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| 1 | |
The game plan a company's management is using to grow the business, stake out a market position, attract and please customers, compete successfully, conduct operations, and achieve targeted objectives is referred to as its |
| | A) | strategic vision. |
| | B) | business model. |
| | C) | strategic intent. |
| | D) | mission statement. |
| | E) | strategy. |
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| 2 | |
In crafting a strategy, a company's managers are in effect saying, |
| | A) | "This is where we are headed, this is our game plan for getting where we want to go, and this is how we intend to execute our plan successfully.'' |
| | B) | "This is the current business plan we have for being a winner in the marketplace and our extensive analysis of the company's situation indicates it will work." |
| | C) | "This is how we are going to knock the socks off our competitors." |
| | D) | "Among all the paths we could have chosen, we have decided to focus on these markets and customer needs, compete in this fashion, allocate our resources and energies in these ways, and use these particular approaches to doing business." |
| | E) | "This is our current business plan, even though it will probably change and evolve as we react to new market conditions." |
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| 3 | |
What separates a powerful strategy from an ordinary or weak one is |
| | A) | whether the strategy allows the company's business model to work as planned. |
| | B) | whether the strategy produces good bottom-line results. |
| | C) | management's ability to forge a series of moves, both in the marketplace and internally, that tilts the playing field in the company's favor by giving buyers a reason to prefer its products or services and that produces a sustainable competitive advantage over rivals. |
| | D) | the extent to which the strategy enables a company to boost its sales and market share. |
| | E) | whether the strategy ends up being a substantial contributor to achieving the company's strategic vision. |
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| 4 | |
Which one of the following is not something to look for in identifying what strategy a company is pursuing? |
| | A) | Its actions to enter new geographic or products markets (or exit existing ones). |
| | B) | Its actions to merge with or acquire another company and to form strategic alliances and collaborative partnerships |
| | C) | Its actions to strengthen its competitive capabilities and correct competitive weaknesses |
| | D) | Its actions to revise its strategic vision and strategic intent |
| | E) | The actions and approaches that define how R&D, production, sales and marketing, finance, and other key activities are being managed |
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| 5 | |
The best explanation of why a company's strategy evolves over time is that |
| | A) | it is a bad idea to do too much strategizing until a company has been in business long enough to know what strategy will really work best. |
| | B) | most managers like to develop the strategy in bits and pieces rather than all at once. |
| | C) | even a well-planned-out-in-advance strategy must be adapted to shifting market conditions, the fresh actions of competitors, changing customer preferences and expectations, emerging opportunities and threats, unforeseen events, and new managerial thinking about how to improve the present strategy. |
| | D) | many managers are conservative, preferring to respond slowly and cautiously to any new developments and to avoid the risks deciding on a final strategy too quickly. |
| | E) | a strategy does not really take on its final shape until a company has tried it out in the marketplace for a number of years and had ample time to fine-tune and adjust it based on its experiences with what worked well and what did not. |
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| 6 | |
A company's strategy can be considered "ethical" |
| | A) | if all of its different actions and elements are legal and in compliance with governmental rules and regulations. |
| | B) | so long as its actions and behaviors can pass the test of "moral scrutiny" and are aboveboard in the sense of not being shady or unconscionable, injurious to others, or unnecessarily harmful to the environment. |
| | C) | only if all elements of the strategy are in accord with what is generally considered as being in the overall best interests of society at large. |
| | D) | so long as religious authorities and noted ethics experts find nothing "wrong" in the company's actions. |
| | E) | if it in compliance with the company's code of ethics and has been approved by the company's chief ethics officer. |
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| 7 | |
Management's storyline for how and why the company's product offerings and competitive approaches will generate a revenue stream and have an associated cost structure that produces attractive earnings and returns on investment is |
| | A) | called a company's strategy. |
| | B) | referred to as a company's strategic intent. |
| | C) | referred to as a company's primary financial objective. |
| | D) | what a company's mission statement is all about. |
| | E) | referred to as a company's business model. |
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| 8 | |
Which of the following statements about a company's strategy is false? |
| | A) | A company's strategy is driven partly by management analysis and choice and partly by the necessity of adapting and learning by doing. |
| | B) | A company's strategy is less likely to produce a durable competitive edge over rivals if the strategy is based on having a distinctive product and more likely to produce a durable competitive edge over rivals if it is focused on building competitively valuable expertise and capabilities that are difficult for rivals to match. |
| | C) | A company's strategy is typically based partly on proactive actions by management to improve the company's market position and financial performance and partly on as-needed reactions to unanticipated developments and fresh market conditions. |
| | D) | Normally, companies have a narrow window of strategic freedom in choosing the hows of strategy because all competitors are facing the same market conditions and competitive pressures and, therefore, have to cope with them using very similar strategies. |
| | E) | A company's strategy is a work in progress, not a one-time management exercise. |
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| 9 | |
Which of the following statements concerning Microsoft's business model and Red Hat Linux's business model (as discussed in Company Spotlight 1.2) is false? |
| | A) | Microsoft has a proven business model while Red Hat Linux's business model is unproven. |
| | B) | Microsoft's business model involves employing a cadre of highly skilled programmers to develop proprietary code; keeping the source code hidden from customers/users, and locking them in to using Microsoft's proprietary software. |
| | C) | Most of Microsoft's costs arise on the front end in developing the software and are thus "fixed"; the variable costs of producing and packaging the CDs provided to users are only a couple of dollars per copy—once the breakeven volume is reached, Microsoft's revenues from additional sales are almost pure profit. |
| | D) | Red Hat relies on the collaborative efforts of volunteer programmers from all over the world who contribute bits and pieces of code to improve and polish the Linux system. |
| | E) | Red Hat's business model is predicated on closely guarding its source code while Microsoft is a strong advocate of open-source (or free) code. |
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| 10 | |
A winning strategy is one that |
| | A) | makes the company a market leader, is ethically and socially responsible, and maximizes profits. |
| | B) | is highly profitable and boosts the company's market share. |
| | C) | passes the profitability test, the ethics and social responsibility test, the customer satisfaction test, and the shareholder wealth test. |
| | D) | fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance. |
| | E) | passes the ethical standards test, the competitive advantage test, and the profitability test. |
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| 11 | |
Which one of the following is not one of the five interrelated and integrated phases of the managerial process of crafting and executing a company's strategy? |
| | A) | Developing a strategic vision |
| | B) | Developing a business model |
| | C) | Setting objectives and crafting a strategy to achieve them |
| | D) | Monitoring developments, evaluating performance, and initiating corrective adjustments in the company's long-term direction, objectives, strategy, or execution |
| | E) | Implementing and executing the chosen strategy efficiently and effectively |
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| 12 | |
The difference between a company's mission statement and the concept of a strategic vision is that |
| | A) | the mission statement lays out the desire to make a profit, whereas the strategic vision addresses what strategy the company will employ in trying to make a profit. |
| | B) | a mission statement deals with "where we are headed " whereas a strategic vision provides the critical answer to "how will we get there?" |
| | C) | a mission deals with what a company is trying to do and a vision concerns what a company ought to do. |
| | D) | a mission statement typically identifies a company's present business scope and purpose ("who we are, what we do, and why we are here"), whereas a strategic vision primarily concerns the company's future business scope ("where we are going and why"). |
| | E) | a mission is about what to accomplish for shareholders whereas a strategic vision concerns what to accomplish for customers. |
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| 13 | |
Which of the following is not one of the factors company managers should consider in deciding to commit the company to one directional path versus another? |
| | A) | Are changes presently under way in the market and competitive landscape acting to enhance or weaken the company's business outlook? |
| | B) | Where should we head in order to keep our strategy working well and demonstrate that our business model is viable? |
| | C) | Will the company's present business generate sufficient growth and profitability in the years ahead to please shareholders? |
| | D) | What, if any, new customer groups and/or geographic markets should the company get in position to serve? |
| | E) | What are our ambitions for the company—what industry standing do we want the company to have? |
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| 14 | |
Which one of the following is not a characteristic of an effectively-worded strategic vision statement? |
| | A) | Directional (says something about the company's journey and destination and the kinds of business and strategic changes that will be forthcoming) |
| | B) | Inspirational (is so motivational and stirring that it garners enthusiastic and energetic support from company personnel and shareholders) |
| | C) | Graphic (paints a clear picture of the kind of company management is trying to create) |
| | D) | Easy to communicate (ideally, explainable in 10 minutes) |
| | E) | Focused and flexible (has specifics but stops short of a once-and-for-all-time pronouncement because the strategic path may need to be changed as events unfold) |
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| 15 | |
Which of the following is not a common shortcoming of company vision statements? |
| | A) | Vague or incomplete—short on specifics |
| | B) | Too reliant on such superlatives as best, most successful, recognized leader, global or worldwide leader, first choice of buyers) |
| | C) | Too long and wordy—is described in a paragraph or two, instead of a short, snappy phrase |
| | D) | Not distinctive—could apply to most any company (or at least several others in the same industry) |
| | E) | So broad that it really doesn't rule out pursuing most any opportunity management spots |
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| 16 | |
Which of the following statements about objectives and objective-setting is not accurate? |
| | A) | According to the balanced-scorecard approach to objective-setting, a company should have both financial and strategic objectives but company's managers are nonetheless well-advised to give the achievement of financial objectives a much higher priority than the achievement of strategic objectives because achieving acceptable financial results is a must. |
| | B) | The surest path to boosting company profitability quarter after quarter and year after year is to relentlessly pursue strategic outcomes that strengthen the company's market position and produce a growing competitive advantage over rivals. |
| | C) | A "balanced scorecard" that includes both strategic and financial performance targets is a conceptually strong approach for judging a company's overall performance because a company's financial performance measures are really lagging indicators that reflect the results of past decisions and organizational activities whereas a company's strategic performance measures are reliable leading indicators of its future financial performance. |
| | D) | Objectives should be set at high enough levels to stretch an organization to reach its full potential. |
| | E) | A company's objectives function as yardsticks for tracking an organization's performance and progress and should be quantifiable or measurable and contain a deadline for achievement. |
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| 17 | |
The task of crafting a company's strategy is |
| | A) | the function and responsibility of a few high-level executives. |
| | B) | more of a collaborative group effort that involves all managers and sometimes key employees striving to arrive at a consensus on what the overall best strategy should be. |
| | C) | the function and responsibility of a company's strategic planning staff. |
| | D) | a job for a company's whole management team—senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making pyramid shown in Figure 1.4). |
| | E) | first and foremost the function and responsibility of a company's board of directors. |
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| 18 | |
Which one of the following statements about a company's strategy is false? |
| | A) | A company's strategy is really a collection of strategic initiatives and actions devised by managers and key employees up and down the whole organization. |
| | B) | A company's strategic intent consists of its strategic vision, its strategic objectives, and its strategy. |
| | C) | When a company has diversified and operates a group of businesses, then its overall strategy consists of corporate strategy, business-level strategies, functional strategies, and operating strategies. |
| | D) | consists of its diversification strategy, line of business strategies, and operating strategies. |
| | E) | A single-business company's strategy hierarchy consists of business strategy, functional strategies, and operating strategies. |
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| 19 | |
Which one of the following is not among the chief duties/responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? |
| | A) | Instituting a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests, most especially those of shareholders |
| | B) | Being inquiring critics and exercising strong oversight over the company's strategic direction, the major elements of its strategy, and the business approaches that management is using to implement and execute the strategy |
| | C) | Overseeing the company's financial accounting and financial reporting practices |
| | D) | Taking over the strategy-making reins when a company gets in financial difficulty and/or when board members believe that top executives are not doing a good job of supervising the strategy execution process |
| | E) | Evaluating the caliber of senior executives' strategy-making/strategy-executing skills |
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| 20 | |
The most trustworthy signs of a well-managed company are |
| | A) | a strong emphasis on achieving the company's strategic intent, a balanced scorecard approach to objective-setting, and a profitable business model. |
| | B) | a set of ambitious stretch objectives, a strategy matched to fast-evolving market conditions, bigger profit margins than rivals, and a steady upward trend in net income. |
| | C) | consistent achievement of the company's financial and strategic objectives. |
| | D) | having a profitable business model, a willingness to change the company's business model whenever circumstances warrant, and a sustainable competitive advantage. |
| | E) | good strategy-making combined with good strategy execution. |
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