SECTION A- MULTIPLE CHOICE (3 marks)

Answer ALL the questions, each question is worth 0.25 mark.

Chap 1
1) Strategic management focuses on integrating management, ________, and information systems
to achieve organizational success.
A) marketing
B) finance and accounting
C) production and operations
D) research and development
E) all of the above

2) The goal of strategic management is to

A) achieve competitive advantage.
B) maintain competitive advantage.
C) achieve and maintain competitive advantage.
D) eliminate competitive advantage.
E) eliminate and abolish competitive advantage.

3) 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) Strategy evaluation
C) Strategy implementation
D) Strategic management
E) Strategic leading

4) Which individuals are most responsible for the success and failure of an organization?
A) Strategists
B) Financial planners
C) Personnel directors
D) Stakeholders
E) Human resource managers

5) What step in the strategic management process involves mobilizing employees and managers
to put strategies into action?
A) Strategy formulation
B) Strategy evaluation
C) Strategy implementation
D) Strategic advantage
E) Competitive advantage

6) Which statement best describes intuition?

A) It alone should be used in decision-making.
B) It represents a minor factor in decision-making integrated with analysis.
C) It should be coupled with analysis in decision-making.
D) It is better than analysis in decision-making.
E) It is management by ignorance.

7) In recent years, the speedy flow of information through technology has

A) made it harder for people worldwide to see how others work and live.
B) strengthened national boundaries and made countries more self-contained.
C) created a borderless world with global competitors, customers, and citizens.
D) ensured that the United States is unrivaled by other companies in all industries.
E) made the real flow of financial activity align with political boundaries between countries.

8) What are enduring statements of purpose that distinguish one business from other similar firms?
A) Policies
B) Mission statements
C) Objectives
D) Rules
E) Employee conduct guidelines

9) What types of skills are especially critical for successful strategy implementation?
A) Interpersonal
B) Marketing
C) Technical
D) Conceptual
E) Visionary

10) The act of strengthening employees' sense of effectiveness by encouraging and rewarding them
for participating in decision-making and exercising initiative and imagination is referred to as
A) authoritarianism.
B) proaction.
C) empowerment.
D) transformation.
E) delegation.

11) The strategic-management process is becoming more widely used by

A) small firms.
B) nonprofit institutions.
C) governmental organizations.
D) multinational conglomerates.
E) all of the above

12) ________ is NOT a strategy-implementation activity.

A) Taking corrective actions
B) Establishing annual objectives
C) Devising policies
D) Allocating resources
E) Motivating employees
13) Strategic management enables an organization to ________, instead of just responding to
threats in its business environment.
A) be proactive
B) be immune to threats
C) avoid responsibility for shaping its future
D) relinquish control over its destiny
E) be reactive

14) An organization's vision statement

A) is a constant reminder to its employees of why the organization exists.
B) broadly charts the future direction of an organization.
C) addresses the basic question: "What is our business?"
D) answers the question: "What do we want to become?"
E) none of the above

15) During what stage of strategic management are a firm's specific internal strengths and
weaknesses determined?
A) Formulation
B) Implementation
C) Evaluation
D) Feedback
E) Goal-setting

Chap 2
1) Which of these basic questions should a vision statement answer?
A) What is our business?
B) What is our core strength?
C) What are our challenges?
D) What do we want to become?
E) Who are our competitors?

2) The process of developing a vision and mission statement often includes which of these as the
first activity?
A) Requesting that managers modify the current documents
B) Asking managers to read selected articles about vision and mission statements
C) Asking managers to prepare a vision statement for the organization
D) A brainstorming session on whether the organization should have only a vision statement
E) Merging several mission statements into one document

3) All stakeholders' claims on an organization ________ pursued with equal emphasis.

A) cannot be
B) should always be
C) are required to be
D) must ideally be
E) can usually be
4) All of the following utility statements are relevant in developing a mission statement EXCEPT
A) Do not offer me shoes. Offer me comfort for my feet and the pleasure of walking.
B) Do not offer me furniture. Offer me comfort and the quietness of a cozy place.
C) Do not offer me ideas, emotions, ambience, feelings, and benefits. Offer me things.
D) Do not offer me books. Offer me hours of pleasure and the benefit of knowledge.
E) Do not offer me a house. Offer me security, comfort, and a place that is clean and happy.

5) Which statement is TRUE?

A) Companies must choose between having a mission statement or a vision statement.
B) A company can't have a mission statement unless it has a vision statement.
C) A vision statement cannot be established until a company has developed its mission statement.
D) The vision statement should be established before the mission statement.
E) Companies are required by law to have both mission and vision statements.

6) After a draft mission statement has been developed, it is important to

A) ask managers to read several articles about mission statements as background information.
B) vote on the mission statement.
C) ask managers to prepare a mission statement for the organization.
D) ask managers to seek support for the mission statement from their subordinates.
E) request modifications, additions, and deletions.

7) All stakeholders
A) have claims and concerns about an organization, but these claims and concerns vary.
B) have the same claims and concerns about an organization.
C) have ownership rights in an organization.
D) have the same voting rights in an organization.
E) have environmental concerns as their top priority.

8) Which of these examples of a mission statement focus area does NOT identify the utility of the
firm's products to its customers?
A) AT&T focuses on communication rather than telephones.
B) ExxonMobil focuses on oil and gas rather than energy.
C) Union Pacific focuses on transportation rather than railroads.
D) Universal Studios focuses on entertainment rather than movies.
E) A clothing retailer focuses on attractive looks rather than on clothes.

9) The ideal length of a vision statement is

A) one page.
B) several paragraphs.
C) one sentence.
D) several sentences.
E) as long as is necessary to convey the message.

10) A(n) ________ with expertise in developing vision and mission statements and with unbiased
views, can at times manage the process more effectively than an internal group or committee of
managers.
A) external group
B) external auditor
C) outside process analyst
D) internal auditor
E) outside facilitator

11) According to Drucker, what is the best time to ask "What do we want to become?" and "What
is our business?"?
A) When a firm is in decline
B) When the firm is successful
C) When the firm is in financial trouble
D) When the firm is in legal trouble
E) When the firm encounters competition

12) Good mission statements identify the ________ of a firm's products to its customers.
A) utility
B) price
C) profit margin
D) demand
E) popularity

13) Which basic question should the vision statement answer?

A) What is our business?
B) How can we improve ourselves?
C) What do we want to become?
D) Who are our stakeholders?
E) How can we increase profitability?

14) Effective and carefully planned mission statements

A) require major changes every few months.
B) require major changes every few quarters.
C) require major revision every few years.
D) do not require revision.
E) require infrequent major changes, but are always subject to revision.

15) An effective mission statement does all of the following EXCEPT

A) it reflects judgments about future growth directions that are based upon forward-looking
external and internal analyses.
B) it provides useful criteria for selecting among alternative strategies.
C) it provides a basis for generating and screening strategic options.
D) it is static in orientation.
E) it should be enduring.

16) A good mission statement has

A) an employee orientation.
B) a customer orientation.
C) a shareholder orientation.
D) an environmental orientation.
E) a profit orientation.

17) The general public is especially interested in ________, whereas stockholders are more
interested in ________.
A) environmental concerns; social responsibility
B) social responsibility; the treatment of employees
C) the treatment of employees; environmental concerns
D) profitability; social responsibility
E) social responsibility; profitability

18) The following excerpt from a mission statement illustrates which of the nine essential
components of a mission statement?
"We believe our first responsibility is to the doctors, nurses, patients, mothers, and all others who
use our products and services."
A) Markets
B) Customers
C) Concern for Employees
D) Concern for Public Image
E) Technology

19) Which component of a mission statement addresses the firm's distinctive competence or major
competitive advantage?
A) Technology
B) Philosophy
C) Concern for public image
D) Customers
E) Self-concept

20) Which component of a mission statement addresses the basic beliefs, values, aspirations, and
ethical priorities of the firm?
A) Technology
B) Philosophy
C) Concern for public image
D) Customers
E) Self-concept

21) Which of the following is NOT one of the nine recommended components of a mission
statement?
A) Strategies
B) Self-concept
C) Employees
D) Markets
E) Customers
Chap 3
1) What is the range for a firm's total weighted score in a Competitive Profile Matrix (CPM)?
A) 0 to 4
B) 0 to 5
C) 1 to 4
D) 1 to 5
E) 0 to 10

2) The critical success factors in a Competitive Profile Matrix and EFE Matrix include
A) internal but not external issues.
B) external but not internal issues.
C) both internal and external issues.
D) neither internal or external issues.
E) only non-quantifiable data.

3) Generally, external opportunities and threats are

A) uncontrollable by a single organization.
B) unable to have a significant impact on an organization.
C) not worth monitoring and evaluating.
D) key functions in strategy implementation.
E) key functions in strategy exploitation.

4) Collecting and evaluating information on competitors is essential for successful

A) internal analysis.
B) strategy evaluation.
C) strategy formulation.
D) strategy implementation.
E) strategy correction.

5) The process of performing an external audit needs to include

A) only top level managers, as it is a planning function.
B) as many managers and employees as possible.
C) primarily front-line supervisors.
D) between 15 to 20 managers for it to be valid.
E) stockholders and external government agencies.

6) According to Porter, what is usually the most powerful of the five competitive forces?
A) Potential development of substitute products
B) Bargaining power of suppliers
C) Bargaining power of consumers
D) Rivalry among competing firms
E) Potential entry of new competitors

7) Competition in virtually all industries is

A) nonexistent.
B) intense.
C) never cutthroat.
D) easily avoidable.
E) insignificant.

8) Many economists say the current rash of trade constraints will make it ________ for global
economic growth.
A) easier
B) impossible
C) harder
D) more likely
E) less time-consuming

9) Whenever new firms can easily enter a particular industry, the intensity of competitiveness
among firms tends to
A) stay the same.
B) increase.
C) decrease.
D) neutralize.
E) become irrelevant.

10) A weak dollar means

A) lower exports and higher imports.
B) lower exports and lower imports.
C) lower exports and no effect on imports.
D) higher exports and higher imports.
E) higher exports and lower imports.

11) External audits attempt to identify key variables that offer ________ responses.
A) actionable
B) authoritative
C) profitable
D) strategic
E) terminal

12) If suppliers are unreliable or too costly, which of these strategies may be appropriate?
A) Horizontal integration
B) Backward integration
C) Market penetration
D) Forward integration
E) Concentric diversification

13) In general, what happens to American goods in overseas markets when there is a strong dollar?
A) They are less expensive.
B) They are more attractive.
C) They are cheaper.
D) They are more expensive.
E) They are desirable.

14) According to I/O theorists, which of the following contributes LEAST to firm's performance?
A) Economies of scale
B) Barriers to market entry
C) Product differentiation
D) Internal resources
E) Level of competitiveness

15) The Industrial Organization (I/O) approach to competitive advantage advocates that external
factors are ________ internal factors in a firm achieving competitive advantage.
A) less important than
B) equally important as
C) more important than
D) more common than
E) less common than

16) To perform an external audit, a company first must

A) get an approval from the Securities and Exchange Commission.
B) perform an internal audit.
C) gather competitive intelligence and information about external trends.
D) hire a consultant to develop a comprehensive strategic plan.
E) all of the above

17) What is NOT one of Michael Porter's five competitive forces?

A) Potential entry of new competitors
B) Rivalry among competing firms
C) Bargaining power of unions
D) Bargaining power of suppliers
E) Bargaining power of consumers

18) When an industry relies heavily on government contracts, which forecasts can be the most
important part of an external audit?
A) Economic
B) Political
C) Technological
D) Competitive
E) Multinational

19) Changes in which of the following can significantly affect firms?

A) Patent laws
B) Antitrust legislation
C) Tax rates
D) Lobbying activities
E) All of the above

20) The process of performing an external audit should involve

A) key representatives from each stakeholder group.
B) as many stakeholders as possible.
C) only strategists.
D) primarily strategists.
E) as many managers and employees as possible.

21) All of the following are political, governmental, and legal variables that can represent key
opportunities or threats to organizations EXCEPT
A) tariffs.
B) environmental regulations.
C) level of defense expenditures.
D) legislation on equal employment.
E) population changes by race, age, sex, and level of affluence.

22) What is the first step in designing an External Factor Evaluation (EFE) Matrix?
A) Identifying key external factors
B) Summing the weighted score for each competitor
C) Calculating the sales of each competitor
D) Drawing the horizontal and vertical lines for the matrix
E) Determining four competitors

23) Without assumptions, planning would be

A) impossible.
B) easier.
C) difficult.
D) inexpensive.
E) intuitive.

24) When using External Factor Evaluation (EFE) Matrix, what is done after multiplying each
factor's weight by its rating to determine a weighted score?
A) Identifying key external factors
B) Summing the weighted score for each competitor
C) Summing the weighted scores for each variable to determine the total weighted score for the
organization
D) Drawing the horizontal and vertical lines for the matrix
E) Determining the preferred strategic factors

Chap 4
1) Organizational resources include all of the following EXCEPT
A) employee training.
B) firm structure.
C) planning processes.
D) information systems.
E) copyrights.

2) A resource is valuable if it is rare, hard to imitate, or

A) expensive.
B) inexpensive.
C) easily substitutable.
D) not easily substitutable.
E) inefficient.

3) Who should perform an internal audit?

A) A private auditing firm
B) The organization's accounting department
C) Representative managers and employees from throughout the firm
D) A small team of top-level managers
E) The chief executive officer

4) Life-directing attitudes that serve as behavioral guidelines are called

A) values.
B) rites.
C) beliefs.
D) metaphors.
E) legends.

5) All of the following are basic activities of management EXCEPT

A) staffing.
B) planning.
C) consolidating.
D) organizing.
E) motivating.

6) ________ can reveal the demographic characteristics of an organization's customers.

A) Customer profiling
B) Test marketing
C) Market development
D) The vision statement
E) Telemarketing

7) The three all-encompassing internal resource categories used in the resource-based view are
physical resources, human resources, and
A) financial resources.
B) shareholder resources.
C) organizational resources.
D) non-renewable resources.
E) technological resources.

8) Metaphors are
A) several rites connected together.
B) shorthand of words used to capture a vision or to reinforce old or new values.
C) narratives based on true events.
D) fictional stories.
E) any objects, acts, events, qualities, or relations used to convey meaning.

9) Which management function includes breaking tasks into jobs, combining jobs to form
departments, and delegating authority?
A) Motivating
B) Staffing
C) Organizing
D) Controlling
E) Planning

10) What marketing function includes test marketing?

A) Selling products and services
B) Pricing
C) Customer analysis
D) Product and service planning
E) Distribution

11) A firm's strengths that cannot be easily matched or imitated by competitors are called
A) internal audits.
B) distinctive competencies.
C) external audits.
D) interrelated properties.
E) internal properties.

12) What is the term for a historical narrative describing the unique accomplishments of a group
and its leaders?
A) Rite
B) Saga
C) Story
D) Myth
E) Folktale

13) What is the essential bridge between the present and the future that increases the likelihood of
achieving desired results?
A) Motivating
B) Planning
C) Controlling
D) Staffing
E) Organizing

14) Pricing is one of the basic functions of

A) marketing.
B) finance/accounting.
C) management information systems.
D) production/operations.
E) research and development.

15) Distribution includes

A) customer analysis.
B) pricing.
C) warehousing.
D) advertising.
E) test marketing.

16) ________ management deals with inputs, transformations, and outputs that vary across
industries and markets.
A) Marketing
B) Financial
C) Research and development
D) Production and operations
E) Information systems

17) The process whereby a firm determines the costs associated with organizational activities from
purchasing raw materials to manufacturing products to marketing those products is called
A) The Resource-Based Approach.
B) Value Chain Analysis.
C) Strategic Cost Analysis.
D) The Internal Factor Evaluation Matrix.
E) Cost-Benefit Analysis.

Chap 5
1) Long-term objectives are needed at which level(s) in an organization?
A) Corporate
B) Divisional
C) Functional
D) All of the above
E) Corporate & divisional levels, but not functional level

2) Which of these strategies is effective when the number of suppliers is small and the number of
competitors is large?
A) Conglomerate diversification
B) Forward integration
C) Concentric diversification
D) Backward integration
E) Horizontal diversification

3) When a domestic company first begins to export to India, it is an example of

A) horizontal integration.
B) backward integration.
C) forward integration.
D) concentric diversification.
E) market development.

4) Procter & Gamble's (P&G) sale of many of its brands in order to focus on its core brands is an
example of which type of strategy?
A) Related diversification
B) Unrelated diversification
C) Retrenchment
D) Divestiture
E) Liquidation

5) What principle is based on the belief that the true measure of a really good strategist is the ability
to solve problems?
A) Managing by crisis
B) Managing by objectives
C) Managing by extrapolation
D) Managing by exception
E) Managing by hope

6) What refers to a strategy of seeking ownership of, or increased control over a firm's competitors?
A) Forward integration
B) Conglomerate diversification
C) Backward integration
D) Horizontal integration
E) Concentric diversification

7) A pasta manufacturer's purchase of some pet food brands is an example of

A) backward integration.
B) divestiture.
C) retrenchment.
D) unrelated diversification.
E) forward integration.

8) What kind of strategy is retrenchment?

A) A turnaround strategy
B) An expansion strategy
C) A diagonal strategy
D) An intensive strategy
E) An offensive strategy
9) What principle is built on the idea that there is no general plan for which way to go and what to
do?
A) Managing by crisis
B) Managing by extrapolation
C) Managing by objectives
D) Managing by hope
E) Managing by subjectives

10) In which situation would horizontal integration be an especially effective strategy?

A) When an organization can gain monopolistic characteristics in a particular area or region
without being challenged by the federal government for "tending substantially" to reduce
competition
B) When an organization competes in a slowing industry
C) When decreased economies of scale provide major competitive advantages
D) When an organization has neither the capital nor human talent needed to successfully manage
an expanded organization
E) When competitors are succeeding due to managerial expertise or having particular resources an
organization possesses

11) Bankruptcy
A) should never be used as a strategy.
B) should be used only when one is legally forced to do so.
C) can be an effective type of retrenchment strategy.
D) should only be used for large firms.
E) should only be used for small, private firms.

12) Websites that sell products directly to consumers are examples of which type of strategy?
A) Backward integration
B) Product development
C) Forward integration
D) Horizontal integration
E) Conglomerate diversification

13) Amazon's start of rapid delivery services in some U.S. cities is an example of which type of
strategy?
A) Forward integration
B) Backward integration
C) Horizontal integration
D) Related diversification
E) Unrelated diversification

14) Backward integration is effective in all of these cases EXCEPT

A) when an organization competes in an industry that is growing rapidly.
B) when an organization has both capital and human resources to manage the new business of
supplying its own raw materials.
C) when an organization needs to acquire a needed resource quickly.
D) when the advantages of stable prices are not particularly important.
E) when present suppliers have high profit margins.

15) According to Porter, which strategy offers products or services to a niche group of customers
at the lowest price available on the market?
A) Cost Leadership - Low Cost
B) Cost Leadership - Best Value
C) Focus - Low Cost
D) Focus - Best Value
E) Differentiation

16) When two organizations of about equal size unite to form one enterprise, which of these
occurs?
A) Hostile takeover
B) Merger
C) Acquisition
D) Leveraged buyout
E) Friendly takeover

17) Which word or phrase would be most suitable to use in written objective statements?
A) Maximize
B) Minimize
C) 10 percent increase
D) Adequate
E) As soon as possible

18) Which strategy seeks to increase market share for present products or services in present
markets through greater marketing efforts?
A) Market penetration
B) Forward integration
C) Market development
D) Backward integration
E) Product development

19) Which strategy generally entails large research and development expenditures?
A) Market penetration
B) Retrenchment
C) Forward integration
D) Product development
E) Divestiture

20) Which strategy is appropriate when an organization competes in an industry characterized by

rapid technological developments?
A) Retrenchment
B) Product development
C) Backward integration
D) Liquidation
E) Market penetration

21) Gap's opening of its first five stores in China is an example of which type of strategy?
A) Forward integration
B) Backward integration
C) Horizontal integration
D) Market development
E) Product development

22) Staples 170 store closings in North America in 2014 is an example of

A) divestiture.
B) backward integration.
C) liquidation.
D) retrenchment.
E) forward integration.

Chap 6
1) Which matrix is included in the decision stage of the strategy formulation framework?
A) Internal Factor Evaluation (IFE) Matrix
B) Quantitative Strategic Planning Matrix (QSPM)
C) Boston Consulting Group (BCG) Matrix
D) Grand Strategy Matrix
E) Strategic Position and Action Evaluation (SPACE) Matrix

2) In the Boston Consulting Group (BCG) Matrix, how would a division with a low relative market
share position in a high growth industry be described?
A) Question Mark
B) Cash Cow
C) Star
D) Stuck-in-the-middle
E) Dog

3) Which strategies aim at improving internal weaknesses by taking advantage of external

opportunities?
A) SO
B) WO
C) SW
D) ST
E) WT

4) In the BCG Matrix, when a division of an organization has a high relative market share and is
in a fast-growing industry, it is called a
A) Star.
B) Cash Cow.
C) Cat.
D) Question Mark.
E) Dog.

5) 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.

6) The two internal dimensions represented on the axes of the SPACE Matrix are
A) stability position and industry position.
B) industry position and internationalization.
C) internationalization and competitive position.
D) competitive position and financial position.
E) financial position and stability position.

7) What are the two external dimensions of the SPACE Matrix?

A) Stability position and industry position
B) Stability position and competitive position
C) Industry position and competitive position
D) Competitive position and financial position
E) Financial position and industry position

Chap 7
1) Which approach for managing and resolving conflict involves exchanging members of
conflicting parties so that each can gain an appreciation of the other's point of view?
A) Avoidance
B) Resistance
C) Compliance
D) Defusion
E) Confrontation

2) What type of organizational structure promotes specialization of labor and allows rapid decision
making?
A) Divisional structure by product
B) Functional structure
C) Divisional structure by customer
D) Strategic business unit
E) Matrix structure

3) The primary benefit sought from restructuring is

A) employee involvement.
B) cost reduction.
C) increased morale.
D) increased number of hierarchical levels in the organization.
E) increased innovation.

4) Changing a strategy to fit an existing culture

A) is usually less effective than changing a firm's culture to fit a new strategy.
B) is usually more effective than changing a firm's culture to fit a new strategy.
C) is just as effective as changing a firm's culture to fit a new strategy.
D) is always the best option.
E) none of the above

5) What are the three categories of approaches for managing and resolving conflict?
A) Avoidance, defusion, and confrontation
B) Avoidance, apathy, and defusion
C) Ignorance, indifference, and apathy
D) Defusion, apathy, and avoidance
E) Indifference, avoidance, and role-playing

6) Which organizational structure is the most widely used?

A) Departmental
B) Strategic business unit
C) Functional
D) Decentralized
E) Matrix

7) Which term is primarily concerned with shareholder well-being rather than employee well-
being?
A) Benchmarking
B) Reengineering
C) Product redesign
D) Process management
E) Restructuring

8) According to the information in the text, how many Fortune 500 have women CEOs?
A) Two
B) Five
C) Twelve
D) Eighteen
E) Twenty-six

9) A divisional structure by product is most effective when

A) special emphasis needs to be placed on specific products.
B) an organization offers few products.
C) an organization's products or services differ substantially.
D) special emphasis needs to be placed on specific services.
E) all of the above

10) Conflict in an organization is

A) always bad.
B) always good.
C) not always bad.
D) a sign of bankruptcy.
E) completely avoidable.

11) All of the following are examples of offerings at companies to promote a corporate wellness
culture EXCEPT
A) stress management programs.
B) health fairs.
C) abundance of bicycle racks onsite.
D) free health insurance for employees who exercise regularly.
E) cash incentives for completing Ironman triathlons.

12) Wellness programs

A) are too expensive for most companies to afford.
B) are desired by employees but don't provide value to the company.
C) are becoming more prevalent as companies realize the benefits to the firm.
D) attract prospective employees who then fail to take advantage of them.
E) are facing legal challenges from the health-care industry.

13) Modern organizational realities demand that employees demonstrate greater

A) flexibility.
B) innovation.
C) creativity.
D) initiative.
E) all of the above

14) "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) objective.
D) policy.
E) procedure.

Chap 8
1) Which two variables rank as marketing's most important contributions to strategic management?
A) Diversification and budgeting
B) Marketing penetration and competition
C) Competition and collaboration
D) Product development and market development
E) Market segmentation and product positioning

2) Which is NOT a required step in perceptual mapping?

A) Select key criteria that effectively differentiate products or services in the industry.
B) Serve two segments with the same strategy.
C) Plot major competitors' products or services in the resultant matrix.
D) Identify areas in the positioning map where the company's products or services could be most
competitive in the given target market.
E) Develop a marketing plan to position the company's products and services appropriately.

3) Which of the following is NOT given as an example of a decision that may require
finance/accounting policies?
A) To extend the time of accounts receivable
B) To establish a certain percentage discount on accounts within a specified period of time
C) To lease or buy fixed assets
D) To use LIFO, FIFO, or a market-value accounting approach
E) To be a price leader or a price follower

4) Which statement is NOT true?

A) Having an effective management information system may be the most important factor in
differentiating successful from unsuccessful firms.
B) Like inventory and human resources, information is now recognized as a valuable
organizational asset that can be controlled and managed.
C) Computer vulnerability has nearly been eradicated by recent innovations, and it is now possible
to secure and safeguard all corporate communications, files, and business conducted over the
Internet.
D) In many firms, information technology is allowing employees to work at home or anywhere,
anytime.
E) Improved quality and service often result from an improved management information system.

5) All of the following are basic functions of marketing EXCEPT

A) value chain analysis.
B) customer analysis.
C) product and service planning.
D) pricing.
E) distribution.

6) Financial objectives involve all of the following EXCEPT

A) growth in revenues.
B) larger market share.
C) higher dividends.
D) greater return on investment.
E) a rising stock price.

7) Subdividing a market into distinct subsets of customers according to their needs and buying
habits is known as
A) market penetration.
B) product diversification.
C) market segregation.
D) market segmentation.
E) positioning.

8) An area on a perceptual map without ideal points indicates a

A) market segment.
B) demand void.
C) vacant niche.
D) multidimensional scale.
E) product reposition.

9) The first step in performing projected financial analysis is to

A) prepare the projected balance sheet.
B) take an inventory of goods.
C) estimate increases in debt.
D) forecast sales as accurately as possible.
E) calculate the projected net income.

10) Information collection, retrieval, and storage can be used to create competitive advantages in
ways such as
A) cross-selling to customers.
B) monitoring suppliers.
C) keeping managers and employees informed.
D) coordinating activities among divisions.
E) all of the above

11) Competitive advantage normally is the result of superiority in resources, skills, or

A) employees.
B) position.
C) consistency.
D) feasibility.
E) governance.

12) Why is market segmentation an important variable in the strategy-implementation process?

A) Company strategies do not require increased sales through new markets and products.
B) It allows a firm to operate with no resources.
C) It directly affects marketing mix variables.
D) It allows a firm to minimize per-unit profits and per-segment sales.
E) All of the above

13) Multidimensional scaling is used in

A) determining the size of a new building.
B) determining the size of a new department.
C) evaluating the amount of high-tech equipment a firm needs.
D) perceptual mapping.
E) market segmentation.

14) Which is NOT a step in performing a projected financial analysis?

A) Prepare the projected income statement before preparing the balance sheet
B) Forecast sales as accurately as possible
C) Use the percentage-of-sales method to project CGS
D) Subtract from the net income any dividends to be paid for that year and bring this retained
earnings amount over to the balance sheet
E) Use the revenue account as the plug figure

15) Which of the following is NOT a current development or trend?

A) Efforts to repeal federal laws currently preventing businesses from using GPS devices to
monitor employees
B) Tracking the location of employees through company provided hand-held devices
C) The use of smartphones as hotel room keys
D) Desktop videoconferencing
E) Assertions by employees that employers are invading their privacy with various monitoring
practices

16) Matching which factors would allow factories to produce desirable levels without extra shifts,
overtime, or subcontracting?
A) Markets and competitors
B) Competition and positioning
C) Customer behavior and positioning
D) Supply and demand
E) Segments and competitors

17) Which of the following is true about two different market segments?
A) They can usually be served with the same marketing strategy.
B) They usually require different marketing strategies.
C) They are always in different geographic locations.
D) They are usually interchangeable.
E) All of the above

18) R&D employees and managers perform all of the following tasks EXCEPT
A) transferring complex technology.
B) altering products to particular tastes and specifications.
C) researching resource availability.
D) adapting processes to local markets.
E) adjusting processes to local raw materials.

19) Which variable would be considered part of the "product" element of the marketing mix?
A) Advertising
B) Packaging
C) Payment terms
D) Inventory levels and location
E) Publicity

Chap 9

1) Strategy evaluation is necessary because

A) internal and external factors are constantly changing.
B) the SEC requires strategy evaluation.
C) success today is a guarantee of success tomorrow.
D) the IRS requires strategy evaluation.
E) firms have limited resources.

2) All of these are Richard Rumelt's criteria to evaluate a strategy EXCEPT

A) advantage.
B) consistency.
C) feasibility.
D) distinctiveness.
E) consonance.

3) 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.
A) unnecessary
B) needed
C) undesirable
D) prohibitively expensive
E) futile

4) A revised ________ should focus on changes in the organization's management, marketing,

finance and accounting, production and operations, research and development (R&D), and
management information systems (MIS) strengths and weaknesses.
A) mission
B) IFE Matrix
C) vision
D) EFE Matrix
E) EPM Matrix

5) Research suggests that which of the following is one of the best ways to overcome individuals'
resistance to change in strategy evaluation?
A) Participation
B) Command-and-control
C) Laissez-faire system
D) Rational argument
E) Emotional reactions
6) If you discover during the course of strategy evaluation that major changes have occurred in the
firm's internal strategic position, you should
A) continue on the present strategic course.
B) wait until the next quarter to see if things revert.
C) take corrective actions.
D) follow the original strategic plan.
E) none of the above

7) A revised ________ should indicate how effective a firm's strategies have been in response to
key opportunities and threats.
A) IFE Matrix
B) mission
C) EFE Matrix
D) vision
E) CPM Matrix

8) According to researchers, all of the following encourage individuals to accept change EXCEPT
A) having a cognitive understanding of the changes.
B) having a sense of control over the situation.
C) having an awareness that necessary actions are going to be taken to implement change.
D) participating in strategy-evaluation activities.
E) being overpowered by the nature, types, and speed of changes.

9) Rumelt's criteria of consonance refers to the need for strategists to examine

A) inconsistent goals.
B) trends.
C) impractical objectives.
D) competitive advantages.
E) the costs associated with particular strategies.

10) Which of the following is NOT included in measuring organizational performance?

A) Comparing results to competitors' expectations
B) Examining progress being made toward meeting stated objectives
C) Investigating deviations from plans
D) Evaluating individual performance
E) Comparing expected results to actual results

11) Which of the following is a corrective action a company might take to correct unfavorable
variances?
A) Divesting a division
B) Revising objectives
C) Raising capital with stock or debt
D) Allocating resources differently
E) All of the above
12) Increased education and diversity of the workforce at all levels are reasons why
A) the top-down approach is preferred.
B) the bottom-up approach is untenable.
C) only top executives have the experience and acumen to make strategy decisions.
D) middle-level and lower-level managers, and even non-managers, should be involved in the
strategic planning process.
E) the horizontal approach is the most pragmatic choice.

13) If success for one organizational department means failure for another department, then
strategies may be
A) synergistic.
B) advantageous.
C) trendy.
D) feasible.
E) inconsistent.

14) Which of the following statements about contingency plans is NOT true?
A) Contingency plans should be as simple as possible.
B) Only high-priority areas require the insurance of contingency plans.
C) Contingency plans should be developed for favorable and unfavorable events.
D) Strategists should plan for all possible contingencies.
E) Contingency plans minimize the impact of potential threats.

15) ________ are quantitative criteria commonly used to evaluate strategies.

A) Cash budgets
B) Balanced Scorecards
C) Capital Asset Pricing Models
D) Financial ratios
E) Present value strategic analyses

16) ________ plans can be defined as alternative plans that can be put into effect if certain key
events do not occur as expected.
A) Agile
B) Scenario
C) Evaluation
D) Contingency
E) Forecast

SECTION B – SHORT ANSWER

Answer all of the following questions (200-300 words/each question). (7 marks)
Chap 1
1) Explain the relationship between strategic management and competitive advantage. How
can a firm achieve sustained competitive advantage? (1.5 mark)
Answer: Strategic management is about gaining and maintaining competitive advantage.
Competitive advantage is anything a firm does especially well compared to rival firms. When a
firm can do something that rival firms cannot do, or owns something that rival firms desire, that
can represent a competitive advantage. Getting and keeping competitive advantage is essential for
long-term success of an organization. A firm must strive to achieve sustained competitive
advantage by 1: continually adapting to changes in external trends and events and internal
capabilities, competencies and resources, and by 2: effectively formulating, implementing and
evaluating strategies that capitalize upon those factors.

2) What are five differences between strategy formulation and strategy implementation?
Answer: Student answers should include five of the following: Strategy formulation is
positioning forces before the action, whereas strategy implementation is managing forces during
the action. Strategy formulation focuses on effectiveness, whereas strategy implementation
focuses on efficiency. Strategy formulation is primarily an intellectual process, whereas strategy
implementation is primarily an operational process. Strategy formulation requires good intuitive
and analytical skills, whereas strategy implementation requires special motivational and
leadership skills. Strategy formulation requires coordination among a few individuals, whereas
strategy implementation requires coordination among many individuals. Strategy formulation is
science with tools and techniques, whereas strategy implementation is an art to energize people.
Strategy formulation and strategy implementation are both difficult to do well, but strategy
implementation is considerably more difficult to do well. Strategy orientation is process oriented,
whereas strategy implementation is people oriented. Strategy formulation is primarily the
responsibility of top managers, whereas strategy implementation is primarily the responsibility of
mid and lower level managers.

3) Explain who strategists are and what they do in an organization.

Answer: Strategists are individuals who are most responsible for the success or failure of an
organization. They help an organization gather, analyze and organize information. They track
industry and competitive trends, develop forecasting models and scenario analyses, identify
business threats and develop creative action plans. Strategic planners usually serve in a support or
staff role. Usually found in higher levels of management, they typically have considerable
authority for decision making in the firm. The CEO is the most visible and critical strategic
manager. Any manager who has responsibility for a unit or division, responsibility for profit and
loss outcomes, or direct authority over a major piece of the business is a strategic manager
(strategist). In the last few years, the position of chief strategy officer (CSO) has emerged as a new
addition to the top management ranks of many organizations. This corporate officer title represents
recognition of the growing importance of strategic planning in business.

Chap 2
1) Discuss the differences between vision and mission statements.
Answer: Many organizations today develop a vision statement that answers the question "What
do we want to become?" Developing a vision statement is often considered the first step in strategic
planning, preceding even development of a mission statement. Many vision statements are a single
sentence. For example, the vision statement of Stokes Eye Clinic in Florence, South Carolina, is
"Our vision is to take care of your vision." Mission statements are "enduring statements of purpose
that distinguish one business from other similar firms. A mission statement identifies the scope of
a firm's operations in product and market terms." It addresses the basic question that faces all
strategists: "What is our business?" A clear mission statement describes the values and priorities
of an organization. Developing a mission statement compels strategists to think about the nature
and scope of present operations and to assess the potential attractiveness of future markets and
activities. A mission statement broadly charts the future direction of an organization and serves as
a constant reminder to employees of why the organization exists and what its founders envisioned.

2) List and define the major components of an effective mission statement.

Answer: 1) Customers: Who are the firm's customers?; 2) Products or services: What are the firm's
major products or services?; 3) Markets: Geographically, where does the firm compete?; 4)
Technology: Is the firm technologically current?; 5) Survival, growth, and profitability: Is the firm
committed to growth and financial soundness?; 6) Philosophy: What are the basic beliefs, values,
aspirations, and ethical priorities of the firm?; 7) Self-concept (Distinctive Competence): What is
the firm's major competitive advantage?; 8) Public image: Is the firm responsive to social,
community, and environmental concerns?; and 9) Employees: Are employees a valuable asset of
the firm?

Chap 3
1) Discuss the following statement: "Planning would be impossible without assumptions."
Answer: By identifying future occurrences that could have a major effect on the firm and by
making reasonable assumptions about those factors, strategists can carry the strategic-
management process forward. Assumptions are needed only for future trends and events that are
most likely to have a significant effect on the company's business. Assumptions can serve as
checkpoints on the validity of strategies. If future occurrences deviate significantly from
assumptions, strategists know that corrective actions may be needed. Without reasonable
assumptions, the strategy-formulation process could not proceed effectively. Firms that have the
best information generally make the most accurate assumptions, which can lead to major
competitive advantages.

Chap 4
1) Explain the resource-based view and its relation to strategic management.
Answer: The resource-based view (RBV) approach to competitive advantage contends that
internal resources are more important than external factors for a firm in achieving and sustaining
competitive advantage, in contrast to the I/O theory. According to the RBV, organizational
performance is determined by physical resources, human resources, and organizational
resources. RBV theory asserts that resources are actually what help a firm exploit opportunities
and neutralize threats. The theory also asserts that in order to maintain a competitive advantage,
a resource must either be rare, not easily substitutable, or hard to imitate.

2) Describe the controlling function of management. Include the four basic steps that
comprise this function in your description.
Answer: The controlling function of management includes all of those activities undertaken to
ensure that actual operations conform to planned operations, and is particularly important for
effective strategy evaluation. Controlling consists of four basic steps: 1) establishing
performance standards; 2) measuring individual and organizational performance; 3) comparing
actual performance to planned performance standards; and 4) taking corrective actions.
Chap 5
1) Define and give examples of three intensive strategies. (1 mark)
Answer: Market penetration, market development, and product development are the three types
of intensive strategies. Market penetration is the use of greater marketing efforts in an attempt to
increase market share for present products or services, in present markets. Market development is
the introduction of present products or services into new geographic areas. Product development
is the seeking of increased sales through new or improved products or services.

2) List three guidelines for when related diversification would be a particularly good strategy
to pursue. (1.5 mark)

Answer: Six guidelines for when related diversification may be an effective strategy are: 1) when
an organization competes in a no-growth or a slow-growth industry; 2) when adding new, but
related, products would significantly enhance the sales of current products; 3) when new, but
related, products could be offered at highly competitive prices; 4) when new, but related, products
have seasonal sales levels that counterbalance an organization's existing peaks and valleys; 5)
when an organization's products are currently in the declining stage of the product's life cycle; and
6) when an organization has a strong management team.

3) List three guidelines for when market development would be a particularly good
strategy to pursue.
Answer: Market development would be an effective strategy in all of the following situations: 1)
when new channels of distribution are available that are reliable, inexpensive, and of good
quality; 2) when an organization is successful at what it does; 3) when new untapped or
unsaturated markets exist; 4) when an organization has the needed capital and human resources
to manage expanded operations; 5) when an organization has excess production capacity; and 6)
when an organization's basic industry is rapidly becoming global in scope.

4) List three guidelines for when forward integration would be a particularly good strategy
to pursue.
Answer: Some guidelines for when forward integration would be an especially effective strategy
are: 1) when an organization's present distributors are especially expensive, unreliable, or
incapable of meeting the firm's distribution needs; 2) when the availability of quality distributors
is so limited as to offer a competitive advantage to those firms that integrate forward; 3) when an
organization competes in an industry that is growing and is expected to continue to grow markedly;
4) when an organization has both the capital and human resources needed to manage the new
business of distributing its own products; 5) when the advantages of stable production are
particularly high; and (6) when present distributors or retailers have high profit margins.

5) List and define the three types of integration strategies.

Answer: The three integrative strategies are forward integration, backward integration, and
horizontal integration. Forward integration is the acquisition of ownership or increased control
over distributors or retailers. Backward integration is the acquisition of ownership or increased
control of a firm's suppliers. Horizontal integration is the acquisition of ownership or increased
control over competitors.

Chap 6
1) Compare and contrast the Internal-External (IE) Matrix with the Boston Consulting
Group (BCG) Matrix. (1.5 mark)
Answer: The IE Matrix is similar to the BCG Matrix in that both tools involve plotting
organizational divisions in a schematic diagram. Also, the size of each circle represents the
percentage sales contribution of each division, and pie slices reveal the percentage profit
contribution of each division in both the BCG and IE Matrix. There are four important differences
between the BCG Matrix and the IE Matrix: 1) different axes; 2) the IE Matrix requires more
information about the divisions than the BCG Matrix; 3) the strategic implications of each matrix
are different; and 4) the IE Matrix has nine quadrants versus four in a BCG Matrix.
2) Using a Grand Strategy Matrix approach, what strategies are recommended for a firm
that is a weak competitor in a slow-growing market? Elaborate on what these strategies
could mean for a college or university.
Answer: A firm that is a weak competitor in a slow-growing market would be located in Quadrant
III. These firms must make some drastic changes quickly to avoid further decline and possible
liquidation. Extensive cost and asset reduction (retrenchment) should be pursued first. An
alternative strategy is to shift resources away from the current business into different areas
(diversify). If all else fails, the final options for Quadrant III businesses are divestiture or
liquidation. Students should mention that the college or university could possibly have to be
closed. Faculty and/or staff might have to be greatly reduced, which could lead to unhappy students
in very large classes.

3) Explain the benefits and limitations of developing a Boston Consulting Group (BCG)
Matrix. (1.5p)
Answer: The major benefit of the BCG Matrix is that it draws attention to the cash flow,
investment characteristics, and needs of an organization's various divisions. The BCG Matrix has
some limitations: 1) Viewing every business as either a Star, Cash Cow, Dog or Question Mark is
an oversimplification; many businesses fall right in the middle of the BCG Matrix and thus are not
easily classified; 2) the BCG Matrix does not reflect whether or not various divisions or their
industries are growing over time; that is, the matrix has no temporal qualities, but rather it is a
snapshot of an organization at a given point in time; and 3) other variables besides relative market
share position and industry growth rate in sales are important in making strategic decisions about
various divisions.

Chap 7
1) Is “organizational change” a bad thing within an organization and how can manager
deal with the resistance to change in that organization?
Resistance to change can emerge at any stage or level of the strategy-implementation process.
Although there are various approaches for implementing changes, three commonly used
strategies are a force change strategy, an educative change strategy, and a rational or self-interest
change strategy.
Force Change Strategy
involves giving orders and enforcing those orders
Educative Change Strategy
presents information to convince people of the need for change
Self-interest Change Strategy
attempts to convince individuals that the change is to their personal advantage

Chap 9
1) Identify some characteristics of an effective evaluation system.
Answer: There is no one ideal system; the unique characteristics of a firm should determine the
system's final design. Strategy-evaluation activities must be economical, meaningful, and should
provide timely information. Strategy evaluation processes should be designed to provide a true
picture of what is happening. Controls need to be action-oriented rather than information-
oriented. The strategy-evaluation process should not dominate decisions; it should foster mutual
understanding, trust, and common sense. The test of an effective system is its usefulness, not its
complexity.