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Chapter 1-Strategic Management

Strategic management focuses on integrating management, marketing, finance and accounting, production and operations, research and development, and information systems to achieve organizational success.
True
Optimizing for tomorrow the trends of today is the purpose of strategic management.
False
Even though useful, strategic planning has been cast aside by corporate America since the early 1990s.
False
The decision to expand or diversify operations is a strategy-formulation issue.
True
The terms strategic management and strategic planning are synonymous in this text.
True
A vision statement identifies the scope of a firm’s operations in product and market terms.
False
Strategy implementation is often considered to be the most difficult stage in the strategic-management process because it requires personal discipline, commitment, and sacrifice.
True
The final stage in strategic management is strategy implementation.
False
Formulation, implementation, and evaluation of strategy activities occur at three hierarchical levels in a large organization: corporate, divisional or strategic business unit, and functional.
True
One of the fundamental strategy evaluation activities is reviewing external and internal factors that are the basis for current strategies.
True
An objective, logical, systematic approach for making major decisions in an organization is a way to describe the strategic-management process.
True
Strategic management is an attempt to organize qualitative and quantitative information in a way that allows effective decisions to be made under conditions of uncertainty.
True
Analytical and intuitive thinking should complement each other.
True
According to Albert Einstein, “Knowledge is far more important than intuition.”
False
Management by intuition can be defined as operating from the “I’ve-already-made-up-my-mind-don’t-bother-me-with-the-facts mode.”
False
By occasionally monitoring external events, companies should be able to identify when change is required.
False
Firms, like organisms, must be “adept at adapting” or they will not survive.
True
U.S. firms are not being challenged in the computer industry.
False
Anything the firm does especially well compared to rival firms could be considered a competitive advantage.
True
Once a firm acquires a competitive advantage, they are usually able to sustain the competitive advantage indefinitely.
False
Newspaper companies in the United States provide a good example of how a company can sustain a competitive advantage over the long-term.
False
Although e-commerce has increased in popularity, it has actually led to increases in company expenses.
False
While the number of people shopping online has increased, the average amount spent online has decreased.
False
One of the ways in which the Internet has transferred power from businesses to individuals is by making comparison-shopping quick and easy.
True
Most traditional retailers have tried in vain to use their online sales to boost in-store sales.
False
In order for a firm to achieve sustained competitive advantage, a firm must continually adapt to changes in external trends and events and effectively formulate, implement, and evaluate strategies that capitalize upon those factors.
True
Strategists are usually found in higher levels of management and have considerable authority for decision-making in the firm.
True
The middle manager is the most visible and critical strategic manager.
False
All strategists have similar attitudes, values, ethics and concerns for social responsibility.
False
A vision statement answers the question, “What is our business?” whereas a mission statement answers, “What do we want to become?”
False
In the last five years, the position of chief strategy officer (CSO) has diminished so drastically that today it is almost unheard of for companies to have such a position on staff.
False
A clear mission statement describes the values and priorities of an organization.
True
Strengths and weaknesses are determined relative to competitors.
True
In a multidivisional firm, objectives should be established for the overall company but not for each division.
False
Objectives should be measurable, challenging, reasonable, consistent, and clear.
True
Annual objectives are long-term milestones that organizations must achieve to reach short-term objectives.
False
Annual objectives are especially important in strategy formulation.
False
According to research, a healthier workforce can more effectively and efficiently implement strategies.
True
Identifying an organization’s existing vision, mission, objectives, and strategies is the final step for the strategic management process.
False
Once an effective strategy is designed, modifications are rarely required.
False
Application of the strategic-management process is typically more formal in larger and well-established organizations.
True
Commitment and understanding are the most important benefits of strategic management.
True
The best thing strategists can do is develop strategic plans themselves and then present them to operating managers to execute.
False
Firms with planning systems more closely resembling strategic-management theory generally exhibit superior long-term financial performance relative to their industry.
True
Low-performing firms typically underestimate their competitor’s strengths and overestimate their own firm’s strengths.
True
According to Greenley, strategic management provides increased discipline, enhanced communication, and more effective allocation of time and resources.
True
The lack of monetary rewards is one reason managers do not engage in strategic planning.
True
Crises and firefighting in an organization give managers the extra time needed to plan ahead.
False
Making many intuitive decisions that conflict with the formal plan is one pitfall to avoid in strategic planning.
True
Managers must be very formal in strategic planning because formality fosters flexibility and creativity.
False
Many organizations mistakenly spend more time and effort on the implementation of a plan, than on the formulation of the plan itself.
False
Strategic-management must be a self-reflective learning process that familiarizes managers and employees in the organization with key strategic issues and feasible alternatives for resolving those issues.
True
The most effective strategic management is ritualistic, predictable, and formal.
False
For the strategic planning process to be effective, organizations must continually strengthen the “good ethics is good business” policy.
True
Military success is usually the happy result of accidental strategies, but business success is the product of continuous attention to changing conditions and insightful adaptations to those conditions.
False
In most respects, business strategy is very different than military strategy.
False
The element of surprise provides great competitive advantages in both military and business strategy.
True
Both military and business strategy are formulated, implemented, and evaluated with an assumption of competition.
False
Superior strategy formulation is well and good, but it cannot overcome an opponent’s superiority in numbers and resources.
False
All firms have a strategy, even if it is informal, unstructured, and sporadic.
True
Firms can be more proactive with strategic management.
True
The goal of strategic management is to
A) achieve competitive advantage.
B) maintain competitive advantage.
C) achieve and maintain competitive advantage.
D) eliminate competitive advantage.
E) eliminate and abolish competitive advantage.
C) achieve and maintain competitive advantage.
Strategic management focuses on integrating management, ________, and information systems to achieve organizational success.
A) marketing
B) finance and accounting
C) production and operations
D) research and development
E) all of the above
E) all of the above
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?
A) Strategy formulation
B) Strategy evaluation
C) Strategy implementation
D) Strategic management
E) Strategic leading
D) Strategic management
Sometimes ________ is used to refer to strategic formulation, implementation and evaluation, with ________ referring only to strategic formulation.
A) strategic planning; strategic management
B) strategic planning; strategic processing
C) strategic management; strategic planning
D) strategic management; strategic processing
E) strategic implementation; strategic focus
C) strategic management; strategic planning
During what stage of strategic management are a firm’s specific internal strengths and weaknesses determined?
A) Formulation
B) Implementation
C) Evaluation
D) Feedback
E) Goal-setting
A) Formulation
67) An important activity in ________ is taking corrective action.
A) strategy evaluation
B) strategy implementation
C) strategy formulation
D) strategy leadership
E) all of the above
A) strategy evaluation
68) What step in the strategic development process involves mobilizing employees and managers to put strategies into action?
A) Strategy formulation
B) Strategy evaluation
C) Strategy implementation
D) Strategic advantage
E) Competitive advantage
C) Strategy implementation
What types of skills are especially critical for successful strategy implementation?
A) Interpersonal
B) Marketing
C) Technical
D) Conceptual
E) Visionary
A) Interpersonal
Which phase of strategic management is called the action phase?
A) Strategy formulation
B) Strategy implementation
C) Strategy evaluation
D) Competing advantages
E) Measuring performance
B) Strategy implementation
________ is NOT a strategy-implementation activity.
A) Taking corrective actions
B) Establishing annual objectives
C) Devising policies
D) Allocating resources
E) Motivating employees
A) Taking corrective actions
Strategy evaluation is necessary because
A) internal and external factors are constantly changing.
B) the SEC requires strategy evaluation.
C) success today is a guarantee of success tomorrow.
D) the IRS requires strategy evaluation.
E) firms have limited resources.
A) internal and external factors are constantly changing.
Which statement best describes intuition?
A) It alone should be used in decision-making.
B) It represents a minor factor in decision-making integrated with analysis.
C) It should be coupled with analysis in decision-making.
D) It is better than analysis in decision-making.
E) It is management by ignorance.
C) It should be coupled with analysis in decision-making.
In recent years, the speedy flow of information through technology has
A) made it harder for people worldwide to see how others work and live.
B) strengthened national boundaries and made countries more self-contained.
C) created a borderless world with global competitors, customers, and citizens.
D) ensured that the U.S. is unrivaled by other companies in all industries.
E) made the real flow of financial activity align with political boundaries between countries.
C) created a borderless world with global competitors, customers, and citizens.
Anything that a firm does especially well compared to rival firms is referred to as
A) competitive advantage.
B) comparative disadvantage.
C) opportunity cost.
D) unsustainable advantage.
E) an external opportunity.
A) competitive advantage.
In mass retailing, big-box companies like Walmart, Best Buy, and Sears are
A) gaining competitive advantage over smaller stores.
B) participating in a dramatic shift to becoming bigger.
C) increasing the square-footage of their retail locations.
D) finding that less brick and mortar is better.
E) noticing a sharp decline in online purchases.
D) finding that less brick and mortar is better.
The fact that Apple has no manufacturing facilities of its own
A) has caused it to build up massive debt on its balance sheet.
B) has enabled it to remain financially lean with virtually no long-term debt.
C) has been problematic for Apple in terms of debt.
D) illustrates that having more fixed assets than rival firms can provide major competitive advantages in a global recession.
E) means that it is in the same position as Sony.
B) has enabled it to remain financially lean with virtually no long-term debt.
________ allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, and eliminate paperwork.
A) Social networking
B) E-commerce
C) Blogging
D) Viral video
E) “Trading down”
B) E-commerce
79) The Internet has transferred power from ________ to ________.
A) businesses, individuals
B) governments, businesses
C) individuals, businesses
D) businesses, governments
E) individuals, governments
A) businesses, individuals
There is a dramatic shift in mass retailing to
A) “trading up” and taking customers from more exclusive stores.
B) selling only the most expensive merchandise.
C) opening dramatically larger supercenters.
D) operating stores with less square footage.
E) cutting back on their online presence.
D) operating stores with less square footage.
The one factor that has most significantly impacted the nature and core of buying and selling in nearly all industries has been
A) the Internet.
B) political borders.
C) corporate greed.
D) customer and employee focus.
E) the government.
A) the Internet.
Which individuals are most responsible for the success and failure of an organization?
A) Strategists
B) Financial planners
C) Personnel directors
D) Stakeholders
E) Human resource managers
A) Strategists
Which is generally considered to be the first step in strategic planning?
A) Developing a vision statement
B) Establishing goals and objectives
C) Making a profit
D) Developing a mission statement
E) Determining opportunities and threats
A) Developing a vision statement
What are enduring declarations of purpose that distinguish one business from other similar firms?
A) Policies
B) Mission statements
C) Objectives
D) Rules
E) Employee conduct guidelines
B) Mission statements
An organization’s vision statement
A) is a constant reminder to its employees of why the organization exists.
B) broadly charts the future direction of an organization.
C) addresses the basic question: “What is our business?”
D) answers the question: “What do we want to become?”
E) none of the above
D) answers the question: “What do we want to become?”
Generally, external opportunities and threats are
A) uncontrollable by a single organization.
B) unable to have a significant impact on an organization.
C) not worth monitoring and evaluating.
D) key functions in strategy implementation.
E) key functions in strategy exploitation.
A) uncontrollable by a single organization.
Specific results an organization seeks to achieve in pursuing its basic mission are
A) strategies.
B) rules.
C) objectives.
D) policies.
E) tenets.
C) objectives.
Internal ________ are controllable activities in an organization that are performed especially well.
A) opportunities
B) incompetencies
C) strengths
D) objectives
E) factors
C) strengths
What are the means by which long-term objectives will be achieved?
A) Strategies
B) Strengths
C) Weaknesses
D) Policies
E) Opportunities
A) Strategies
Long-term objectives should be all of the following EXCEPT
A) measurable.
B) continually changing.
C) reasonable.
D) challenging.
E) consistent.
B) continually changing.
Annual objectives are especially important in strategy
A) reduction.
B) formulation.
C) implementation.
D) evaluation.
E) policy.
C) implementation.
In which phase of strategic management are long-term objectives especially important?
A) Formulation
B) Control
C) Evaluation
D) Implementation
E) Management
A) Formulation
What are guides to decision making called?
A) Strategies
B) Rules
C) Policies
D) Objectives
E) Goals
C) Policies
The strategic-management process
A) occurs once a year.
B) is a semiannual process.
C) is a continuous process.
D) applies mostly to companies with sales greater than $100 million.
E) applies mostly to small businesses.
C) is a continuous process.
Which of the following is part of the strategic management model?
A) Measure and evaluate performance
B) Develop mission and vision statements
C) Establish long-term objectives
D) Implement strategies
E) All of the above
E) All of the above
Strategic management enables an organization to ________, instead of just responding to threats in its business environment.
A) be proactive
B) be immune to threats
C) avoid responsibility for shaping its future
D) relinquish control over its destiny
E) be reactive
A) be proactive
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
A) authoritarianism.
B) proaction.
C) empowerment.
D) transformation.
E) delegation.
C) empowerment.
How do line managers become “owners” of the strategy?
A) By attending top manager meetings
B) By executing plans formulated by other people
C) By involvement in the strategic-management process
D) By becoming a shareholder of the firm
E) By buying off top managers
C) By involvement in the strategic-management process
Annually, ________ businesses in the U.S. fail.
A) exactly 100
B) less than 1,000
C) about 10,000
D) more than 100,000
E) almost 10 million
D) more than 100,000
According to research, organizations using strategic management are ________ than those that do not.
A) more profitable
B) more complex
C) less profitable
D) less successful
E) less complex
A) more profitable
According to Greenley, strategic management offers all of the following benefits EXCEPT
A) increased discipline.
B) enhanced communication.
C) increased synergy.
D) increased resistance to change.
E) more effective allocation of time and resources.
D) increased resistance to change.
Which of the following is NOT a reason given for poor or no strategic planning in an organization?
A) Planning is viewed as a waste of time
B) Content with current success
C) Too busy “firefighting” to plan ahead
D) No monetary rewards for planning
E) Trust of management makes it unnecessary
E) Trust of management makes it unnecessary
All of these are pitfalls an organization should avoid in strategic planning EXCEPT
A) using plans as a standard for measuring performance.
B) using strategic planning to gain control over decisions and resources.
C) failing to involve key employees in all phases of planning.
D) too hastily moving from mission development to strategy formulation.
E) being so formal in planning that flexibility and creativity are stifled.
A) using plans as a standard for measuring performance.
Which of the following is NOT a pitfall an organization should avoid in strategic planning?
A) Failing to communicate the plan to employees
B) Involving all managers rather than delegating planning to a “planner”
C) Top managers not actively supporting the strategic-planning process
D) Doing strategic planning only to satisfy accreditation or regulatory requirements
E) Failing to create a collaborative climate supportive of change
B) Involving all managers rather than delegating planning to a “planner”
Which of the following statements is NOT true?
A) Open-mindedness is an important guideline for effective strategic management.
B) Strategic management must become a self-perpetuating bureaucratic mechanism.
C) No organization has unlimited resources.
D) Strategic decisions require trade-offs.
E) Strategic management must be a self-reflective learning process.
B) Strategic management must become a self-perpetuating bureaucratic mechanism.
All of the following are guidelines for effective strategic planning EXCEPT
A) it should be simple and nonroutine.
B) it should be a learning process for all managers and employees.
C) it should be a paper process more than a people process.
D) it should not disregard qualitative information.
E) it should not be a formal system for control.
C) it should be a paper process more than a people process.
What is NOT a guideline given for effective strategic planning?
A) Continually strengthen the “good ethics is good business” policy.
B) It should not include jargon or arcane planning language.
C) It should not be too formal, predictable, or rigid.
D) It should welcome bad news.
E) It should be controlled by “technicians.”
E) It should be controlled by “technicians.”
Which of the following statements is FALSE?
A) No organization can pursue all the strategies that potentially could benefit the firm.
B) Most organizations today recognize that strategic-management concepts and techniques can enhance the effectiveness of decisions.
C) A key role of strategists is to facilitate continuous organizational learning and change.
D) Effective strategic planning should accept the assumptions underlying the current corporate strategy.
E) Even the most technically perfect strategic plan will serve little purpose if it is not implemented.
D) Effective strategic planning should accept the assumptions underlying the current corporate strategy.
Terms such as objectives, mission, strengths, and weaknesses were first formulated to address problems
A) on the battlefield.
B) in the boardroom.
C) on the trading floor.
D) in the military hierarchy.
E) in interpersonal relationships.
A) on the battlefield.
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.”
A) competitive advantage
B) war
C) strategy
D) formulation
E) business
C) strategy
Business or military success is
A) generally the happy result of accidental strategies.
B) undermined by the element of surprise.
C) the product of both attention to changing external and internal conditions and the insightful adaptations to those conditions.
D) unrelated to external conditions.
E) none of the above.
C) the product of both attention to changing external and internal conditions and the insightful adaptations to those conditions.
Superior strategy formulation and implementation ________ an opponent’s superiority in numbers and resources.
A) are irrelevant to
B) are not enough to surmount
C) can overcome
D) can lead to
E) unite
C) can overcome
A strong ________ heritage underlies the study of strategic management.
A) military
B) government
C) political
D) social
E) cultural
A) military
Military strategy is based on an assumption of ________, whereas business strategy is based on an assumption of ________.
A) conflict; cooperation
B) conflict; competition
C) cooperation; conflict
D) competition; conflict
E) cooperation; competition
B) conflict; competition
Both business and military organizations must ________ and ________ to be successful.
A) be impervious to change; continually improve
B) adapt to change; continually improve
C) shun change; stay the course
D) be impervious to change; stay the course
E) none of the above
B) adapt to change; continually improve
The strategic-management process is becoming more widely used by
A) small firms.
B) nonprofit institutions.
C) governmental organizations.
D) multinational conglomerates.
E) all of the above
E) all of the above
Organizations should take a(n) ________ approach in their industry.
A) adversarial rather than a collegial
B) collegial rather than an adversarial
C) reactive rather than a proactive
D) proactive rather than a reactive
E) cooperative rather than a competitive
D) proactive rather than a reactive
The strategic-management process represents a(n) ________, ________, and ________ approach for determining an enterprise’s future direction.
A) logical; systematic; subjective
B) intuitive; disorganized; subjective
C) logical; systematic; objective
D) intuitive; disorganized; objective
E) inconsistent; systematic; subjective
C) logical; systematic; objective

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