or military success is

1. A) generally the happy result of accidental strategies.

2. B) undermined by the element of surprise.
3. C) the product of both attention to changing external and internal conditions and
the insightful adaptations to those conditions.
4. D) unrelated to external conditions.
5. E) none of the above

Answer: C
114) Superior strategy formulation and implementation ________ an opponent's
superiority in numbers and resources.

1. A) are irrelevant to
2. B) are not enough to surmount
3. C) can overcome
4. D) can lead to
5. E) unite

Answer: C
115) A strong ________ heritage underlies the study of strategic management.

1. A) military
2. B) government
3. C) political
4. D) social
5. E) cultural

Answer: A

116) Military strategy is based on an assumption of ________, whereas business

strategy is based on an assumption of ________.

1. A) conflict; cooperation
2. B) conflict; competition
3. C) cooperation; conflict
4. D) competition; conflict
5. E) cooperation; competition

Answer: B

117) Both business and military organizations must ________ and ________ to be
successful.

1. A) be impervious to change; continually improve

2. B) adapt to change; constantly improve
3. C) shun change; stay the course
4. D) be impervious to change; stay the course
5. E) none of the above

Answer: B