Deck 9: Strategy Review, Evaluation, and Control

Question 1

Financial ratios are rarely used as criteria to evaluate strategies.

Answer 1

False

Question 2

According to Richard Rumelt, consonance and consistency are mostly based on a firm's external assessment.

Answer 2

False

Question 3

Measuring organizational performance includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives.

Answer 3

True

Question 4

It is most effective to conduct strategy evaluation annually, at the end of the fiscal year.

Question 5

Criteria for evaluating strategies should be measurable and easily verifiable.

Question 6

Competitive advantages normally are the result of superiority in one of three areas: feasibility, consistency, or consonance.

Question 7

Most quantitative evaluation criteria are geared to long-term objectives rather than annual objectives.

Question 8

Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored.

Question 9

According to Rumelt, consistency and feasibility are largely based on a firm's internal assessment.

Question 10

Intuitive judgments are almost always involved in deriving quantitative criteria.

Question 11

Strategy evaluation should have a long-run focus and avoid a short-run focus.

Question 12

Changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and MIS strengths and weaknesses should all be the focus of a revised EFE matrix in strategy evaluation.

Question 13

The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is more difficult today.

Question 14

Regardless of the size of the organization, a certain amount of "management by wandering around" at all levels is essential to effective strategy evaluation.

Question 15

Strategies may be inconsistent if policy problems and issues continue to be brought to the top for resolution.

Question 16

In strategy evaluation, a revised IFE matrix should indicate how effective a firm's strategies have been in response to key opportunities and threats.

Question 17

Consistency, distinctiveness, advantage, and feasibility are Richard Rumelt's four criteria for evaluating a strategy.

Question 18

Strategy evaluation is becoming increasingly easier with the passage of time, given technological advances.

Question 19

Strengths, weaknesses, opportunities, cost and threats should continually be monitored for change because it is not really a question of whether these factors will change, but rather when they will change and in what ways.

Question 20

When measuring organizational performance, you need to compare expected results to actual results.

Question 21

Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm's objectives.

Question 22

Timely approximate information is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present.

Question 23

Alternative strategies not selected for implementation should be discarded, as they have a tendency to contaminate the contingency plans.

Question 24

The most admired electronics company in 2011 was Tyco International.

Question 25

Strategists should try to cover all bases by planning for all possible contingencies.

Question 26

Alvin Toffler argues that environments are becoming so dynamic and complex that they threaten people and organizations with future shock, in his thought-provoking books entitled Future Shock and The Third Wave.

Question 27

The Balanced Scorecard approach deals with the question, "How satisfied are the firm's customers?"

Question 28

Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.

Question 29

The form of a Balanced Scorecard does not vary for different organizations or industries.

Question 30

Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated.

Question 31

Small organizations require a more elaborate and detailed strategy-evaluation system because they are still evolving.

Question 32

Future shock occurs when the nature, type, and speed of changes overpower an individual's or organization's ability and capacity to adapt.

Question 33

Each year, Fortune publishes strategy-evaluation research on both the United States and other countries.

Question 34

Organizations should prepare contingency plans just for unfavorable events.

Question 35

There is no one ideal strategy-evaluation system for all organizations.

Question 36

The test of an effective evaluation system is its complexity.

Question 37

Measuring organizational performance requires making changes to reposition a firm competitively for the future.

Question 38

According to research, participation in strategy-evaluation activities is one of the best ways to overcome individuals' resistance to change.

Question 39

Contingency plans should be as simple as possible.

Question 40

Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving stated objectives.

Question 41

What is the cornerstone of effective strategy evaluation?

A) Adequate and timely feedback
B) Quality and quantity of managers
C) Smaller ratio of top- to lower-level management
D) Evaluation preceding implementation stage
E) Punitive corrective actions

Question 42

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

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

Question 43

All of the following are reasons strategy evaluation is more difficult today EXCEPT

A) a dramatic increase in the environment's complexity
B) the increasing number of variables
C) the increase in the number of both domestic and world events affecting organizations
D) the decreasing difficulty of predicting the future with accuracy
E) the rapid rate of obsolescence of even the best plans

Question 44

Competitive advantage normally is the result of superiority in resources, skills, and

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

Question 45

Too much emphasis on evaluating strategies

A) may be expensive and counterproductive.
B) is not possible - the more emphasis the better.
C) is good for morale, as employees like being closely evaluated.
D) is always advised if the firm can afford it.
E) is worse than too little or no evaluation.

Question 46

The U.S. Chamber of Commerce is against the accounting switch from GAAP to IFRS, saying it will cause cross-border commerce to decline.

Question 47

Which of the following is NOT a reason for the increasing difficulty of evaluating strategies?

A) Product life cycles are longer.
B) Domestic and world economies are less stable.
C) Product development cycles are shorter.
D) Technological advancement is more rapid.
E) Change is occurring more frequently.

Question 48

IFRS standards comprise 25,000 pages, whereas GAAP standards comprise 5,000 pages.

Question 49

The strategic management process should be completely open because participation and openness enhance understanding, commitment, and communication within the firm.

Question 50

The accounting switch from GAAP to IFRS in the U.S. is going to cost businesses millions of dollars in fees and upgraded software systems and training.

Question 51

Success today

A) guarantees success tomorrow.
B) is no guarantee of success tomorrow.
C) should lull a firm into complacency.
D) is all that really matters.
E) none of the above.

Question 52

The U.S. Chamber of Commerce supports the change from GAAP to IFRS, saying it will help the U.S. compete in the world economy.

Question 53

According to Rumelt, the final broad test of strategy is its

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

Question 54

Identifying both beneficial and unfavorable events that could possibly derail the strategy or strategies is the first step of effective contingency planning.

Question 55

Increased education and diversity of the workforce at all levels are reasons why the top-down approach should be favored in organizations.

Question 56

Unless the timetable is changed, all companies will be required to use the IFRS procedures in 2011.

Question 57

Public accounting firms usually avoid strategy-evaluation services.

Question 58

With the passage of time strategy evaluation is becoming

A) increasingly difficult.
B) much simpler.
C) very convenient.
D) an unnecessary activity.
E) less important.

Question 59

Which of these is a basic activity of strategy evaluation?

A) Reviewing the underlying bases of current strategies
B) Comparing expected results with actual results
C) Taking corrective actions
D) Choices B and C only
E) All of the above

Question 60

A frequently used tool in strategy evaluation is the audit.

Question 61

Which of these is NOT a key financial ratio?

A) Market share
B) Production quality
C) Earnings per share
D) Asset growth
E) Return on equity

Question 62

Quantitative criteria commonly used to evaluate strategies are

A) ash budgets.
B) Balanced Scorecards.
C) Capital Asset Pricing Models.
D) financial ratios.
E) present value analyses.

Question 63

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

Question 64

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

Question 65

According to author Alvin Toffler, what occurs when the nature, types, and speed of changes overpower an individual's or organization's ability and capacity to adapt?

A) Corporate insecurity
B) Corrective actions
C) Future shock
D) Corporate agility
E) Projected performance

Question 66

What corrective actions might a firm take during strategy evaluation?

A) Revising the business mission
B) Issuing stock
C) Revising objectives
D) Selling a division
E) All of the above

Question 67

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

Question 68

What term refers to the need for strategists to examine sets of trends, as well as individual trends, in evaluating strategies?

A) Consistency
B) Consonance
C) Synergy
D) Feasibility
E) Advantage

Question 69

Financial ratios are used to compare a firm's performance over different time periods, to compare the firm's performance to industry averages, and to compare a firm's performance with

A) overall business standards.
B) projected goals.
C) the performance of suppliers.
D) non-financial ratios.
E) the performance of competitors.

Question 70

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

Question 71

Strategy-evaluation activities should ideally be performed

A) just on a periodic basis.
B) only at the onset of a problem.
C) on a continuous basis.
D) solely upon completion of major projects.
E) annually only.

Question 72

Most quantitative criteria are geared to ________ objectives rather than ________ objectives.

A) top-management; employee
B) short-term; annual
C) annual; long-term
D) environmental; community
E) profit; social

Question 73

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

Question 74

Modern organizational realities demand that employees demonstrate greater

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

Question 75

Changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and MIS strengths and weaknesses should be the focus of a revised

A) mission.
B) IFE matrix.
C) vision.
D) EFE matrix.
E) EPM matrix.

Question 76

Corrective actions should always

A) strengthen an organization's competitive position in its industry.
B) streamline asset holdings.
C) have no risk.
D) involve abandoning existing strategies.
E) all of the above

Question 77

Also important in evaluating strategies are ________ criteria, like high absenteeism and turnover rates, or low employee satisfaction.

A) numerical
B) qualitative
C) quantitative
D) accounting
E) financial

Question 78

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.

Question 79

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

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

Question 80

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