ch07 strategy and strategic management

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File: mod07, Module 07: Strategy and Strategic Management

Multiple Choice

1. A comprehensive action plan that identifies long term direction for an organiation iscalled a !!!!!!!!!!!!.

a" competitive advantage

#" strategy

c" o#$ectived" idea

Ans: #

%esponse: See page See page 1&'(evel: )asy

'. !!!!!!!!!!!! is a phrase or statement that focuses organiational energies onachieving a specific goal.

a" Mission

#" *ision

c" Strategic intentd" (ogo

Ans: c%esponse: See page 1&'

(evel: )asy

+. uring the time of the great depression, -er#ert -oover promised the voters a

chic/en in every pot and a car in every garage. his could #e considered a statement of !!!!!!!!!!.

a" strategic intent

#" strategyc" competitive advantage

d" glo#al positioning

Ans: a

%esponse: See page 1&'

(evel: Medium



&. 2perating in successful 3ays that are difficult to imitate is called a !!!!!!!!!!!!!!.a" strategy

#" strategic intent

c" #usiness pland" competitive advantage

Ans: d%esponse: See page 1&'

(evel: )asy

4. 5hich of the follo3ing does not contri#ute to a sustaina#le competitive advantage6

a" #eing easily imitated

#" outperforming your rivalsc" performing successfully for customers

d" #eing a#le to maintain your edgee" all of the a#ove

Ans: a%esponse: See page 1&' to have a sustaina#le advantage, your edge must #e hard to

imitate.

(evel: Medium

8. he levels of strategy used in organiations are corporate, #usiness and !!!!!!!!.a" personal

#" competitive

c" functionald" legal

Ans: d

%esponse: See page 1&+(evel: Medium

7. 9n a large company, a strategy that sets the long term direction for the entire company

is called a !!!!!!!!!! strategy.a" corporate

#" senior level

c" functional

d" #oard



Ans: a


(evel: )asy

. An e;ample of a strategic <uestion at the corporate level is:

a" 5hat should our ne;t product #e6

#" -o3 3ill 3e price our ne3est product6c" Should 3e set up more sales offices6

d" 9n 3hat industries and mar/ets should 3e compete6

Ans: d%esponse: See page 1&'

(evel: Medium

=. A strategy that identifies ho3 a division or #usiness unit 3ill compete in its product orservice domain is called a !!!!!!!!!! strategy.

a" corporate

#" middle managementc" #usiness

d" #ottom level

Ans: c%esponse: See page 1&+

(evel: )asy

10. A !!!!!!!!!! strategy is one that guides activities 3ithin specific area such asengineering and mar/eting.

a" #usiness

#" functional

c" corporated" employee

Ans: #%esponse: See page 1&+

(evel: Medium

11. An e;ample of a strategic <uestion at the division or strategic #usiness unit level is:

a" 5hat should our ne;t product or service #e6



#" 5hat is our role in supporting engineering6

c" -o3 many divisions should 3e have6

d" 9n 3hat industries and mar/ets should the corporation compete in6

Ans: a


1'. An e;ample of a strategic <uestion at the functional level is:

a" -o3 do 3e support the #usiness strategy6

#" -o3 many divisions should 3e have6c" -o3 are 3e going to compete 3ithin this industry or mar/et6

d" 9n 3hat industries and mar/ets should the corporation compete in6

Ans: a%esponse: See page 1&+

(evel: Medium

1+. A strategy for e;panding an organiation>s #usiness is called a !!!!!!!!! strategy.

a" #ig

#" multiple

c" retrenchmentd" gro3th

Ans: d%esponse: See page 1&+

(evel: )asy

1&. 5hich of the follo3ing is not a gro3th strategy6

a" concentration #" diversification

c" vertical integration

d" restructuring

Ans: d

%esponse: See pages 1&+(evel: Medium



14. 5hen a company e;pands in its e;isting mar/ets it is called gro3th through !!!!!!!.

a" e;pansion

#" diversificationc" concentration

d" glo#aliation

Ans: c

%esponse: See page 1&+

(evel: )asy

18. 5hen a company e;pands #y entering ne3 #usiness areas, it is called gro3th through !!!!!!!!.

a" diversification

#" vertical integration

c" e;pansiond" glo#aliation

Ans: a

%esponse: See page 1&+

(evel: )asy

17. 5hen a company e;pands #y ac<uiring suppliers or distri#utors, it is called gro3ththrough !!!!!!!!.

a" diversification

#" vertical integrationc" e;pansion

d" glo#aliation

Ans: #

%esponse: See page 1&&

(evel: )asy

1. he ris/iest gro3th strategy is through:a" vertical integration

#" unrelated diversification

c" related diversificationd" #ac/3ard integration

e" for3ard integration

Ans: #



%esponse: See page 1&& the issue is moving into an area that you don>t /no3 or don>t

have e;pertise in.

(evel: Medium

1=. A strategy 3hose o#$ective is to correct ma$or pro#lems in the #usiness through

radical changes to current operations is called a !!!!!!!!! strategy.

a" going out of #usiness #" gro3th

c" status <uo

d" retrenchment

Ans: d


(evel: )asy

'0. 5hich of the follo3ing is not a retrenchment strategy6

a" diversification

#" li<uidationc" restructuring

d" divestiture

Ans: a%esponse: See page 1&&

(evel: )asy

'1. 5hen a company closes and sells its assets in order to pay its de#ts, it is called !!!!!!!!!!!!.

a" divestiture

#" li<uidation

c" diversificationd" restructuring

Ans: #%esponse: See page 1&&

(evel: )asy

''. 5hen a company reduces the sie of its e;isting operations, it is called

!!!!!!!!!!!!.



a" divestiture

#" li<uidation

c" do3nsiingd" diversification

Ans: c%esponse: See page 1&&

(evel: )asy

'+. he retrenchment strategy that calls for selling off part of the organiation is called:

a" li<uidation #" do3nsiing

c" diversification

d" divestiture

e" #ac/3ards integration

Ans: d%esponse: See definitions on page 1&&

(evel: )asy

'&. A !!!!!!!!! protects an insolvent firm from creditors during a period of

reorganiation to restore profita#ility. he retrenchment strategy that calls for selling off part of the organiation is called:

a" divestiture

#" do3nsiingc" retrenchment

d" chapter 11 #an/ruptcy

Ans: d

%esponse: See definitions on page 1&&

(evel: )asy

'4. A !!!!!!!!!! strategy vie3s the 3orld as one mar/et and adopts standard productsand advertising for use 3orld3ide.

a" multidomestic

#" glo#aliationc" diversification

d" transnational

Ans: #




(evel: )asy

'8. A !!!!!!!!!! strategy customies products and advertising to the culture of the localmar/ets into 3hich they sell.

a" multidomestic

#" glo#aliationc" diversification

d" transnational

Ans: a%esponse: See page 1&&

(evel: )asy

'7. A !!!!!!!!!! strategy tries to operate 3ithout a strong national identity and see/s a #alance #et3een the efficiency of 3orld3ide operations and responsiveness to local

cultures.

a" multidomestic #" glo#aliation

c" diversification

d" transnational

Ans: d

%esponse: See page 1&4

(evel: )asy

'. 5hen t3o companies $oin together in partnership to pursue an area of mutual interest,

it is called a !!!!!!!!!!!!!!!.

a" ac<uisition

#" do3nsiingc" strategic alliance

d" divestiture

Ans: c


(evel: )asy



'=. 5hen a company legally 3or/s 3ith its rivals on pro$ects of mutual #enefit, it is

called !!!!!!!.

a" competition #" collusion

c" co?opetition

d" restructuring

Ans: c

%esponse: See page 1&4(evel: )asy

+0. Companies that use the internet to mar/et their products and gain competitive

advantage are employing a@n" !!!!!!!!!!! strategy.

a" communication

#" computer c" e?#usiness

d" electronic

Ans: c


+1. he electronic version of the #asic retail strategy of selling directly to customers is:

a" e?#usiness

#" 'Cc" 'B

d" '

e" 9

Ans: #

%esponse: See page 1&8 'C means #usiness?to?customer and involves selling via the

internet directly to customers(evel: )asy

+'. A !!!!!!!!! strategy uses information technology and the internet to lin/

organiations vertically in supply chains.a" 'C

#" 'S

c" 'B

d" '



Ans: d


++. he process of formulating and implementing strategies to accomplish long term

goals and to maintain a competitive advantage is called !!!!!!!!!!.a" strategic controlling

#" strategic management

c" glo#aliation

d" vertical integration

Ans: #

%esponse: See page 1&

(evel: )asy

+&. Strategic management consists of strategy !!!!!!!!! and !!!!!!!!!.

a" action implementation #" implementation direction

c" formulation implementation

d" formulation revie3

Ans: c

%esponse: See page 1&

(evel: )asy

+4. he !!!!!!!!! statement defines the purpose of the organiation and its reason for

e;istence in society.

a" operating o#$ectives

#" corporate strategyc" mission

d" strategy

Ans: c

%esponse: See the definition on page 1&(evel: )asy



+8. Specific results such as net sales and profits are common results called !!!!!!!!!

that companies try to achieve.

a" operations #" mission statements

c" strategic plans

d" operating o#$ectives

Ans: d

%esponse: See page 1&=(evel: )asy

+7. 5hich of the follo3ing is not a part of a S52 analysis6

a" strengths

#" standards

c" 3ea/nessesd" opportunities

Ans: #

%esponse: See page 1&=

(evel: )asy

+. he S52 element that focuses on internal deficiencies is:a" threats

#" opportunities

c" 3ea/nessesd" strengths

e" 3ants

Ans: c

%esponse: See page 1&= for these descriptions

(evel: )asy

+=. A special strength that a company has that gives it a competitive advantage is called a !!!!!!!!!.

a" unfair advantage

#" differential strategyc" core competency

d" differential advantage

Ans: c



%esponse: See page 140

(evel: Medium

&0. Dorter suggests that industry attractiveness is a function of five forces, including:a" profita#ility, mar/et share, 3or/force <uality, innovativeness, social responsi#ility

#" cost efficiency, product <uality, service <uality, 3or/force <uality, innovativeness

c" differentiation, cost leadership, focused differentiation, focused cost, integrationd" rivalry, ne3 entrant threat, supplier po3er, #uyer po3er, threat of su#stitutes

e" Eone of the a#ove is Dorter>s list of forces

Ans: d%esponse: See the description on page 140

(evel: Medium

&1. A strategy that focuses on offering products that are uni<ue 3ith respect tocompetitor>s products is called a !!!!!!!!!!!!! strategy.

a" integrated

#" cost leadershipc" differentiation

d" diversification

Ans: c%esponse: See page 141

(evel: )asy

&'. A strategic position 3ithin an industry relying upon lo3 cost for a mar/et segment3ould #e called a@n":

a" focused price leadership strategy

#" focused differentiation strategy

c" focused cost leadership strategyd" differentiation strategy

e" integrated strategy

Ans: c

%esponse: See the descriptions on page 141

(evel: )asy



&+. he recommendation of the CB matri; on <uestion mar/s is retrenchment or

!!!!!!!!.

a" invest freely #" invest for sta#ility

c" invest in a targeted manner

d" divest

Ans: c

%esponse: See page 14+ these are potentially either stars or dogs, so invest carefully(evel: Medium

&&. 5hat is the #est strategy for products that the oston Consulting Broup 3ould

identify as dogs6

a" high gro3th

#" retrenchmentc" lo3 gro3th

d" no gro3th

Ans: #

%esponse: See page 14+(evel: Medium

&4. A strategic leader has to:

a" avoid communication in order to minimie distractions.

#" dictate direction.c" strive for am#iguity in order to avoid divisions in the group.

d" create a sense of urgency.

Ans: d

%esponse: See page 14& the others are reversed

(evel: Medium

rueFalse

&8. usiness strategies should support #usiness goals and o#$ectives.

Ans: rue




(evel: )asy

&7. he /ey to having a sustaina#le competitive advantage is operating in a 3ay that is

difficult to imitate.

Ans: rue

%esponse: See page 1&'(evel: )asy

&. A functional strategy provides long term direction for the total enterprise.

Ans: False


&=. he advantage of gro3th through concentration is that you are gro3ing in an area thatyou /no3 and, presuma#ly, have e;pertise.

Ans: rue

%esponse: See discussion on page 1&+(evel: )asy

40. A retrenchment strategy could #e a going out of #usiness strategy.

Ans: rue

%esponse: See <uote on page 1&&

(evel: )asy

41. ust a#out any /ind of partnership #et3een t3o companies could #e called a strategicalliance.

Ans: rue%esponse: See definitions on page 1&4.

(evel: Medium



4'. Co?opetition is the strategy of 3or/ing 3ith rivals on pro$ects of mutual #enefit.

Ans: rue


(evel: Medium

4+. he process of strategic management focuses only upon developing strategies.

Ans: False

%esponse: See page 1& it focuses on #oth formulation and implementation.(evel: Medium

4&. A mission statement includes specific goals that the organiation 3ants to achieve.

Ans: False

%esponse: See page 1& mission statements should #e related to specific goals #ut they

are not included in the statement.(evel: ifficult

44. A S52 analysis includes a detailed e;amination of an organiation>s strengths and

3ea/nesses.

Ans: rue

%esponse: See page 1&=

(evel: )asy

48. A special strength that gives an organiation a competitive advantage is called a corecompetency.

Ans: rue%esponse: See page 140

(evel: )asy

47. Dorter>s Model of 9ndustry Attractiveness includes four forces.



Ans: False

%esponse: See page 140(evel: )asy

4. 9f your strategy is to compete on price against your competitors, your strategy is one

of focused differentiation.

Ans: False

%esponse: See page 141 general competition #ased on price is a cost leadership strategy

(evel: )asy

4=. 9n the CB matri;, stars are the #usiness units that have high mar/et shares in high?gro3th mar/ets.

Ans: rue

%esponse: See pages 14+ for this definition

(evel: )asy

80. Strategic leadership inspires people to implement organiational strategies.

Ans: rue

%esponse: See page 14&(evel: )asy

Fill?in?the?lan/

81. A !!!!! is a comprehensive action plan that identifies long?term direction for an

organiation and guides resource utiliation to accomplish its goals.

Ans: strategy

%esponse: See page 1&' for this definition(evel: )asy



8'. !!!!! strategies guide the activities of specific areas in implementing the

organiational?level strategies.

Ans: Functional

%esponse: See page 1&+ for this definition

(evel: Medium

8+. );pansion into areas of ne3 #usiness is called !!!!!.

Ans: diversification

%esponse: See page 1&+ for this discussion(evel: )asy

8&. !!!!! entails cutting the sie of your organiation and reducing the 3or/force.

Ans: o3nsiing

%esponse: See page 1&& for this definition

(evel: )asy

84. he international #usiness strategy that adopts standard products and advertising touse 3orld3ide is called a !!!!! strategy.

Ans: glo#aliation%esponse: See page 1&& for this discussion

(evel: Medium

88. Strategic !!!!! is the process of putting strategies into action.

Ans: implementation

%esponse: See page 1& for this definition

(evel: )asy

87. he shorter?term guides to action under the mission statement are called !!!!!

!!!!!.

Ans: operating o#$ectives



%esponse: See page 1&= for this definition

(evel: Medium

8. !!!!! !!!!! are special strengths of an organiation and give the organiation acompetitive advantage.

Ans: Core competencies%esponse: See page 140 for this definition

(evel: Medium

8=. A@n" !!!!! strategy indicates concentration on a special mar/et segment or niche.

Ans: focus%esponse: See page 141 for this discussion

(evel: )asy

70. !!!!! !!!!! is the capa#ility to inspire people to successfully engage in a process of

continuous change, performance enhancement, and implementation of the firm>s goals.

Ans: Strategic leadership%esponse: See page 14& for this definition

(evel: Medium

)ssay

71. efine the difference #et3een a competitive advantage and a sustaina#le competitiveadvantage.

Ans: A competitive advantage is something that you do #etter than your rivals. -o3ever,

a sustaina#le competitive advantage has the addition strength of #eing a competitiveadvantage that is also difficult to imitate.

%esponse: See pages 1&'

(evel: Medium

7'. 5hat is the difference #et3een a glo#aliation strategy and a transnational strategy6



%esponse: See page 140

(evel: Medium

74. iscuss the classifications in the oston Consulting Broup>s matri; as they relate toindustry gro3th, mar/et share and #usiness strategy.

Ans: he CB matri; consists of Cash Co3s, Stars, Guestion Mar/s and ogs.

Cash Cows are high mar/et share lo3 industry gro3th #usinesses. hey are typically

profita#le and cash generators. he cash co3 strategy is little or no gro3th.

Stars are high mar/et share high industry gro3th #usinesses. hey are typically

profita#le #ut not cash generators due to the high cost of maintaining their gro3th. hestars strategy is to at the mar/et rate or higher.

Question Marks are lo3 mar/et share high industry gro3th #usinesses. hey are

pro#a#ly not profita#le and cash users. he <uestion mar/ strategy is either high gro3th

or retrenchment.Dos are lo3 mar/et share lo3 industry gro3th #usinesses. hey most li/ely are not

profita#le and cash users. he dog strategy is retrenchment.%esponse: See page 14+

(evel: Medium

ch07 strategy and strategic management

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