Deck 7: The Basics of Planning and Strategic Management

Question 1

Following a differentiation strategy implies that the business should have little concern for costs.

Answer 1

False

Question 2

Liquidation is when a company sells or divests itself of a business or part of a business.

Answer 2

False

Question 3

Procedures and rules may be thought of as low-level policies.

Answer 3

True

Question 4

Rules like procedures have to specify sequence.

Question 5

Planning provides a means for actively involving personnel from all areas of the organization in the management of the organization.

Question 6

Contingency plans can be prepared for all possibilities.

Question 7

Planning enables a manager or an organization to actively affect rather than passively accept the future.

Question 8

Tactical plans are prepared to address the what-ifs of the manager's job.

Question 9

Concentric diversification refers to diversification into related fields.

Question 10

Companies that use the focus strategy direct their attention to a narrow market segment.

Question 11

Defensive strategies are used when the organization wants to expand its operations.

Question 12

Divestiture occurs when the entire company is sold or dissolved.

Question 13

The basic purpose of a differentiation strategy is to deliver the product or service for a lower cost than the competition.

Question 14

MBO is a philosophy based on converting personal objectives into organizational objectives.

Question 15

Procedures ignore details.

Question 16

Objectives should be set higher than can be attained.

Question 17

A business strategy is narrower in scope than a corporate strategy.

Question 18

MBO is also known as goals management.

Question 19

Growth is aggressive and quick under a stability strategy.

Question 20

Intermediate plans are derived from long-range plans and short-range plans are derived from intermediate plans.

Question 21

An organization facing major environmental threats with weak internal resources should adopt a defensive strategy.

Question 22

._____ reflect(s)a firm's position in its marketplace.

A) Earnings per share
B) Profit-to-sales ratio
C) Unit volume in sales
D) Ratio of inputs to outputs
E) Capital structure

Question 23

Before deciding if a strategic change is necessary or desirable,the past and present strategies used by the organization need to be clearly identified.

Question 24

Grand strategies are the means by which business strategies are operationalized.

Question 25

The _____ criteria offer helpful guidelines for stating and writing objectives.

A) SMART
B) BCG matrix
C) REAN
D) AIDA
E) SWOT analysis

Question 26

Which of the following refers to the process of deciding what objectives to pursue during a future time period and what to do to achieve those objectives?

A) Implementing
B) Evaluating
C) Planning
D) Appraising
E) Controlling

Question 27

An organization's current structure places certain restrictions on strategy implementation.

Question 28

Which of the following is true of planning?

A) Most planning is carried out on a formal basis.
B) Planning should not involve personnel from all areas of the organization.
C) Planning enables a manager or an organization to passively affect rather than actively accept the future.
D) Planning needs of an organization are independent of the environment, size, and type of business.
E) Long-range planning is possible at any level in the organization.

Question 29

Which of the following is true about strategic planning?

A) It is analogous to short-range planning.
B) It is the planning process applied at the highest levels of the organization.
C) It concentrates on the formulation of functional plans.
D) It is done primarily by lower-level managers.
E) Production schedules are an example of strategic planning.

Question 30

Which of the following is true about contingency plans?

A) Contingency planning is most needed in static environments.
B) Contingency plans can be prepared for all possibilities.
C) They help the manager to be prepared if something does go wrong.
D) They are analogous to top-level, long-range planning.
E) They help managers plan for routine situations.

Question 31

Which of the following is true of objectives?

A) Objectives should be realistic and challenging.
B) Secondary objectives relate directly to profit.
C) Individual objectives apply to specific units of the organization.
D) All objectives in an organization are of same importance.
E) Objectives should have an unlimited time frame.

Question 32

Successful strategic management does not involve the different levels in the organization.

Question 33

The development of functional strategies requires the active participation of many levels of management.

Question 34

The formulation stage of the strategic management process involves developing the corporate- and business-level strategies to be pursued.

Question 35

_____ address the what-ifs of the manager's job.

A) Contingency plans
B) Strategic plans
C) Functional plans
D) Operational plan
E) Tactical plans

Question 36

Long-range organizational objectives should derive from the mission statement.

Question 37

It is possible to prepare a formal plan with a well-defined strategy and not practice strategic management.

Question 38

If a strategy does not fit with the current organizational policies,the conflicting policies must be modified.

Question 39

Which of the following is true about management by objectives (MBO)?

A) It assumes that achieving self-formulated objectives will reduce job performance.
B) It is a philosophy that prioritizes personal objectives and ignores organizational objectives.
C) It works best when the objectives of each organizational unit are derived from the objectives of the next higher unit in the organization.
D) It requires the top management to be solely responsible for the objective-setting process.
E) It originated from the writings of Frederick Taylor.

Question 40

Primary objectives of an organization relate directly to _____.

A) social responsibility
B) profits
C) departmental objectives
D) employees
E) customer service

Question 41

Which of the following is true of a business strategy?

A) It addresses which businesses the organization will be in and how resources will be allocated among those.
B) It is also known as a grand strategy.
C) It is wider in scope than a corporate strategy.
D) It consists of growth, stability, diversification, or concentration strategies.
E) It generally applies to a single business unit.

Question 42

Which of the following is true of a differentiation strategy?

A) Businesses that adopt this strategy should have little concern for costs.
B) It promises a high market share.
C) It aims at lowering a customer's sensitivity to price.
D) This is a type of retrenchment strategy.
E) Under this strategy, organizations charge lower-than-average prices.

Question 43

_____ is a type of retrenchment strategy.

A) Turnaround
B) Diversification
C) Vertical integration
D) Merger and acquisition
E) Cannibalization

Question 44

Which of the following is true of diversification?

A) It is a substrategy of the retrenchment strategy.
B) Concentric diversification is diversification into unrelated areas.
C) It should be adopted by an organization facing major environmental threats with strong internal resources.
D) It aims to make the product or service unique in its category, thus permitting the organization to charge higher-than-average prices.
E) An organization that faces positive market opportunities but is constrained by relatively weak internal resources should adopt this strategy.

Question 45

Which of the following is one among the five major forces in the competitive or industry environment as proposed by Michael Porter?

A) Employees
B) Stockholders
C) Suppliers
D) Labor unions
E) Government

Question 46

_____ occurs when a company moves into areas it previously served either as a supplier to or as a customer for its current products or services.

A) Horizontal integration
B) Vertical integration
C) Diversification
D) Retrenchment strategy
E) Concentration strategy

Question 47

An example of growth strategy is _____.

A) turnaround
B) liquidation
C) divestiture
D) diversification
E) differentiation

Question 48

The third primary level of strategy is _____ strategy.

A) corporate
B) competitive
C) stability
D) functional
E) defensive

Question 49

Which of the following is true of an organization's mission?

A) Defining mission is not crucial for an organization.
B) Customers have no role in determining an organization's mission.
C) An organization's name, statutes, or articles of incorporation define the purpose more clearly than customer satisfaction.
D) An organization's mission outlines why the organization exists.
E) It is the narrowest and lowest level of objectives.

Question 50

Which of the following is true of SWOT analysis?

A) It is a tool used to formulate an organization's mission statement.
B) Broad environmental factors are those that are close to an organization.
C) An organization's strengths and weaknesses are identified by methodically assessing the organization's external environment.
D) It provides a general overview of whether the overall situation is healthy or unhealthy.
E) Broad environmental factors consist of stockholders, suppliers, competitors, labor unions, customers, and potential new entrants.

Question 51

An organization's _____ is the broadest and highest level of objectives.

A) mission
B) rule
C) procedure
D) policy
E) functional strategy

Question 52

The five forces model of competition is a tool developed by Michael Porter to help managers analyze their _____.

A) competitive environment
B) economic environment
C) mission statement
D) corporate governance
E) social responsibility

Question 53

Corporate strategies are known as _____.

A) great strategies
B) contingency strategies
C) grand strategies
D) guerilla strategies
E) composite strategies

Question 54

An organization that faces very positive market opportunities but is constrained by relatively weak internal resources should opt for the _____ strategy.

A) turnaround
B) vertical integration
C) liquidation
D) aggressive
E) diversification

Question 55

Which of the following is true of stability strategies?

A) Growth is not possible under a stability strategy.
B) They are used when a company wants or needs to reduce its operations.
C) Under this strategy, organizations can adopt concentration strategy, diversification, or vertical integration.
D) They will be successful in unchanging or very slowly changing environments.
E) Growth is quick and aggressive under this strategy.

Question 56

An organization facing several environmental opportunities with numerous internal strengths should adopt a(n)_____ strategy.

A) aggressive
B) liquidation
C) turnaround
D) divestiture
E) cannibalization

Question 57

_____ are a part of an organization's broad environment.

A) Stockholders
B) Suppliers
C) Competitors
D) Customers
E) Political trends

Question 58

Which of the following is true of strategic management?

A) It is the application of the basic planning process at the lowest levels of the organization.
B) Through the strategic management process, lower-levels of management determine the long-run direction and performance of the organization.
C) Middle- and lower-level managers should be excluded from strategic management.
D) It is possible to prepare a formal plan with a well-defined strategy and not practice strategic management.
E) It ensures that the strategic plans that are developed are independent of the changes that occur internally and in the environment.

Question 59

_____ aims to make the product or service unique in its category,thus permitting the organization to charge higher-than-average prices.

A) Diversification
B) Divestiture
C) Differentiation
D) Turnaround
E) Vertical integration

Question 60

Which of the following is true of functional strategies?

A) They are wider in scope than business strategies.
B) They are primarily concerned with how to compete in a given business.
C) They support the business strategies.
D) They are in effect for a relatively long period.
E) They are also called competitive strategies.

Question 61

The strategy formulation phase of the strategic management process begins with _____.

A) analyzing the organizational factors
B) choosing a functional strategy
C) choosing a corporate strategy
D) developing the short-range objectives
E) identifying the mission

Question 62

What is a strategic business unit (SBU)?

Question 63

_____ strategies are the means by which business strategies are operationalized.

A) Functional
B) Stability
C) Defensive
D) Diversification
E) Vertical integration

Question 64

Elaborate on the SMART criteria used for stating and writing objectives.

Question 65

_____ is a distinct business that has its own set of competitors and can be managed reasonably independently of other businesses within the organization.

A) Shell corporation
B) Dummy corporation
C) Holding company
D) Business cluster
E) Strategic business unit

Question 66

The _____ strategy is adopted when an organization has weak internal resources and has to face major environmental threats.

A) concentration
B) differentiation
C) diversification
D) defensive
E) aggressive

Question 67

Which of the following is true of strategic business units (SBU)?

A) They are highly dependent on the other businesses within the organization.
B) The elements of an SBU remain identical across organizations.
C) They lack their own set of competitors.
D) They exclude single divisions, subsidiaries, or single product lines.
E) In a small organization, the entire company may be an SBU.

Question 68

Why should planning involve personnel from all areas of the organization?

Question 69

While evaluating and controlling the strategic plan,organizations _____.

A) identify past and present strategies
B) diagnose present performance
C) determine and implement an appropriate organizational structure
D) create mission statement
E) monitor progress toward long-range objectives and mission

Question 70

The last step in the strategy formulation phase of the strategic management process is _____.

A) identifying organizational mission
B) conducting SWOT analysis
C) identifying past and present strategies
D) diagnosing past and present performance
E) selecting a corporate strategy from various alternatives

Question 71

How do organizational factors affect strategic implementation?

Question 72

Explain the three major phases that compose the strategic management process.

Question 73

Define corporate strategy and list the four basic types of corporate strategy an organization can adopt.

Question 74

What are the steps involved in SWOT analysis?

Question 75

During the implementation phase of the strategic management process,organizations typically _____.

A) identify their mission
B) set their long-run objectives
C) choose a corporate strategy
D) choose an appropriate organizational structure
E) identify past and present strategies

Question 76

Elaborate on the five forces model of competition developed by Michael Porter.

Question 77

Differentiate business strategies from corporate strategies.

Question 78

Functional strategy is chosen during the _____ phase of the strategic management process.

A) formulation
B) implementation
C) evaluation
D) feedback
E) controlling

Question 79

Outline areas for establishing objectives in most organizations.

Question 80

Which of the following is true of functional strategies?

A) Functional strategies outline the specific long-range actions to be taken by the organization.
B) Functional strategies are initiated at the highest level in an organization.
C) Input by lower levels of management is essential to the successful implementation of functional strategies.
D) These strategies are chosen during the evaluation phase of the strategic management process.
E) They are also called competitive strategies.