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MGMT499 6 – 9

Alternative strategies don’t come out of the blue; they are derived from the firm’s vision, mission and objectives.
True
The first stage of the strategy-formulation framework is the input stage, and it is directly followed by the matching stage.
True
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.
True
When completing the matching stage of the strategy-formulation framework, the SWOT Matrix, the SPACE Matrix, the BCG Matrix, IE Matrix, and Grand Strategy Matrix can be completed in any order.
True
Strengths-opportunities strategies are based on using a firm’s internal strengths to take advantage of external opportunities and threats.
True
One of the steps of the SWOT Matrix is to list the firm’s key external opportunities.
True
The most important determinants of an organization’s overall strategic position are considered to be the two internal dimensions, financial position (FP) and competitive position (CP), and the two external dimensions, industry position (IP) and stability position (SP).
True
Market penetration can be classified as either a conservative, aggressive, or competitive strategy.
True
Conservative strategies in a SPACE Matrix most often include product development, market development, market penetration and related diversification.
True
A firm should pursue aggresive strategies if the coordinates of a SPACE directional vector are (+2,+3).
True
Relative market share position is given on the x-axis of the BCG Matrix.
True
The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.
True
Stars, Question Marks, Cash Cows and Dogs are the four quadrants exhibited by the SPACE Matrix.
True
The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization’s various divisions.
True
The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time.
True
Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time.
True
The IE Matrix requires more information about the divisions than the BCG Matrix.
True
The IE Matrix can be divided into three major regions that have different strategy implications: grow and build, hold and maintain, and harvest or divest.
True
According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily committed to a single product, then related diversification may reduce the risks associated with a narrow product line.
True
To objectively evaluate feasible alternative strategies identified in Stage 2, the QSPM uses input information derived from Stage 1.
True
Total attractiveness scores are defined as the product of multiplying the weights by the Attractiveness Scores in each row. Are computed in the fifth step of the QSPM.
True
One positive feature of QSPM is that it requires intuitive judgments and educated assumptions.
True
Strategy changes may be highly effective and productive if a supportive culture exists.
True
Successful strategists minimize their own political exposure on issues that are highly controversial and in circumstances where opposition from major power centers is likely.
True
Shifting focus from specific issues to more general ones may increase strategists’ options for gaining organizational commitment.
True
Today boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management.
True
Strategy analysis and choice largely involves making ________ decisions based on ________ information.
subjective; objective
Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning Matrix?
Stage 3
Each of the nine techniques included in the strategy formulation framework rely on the use of
intuition and analysis.
Which stage of the strategy-formulation framework contains the Internal-Factor Evaluation Matrix?
Input stage
Which section of the SWOT Matrix involves matching internal strengths with external opportunities?
The SO cell
Which strategies use a firm’s strengths to avoid or reduce the impact of external threats?
ST
How many cells are in a SWOT Matrix?
Nine
Which of the following is a limitation associated with a SWOT Matrix?
The matrix has no temporal qualities.
What type of strategy would divestiture be classified as?
Defensive
What are the two external dimensions of the SPACE Matrix?
Stability position and industry position
What type of strategies would you recommend when a firm’s SPACE Matrix directional vector has the coordinates (-2, +3)?
Conservative
The BCG Matrix is designed specifically to enhance which type of firm’s efforts to formulate strategies?
Companies with more than one division
How would a division with a low relative market share position in a high growth industry be described?
Question Mark
A division with a high relative market share position in a low-growth industry can be described as a
Cash Cow.
Strategy implementation is the managing of forces during the action, whereas Strategy formulation is the positioning of forces before the action.
True
Unlike strategy formulation, strategy implementation varies considerably among different types and sizes of organizations.
True
Horizontal consistency is as important as vertical consistency in developing annual objectives.
True
Policies clarify what can and cannot be done in pursuit of an organization’s objectives.
True
Avoidance, diffusion and confrontation are the classifications for various approaches of managing and resolving conflict.
True
Holding a meeting at which conflicting parties present their views and work through their differences is part of the confrontation technique of managing conflict.
True
Tasks and activities are grouped together by business function in a functional organizational structure.
True
With a divisional structure, it is possible that competition between divisions may become so intense that it is dysfunctional and leads to limited sharing of ideas and resources for the common good of the firm.
True
The most complex of all organizational structures is a matrix structure.
True
When developing an organizational chart, it is not wise to recommend a dual title for just one executive.
True
In terms of number of employees, restructuring usually involves decreasing the size of the firm.
True
The focus of restructuring is cost reduction.
True
On average, CEOs at Japanese companies are paid less than CEOs at American or European companies.
True
A rational change strategy means convincing individuals that the change is to their personal advantage.
True
Strategy formulation requires coordination among a few individuals, but strategy implementation requires coordination among many.
True
A top-down flow of communication is essential for developing bottom-up support.
True
Undesirable conduct such as distorting the records can be a result of overemphasis on achieving objectives.
True
Not allocating resources according to the priorities indicated by approved objectives is detrimental to the strategic-management process.
True
Well-run organizations are not able to completely avoid conflict.
True
Exchanging members of conflicting parties so each can gain an appreciation of the other’s point of view exemplifies a confrontation approach.
True
A functional structure leads to short-term and narrow thinking.
True
With a divisional structure by customer, an organization can effectively cater to the requirements of clearly defined customer groups.
True
With the matrix structure it is common for functional resources to not be duplicated.
True
In developing an organizational chart, avoid having a particular person reporting to more than one person above them in the chain of command.
True
Reengineering does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs.
True
Cornerstones of reengineering are decentralization, reciprocal interdependence and information sharing.
True
People’s anxieties are raised with the thought of change because they fear economic loss, inconvenience, uncertainty and a break in normal social patterns.
True
When the rational type change strategy is successful, strategy implementation can be relatively easy.
True
Strategists should strive to create a work environment in which change is recognized as necessary and beneficial so that individuals can more easily adapt to change.
True
A force change strategy is plagued by low commitment and high resistance.
True
Organizational change today should be viewed as a continuous project.
True
Changing a strategy to fit an existing culture is not as effective as changing a firm’s culture to fit a new strategy.
True
Strategists should strive to preserve, emphasize, and build upon aspects of an existing culture that are support proposed strategies.
True
Recruitment, promotion, and mentoring are ways to alter an organization’s culture.
True
When attachments to a culture are severed in an organization’s attempt to change direction, employees and managers often experience deep feelings of grief.
True
Production processes typically constitute more than 70 percent of a firm’s total assets.
True
JIT significantly reduces the costs of implementing strategies.
True
Besides reducing worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial tax savings.
True
ESOPs do not work well in firms with fluctuating payrolls and profits.
True
Being long-term in nature, strategy implementation affects top, middle managers and lower-level employees.
True
Given that much information on individuals is available online, the extent to which companies can track individuals’ movements on the Internet is of increasing concern to consumers today.
True
The marketing mix component variables are product, place, promotion, and price.
True
The most common bases for segmenting markets are geographic and demographic.
True
Segmenting consumer markets is generally simpler and easier than segmenting industrial markets.
True
The next step after segmenting markets so a firm can target particular customer groups is to find out what customer groups want and expect.
True
Multidimensional scaling involves examining three or more criteria simultaneously in a product-positioning analysis.
True
It is never okay for firms to create expectations that exceed the service the firm can or will offer if it will attract customers.
True
Besides net profit from operations and the sale of assets, two basic sources of funds for an ongoing enterprise are debt and equity.
True
Additional capital is often required for successful strategy implementation.
True
In times of depressed stock prices, stock issuances debt may prove to be the most suitable alternative for obtaining capital.
True
When performing projected financial analysis, the income statement should be prepared before the balance sheet .
True
The cash account is used as the plug figure in projected balance sheets.
True
A financial budget is a document that details how funds will be obtained and spent for a specified period of time.
True
The most common type of financial budget is the annual budget.
True
As a balance sheet entry, goodwill represents when a firms pays more than the book value to purchase another firm.
True
It is generally not recommended for companies with less than $10 million in sales to go public.
True
Going public means selling off a percentage of your company to other in order to raise capital.
True
According to research, the most successful new product companies use a research and development strategy that ties internal strengths to external opportunities and is linked with corporate objectives.
True
A major effort in R&D may be very risky if technology is changing rapidly and the market is growing slowly.
True
A current trend in R&D management involves the lifting of the veil of secrecy whereby firms, even major competitors, are joining forces to develop new products.
True
With information technology, in some cases it is possible to do away with the workplace by allowing employees to work at home or anywhere, anytime.
True
What level of management is directly affected by strategy implementation?
Plant managers
Sales managers
Project managers
Division managers
Which two variables rank as marketing’s most important contributions to strategic management?
Market segmentation and product positioning.
Why is market segmentation an important variable in strategy implementation?
It allows a small firm to compete successfully with a large firm.
It allows a firm to operate with limited resources.
Mass production, mass distribution and mass advertising are not always required.
Market segmentation decisions directly affect marketing mix variables.
Why is market segmentation an important variable in the strategy-implementation process?
It directly affects marketing mix variables.
Matching of which factors would allow factories to produce desirable levels without extra shifts, overtime or subcontracting?
Supply and demand
Which variable would be considered part of the “place” element of the marketing mix?
Sales territory
Which is not a required step in product positioning?
Serve two segments with the same strategy
Multidimensional scaling is used to determine
product positioning.
Which of these is not a rule of thumb when using product positioning as a strategy-implementation tool?
“Try to serve more than one segment with the same strategy.”
In the low earnings period, too much ________ in the capital structure of an organization can endanger stockholders’ return and jeopardize company survival.
debt
What is the most widely used technique for determining the best combination of debt and stock?
Earnings per share/earnings before interest and tax analysis
What becomes a more attractive financing technique when cost of capital is high?
Stock issuance
A benefit of using projected balance sheets and income statements is that
an organization can compute projected financial ratios under various scenarios.
What is a central strategy-implementation technique that allows an organization to examine the expected results of various actions and approaches?
Projected financial statement analysis
In preparing projected statements, to project cost of goods sold and the expense items in the income statement, which of these methods is recommended?
Percentage-of-sales method
Retained earnings is obtained by subtracting
any dividends to be paid for that year from net income.
Which of these is the most common type of budgeting time frame?
Annual
What is the most common type of financial budget?
Cash
Adequate, timely feedback is important to effective strategy evaluation.
True
According to Richard Rumelt, consonance and advantage are mostly based on a firm’s external assessment.
True
Strategy evaluation is becoming increasingly difficult with the passage of time, given technological advances.
True
Competitive advantages normally are the result of superiority in one of three areas: resources, skills, or position.
True
Strategy evaluation should be performed on a continuous basis rather than at the end of specified periods of time.
True
Strengths, weaknesses, opportunities and threats should continually be monitored for change because it is not really a question of whether these factors will change, but rather when they will change and in what ways.
True
Specific financial ratios are always used to evaluate strategies.
True
Most quantitative evaluation criteria are geared to annual objectives rather than long-term.
True
Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving stated objectives.
True
According to research, participation in strategy-evaluation activities is one of the best ways to overcome individuals’ resistance to change.
True
Each year, Fortune publishes strategy evaluation research on both the United States and other countries.
True
Timely approximate information is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present.
True
There is no one ideal strategy-evaluation system for all organizations.
True
Strategies cannot and should not try to cover all bases by planning for all possible contingencies.
True
Identifying both beneficial and unfavorable events that could possibly derail the strategy or strategies is the first step of effective contingency planning.
True
Too much emphasis on evaluating strategies may be expensive and counterproductive.
True
According to Rumelt, consistency and feasibility are largely based on a firm’s internal assessment.
True
The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is more difficult today.
True
Regardless of the size of the organization, a certain amount of “management by wandering around” at all levels is essential to effective strategy evaluation.
True
Changes in the organization’s management, marketing, finance/accounting, production/operations, R&D and MIS strengths and weaknesses should all be the focus of a revised IFE matrix in strategy evaluation.
True
When measuring organizational performance, you need to compare expected results to actual results.
True
Measuring organizational performance includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance and examining progress being made toward meeting stated objectives.
True
Measuring organizational performance includes comparing expect results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives.
True
Alvin Toffler argues that environments are becoming so dynamic and complex that they threaten people and organizations with future shock, in his thought-provoking books entitled Future Shock and The Third Wave.
True
The basic form of a Balanced Scorecard will vary for different organizations or industries.
True
The most admired company in the world in 2009 was Nike.
True
The test of an effective evaluation system is its usefulness not its complexity.
True
Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.
True
Contingency plans should be as simple as possible.
True
A frequently used tool in strategy evaluation is the audit.
True
The accounting switch from GAAP to IFRS in the U.S. is going to cost businesses millions of dollars in fees and upgraded software systems and training.
True
GAAP standards comprise 25,000 pages, whereas IFRS standards comprise 5,000 pages.
True
Which of these is a basic activity of strategy evaluation?
Reviewing the underlying internal and external factors that represent the bases of current strategies.
Measuring organizational performance.
Taking corrective actions.
All of these are Richard Rumelt’s criteria to evaluate a strategy except:
advantage.
consistency.
feasibility.
(distinctiveness)
consonance.
Which of the following is not a reason for the increasing difficulty of evaluating strategies?
(Product life cycles are longer)
Domestic and world economies are less stable.
Product development cycles are shorter.
Technological advancement is more rapid.
Change is occurring more frequently.
Competitive advantage normally is the result of superiority in resources, skills and
position.
If success for one organizational department means failure for another department, then strategies may be
inconsistent.
Corrective actions are almost always _______ except when external and internal factors have not significantly changed and the firm is progressing satisfactorily toward achieving stated objectives.
needed
A revised ________ should indicate how effective a firm’s strategies have been in response to key opportunities and threats.
EFE matrix
What is the basis for quantitative financial evaluation?
Financial ratios

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