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Chapter 1 Basic Concepts in Strategic Management

1) Strategic management is one decision that determines the short-term performance of a corporation.

FALSE2) In the externally oriented planning phase, plans are deeloped !y heaily inoling the inp"t of managers from lo#er leels.

FALSE

$) %eneral Electric led the transition from strategic planning to strategic management d"ring the 1&'(s.

*+E) ne of the !enefits of strategic management is a clearer sense of ision for the firm.

*+E

) o !e effectie, strategic management m"st !e a formal process.

FALSE/) %lo!ali0ation is the internationali0ation of marets and corporations.

*+E

) As more ind"stries !ecome glo!al, strategic management is !ecoming less important in positioning a company for long-term

competitie adantage.FALSE

') Enironmental s"staina!ility reflects !"siness practices to red"ce a firm3s impact on the physical enironment.

*+E

&) ne mem!er of the E"ropean +nion 4E+) is 5hile.FALSE

1() he goal of 6AFA is complete economic integration.

FALSE

11) 5limate change has !ecome a gro#ing concern for !"sinesses to incl"de in their corporate strategies.

*+E12) 7no#ing a company is mindf"l of its impact on the enironment seldom changes cons"mer !"ying ha!its.

FALSE

1$) 8hile there are litigation and physical riss to companies as a res"lt of climate change, there is no ris c"rrently identified to thecompany on its oerall rep"tation.

FALSE

1) 9op"lation ecology is a theory that proposes organi0ations can and do adapt to change !y imitating other s"ccessf"l organi0ations.

FALSE1) According to organi0ational learning theory, an organi0ation "ses no#ledge to improe the fit !et#een itself and its enironment.

*+E

1/) Strategic flexi!ility is the a!ility to shift from one dominant strategy to another.

*+E1) ne tenet of the learning organi0ation is to maintain sta!ility.

FALSE1') he internal enironment incl"des the aria!les of opport"nities and threats.

FALSE1&) *esearch indicates that a !road mission statement may !e !est in a t"r!"lent enironment.

FALSE

2() An example of an o!:ectie is ;increased profita!ility,; #hile an example of a goal is ;to increase the firm3s profita!ility in 2(1(!y 1< oer 2((&.;

FALSE

21) A strategy maximi0es competitie adantage and minimi0es competitie disadantage.

*+E22) 5orporate strategy occ"rs at the !"siness "nit or prod"ct leel.

FALSE

2$) A !"siness strategy may incl"de competitie or cooperatie strategies.

FALSE2) A hierarchy of strategy emphasi0es the need for the three leels of strategy to complement and s"pport one another.

*+E

2) A !"dget is a statement of a corporation3s programs in terms of dollars.

*+E2/) 9erformance res"lts are monitored at the strategy form"lation phase of the strategic management process.

FALSE

2) =enry >int0!erg discoered that strategic form"lation is a reg"lar, contin"o"s process.

FALSE2') 9"nct"ated e?"ili!ri"m descri!es organi0ations as eoling thro"gh relatiely long periods of sta!ility p"nct"ated !y relatiely

short !"rsts of f"ndamental change.

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*+E

2&) A strategic decision is rare, conse?"ential, and directie.

*+E$() >int0!erg3s entreprene"rial mode is sometimes referred to as ;m"ddling thro"gh; since this decision- maing mode tends to !e

more reactie than proactie in the search for ne# opport"nities.

FALSE

$1) Logical incrementalism is a "sef"l decision-maing mode #hen the enironment is rapidly changing and #hen it is important to!"ild consens"s.

*+E

$2) he strategic a"dit is an all-incl"sie list of critical ?"estions needed for a detailed strategic analysis of any !"siness.

FALSE$$) he emphasis of strategic management is on

A) monitoring and eal"ating external opport"nities and threats in light of a corporation3s strengths and #eanesses.

$) *esearch s"ggests that strategic management eoles thro"gh fo"r se?"ential phases in corporations. he first phase is

) !asic financial planning.$) he time hori0on inoled #ith regard to !asic financial planning is "s"ally

A) one year.

$/) A difference !et#een !asic financial planning and forecast-!ased planning is

) forecast-!ased planning incorporates internal and external information.$) op-do#n planning that emphasi0es formal strategy form"lation and leaes the implementation iss"es to lo#er management leels

is no#n as

) externally-oriented planning.

$') In the final phase of strategic management, strategic information is aaila!le to

A) people thro"gho"t the organi0ation.$&) In a s"rey of ( corporations, #hich of the follo#ing #as rated as a !enefits of strategic managementB

A) clearer sense of ision for the firm

() 8hen an organi0ation is eal"ating its strategic position, #hich is 6 one of the strategic ?"estions that an organi0ation m"stas itselfB

) =o# can f"nctional and operational areas !e improedB

1) *esearch of the planning practices of companies in the oil ind"stry concl"des that the real al"e of modern strategic planning is

more) in the strategic thining and organi0ational learning.

2) Strategic planning #ithin a small organi0ation

A) may !e informal and irreg"lar.

$) Strategic planning in a m"ltidiisional corporationE) sho"ld !e a formali0ed and sophisticated system.

) he integrated internationali0ation of marets and corporations is called5) glo!ali0ation.

C) nationali0ation. %lo!ali0ation D Enironmental S"staina!ility5hallenges to Strategic) ne of the !enefits of glo!ali0ation is

A) economies of scale.

/) he regional trade association composed of Argentina, ra0il, +r"g"ay, and 9arag"ay is calledC) >ercos"r.

) >em!ers of the E"ropean +nion 4E+) incl"de all of the follo#ing E5E9

) >alaysia.

') 5anada, the +nited States, and >exico are affiliated economically "nder #hich trade allianceBC) 6AFA

&) he c"rrency "sed to integrate the monetary systems of the E"ropean +nion 4E+) is called the

5) e"ro.

() All of the follo#ing reflect categories of organi0ational ris as a res"lt of climate change E5E95) s"staina!ility ris.

1) 8hich theory proposes that once an organi0ation is s"ccessf"lly esta!lished in a partic"lar enironmental niche, it is "na!le to

adapt to changing conditionsB

A) pop"lation ecology opic heories of rgani0ational Adaptation

2) he theory that proposes organi0ations can and do adapt to changing conditions !y imitating other s"ccessf"l organi0ations is

no#n as

) instit"tion theory.$) he a!ility of an organi0ation to reshape its enironment is descri!ed !y

5) the strategic choice perspectie.


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) he a!ility of a corporation to shift from one dominant strategy to another is called

E) strategic flexi!ility. 5reating a Learning rgani0ation

) An organi0ation silled at creating, ac?"iring, and transferring no#ledge, and at modifying its !ehaior to reflect ne# no#ledgeand insights is a4an)

A) learning organi0ation.

/) All of the follo#ing reflect actiities of a learning organi0ation E5E9

C) alienating competitors in the ind"stry.) According to Alfred 5handler

A) high-tech ind"stries are defined !y ;paths of learning.;

) companies spring from an indiid"al entreprene"r3s no#ledge, #hich then eoles into organi0ational no#ledge.

5) once a corporation has !"ilt its learning !ase to the point #here it has !ecome a core company in its ind"stry,entreprene"rial start-"ps are rarely a!le to s"ccessf"lly enter.

C) organi0ational no#ledge can !ecome a competitie adantage.

E) All of the a!oe.

') Strategic management is that set of managerial decisions and actions that determine the long-r"n performance of a corporation.8hich one of the follo#ing is 6 one of the !asic elements of the strategic management processB

5) statistical process control. asic >odel of Strategic >anagement

&) he monitoring, eal"ating, and disseminating of information from the external and internal enironments to ey people #ithin

the corporation is referred to asA) enironmental scanning.

/() he S in S.8... stands for

5) strengths.

/1) he in S.8... stands for

C) threats./2) he aria!les str"ct"re, c"lt"re, and reso"rces pertain to the

) internal enironment.

/$) he tas enironmentA) incl"des those elements or gro"ps #ithin an organi0ation3s ind"stry.

/) 8hich one of the follo#ing is incl"ded in the firm3s societal enironmentB

) economic forces

/) 8hich one of the follo#ing is incl"ded in the firm3s tas enironmentBC) stocholders

//) he Strategic >anagement >odel presents the follo#ing process of strategy form"lation

E) >ission -- !:ecties -- Strategies -- 9olicies.

/) he deelopment of long-range plans for the effectie management of enironmental opport"nities and threats in light ofcorporate strengths and #eanesses is no#n as

A) strategy form"lation./') he corporate mission is !est descri!ed !y #hich one of the follo#ingB

) he p"rpose or reason for the corporation3s existence./&) 8hich one of the follo#ing is an example of a narro# scope in a missionB

) comp"ters 4s. office e?"ipment)

() he organi0ation3s corporate mission statement5) sho"ld set the organi0ation apart from its competitors.

1) 8hich of the follo#ing is an example of a mission statementB

C) Ceelop and sell ?"ality appliances #orld#ide.

2) A goal differs from an o!:ectie !eca"se itA) is open-ended.

$) 8hich of the follo#ing is an example of an o!:ectieB

) Increase sales !y 1(< oer last year.

) 8hich of the follo#ing is an example of a corporate strategyBA) Ciersify prod"ct line to appeal to more people.

) he type of strategy #hich descri!es a company3s oerall direction in terms of its general attit"de to#ard gro#th and the

management of its ario"s !"sinesses and prod"ct lines is

E) corporate./) he type of strategy #hich emphasi0es the improement of the competitie position of a corporation3s prod"cts or serices in a

partic"lar ind"stry or maret segment sered !y a !"siness "nit is

5) !"siness.

) he type of strategy #hich achiees corporate and !"siness "nit o!:ecties and strategies !y maximi0ing reso"rce prod"ctiity isA) f"nctional.

') A large, m"ltidiisional !"siness has three leels in its hierarchy of strategy

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A) 5orporate -- "siness -- F"nctional.

&) As defined in this co"rse, a policy is

5) a !road g"ideline for maing decisions that lins the form"lation of strategy #ith its implementation.'() 8hich of the follo#ing is an example of a policyB

5) 9ay highest salaries to eep high ?"ality employees.

'1) he process !y #hich strategies and policies are p"t into action thro"gh the deelopment of programs, !"dgets, and proced"res is

5) strategy implementation.'2) 8hich of the follo#ing is 6 a part of strategy implementationB

A) performance eal"ation

'$) 8hich of the follo#ing is an example of a programB

E) *ed"ce final assem!ly time to three days !y haing s"ppliers !"ild plan sections.') A program is

5) A statement of the actiities needed to accomplish a single-"se plan.

') A !"dget is a statement of a corporation3s programs in dollar terms. 8hich is 6 tr"e of the !"dgetary f"nctionB

5) nly one !"dget is necessary to capt"re all programs.'/) FedEx stip"lates specific employee !ehaior incl"ding ho# a drier dresses to ho# eys are held #hen approaching a c"stomer3s

door. his is an example of a

5) proced"re

') As a part of the strategic management process, eal"ation and control is concerned #ith all of the follo#ing, E5E9E) determining top management compensation.

'') A set of se?"ential steps or techni?"es that descri!e in detail ho# a partic"lar tas or :o! is to !e done is referred to as

A) a standard operating proced"re.

'&) *esearch done !y =enry >int0!erg s"ggests that strategy form"lation

A) is typically an irreg"lar and a discontin"o"s process. Initiation of Strategy riggering Eents&() he phenomenon that descri!es corporations as eoling thro"gh relatiely long periods of sta!ility p"nct"ated !y relatiely short

!"rsts of f"ndamental change is no#n as

5) p"nct"ated e?"ili!ri"m.&1) 8hich of the follo#ing is 6 one the fo"r triggering eents listed in the text that are the stim"l"s for a strategic changeB

) ann"al strategic planning conference

&2) he existence of a performance gap

A) sho"ld ca"se management to ?"estion their o!:ecties, strategies, and policies.&$) 8hich of the follo#ing statements is not tr"e of a strategic inflection pointB

E) A ne# 5E is an example of a strategic inflection point.

&) 8hich of the follo#ing is 6 a characteristic of strategic decisions as mentioned in the textB

C) contin"o"s&) According to >int0!erg, the entreprene"rial mode of strategy form"lation

5) is foc"sed on opport"nities seen !y one person. Strategic Cecision >aing

&/) According to =enry >int0!erg, the three most typical approaches to strategic decision-maing areA) entreprene"rial, adaptie, and planning.

&) Ama0on.com, fo"nded !y Geff e0os and reflecting his ision, is an example of #hich mode of strategic decision-maingB

) entreprene"rial&') 8hat characteri0es the planning mode of strategy form"lationB

5) It inoles the systematic gathering of appropriate information for situation analysis, thegeneration of feasible alternative strategies, and the rational selection of the most appropriatestrategy.&&) I> "nder 5E Lo"is %erstner and his strategic decision to inest in serices in 1&&$, is an example of #hich mode of strategic

decision-maingB

C) planning

1(() he mode of strategic decision-maing typical of most "niersities, many large hospitals, a large n"m!er of goernmentalagencies, and a s"rprising n"m!er of large corporations is

A) adaptie.

1(1) he mode of strategy form"lation "sed #hen top management has a reasona!ly clear idea of the corporation3s mission ando!:ecties, !"t it chooses to deelop a series of tentatie or partial strategies instead of deeloping f"ll-!lo#n strategies is called

) logical incrementalism.

1(2) 8hich approach to decision-maing is most "sef"l #hen the enironment is changing rapidly and #hen it is important to !"ild

consens"s and deelop needed reso"rces !efore committing the entire corporation to a specific strategyB5) logical incrementalism

1($) A checlist of ?"estions, !y area or iss"e that ena!les a systematic analysis to !e made of ario"s corporate f"nctions and

actiities is referred to as aHan


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5) strategic a"dit. he Strategic A"dit Aid to Strategic Cecision->aing


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