Management 10th Edition Daft Test Bank

Management 10th Edition Daft Test
Bank
Visit to download the full and correct content document:
https://testbankdeal.com/download/management-10th-edition-daft-test-bank/
Chapter 8—Strategy Formulation and Execution
TRUE/FALSE
1. Strategic management largely determines which organizations succeed and which ones struggle.
ANS: T PTS: 1 DIF: 1 REF: 203

NAT: AACSB Analytic | Strategy TYP: F
2. Front-line managers have the final responsibility for strategic planning.
ANS: F PTS: 1 DIF: 2 REF: 204

3. Top managers and chief executives have the final responsibility for strategic planning.

4. Research has shown that strategic thinking and planning positively affect a firm's performance and
financial success.

5. Better-Than-The-Rest, Inc.'s ability to market its products better than its competitors is an example of
its core competence.
ANS: T PTS: 1 DIF: 2 REF: 204-205

NAT: AACSB Analytic | Strategy TYP: A
6. Core competence is the plan of action that prescribes resource allocation and other activities for
dealing with the environment.

7. The essence of formulating strategy is choosing how the organization will be identical to its key
competitors in the industry.

8. Competitive advantage refers to the set of decisions and actions used to formulate and implement
strategies.

8-1
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8: Strategy Formulation and Execution
9. The interaction of Production and Sales working together to produce profit greater than the total of
both working separately is an example of synergy.

10. The combination of benefits received and costs paid by the customer refers to value.

11. Value occurs when the organizational parts interact to produce a joint effect that is greater than the
sum of the parts acting alone.

12. Corporate-level strategy pertains to the organization as a whole.

13. The "How do we compete?" question concerns functional-level strategy.

14. Strategic decisions at the business level concern amount of advertising, direction and extent of R & D,
product changes, new product development, equipment and facilities, and expansion or contraction of
product lines.

15. The three levels of strategy are business, corporate, and global.

16. Strategy implementation involves the planning and decision making that lead to the establishment of
the firm's goals.

17. The administration and implementation of the strategic plan is strategy execution.

8-2
18. SWOT analysis includes a review of the internal threats and opportunities.

19. Executives acquire information about external opportunities and strengths from a variety of reports,
including budgets, financial ratios, profit and loss statements, and surveys of employee attitudes and
satisfaction.

20. Internal analysis examines overall organization structure, management competence and quality, and
human resource characteristics.

21. Threats are characteristics of the internal environment that may prevent the organization from
achieving its strategic goals.

22. The task environment sectors are the most relevant to strategic behavior and include the behavior of
competitors, customers, suppliers, and the labor supply.

23. The mix of business units and product lines that fit together in a logical way to provide synergy and
competitive advantage for the corporation pertains to portfolio strategy.

24. The BCG (Boston Consulting Group) matrix evaluates SBUs with respect to their business growth rate
and geographical location.

25. The question mark exists in a new, rapidly growing industry but has only a small market share,
according to the BCG Matrix.

8-3
26. In BCG Matrix, the circle size represents the relative profit made by each business in the company's
portfolio.

27. According to the BCG Matrix, the cash cow has a large market share in a rapidly growing industry.

28. The dog, according to the BCG Matrix, is a poor performer.

29. Diversification is a strategy of moving into new lines of business.

30. The bargaining power of customers is one of Porter's five competitive forces.

31. According to Porter, the bargaining power of the government is one of the five competitive forces
affecting an organization's competitive environment.

32. Vertical integration means a firm expands into businesses that either produce the supplies needed to
make products or that distribute and sell those products to customers.

33. The Internet tends to lower the bargaining power of suppliers.

34. With the leveling force of the Internet and information technology, it has become easier for many
companies to find ways to distinguish themselves from their competitors.

8-4
35. Differentiation, cost leadership, and focus are three of Porter's competitive strategies.

36. Cost leadership is a type of competitive strategy with which the organization seeks to distinguish its
products or services from that of competitors.

37. A differentiation strategy can increase rivalry with competitors if buyers are loyal to a company's
brand.

38. Organization's with a focus strategy concentrate on a specific regional market or buyer group.

39. Strategic partnerships are the current trend, rather than mergers and acquisitions.

40. The world-wide standardization of product design and advertising refers to globalization.

41. The export strategy treats the world as a single global market.

42. The transnational strategy handles markets independently for each country.
ANS: F PTS: 1 DIF: 2 REF: 221-222

43. With a multidomestic strategy, a company will achieve the globalization or standardization of
marketing and production approaches.

8-5
44. A multidomestic strategy standardizes global products/advertising strategies.

45. A transnational strategy seeks to achieve both global integration and national responsiveness.

46. Human resources, in strategy implementation, are the ability to influence people to adopt the new
behaviors need.

47. In strategy implementation, leadership is the ability to influence people to adopt the new behaviors
needed.

48. Effective implementation is not a necessity if the strategies are truly creative.

49. For successful execution, alignment of everyone in the organization must occur.
ANS: T PTS: 1 DIF: 1 REF: 223-224

50. Communication is one of the most important methods for effective strategy execution.

51. A firms' leadership is responsible for recruiting, selecting, training, transferring, promoting, and laying
off employees.

52. Strategic thinking is more important -profit businesses than for non-profit organizations.

8-6
53. A director of finance would most likely be interested in executing functional level strategies.

54. Business-level strategies include all of the major functions, including finance, research and
development, marketing, and manufacturing.

55. The final stage of the strategic management process is execution of the new strategy.

56. Some companies hire competitive intelligence professionals to scan the external environment and
provide data and research on relevant domestic and global trends.

57. Opportunities are characteristics of the internal environment that have the potential to help the
organization achieve or exceed its strategic goals.

58. An SBU stands for Star Business Unit.

59. Unrelated diversification occurs when an organization expands into a totally new line of business.

60. As a result of the growth of the Internet, barriers to entry into new markets are now much higher than
ever before.

NAT: AACSB Analytic | Information Technologies TYP: F
61. The concentration of suppliers and the availability of substitute suppliers are significant factors in
determining supplier power.

8-7
62. Cost leadership firms are more likely to reward employee innovation than differentiation firms or
focus firms.

63. In a turbulent business climate, managers should focus on strategic stability rather than flexibility.

64. A transnational strategy combines degrees of both global standardization and national responsiveness.

65. A multidomestic strategy helps an organization reap efficiencies by standardizing product design and
manufacturing, using common suppliers, and eliminating overlapping facilities.

66. A top-down management style has been identified as a silent killer of strategy.

67. For the social networking site Facebook, technological know-how and an aggressive and innovative
culture are significant strengths to include in its SWOT analysis.

MULTIPLE CHOICE
1. The set of decisions and actions used to formulate and implement strategies that will provide a
competitively superior fit between the organization and its environment so as to achieve organizational
goals is known as
a. strategy formulation.
b. strategic planning.
c. strategic management.
d. strategy implementation.
e. strategy evaluation.
ANS: C PTS: 1 DIF: 1 REF: 204
8-8
2. The plan of action that prescribes resource allocation and other activities for dealing with the
environment and helping the organization attain its goals is known as a(n)
a. goal.
b. objective.
c. mission.
d. vision.
e. strategy.
ANS: E PTS: 1 DIF: 2 REF: 204
3. Which of the following is a business activity that an organization does especially well relative to its
competition?
a. Strategy
b. Synergy
c. Cash cow
d. Core competence
e. Multidomestic
ANS: D PTS: 1 DIF: 1 REF: 204
4. The condition that exists when the organization's parts interact to produce a joint effect that is greater
than the sum of the parts acting alone is known as
a. core competence.
b. synergy.
c. value creation.
d. business-level strategy.
e. multidomestic strategy.
ANS: B PTS: 1 DIF: 1 REF: 205
5. ____ can be defined as the combination of benefits received and costs paid by the customer.
a. Organizational benefits
b. Value
c. Cost-benefit diversity
d. Synergy
e. Core competence
6. When properly managed, ____ can create additional value with existing resources, providing a big
boost to the bottom line.
a. synergy
b. competitors
c. government contacts
d. command structure
e. cooperation among customers
ANS: A PTS: 1 DIF: 2 REF: 205
8-9
7. When AT&T decided to buy Media One, a cable company, it was pursuing a
a. functional-level strategy.
b. internal growth strategy.
c. multi-domestic strategy.
d. corporate-level strategy.
e. business-level strategy.
8. When Philip-Morris, the tobacco giant, bought Kraft, Inc., it was pursuing a
a. corporate-level strategy.
b. business-level strategy.
c. functional-level strategy.
d. multidomestic strategy.
e. retrenchment strategy.
9. Which of the following pertains to the organization as a whole?

a. Business-level strategy
b. Functional-level strategy
c. Corporate-level strategy
d. Operational-level strategy
e. Competitive-level strategy
10. Sears' decision to sell off much of its financial services division is an example of a
a. corporate-level strategy.
b. business-level strategy.
c. functional-level strategy.
d. growth strategy.
e. stability strategy.
11. A corporate-level strategy is concerned with the question

a. what business are we in?
b. how do we compete?
c. how do we support our chosen strategy?
d. where do we market our products?
e. should we promote from within?
8-10
12. When Coca-Cola introduced Surge, a new citrus soft-drink, what type of strategy was being pursued?
a. Functional-level strategy
b. Multi-domestic strategy
c. Corporate-level strategy
d. Retrenchment strategy
e. Business-level strategy
13. Ford's decision to completely redesign its Ford Taurus can be classified as a
a. corporate level strategy.
b. business level strategy.
c. functional level strategy.
d. retrenchment strategy.
e. stability strategy.
14. Decisions regarding the proper amount of advertising for a particular good or service are related to
a. corporate-level strategies.
b. functional-level strategies.
c. tactical-level strategies.
d. business-level strategies.
e. retrenchment strategies.
15. Which of these questions is central to a functional-level strategy?

a. What business are we in?
b. How do we compete?
c. How do we support our chosen strategy?
d. What business do we buy?
e. Where to market our products?
16. ____ refers to the use of managerial tools to direct resources toward the achievement of strategic goals.
a. Strategy formulation
b. Strategy coordination
c. Strategy execution
d. Strategy control
e. Strategy planning
8-11
17. Which of the following refers to the planning and decision making that lead to the establishment of the
organization's goals and of a specific strategic plan?
a. Strategy formulation
b. Strategy implementation
c. Strategy coordination
d. Strategy control
e. SWOT
18. Fred has been assigned to conduct a SWOT analysis for his organization, Flintstones, Inc. As part of
this assignment, Fred will
a. conduct an external wage survey.
b. search for the strengths, weaknesses, opportunities, and threats that impact his firm.
c. choose a grand strategy for his firm.
d. do a cost/benefit analysis.
e. develop a mission.
19. Techniques used to monitor external environments include

a. hiring scanning organizations.
b. hiring the competitive intelligence professionals.
c. government reports.
d. professional journals.
e. all of these.
20. Classy Clay has extremely creative employees who, in the opinion of the organization, keep the
company ahead of the competition. The creativity of these employees would be classified as
a. an internal weakness.
b. an external opportunity.
c. an external strength.
d. an internal strength.
e. a neutral factor.
21. Where does the information about opportunities and threats comes from?
a. An analysis of the organization's internal environment
b. A department by department study of the organization
c. Scanning the external environments
d. Employee grievances
e. Financial ratios of the organization
8-12
22. Flush Away, Inc. is particularly concerned about pending legislation in Congress that would further
regulate their organization. This legislation would be classified as
a. an external opportunity.
b. an internal strength.
c. an external threat.
d. an external weakness.
e. a congressional chaos.
23. Which of the following is NOT a strength of the social network company, Facebook?
a. A new legislation that opens the international markets
b. Technological know-how
c. An aggressive and innovative culture
d. A partnership with Microsoft
e. Work networks are exploding and older generations prefer Facebook
24. How business units and product lines fit together in a logical way is the essence of
a. business-level strategy.
b. portfolio strategy.
c. competitive strategy.
d. financial strategy.
e. functional strategy.
25. The BCG matrix organizes along which of the following dimensions?
a. Market share and profit
b. Sales and market share
c. Business growth rate and market share
d. Business growth rate and profit
e. Sales and profits
26. Double Click, Inc. has a number of strategic business units. Their hand-held computer unit has a large
market share in this rapidly growing industry. Their hand-held computer business would be classified
as
a. a dog.
b. a star.
c. a question mark.
d. a cash cow.
e. stuck in the middle.
8-13
27. Which of these is true about the cash cow?

a. It generates tremendous profits in a rapidly growing industry.
b. It has a small market share in a rapidly growing industry.
c. It has a small market share in a slow growth industry.
d. It has a large market share in a slow growth industry.
e. It is generally a dead business that should be divested.
28. The star has a

a. large market share in a rapidly growing industry.
b. large market share in a slow growth industry.
c. small market share in a rapidly growing industry.
d. small share of a slow growth market.
e. moderate market share in a slow growth industry.
29. Which of the following portfolio categories is made up of poor performers who command only a small
share of a slow growth market?
a. Star
b. Cash cow
c. Question mark
d. Dog
e. Cat
30. The question mark has a

a. large market share in a rapidly growing industry.
b. large market share in a slow growth industry.
c. small market share in a rapidly growing industry.
d. small share of a slow growth market.
e. moderate market share in a slow growth industry.
31. Which of these is true about the dog division?

a. It has a large market share in a rapidly growing industry.
b. It has a large market share in a slow growth industry.
c. It has a small market share in a rapidly growing industry.
d. It has a small share of a slow growth market.
e. It has a moderate market share in a rapidly growing industry.
8-14
32. Gillette operates numerous strategic business units. Most of its units in the personal care division have
low market share but high business growth. These units are classified as _____.
a. dogs
b. question marks
c. stars
d. cash cows
e. none of these
33. The purpose of ________ is to expand the firm’s business operations to produce new kinds of valuable
products and services?
a. retrenchment.
b. diversification.
c. liquidation.
d. cash cow.
e. internal growth.
34. Which of the following strategies refers to moving into a new business that is related to the company's
existing business activities?
a. Horizontal integration
b. Vertical integration
c. Unrelated diversification
d. Related diversification
e. Strategic partnership
35. According to the BCG Matrix, which of the following exists in a mature, slow-growth industry, but is
a dominant business in the industry, with a large market share?
a. Question mark
b. Asterisk
c. Dog
d. Star
e. Cash cow
36. Barriers to entry are related to which competitive force?

a. Rivalry among competitors
b. Potential new entrants
c. Threat of substitute products
d. Bargaining power of buyers
e. Bargaining power of suppliers
8-15
37. All of the following are Porter's competitive forces EXCEPT

a. differentiation.
b. bargaining power of buyers.
c. bargaining power of suppliers.
d. threat of substitute products.
e. potential new entrants.
38. Which of the following is NOT one of Porter's competitive forces?

a. Potential new entrants
b. Bargaining power of suppliers
c. Bargaining power of stockholders
d. Bargaining power of customers
e. Rivalry among competitors
39. Which of Porter's five forces is influenced by all of the other four?
a. Threat of substitute products
b. Rivalry among competitors
c. Bargaining power of buyers
d. Potential new entrants
e. Bargaining power of suppliers
40. Which of the following strategies involve an attempt to distinguish the firm's products or services from
others in the industry?
a. Cost leadership
b. Differentiation
c. Focus
d. Internal growth
e. Liquidation
41. Which strategy can be profitable for an organization when customers are loyal and willing to pay high
prices?
a. Focus
b. Globalization
c. Overall cost leadership
d. Differentiation
e. Liquidation
8-16
42. The ____ strategy involves seeking efficient facilities, cutting costs and using tight cost controls to be
more efficient than competitors.
a. cost leadership
b. differentiation
c. focus
d. internal growth
e. liquidation
43. The human resource department at Paula's Powerwheels is implementing a number of functional level
strategies. These strategies include focusing on ways to retain and develop a stable work force and
ways to improve efficiency in the organization. These functional-level strategies are consistent with
which of the following strategies?
a. Overall cost leadership
b. Differentiation
c. New product development
d. New market development
e. Divestiture
44. With a(n) ____ strategy, the organization concentrates on a specific regional market or buyer group.
a. cost leadership
b. differentiation
c. focus
d. internal growth
e. liquidation
45. Mingles, Inc. concentrates its efforts on its target market of 18 to 25 year olds. It is using a(n) ____
strategy.
a. focus
b. differentiation
c. overall cost leadership
d. multidomestic
e. universal strategy
8-17
46. If ABC International has standardized its product line throughout the world it is pursuing a
a. multidomestic strategy.
b. retrenchment strategy.
c. diversity strategy.
d. globalization strategy.
e. liquidation strategy.
47. The assumption that a single global market exists would lead to a
a. globalization strategy.
b. multidomestic strategy.
c. diversity strategy.
d. domestic strategy.
e. liquidation strategy.
48. Which of the following strategies would be appropriate when the need for both national
responsiveness and global integration is low?
a. Globalization
b. Multidomestic
c. Export
d. Transnational
e. Import
49. ____ refers to the modification of product design and advertising strategies to suit the specific needs of
individual countries.
a. Domestic strategy
b. Global strategy
c. Transnational strategy
d. Multidomestic strategy
e. Market design strategy
50. Which of the following refers to a strategy that combines global coordination to attain efficiency with
flexibility to meet specific needs in various countries?
a. Domestic strategy
b. Global strategy
c. Transnational strategy
d. Multidomestic strategy
e. Region design strategy
8-18
51. Some people argue that ____ is the most difficult and most important part of strategic management.
a. SWOT analysis
b. strategic formation
c. strategic execution
d. strategic analysis
e. strategy evaluation
52. Persuasion, motivation, and changes in cultures and values are examples of which of the dimensions
used to implement strategy?
a. Leadership
b. Structural design
c. Human resources
d. Information and control systems
e. Compensation
53. Which of the following is NOT one of the tools used for putting strategy into action?
a. Visible leadership
b. Diversification
c. Human Resources
d. Communication
e. Clear roles and accountability
54. The ____ function recruits selects, trains, transfers, promotes, and lays off employees to achieve
strategic goals.
a. production
b. leadership
c. information and control systems
d. structural design
e. human resource
55. To remain competitive, companies should develop strategies that focus on core competencies,
providing synergy, and creating value for:
a. Customers
b. Suppliers
c. Stockholders
d. Employees
e. Board members
8-19
56. After Sunshine Systems merged with RTD Enterprises, company executives noticed that due to
increased employee collaboration between the two units, costs were down and revenues increased
within both areas. This is an example of what business phenomenon?
a. Strategy execution
b. Portfolio strategy
c. Core competency
d. Synergy
e. Delivering value
57. Janessa is the CEO of a privately-held software company. In defining corporate-level strategies,
which of the following questions would she most likely be concerned with?
a. How do we compete?
b. What business are we in?
c. How does marketing support the business?
d. How can we maximize profits?
e. How can we make manufacturing processes more efficient?
58. ________-level strategy pertains to the major functional departments within the business unit.
a. Operational
b. Corporate
c. National
d. Business
e. Functional
59. Which of the following lists the strategic management process in proper order?
a. Formulate strategy; Evaluate strategy; Perform SWOT analysis; Define new
mission/goals; Execute strategy; Control strategy
b. Perform SWOT analysis; Evaluate current mission/goals; Formulate strategy; Execute
strategy; Define new mission/goals
c. Evaluate current mission/goals; Define new mission/goals; Formulate strategy; Execute
strategy; Perform SWOT analysis
d. Evaluate current mission/goals; Perform SWOT analysis; Define new mission/goals;
Formulate strategy; Execute strategy
e. Define new mission/goals; Execute strategy; Formulate strategy; Evaluate new
mission/goals; Perform SWOT analysis
8-20
60. Sherri has been asked to participate on a cross-functional task force that is charged with performing an
audit checklist for her advertising firm. The task force will analyze organizational strengths and
weaknesses as they apply to the firm. Sherri’s task is to analyze management quality, staff quality,
degree of centralization, and organizational charts. This level of analysis pertains to which area of the
audit?
a. Management and organization
b. Marketing
c. Human resources
d. Research and development
e. Production
61. What type of organizational unit has a unique business mission, product line, competitors, and markets
relative to other units in the same corporation?
a. Product unit
b. Functional unit
c. Strategic business unit
d. Operational unit
e. Business consulting group unit
62. Gatekeep Utilities is a subsidiary of GW Enterprises. Gatekeep has a mission and product line that is
unique from GW. Gatekeep’s competitors are also very different from those of its parent, and the
subsidiary markets to a very different group of customers. As such, Gatekeep can be described as a(n):
a. Product unit
b. Functional unit
c. Operational unit
d. Strategic business unit
e. Boston consulting group unit
63. When an organization expands into a totally new line of business, it is implementing a strategy of:
a. Related diversification
b. Unrelated diversification
c. Cross-functional diversification
d. Product line diversification
e. Industry diversification
64. Semway, a regional bank, recently announced that it would soon begin offering financial planning
services. This is an example of which of these?
8-21
a. Related diversification
b. Unrelated diversification
c. Cross-functional diversification
d. Product line diversification
e. Industry diversification
65. Which of the following is true regarding the impact of the Internet on Porter’s Five Forces affecting
industry competition?
a. Internet increases barriers to entry
b. Internet decreases bargaining power of suppliers
c. Internet shifts power away from end customers
d. Internet cuts down on substitute product threats
e. Internet blurs differences among competitors
66. Sugar manufacturers have been steadily losing business as a result of increasing use of high-fructose
corn syrup in processed foods. However, sugar sales are beginning to increase again in recent months.
This example most closely demonstrates which of Porter’s Five Forces?
a. Bargaining power of suppliers
b. Bargaining power of consumers
c. Rivalry among competitors
d. Threat of new entrants
e. Threat of new substitutes
67. General Products Inc. is a small clothing designer and manufacturer located in the United States. A
vast majority of the company’s revenues comes from U.S. sales, although about ten percent of the
company’s revenue come from sales to Canada. General Products Inc. can best be described as using
which global corporate strategy?
a. Globalization strategy
b. Multidomestic strategy
c. Export strategy
d. Transnational strategy
e. Domestic strategy
68. FLY Industries is a global conglomerate company headquartered in the United States that does
business in over fifty countries. The company seeks to balance global efficiencies and local
responsiveness by hiring locally as well as from home. It can best be described as using which global
corporate strategy?
a. Globalization strategy
8-22
b. Multidomestic strategy
c. Export strategy
d. Transnational strategy
e. Domestic strategy
69. People need to understand how their individual actions can contribute to achieving an organizational
strategy. This can be accomplished by delegating authority, creating teams, and defining roles. These
actions are part of which tool for putting strategy into action?
a. Visible leadership
b. Candid communication
c. Human resources
d. Clear roles and accountability
e. Bargaining power of employees
CASE
Scenario - Theresa Teutul
Theresa Teutul was an executive with Digital Industries, a leading manufacturer of color televisions.
She recognized that the color television market in the late 1970's was facing significant challenges.
After two decades of highly successful development and marketing, the sales of color televisions had
slowed and replacing older color television sets largely created her market.
1. Using the logic of the BCG grid, Theresa should recognize that her strategic business unit was in
which quadrant?
a. Star
b. Cash Cow
c. Question Mark
d. Dog
e. None of these
ANS: b
PTS: 1 DIF: 2 REF: 212 NAT: AACSB Analytic | Strategy

KEY: Scenario Questions TYP: A
8-23
2. The strategy that the BCG matrix suggests that Theresa should take for this SBU is
a. invest and grow.
b. liquidate while still profitable.
c. ask her astrologer for advice.
d. keep the SBU healthy and use its excess earnings to invest in other SBU's.
e. divestiture.
ANS: d

3. Which one of the following is not one of the competitive forces that Porter recommends that Theresa
should recognize?
a. Potential new entrants
b. Bargaining power of buyers
c. Threat of substitute products
d. Bargaining power of suppliers
e. All of these are competitive forces.
ANS: e
PTS: 1 DIF: 2 REF: 215-216 NAT: AACSB Analytic | Strategy

Scenario - SS.com
Faced with rapidly growing business, Swift Stocks, Inc., a global brokerage company with the largest
market share, recently announced that it has established an on-line stock investment and trading
subsidiary, SS.com, where investors can trade stocks at the lowest rates in the industry. The .com
subsidiary has less than one percent market share but it faces a very high business growth rate. In the
brokerage industry the competition is fierce and all players are cutting their on-line commission rates.
4. Swift Stock's traditional brokerage business could be classified as a

a. cash cow.
b. dog.
c. star.
d. question mark.
e. stuck in the middle business.
ANS: c

8-24
5. SS.com subsidiary for Swift Stocks can be classified as a

a. cash cow.
b. dog.
c. star.
d. question mark.
e. stuck in the middle business.
ANS: d

6. If Swift Stock's traditional brokerage business were to face a declining business growth, it may need to
be reclassified as a
a. cash cow.
b. dog.
c. star.
d. question mark.
e. dead business.
ANS: a

7. Swift Stock is following which strategy, according to Porter, through the .com subsidiary?
a. Stability
b. Cost leadership
c. Focus
d. Differentiation
e. Retrenchment
ANS: b

KEY: Scenario Questions TYP: F
COMPLETION
1. ____________________ is the set of decisions and actions used to formulate and implement strategies
that will provide a competitively superior fit between the organization and its environment so as to
achieve organizational goals.
ANS: Strategic management

TYP: F
8-25
2. The plan of action that prescribes resource allocation and other activities for dealing with the
environment and helping the organization attain its goals is called a(n) ____________________.
ANS: strategy

TYP: F
3. A business activity that an organization does particularly well relative to its competition is known as
a(n) ____________________.
ANS: core competence

TYP: F
4. When organizational parts interact to produce a joint effect that is greater than the sum of the parts
acting alone, ____________________ occurs.
ANS: synergy

TYP: F
5. The question What business are we in? concerns ____________________ strategy.
ANS: corporate-level

TYP: F
6. The question How do we compete? concerns ____________________ strategy.
ANS: business-level

TYP: F
7. The question How do we support the business-level competitive strategy? concerns

____________________ strategy.
ANS: functional-level

TYP: F
8-26
8. ____________________ includes the planning and decision making that lead to the establishment of
the firm's goals and the development of a specific strategic plan.
ANS: Strategy formulation

TYP: F
9. The use of managerial and organizational tools to direct resources toward accomplishing strategic
results is known as ____________________.
ANS: strategy execution

TYP: F
10. ____________________ is a type of corporate-level strategy that pertains to the organization's mix of
strategic business units.
ANS: Portfolio strategy

TYP: F
11. In the BCG matrix, the dog has ____________________ market share and ____________________
business growth rate.
ANS: low; low

TYP: F
12. The acquisition of a business that is related to current product lines or that takes the corporation into
new areas is called ____________________.
ANS: diversification

TYP: F
13. In the BCG matrix, the star has a(n) ____________________ market share in a rapidly growing
industry.
ANS: large

TYP: F
8-27
14. The ____________________ strategy involves an attempt to distinguish the firm's products or services
from others in the industry.
ANS: differentiation

TYP: F
15. With a(n) ____________________ strategy, the organization aggressively seeks efficient facilities,
pursues cost reductions, and uses tight cost controls to produce products more efficiently than
competitors.
ANS: cost leadership

TYP: F
16. With a(n) ____________________ strategy, the organization concentrates on a specific regional
market or buyer group.
ANS: focus

TYP: F
17. The ____________________ is driving and supporting the move toward partnership thinking.
ANS: Internet

TYP: F
18. The standardization of product design and advertising strategies throughout the world is called
____________________.
ANS: globalization

TYP: F
19. When an organization chooses a(n) ____________________ strategy, it means that business decisions
such as product design are made on a country-by-country basis.
ANS: multidomestic

TYP: F
8-28
20. A(n) ____________________ strategy seeks to achieve both global integration and national
responsiveness.
ANS: transnational

TYP: F
21. The ability to influence people to adopt the new behaviors needed for strategy implementation is called
____________________.
ANS: leadership

TYP: F
22. It is argued that ____________________ is the most difficult and most important part of strategic
management.
ANS: strategic execution

TYP: F
SHORT ANSWER
1. List the three global corporate strategies.
ANS:
Globalization strategy, transnational strategy, and multidomestic strategy.

TYP: F
2. List the four components of a SWOT analysis.
ANS:
A SWOT includes -- strengths, weaknesses, opportunities, and threats.

TYP: F
3. List Porter's competitive forces.
ANS:
Potential new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute
products, and rivalry among competitors.

TYP: F
8-29
ESSAY
1. Name and describe the three types of global strategies.
ANS:
The three types of global strategies are globalization, multidomestic, and transnational. Globalization
means that a company's product design and advertising strategies are standardized throughout the
world. This approach is based on the assumption that a single global market exists for many consumer
and industrial products. The theory is that people everywhere want to buy the same products and live
the same way. Multidomestic strategies believe that competition in each country is handled
independently of industry competition in other countries. Thus, marketing, advertising, and product
design is encouraged to be modified and adapted to the specific needs of each country the company is
present in. Many companies reject the idea of a single global market. Transnational strategies seek to
achieve both global integration and national responsiveness. A true transnational strategy is difficult to
achieve, because one goal requires close global coordination while the other goal required local
flexibility. However, many industries are finding that, although increased competition means they
must achieve global efficiency, growing pressure to meet local needs demands national
responsiveness.

TYP: F
2. Compare and contrast the three levels of strategy in an organization.
ANS:
There are three levels of strategy in an organization: corporate-level, business-level, and functional-
level. Corporate-level strategies involve the whole organization. This level of strategy is most
concerned with answering the question: "What business are we in?" These types of decisions often
involve issues of growth, retrenchment, and/or joint ventures. Business-level strategies are concerned
with the question "How do we compete?" They focus on how the individual business unit competes
within its industry. They may involve such issues as advertising, product changes, and new-product
development. Functional-level strategies are concerned with the question of "How do we support the
business-level strategy?" Involving all of the organization's major functions, these types of strategies
link the functional unit with the strategic business unit.

TYP: F
8-30
3. In order for companies to remain competitive, their strategies must focus on three things. Describe
these three focuses.
ANS:
The three focuses are core competencies, synergy, and value creation. Core competence is something
the organization does very well in comparison to its competitors. A core competence represents a
competitive advantage because the company acquires expertise that competitors do not have. Synergy
occurs when organizational parts interact to produce a joint effect that is greater than the sum of the
parts acting alone. The organization may attain a special advantage with respect to cost, market power,
technology, or management skill. Value creation should be at the heart of strategy. Value is the
combination of benefits received and costs paid by the customer. Managers help their companies
create value by devising strategies that exploit core competencies and attain synergy.

TYP: F
4. Differentiate between strategy formulation and strategy implementation.
ANS:
Strategy formulation includes the planning and decision making that lead to the establishment of the
firm's goals and the development of a specific strategic plan. Also, it includes assessing the external
environment and internal problems and integrating the results into goals and strategies. Strategy
implementation uses managerial and organizational tools to direct resources toward accomplishing
strategic results.

TYP: F
5. Briefly describe the Boston Consulting Group matrix, including its dimensions, quadrants, and
strategic recommendations.
ANS:
The two dimensions of the matrix are business growth rate and market share. When growth is high and
share is high, the SBU has the best situation and is called a star. When growth is low and share is high,
the SBU is known as a cash cow. When growth is high but share is low, the SBU is a question mark. In
the fourth quadrant, growth and share are both low. This is the worst situation, and the SBU is a dog.
The strategic recommendations are: (1) invest in stars; (2) milk the cash cow; (3) invest in question
marks to create stars or divest the question marks; and (4) divest the dogs.

TYP: F
8-31
6. Briefly describe the five competitive forces identified by Michael E. Porter.
ANS:
Potential new entrants: Capital requirements and economies of scale are examples of two potential
barriers to entry that can keep out new competitors.
Bargaining power of buyers: Informed customers become empowered customers.
Bargaining power of suppliers: The concentration of suppliers and the availability of substitute
suppliers are significant factors in determining supplier power.
Threat of substitute products: The power of alternatives and substitutes for a company's product may
be affected by changes in cost or in trends that will deflect buyer loyalty.
Rivalry among competitors: This is influenced by the previous four forces as well as by cost and
product differentiation.

TYP: F
7. Briefly discuss Porter's three competitive strategies.
ANS:
Porter identified three competitive strategies: differentiation, cost leadership, and focus. A
differentiation strategy involves the organization attempting to distinguish its product or service from
those of its competition. Advertising, product features, and customer service are some of the ways an
organization can successfully differentiate. A cost leadership strategy is based on the organization
achieving a low-cost position relative to the competition. A company may achieve a cost leadership
through the operation of efficient facilities, cutting costs, or maintaining tight cost control. When a
company uses a differentiation or a cost leadership strategy in a particular market or buyer group, they
are employing a focus strategy. This strategy allows the organization to concentrate on a narrow
market niche.

TYP: F
8-32
8. Briefly describe the tools for putting strategy into action.
ANS:
The tools for putting strategy into action include visible leadership, clear roles and accountability,
human resources, and candid communication.
• Visible leadership is used to motivate people, shape culture and values, and model desired
behaviors
• Clear roles and accountability include delegating authority and responsibility, creating
teams, and defining roles
• Human resource tools include recruiting employees, providing training, and managing
transfers and promotions
• Candid communication is used to open lines of communication and to encourage honesty
and debate

TYP: F
8-33

Management 10th Edition Daft Test Bank

Uploaded by

Copyright:

Available Formats

Management 10th Edition Daft Test Bank

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Management 10th Edition Daft Test Bank

Uploaded by

Copyright:

Available Formats

Management 10th Edition Daft Test

ANS: T PTS: 1 DIF: 1 REF: 203

2. Front-line managers have the final responsibility for strategic planning.

ANS: F PTS: 1 DIF: 2 REF: 204

ANS: T PTS: 1 DIF: 2 REF: 204

ANS: T PTS: 1 DIF: 1 REF: 203

ANS: T PTS: 1 DIF: 2 REF: 204-205

ANS: F PTS: 1 DIF: 2 REF: 204

ANS: F PTS: 1 DIF: 2 REF: 204

ANS: F PTS: 1 DIF: 2 REF: 204

ANS: T PTS: 1 DIF: 3 REF: 205

ANS: T PTS: 1 DIF: 1 REF: 205

ANS: F PTS: 1 DIF: 2 REF: 205

12. Corporate-level strategy pertains to the organization as a whole.

ANS: T PTS: 1 DIF: 1 REF: 206

13. The "How do we compete?" question concerns functional-level strategy.

ANS: F PTS: 1 DIF: 2 REF: 206

ANS: T PTS: 1 DIF: 2 REF: 207

ANS: F PTS: 1 DIF: 2 REF: 206

ANS: F PTS: 1 DIF: 1 REF: 208

ANS: T PTS: 1 DIF: 2 REF: 208

ANS: F PTS: 1 DIF: 1 REF: 209

ANS: F PTS: 1 DIF: 1 REF: 209

ANS: T PTS: 1 DIF: 2 REF: 209

ANS: F PTS: 1 DIF: 2 REF: 209

ANS: T PTS: 1 DIF: 3 REF: 210

ANS: T PTS: 1 DIF: 1 REF: 211

ANS: F PTS: 1 DIF: 1 REF: 212

ANS: T PTS: 1 DIF: 1 REF: 212

ANS: F PTS: 1 DIF: 2 REF: 213

ANS: F PTS: 1 DIF: 2 REF: 212

28. The dog, according to the BCG Matrix, is a poor performer.

ANS: T PTS: 1 DIF: 2 REF: 212

29. Diversification is a strategy of moving into new lines of business.

ANS: T PTS: 1 DIF: 1 REF: 213

ANS: T PTS: 1 DIF: 1 REF: 215

ANS: F PTS: 1 DIF: 1 REF: 215

ANS: T PTS: 1 DIF: 2 REF: 213

33. The Internet tends to lower the bargaining power of suppliers.

ANS: F PTS: 1 DIF: 1 REF: 215

ANS: F PTS: 1 DIF: 2 REF: 216

ANS: T PTS: 1 DIF: 2 REF: 216

ANS: F PTS: 1 DIF: 2 REF: 216

ANS: F PTS: 1 DIF: 2 REF: 216

ANS: T PTS: 1 DIF: 1 REF: 217

ANS: T PTS: 1 DIF: 2 REF: 219

ANS: T PTS: 1 DIF: 1 REF: 220

ANS: F PTS: 1 DIF: 2 REF: 221

ANS: F PTS: 1 DIF: 2 REF: 221-222

ANS: F PTS: 1 DIF: 2 REF: 221

44. A multidomestic strategy standardizes global products/advertising strategies.

ANS: F PTS: 1 DIF: 2 REF: 221

ANS: T PTS: 1 DIF: 1 REF: 222

ANS: F PTS: 1 DIF: 1 REF: 225

ANS: T PTS: 1 DIF: 1 REF: 224

ANS: F PTS: 1 DIF: 2 REF: 223

ANS: T PTS: 1 DIF: 1 REF: 223-224

ANS: T PTS: 1 DIF: 1 REF: 225

ANS: F PTS: 1 DIF: 2 REF: 225