Deck 6: Strategic Management: How Exceptional Managers Realize a Grand Design

Question 1

Lily,the CEO of Beautiful Flowers,is interested in using strategic management in her florist shops nationwide.When she attended the workshop on strategic management,the speaker suggested to first establish the mission and the vision,second to assess the current reality,and third to formulate the grand strategy as the first three steps in the strategic-management process.

Answer 1

True
Explanation: The first three steps of the strategic-management process are (1)establish the mission and the vision, (2)assess the current reality,and (3)formulate the grand strategy (see Figure 6.1).

Question 2

According to Burt Nanus,"powerful mission and vision statements challenge and inspire people in the organization and help to align their energies in multiple directions."

Answer 2

False
Explanation: Burt Nanus says that a good vision statement helps align people's energies in a common direction,and prevents people from being overwhelmed by immediate problems because the vision statement helps distinguish what is truly important from what is merely interesting.

Question 3

The five steps of (1)establishing the mission and the vision, (2)assessing the current reality, (3)formulating the grand strategy, (4)implementing the strategy,and (5)maintaining strategic control and the feedback loop make up the organizational-management process.

Answer 3

False
Explanation: The strategic-management process has five steps,plus a feedback loop (see Figure 6.1): (1)establishing the mission and the vision, (2)assessing the current reality, (3)formulating the grand strategy, (4)implementing the strategy,and (5)maintaining strategic control and the feedback loop.

Question 4

Frank is interested in rewriting the vision for his antique shops,and he wants his employees and his business to grow.So the vision for Frank's stores should be positive and inspiring,and it should stretch the company and his employees to achieve objectives that they believe are not possible.

Question 5

Jiffy Lube provides only lubricants,but it provides them to all kinds of people with all kinds of motor vehicles.This is an example of how a strategic position can result from serving the few needs of many customers.

Question 6

ABC Bowling Centers has a policy of opening locations only in small cities,where there are broad needs and many customers.This is one source of strategic positioning.

Question 7

Most strategies are compatible.Therefore,organizations need only to choose what strategies to follow.

Question 8

Developing a program focused on individual aspects of an organization for short-term success is the focus of strategic planning.

Question 9

A 2013 survey found that the use of mission and vision statements is popular among managers.

Question 10

Writer Geoffrey Colvin stated that successful managers need to be able to make large,painful decisions and radically alter their business design,such as "exiting businesses,firing people,admitting you were wrong (or at least not omniscient)."

Question 11

When Pablo and his partner wrote the mission for their fitness center,like any good mission statement it did not include descriptions of their customers or the products and services they offer.

Question 12

To provide direction and momentum,encourage new ideas,and develop a sustainable competitive advantage are reasons why an organization should adopt strategic management and strategic planning.

Question 13

The vision is an organization's purpose or reason for being,and a company's mission statement is its long-term goal of what it wants to become.

Question 14

Donna's Restaurant is a popular café that specializes in home-cooked meals,friendly service,and a menu that contains vegan and vegetarian dishes,something no other restaurant in the area does.Donna's is engaging in strategic positioning by offering the unique menu items of vegan and vegetarian dishes.

Question 15

The Strategic Management Society voted Michael Porter,a Harvard Business School professor,the most influential living economist.

Question 16

Sustainable competitive advantage occurs when an organization is able to get and stay ahead in being responsive to customers,in innovating,in quality,and in effectiveness.

Question 17

An analysis of several studies found that strategic planning was appropriate only for large firms and companies with more than 500 employees,where the improvement in financial performance was also quite large.

Question 18

Research has shown that companies seldom start utilizing strategic management after a crisis,but rather when profits are high and their industries become less competitive.

Question 19

A and B Supply,a small family-owned company,sells high-priced pens,some as expensive as $2,500,to executives in its area.Very few companies have chosen to market this product,and A and B has enjoyed record profits over the last 25 years.A and B Office Supply is an example of a company that would typically not choose not to utilize strategic planning.

Question 20

According to Harvard Business School professor Michael Porter,strategic positioning "means performing different activities from rivals,or performing similar activities in different ways" to achieve sustainable competitive advantage.

Question 21

Organizations use the three types of forecasting to make decisions regarding the future: trend analysis,scenario development,and contingency planning.

Question 22

The managers of a small bakery decided to do a SWOT analysis to study the strengths and weaknesses within the organization and the external environment so they can better formulate strategies in pursuit of the firm's mission.This defines the benefits of a SWOT analysis.

Question 23

The top management of Finest Papers has set a strategic goal of cutting costs over the next three years.Upper management is researching possible roadblocks within the company's structure and culture and if the right people and control systems are available to execute their strategic plans to accomplish this goal.This is an example of strategy implementation.

Question 24

Organizational threats are an environmental factor that can hinder an organization's ability to achieve a competitive advantage.

Question 25

Once Instructor Services,an IT company,analyzes the company's strengths,weaknesses,opportunities,and threats,managers will be able to do forecasting to develop a long-term strategy.

Question 26

Instructor Services,a technology training company,realizes that with the closing of factories in the area,there will be a large increase in the number of individuals needing computer training to prepare for the workplace.This is an opportunity for Instructor Services.

Question 27

To develop a grand strategy,you need to gather data and make projections,using the tools of competitive intelligence,SWOT analysis,forecasting,benchmarking,and Porter's five competitive forces.

Question 28

Recently Paul,the CEO of Stage Productions,felt the company's strategic plan is getting off track.Immediately he discussed this situation with the other members of the top management team and adjustments were made to correct the situation.To steer a strategic plan back on track,organizations should engage as few employees as possible and make the plan very specific,covering only the needed scenarios for the future.

Question 29

Competitive intelligence means gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately.

Question 30

Mona,the CEO of an auto dealership,told her managers that "based on the high sales for this year,the forecast for next year looks very good." So after completing their budget for the upcoming year,based on the forecast that predicts continued strong sales,Mona and her managers are developing a plan in case sales drop unexpectedly.This type of planning is known as contingency planning.

Question 31

A forecast is a vision or projection of the future.

Question 32

Sandra and her partner are involved in the time-consuming,yet vital process of choosing among different strategies and altering them to best fit the long-term goals of their preschool for the next three years.This process is known as goals formulation.

Question 33

An organization's vision is its short-term goals.

Question 34

A defensive strategy is a grand strategy that involves reduction in the organization's efforts.

Question 35

A stability strategy involves little or no significant change.

Question 36

At a time when many retailers are offering men's suits at cheap prices and reducing their quality to compete,Suave Clothing has continued to live by the tagline "Quality never goes out of style," believing that offering a quality product to the customer always will mean success.It has also aggressively focused on ways to reduce costs.Suave clothing is utilizing a stability strategy.

Question 37

The upper-level managers of Brooms International,a 120-year-old broom and mop manufacturing company,realize that their production facility is outdated.Therefore,they know their competitors,with newer production plants,have gained a competitive advantage over their organization.This is an example of an external weakness.

Question 38

Often strategy implementation means overcoming resistance by people who feel the plans threaten their influence or livelihood.

Question 39

Competitive intelligence,SWOT analysis,forecasting,benchmarking,and Porter's five competitive forces are all tools that can be used to gather data and make projections to develop a grand strategy.

Question 40

A growth strategy involves the increase in employee knowledge.

Question 41

Maria's Mart is a small store located along a major interstate highway that sells gas and diesel,food,souvenirs,DVD movies,and a wide variety of other items.There is even a café inside the store.Maria's Mart is an example of a diversification strategy.

Question 42

Humberto,the owner of a small floral shop,is worried because he recently heard that a popular local grocery store,just two blocks away,is adding a floral department soon.Humberto is concerned because new competitors can take away customers from existing organizations.

Question 43

Because all work ultimately entails some human interaction,effort,or involvement,Bossidy and Charan stated that focusing on organization synergy is the most important process in strategy execution.

Question 44

Sandra displays and sells paintings and local art in her gallery,and in the evenings she teaches art classes in the back of her studio,a business named Sandra's Art School.This is an example of related diversification.

Question 45

In general,the BCG matrix suggests that an organization will do better in fast-growing markets in which it has a high market share rather in slow-growing markets in which it has a low market share.

Question 46

Bossidy and Charan suggested that making realism a priority begins with leaders first being cautious and then being realistic only if the situation allows this.

Question 47

The basic assumption with a trend analysis is that the picture of the present can be projected into the future.This is a bad assumption,because even if you have enough historical data,it is unproductive to assume.

Question 48

Brilliante Pens,a 125-year-old pen manufacturer,has continued to market very high-quality pens,many over $1,000,to executives globally,always maintaining its reputation of superior value.Brilliante is an example of an organization utilizing a cost-focus strategy.

Question 49

According to the BCG matrix,organizations that have high growth and high market share are stars and should be kept.

Question 50

For over 20 years,ABC Manufacturing produced only one product,a car part for Moraine Assembly,the Moraine,Ohio,General Motors truck factory.So when GM closed the Moraine Assembly facility,ABC was an example of a vulnerable company.

Question 51

A trend analysis is a hypothetical extension of a past series of events into the future.

Question 52

In a single-product strategy,a company makes and sells only one product within its market,such as a farmer who grows and sells only corn.

Question 53

In the Porter's model for industry analysis,business-level strategies originate in the three primary competitive forces of the firm's environment: threats of new entrants,bargaining power of suppliers,and threats of substitute products.

Question 54

In the retail industry,time-series forecasts,a type of trend analysis,are used to predict long-term trends such as seasonal variations,as in Christmas sales versus summer sales.

Question 55

Nick,the R&D department manager of Precise,a manufacturer of high-quality watches for over 125 years,was told in a management meeting that the company's biggest competitor,Accurate Watches,is introducing a low-cost,yet attractive line of watches that will be sold in Walmart stores.As a result,the top management of Precise is pressuring Nick to lower the production costs on existing products and also to develop a line of watches that can be manufactured inexpensively to be marketed to a wider variety of customers at a much lower price.This is an example of a quality-leadership strategy.

Question 56

Contingency planning is also known as time management and compartmentalization.

Question 57

The concept that the economic value of separate,related businesses under one ownership and management is greater together than the businesses are worth separately is known as reduced risk.

Question 58

The Johnsons have owned a farm,Johnson Family Holdings Incorporated,for over 150 years.Al Johnson,president of Johnson Family Holdings,purchased a trucking company,shipping products for other farmers and businesses in their area.Later he opened a small store that carries a variety of products,and he even operates a small used auto dealership near the farm.This is an example of unrelated diversification.

Question 59

Contingency planning is a process by which a company compares its performance with that of high-performing organizations.

Question 60

Execution consists of questioning and putting issues on the back burner for a period of time to achieve results promised.

Question 61

Ben attended a workshop hosted by SCORE,a SBA organization that counsels small-business owners on developing a good vision statement.In that workshop the speakers discussed how an organization's vision needs to describe _____.

A)the organization's purpose or reason for being
B)what the company will market and its business plan
C)the organization's purpose or reason for being and its strategic intent
D)the ethical and diversity standards of the organization
E)what the company wants to become,and its long-term direction and strategic intent

Question 62

Tom is the CEO of Yost Tech,a large global manufacturing company,and he is having lunch with a longtime friend,Greg,owner of a small office supply store.Tom told Greg that "Strategic management and planning have really increased our success at Yost.I just read an article about an analysis of several studies that found that strategic management and planning _____."

A)helps only large companies
B)benefits mostly nonprofit organizations
C)makes performance gains inconsistent
D)boosts performance in small companies even more than large companies
E)benefits both small and large organizations

Question 63

Instructor Services is a technology company that offers many IT services in highly populated southern Ohio.Services and products include computer training,support,monitoring,repair,network design,virus removal,and software upgrades.It even sells refurbished computers.The source of Instructor Services' strategic position is _____.

A)low-profit margin and many customers
B)broad needs and few customers
C)broad needs and many customers
D)high-profit margin and many customers
E)high-profit margin and few customers

Question 64

The second step in the strategic-management process is to look at where the organization stands and see what is working and what could be different to maximize efficiency and effectiveness in achieving the organization's mission.This step is the process of completing a(n)_____.

A)organizational vision statement
B)company synergy assessment
C)current reality assessment
D)ethical and diversity evaluation
E)grand strategy

Question 65

One report reads that big companies,such as Amazon,Google,or Apple,"are no longer content simply to enhance part of your life.The new strategy is to build a device,sell it to consumers,and then ____."

A)send customers to partner retailers to supply content
B)sell them the content to play on their device
C)sell them the maintenance agreements for their devices
D)find service companies to assist customers if needed
E)focus on selling more items and devices to their friends and families

Question 66

Is it appropriate for the organization and for the times? Does it set standards of excellence and reflect high ideals? Is it ambitious? These are all questions that are answered in a good _____.

A)belief agreement
B)code of ethics
C)mission statement
D)vision statement
E)management belief statement

Question 67

Strategic position emerges from three sources: _____.

A)few needs,many customers;broad needs,few customers;broad needs,many customers
B)low-cost products;huge market needs;unique products
C)many needs,few customers;little need,many customers;narrow needs,few customers
D)poor products available;few products available;no products available
E)bad economy;strong economy;stable economy

Question 68

To provide direction and momentum,encourage new ideas,and develop a sustainable competitive advantage are reasons why an organization should adopt _____.

A)a diversity policy
B)a positive synergy agenda
C)strategic management and strategic planning
D)an aggressive cost-cutting plan
E)a strong business plan

Question 69

Bossidy and Charan stated that leaders who execute focus on many priorities and goals.

Question 70

A 2013 survey found that among managers,the use of _____ is popular.

A)mission and vision statements
B)organizational diversity
C)TQM
D)an autocratic discipline program
E)a synergy agenda

Question 71

In order,the steps of the strategic-management process are _____.

A)establish the mission and vision;assess the current reality;conduct a trend analysis;maintain the feedback loop
B)establish the mission;maintain strategic control;formulate the grand strategy;implement the strategy
C)establish the mission and vision;assess the current reality;formulate the grand strategy;implement the strategy;maintain strategic control
D)establish the vision;develop a mission statement;formulate the grand strategy;implement the strategy;maintain the feedback loop
E)determine the strategy;carry out the strategic plans

Question 72

Who are our customers? What are our major products or services? In what geographic areas do we compete? These are all questions that are answered in a good _____.

A)vision statement
B)code of ethics
C)mission statement
D)value pact
E)management belief statement

Question 73

With small businesses in very competitive industries,small differences in performance may affect that company's survival.So in this case,it is worth the effort to implement _______.

A)organizational diversity
B)a synergy agenda
C)MBO
D)TQM
E)strategic planning

Question 74

Developing a comprehensive program for long-term success is the focus of ____.

A)strategic planning
B)mission and vision statements
C)organizational diversity
D)TQM
E)a synergy agenda

Question 75

According to Harvard Business School professor Michael Porter,strategic positioning means _____ to achieve sustainable competitive advantage.

A)aggressive growth
B)distinctive positioning
C)collaborative planning
D)strategic alliances
E)retrenchment

Question 76

The growth,stability,and defensive strategies are ____.

A)leadership strategies
B)cost-leadership strategies
C)types of differentiation plans
D)stabilization strategies
E)common grand strategies

Question 77

In the strategic-management process,the final step,maintaining strategic control,is the source of _____.

A)the organizational mission
B)strategy formulation
C)the current reality assessment
D)feedback and evaluation
E)the planning process

Question 78

Access Office Equipment has shifted to sales and service of laptops and PCs,and is no longer offering repairs on older types of office equipment because the demand for service on this equipment is low,costly,and the profits have dropped significantly.This is an example of an organization implementing a ______.

A)growth strategy
B)cutting-edge strategy
C)stability strategy
D)defensive strategy
E)diverse strategy

Question 79

Organic Foods International has decided to increase its market share by hiring a marketing rep to visit businesses in the area and invite their employees to shop at Organic Foods and for monthly health events.The store also hired two new employees to handle the anticipated increase in customer traffic.Organic Foods is utilizing a _____.

A)cutting-edge strategy
B)stability strategy
C)defensive strategy
D)growth strategy
E)diverse strategy

Question 80

When an organization is able to get and stay ahead in the four areas of (1)being responsive to customers, (2)innovating, (3)quality,and (4)effectiveness,that company can develop ____.

A)company diversity
B)increased MBO
C)strong employee morale
D)an environment with few or no competitors
E)a sustainable competitive advantage