Who should perform an internal audit?

a. A small team of top-level managers

b. The chief executive officer
c. Representative managers and employees from throughout the firm
d. A private auditing firm
e. The organization's accounting department
It is always easier to say you are going to do something (strategy formulation) than to
actually do it (strategy implementation).
a. FALSE
b. TRUE
Horizontal integration is seeking ownership or increased control over competitors.
a. TRUE
b. FALSE
Which strategies are defensive tactics directed at reducing internal weaknesses and
avoiding external threats?
a. ST
b. SW
c. SO
d. WO
e. WT
________ plans can be defined as alternative plans that can be put into effect if certain key
events do not occur as expected.
a. Scenario
b. Evaluation
c. Agile
d. Contingency
e. Forecast
Unlike strategy formulation, strategy implementation varies considerably among different
types and sizes of organizations.
a. FALSE
b. TRUE
The SWOT matrix, if used appropriately, does not have any limitations.
a. TRUE
b. FALSE
If Gap opens five stores for the first time in China, this is an example of which type of
strategy?
a. Market development
b. Forward integration
c. Horizontal integration
d. Product development
e. Backward integration
Which of the following is the first activity in strategy evaluation?
a. Examining the underlying bases of current strategies
b. Monitoring the internal environment
c. Monitoring the external environment
d. Taking corrective actions
e. Measuring organizational performance
Economic factors do not have much impact on the attractiveness of strategies.
a. False
b. True
Political issues and stances impact strategic decisions.
a. True
b. False
To perform an external audit, a company first must gather competitive intelligence and
information about economic, social, cultural, demographic, environmental, political,
governmental, legal, and technological trends.
a. False
b. True
________ includes the set of shared values, beliefs, attitudes, customs, norms, rites, rituals,
personalities, heroes, and heroines that describe a firm.
a. Mission
b. Strategy
c. QSPM
d. Culture
e. Objectives
What is NOT one of Michael Porter's five competitive forces?
a. Bargaining power of unions
b. Bargaining power of suppliers
c. Rivalry among competing firms
d. Potential entry of new competitors
e. Bargaining power of consumers
Which of these strategies is effective when the number of suppliers is small and the number of
competitors is large?
a. Forward integration
b. Conglomerate diversification
c. Concentric diversification
d. Horizontal diversification
e. Backward integration
Anything that a firm does especially well compared to rival firms is referred to as
a. comparative disadvantage.
b. opportunity cost.
c. competitive advantage.
d. unsustainable advantage.
e. an external opportunity.
There are four basic types of diversification: concentric, conglomerate, forward, and
backward.
a. FALSE
b. TRUE
Restructuring is sometimes called
a. planning.
b. strategizing.
c. downsizing.
d. outsourcing.
e. unfreezing.
Medium-sized firms tend to use which type of structure?
a. Centralized
b. SBU
c. Functional
d. Matrix
e. Divisional
Adequate and timely ________ is/are the cornerstone of effective strategy evaluation.
a. rewards
b. reminders
c. prompts
d. punishment
e. feedback
Which individuals are most responsible for the success and failure of an organization?
a. Human resource managers
b. Stakeholders
c. Personnel directors
d. Strategists
e. Financial planners
All of the following are political, governmental, and legal variables that can represent key
opportunities or threats to organizations EXCEPT
a. population changes by race, age, sex, and level of affluence.
b. legislation on equal employment.
c. level of defense expenditures.
d. tariffs.
e. environmental regulations.
What is the most complex form of organizational structure?
a. Geographic
b. Functional
c. Matrix
d. Divisional
e. SBU
A resource is valuable if it is rare, hard to imitate, or
a. not easily substitutable.
b. easily substitutable.
c. inefficient.
d. expensive.
e. inexpensive.
"Beginning in March, production employees will have the option of working up to 12 hours of
overtime per week." is an example of a procedure.
a. TRUE
b. FALSE
Pasta manufacturer's purchase of some pet food brands is an example of
a. backward integration.
b. divestiture.
c. unrelated diversification.
d. retrenchment.
e. forward integration.
To gain ________ firms need to provide unique products and services.
a. export orders
b. governmental legitimacy
c. a sustainable competitive advantage
d. competitors
e. a bank loan

________ advantages refer to the benefits a firm may achieve by entering a new market or
developing a new product or service prior to rival firms.
a. Outsourcing
b. Fast follower
c. Differentiator
d. Corporate
e. First mover
There are five basic functions of marketing: marketing research and target market analysis,
product planning, promoting products, pricing products, and placing or distributing products.
a. True
b. False
Specific results an organization seeks to achieve in pursuing its basic mission are
a. strategies.
b. rules.
c. tenets.
d. objectives.
e. policies.
________ is a business technique that involves using software to mine huge volumes of data to
help executives make decisions.
a. Business modeling
b. Strategic planning
c. Business analytics
d. Operations management
e. Production management
Culture and ________ must work together.
a. strategy
b. business model
c. suppliers
d. finances
e. customers
Which approach for managing and resolving conflict involves playing down differences
between conflicting parties, while accentuating similarities and common interests?
a. Defusion
b. Confrontation
c. Avoidance
d. Resistance
e. Compliance
All of the following are basic functions of marketing EXCEPT
a. value chain analysis.
b. pricing products.
c. promoting products.
d. distributing products.
e. product planning.
Which of the following is the first step in developing a QSPM?
a. Assign weights to each key external and internal factor.
b. Examine the Stage 2 matrices and identify alternative strategies the organization should consider
implementing.
c. Make a list of the firm's key external opportunities and threats and internal strengths and weaknesses in
the left column of the QSPM.
d. Determine the Attractiveness Scores.
e. Compute the Total Attractiveness Scores.
The top row of a Quantitative Strategic Planning Matrix (QSPM) consists of alternative
strategies derived from all of the following EXCEPT
a. Internal-External (IE.) Matrix.
b. Boston Consulting Group (BCG) Matrix.
c. Competitive Profile Matrix (CPM).
d. Strategic Position and Action Evaluation (SPACE. Matrix)
e. Grand Strategy Matrix.
"All of our locations will be open at least two evenings per week until 8:30 p.m." is an example
of a(n)
a. administration.
b. goal.
c. policy.
d. objective.
e. procedure.
The most complex of all organizational structures is a matrix structure.
a. TRUE
b. FALSE
Firms located in which quadrant of the Grand Strategy Matrix are in an excellent strategic
position?
a. I
b. III
c. IV
d. V
e. II
Research and Development (R&D. Management is focused on managing inputs,
transformations, and outputs that vary across industries and markets.
a. False
b. True
An organization's present strategies, objectives, vision, and mission, coupled with the external
and internal audit information, provide a basis for generating and evaluating feasible
alternative strategies.
a. FALSE
b. TRUE
A vision statement identifies the scope of a firm's operations in product and market terms.
a. True
b. False
While interesting, organizational culture does not significantly affect business decisions.
a. False
b. True
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. Strategic leading
c. Strategy evaluation
d. Strategic management
e. Strategy implementation
Because of the success of the iPad and the iPhone, Apple has tremendous brand recognition.
Brand recognition is one of Apple's
a. strategies.
b. strengths.
c. threats.
d. opportunities.
e. weaknesses.
What is the first step in designing an External Factor Evaluation (EFE. Matrix?
a. Determining four competitors
b. Calculating the sales of each competitor
c. Identifying key external factors
d. Drawing the horizontal and vertical lines for the matrix
e. Summing the weighted score for each competitor
Which of these is a limitation of QSPM?
a. It requires intuitive informed judgments.
b. It is prohibitively expensive.
c. Strategies cannot be examined sequentially.
d. Only a few strategies can be evaluated at once.
e. It makes it more likely that key factors will be overlooked or weighted inappropriately.
Which term refers to selling a division or part of an organization?
a. Joint venture
b. Liquidation
c. Divestiture
d. Horizontal integration
e. Concentric diversification
The four strategies of the SPACE Matrix are aggressive, conservative, offensive, and
defensive.
a. TRUE
b. FALSE
Major competitors' strengths may represent key threats.
a. False
b. True
Which stage of the strategy-formulation framework includes the IFE Matrix?
a. Matching stage
b. Input stage
c. Analysis stage
d. Decision stage
e. Output stage
If you discover during the course of strategy evaluation that major changes have occurred in
the firm's internal strategic position, you should
a. acquire additional capital.
b. follow the original strategic plan.
c. take corrective actions.
d. continue on the present strategic course.
e. wait until the next quarter to see if things revert.
The ________ decision is the allocation and reallocation of capital and resources to projects,
products, assets, and divisions of an organization.
a. benchmark
b. financing
c. restructuring
d. dividend
e. investment
As many managers and employees as possible should be involved in the process of performing
an external audit.
a. False
b. True
When a domestic company first begins to export to India, it is an example of
a. market development.
b. backward integration.
c. concentric diversification.
d. horizontal integration.
e. forward integration.
In the Boston Consulting Group (BCG) Matrix, which strategy would be most appropriate for
a division classified as a Dog?
a. Retrenchment
b. Market penetration
c. Forward integration
d. Product development
e. Market development
An acquisition occurs when a large organization purchases a smaller one or vice versa.
a. FALSE
b. TRUE
The terms "strategic management" and "strategic planning" are used synonymously in this
text.
a. False
b. True
Backward integration is effective in all of these cases EXCEPT
a. when present suppliers have high profit margins.
b. when an organization competes in an industry that is growing rapidly.
c. when an organization has both capital and human resources to manage the new business of supplying its
own raw materials.
d. when an organization needs to acquire a needed resource quickly.
e. when the advantages of stable prices are not particularly important.
The extent to which a manufacturing plant's output reaches its potential output is called
capacity utilization.
a. False
b. True
Strategists are usually found in higher levels of management and have considerable authority
for decision making in the firm.
a. True
b. False
Bargaining power of consumers is usually the most powerful of Porter's five competitive
forces.
a. False
b. True
What is NOT one of the basic ways a divisional structure can be organized?
a. By geographic area
b. By process
c. By product
d. By cost
e. By customer
All of the following are basic activities of management EXCEPT
a. staffing.
b. motivating.
c. consolidating.
d. organizing.
e. planning.
Which strategy seeks to increase market share for present products or services in present
markets through greater marketing efforts?
a. Backward integration
b. Product development
c. Market development
d. Market penetration
e. Forward integration
Which is NOT a characteristic of policies?
a. Let both employees and managers know what is expected of them
b. Reduce the amount of time managers spend making decisions
c. Allow coordination across organizational units
d. Provide a basis for management control
e. Represent the basis for allocating resources
Policies refer to specific guidelines, methods, procedures, rules, forms, and administrative
practices established to support and encourage work toward stated goals.
a. TRUE
b. FALSE
The strengths and weaknesses of an organization are determined relative to the strengths and
weaknesses of its competitors.
a. True
b. False
In the BCG Matrix, a division with a high relative market share position in a low-growth
industry can be described as a
a. Star.
b. Cash Cow.
c. Question Mark.
d. Dog.
e. Failure.
Marketing research is the systematic gathering, recording, and analyzing of data to identify
and define opportunities and problems relating to the marketing of goods and services.
a. True
b. False
What is the range for a firm's total weighted score in a Competitive Profile Matrix (CPM)?
a. 0 to 5
b. 0 to 10
c. 1 to 4
d. 0 to 4
e. 1 to 5
Which phase of strategic management is most strongly associated with "action"?
a. Strategy evaluation
b. Strategy formulation
c. Measuring performance
d. Strategy implementation
e. Competing advantages
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 implementation; strategic focus
e. strategic management; strategic processing
In terms of number of employees, restructuring usually involves increasing the size of the
firm.
a. TRUE
b. FALSE
Which of the following is NOT a management issue central to strategy implementation?
a. Developing an effective human resources function
b. Revising reward and incentive plans
c. Developing budgets
d. Devising policies
e. Minimizing resistance to change
The shift to a service economy is an example of a(n) ________ force.
a. technological
b. social, cultural, demographic, and environment (SCDE.
c. legal
d. political
e. economic

The emergence of 3D printing is an example of a(n) ________ force that impacts

organizations.
a. technological
b. social, cultural, demographic, and environment (SCDE.
c. legal
d. economic
e. political
Medium-sized firms tend to be divisionally structured, whereas large firms tend to use an SBU
(strategic business unit) or matrix structure.
a. FALSE
b. TRUE
Unrelated diversification is an appropriate strategy when an organization's present channels
of distribution can be used to market the new products to current customers.
a. TRUE
b. FALSE
Effective strategy formulation can usually guarantee successful strategy implementation.
a. FALSE
b. TRUE
Hiring top executives from rival firms is a way companies obtain competitive intelligence.
a. False
b. True
Which section of the SWOT Matrix involves matching internal strengths with external
opportunities?
a. The WT cell
b. The SW cell
c. The SO cell
d. The WO cell
e. The ST cell
Annual objectives are key components in the strategic-management process because they
dictate how resources will be allocated.
a. FALSE
b. TRUE
With a divisional structure by customer, an organization can effectively cater to the
requirements of clearly defined customer groups.
a. TRUE
b. FALSE
Policies help an organization in all of the following ways EXCEPT
a. reduce work load of employees.
b. allow coordination across organizational units.
c. provide a basis for management control.
d. let both employees and managers know what is expected of them.
e. reduce the amount of time managers spend making decisions.
In determining the ________, marketers often make decisions related to areas such as
warehousing, distribution channels, and retail site locations.
a. place
b. product
c. price
d. promotion
e. profit