Question 1

In an EFE Matrix, opportunities often receive higher weights than threats, but threats too can receive high weights if they are especially severe or threatening.

Accepted Answer

This is because EFE (External Factor Evaluation) Matrix is used to evaluate the external opportunities and threats facing a company, and opportunities are generally viewed as positive factors that can help a company to achieve its objectives, while threats are viewed as negative factors that can undermine a company's performance. However, if a particular threat is considered to be very severe or threatening, it may receive a higher weight in the EFE matrix.

Question 2

________ is NOT part of an external audit.
A) Analyzing competitors
B) Analyzing financial ratios
C) Analyzing available technologies
D) Studying the political environment
E) Analyzing social, cultural, demographic and natural environment forces

Accepted Answer

Analyzing financial ratios is typically part of an internal audit, focusing on the company's internal financial performance, rather than external factors.

Question 3

A total weighted score of 1.0 for an EFE Matrix indicates that the firm is responding in an outstanding way to existing opportunities and threats in its industry.

Accepted Answer

The answer of A total weighted score of 1.0 for...

Question 4

The critical success factors in a Competitive Profile Matrix and EFE Matrix include both internal and external issues.

Accepted Answer

The Competitive Profile Matrix (CPM) focuses on external factors, while the EFE Matrix (External Factor Evaluation) also focuses on external factors. Internal factors are evaluated in the IFE Matrix (Internal Factor Evaluation).

Question 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.

Accepted Answer

The process of performing an external audit should involve as many managers and employees as possible, as they can provide unique insights and perspectives on the organization's operations and performance. This helps to ensure that the audit is comprehensive and covers all aspects of the organization. Additionally, involving a broader range of individuals in the audit process can help to build buy-in and support for any recommendations or changes that emerge from the audit.

Question 6

Freund emphasizes that key external factors should be all of these EXCEPT
A) important to achieving long-term and annual objectives.
B) measurable.
C) relatively few in number.
D) applicable to all competing firms.
E) hierarchical in the sense that some will pertain to the overall company while others will be more narrowly focused.

Accepted Answer

The answer of Freund emphasizes that key external factors should...

Question 7

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

Accepted Answer

To perform an external audit, a company must gather competitive intelligence and information about external trends to thoroughly evaluate their performance and identify potential opportunities or threats. While performing an internal audit and developing a strategic plan may be important steps in the overall process, they are not necessary prerequisites for conducting an external audit. Approval from the Securities and Exchange Commission may be required for certain types of audits, but not necessarily for a general external audit. Therefore, option C is the best choice.

Question 8

It is predicted that the United States will have how many racial or ethnic majorities by the year 2075?
A) None
B) One
C) Two
D) Three
E) Five

Accepted Answer

Demographic changes and increasing diversity will lead to a more equal distribution of racial and ethnic groups in the United States, resulting in the absence of a clear majority. This prediction is based on current demographic trends and projections.

Question 9

The lingering high underemployment rate in the U.S. is an example of a(n)________ force affecting business.
A) social
B) economic
C) cultural
D) technological
E) historical

Accepted Answer

The high underemployment rate in the U.S. is directly related to economic factors such as recession, slow economic growth, and changes in industries, which impact businesses and their ability to hire new employees.

Question 10

Regardless of the number of key opportunities and threats included in an External Factor Evaluation Matrix, the highest possible total weighted score for an organization is 4.0, and the lowest possible total weighted score is 0.0.

Accepted Answer

The answer of Regardless of the number of key opportunities...

Question 11

The United States' population is
A) getting younger and less white.
B) getting younger and more white.
C) getting older and less white.
D) getting older and more white.
E) remaining stable as to age and racial make up.

Accepted Answer

According to recent census data, the median age of the US population has been increasing, and the white population has been decreasing as a percentage of the overall population. Therefore, the correct choice is C.

Question 12

The weights and total weighted scores in both a Competitive Profile Matrix and an EFE Matrix have the same meaning.

Accepted Answer

Both matrices use a scale of 1 to 4 (or 0 to 1) to weigh the importance of different factors, and the total weighted score is calculated by multiplying each factor's weight by its rating. Therefore, the weights and total weighted scores have the same meaning in both matrices.

Question 13

What happens when interest rates rise?
A) Discretionary income increases.
B) The demand for discretionary goods increases.
C) Discretionary income is unchanged.
D) The demand for discretionary goods decreases.
E) Discretionary income increases and the demand for discretionary goods decreases.

Accepted Answer

When interest rates rise, borrowing becomes more expensive, causing consumers to reduce their spending, particularly on non-essential, discretionary goods. This decrease in demand causes businesses to respond by reducing production and potentially lowering prices, leading to a decrease in revenue and possibly profits. Therefore, the demand for discretionary goods decreases.

Question 14

A Competitive Profile Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.

Accepted Answer

A Competitive Profile Matrix (CPM) is primarily used to evaluate a company's key competitors based on critical success factors, not to summarize and evaluate broad external factors like economic, social, or political information.

Question 15

Identifying and evaluating key social, political, economic, technological and competitive trends and events comprise
A) developing an effective mission statement.
B) conducting an internal audit.
C) performing an external audit.
D) formulating strategy.
E) implementing strategy.

Accepted Answer

Identifying and evaluating key social, political, economic, technological and competitive trends and events is part of an external audit, which is done to understand the opportunities and threats in the environment that a company operates in. This information can inform the company's strategy formulation. Therefore, the correct answer is performing an external audit.

Question 16

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

Accepted Answer

According to I/O (Industrial Organization) theory, the focus is on the external environment and how it influences a firm's performance. Internal resources (D) are considered less by I/O theorists, who emphasize factors like economies of scale, barriers to market entry, product differentiation, and the level of competitiveness in the industry as more significant contributors to a firm's success.

Question 17

The 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

Accepted Answer

The I/O (industrial organization) approach to competitive advantage emphasizes that the external factors, such as industry structure and competition, have a greater impact and importance in achieving competitive advantage than internal factors. This is because the external factors determine the potential profitability and attractiveness of an industry, and firms that can effectively navigate and leverage these external factors can achieve sustained competitive advantage.

Question 18

The world population is expected to grow to an estimated ________ billion in 2054.
A) 6
B) 7
C) 8
D) 9
E) 10

Accepted Answer

The answer of The world population is expected to grow...

Question 19

What effect do trends in the dollar's value have on companies in different industries and in different locations?
A) Significant and equal
B) Marginal and equal
C) Significant and unequal
D) Insignificant and unequal
E) No significant impact

Accepted Answer

Trends in the dollar's value can have significant and unequal effects on companies in different industries and locations. For example, a strong dollar may negatively affect companies that export goods because their products become more expensive for foreign buyers. On the other hand, a strong dollar may benefit companies that import goods because it can reduce the cost of those goods. Additionally, companies that have significant foreign operations may be more heavily impacted by fluctuations in currency exchange rates. Therefore, the impact of the dollar's value varies depending on a company's industry and location, making option C the best choice.

Question 20

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.

Accepted Answer

When the dollar is strong, American goods become more expensive in overseas markets. This is because it takes more foreign currency to purchase the same amount of dollars needed to buy the American goods. This makes American goods less competitive and less attractive to foreign buyers.

Quiz 3: The External Assessment

In an EFE Matrix, opportunities often receive higher weights than threats, but threats too can receive high weights if they are especially severe or threatening.

________ is NOT part of an external audit.

A total weighted score of 1.0 for an EFE Matrix indicates that the firm is responding in an outstanding way to existing opportunities and threats in its industry.

The critical success factors in a Competitive Profile Matrix and EFE Matrix include both internal and external issues.

The process of performing an external audit needs to include

Freund emphasizes that key external factors should be all of these EXCEPT

To perform an external audit, a company first must

It is predicted that the United States will have how many racial or ethnic majorities by the year 2075?

The lingering high underemployment rate in the U.S. is an example of a(n) ________ force affecting business.

Regardless of the number of key opportunities and threats included in an External Factor Evaluation Matrix, the highest possible total weighted score for an organization is 4.0, and the lowest possible total weighted score is 0.0.

The United States' population is

The weights and total weighted scores in both a Competitive Profile Matrix and an EFE Matrix have the same meaning.

What happens when interest rates rise?

A Competitive Profile Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.

Identifying and evaluating key social, political, economic, technological and competitive trends and events comprise

According to I/O theorists, which of the following contributes LEAST to firm's performance?

The I/O approach to competitive advantage advocates that external factors are ________ internal factors in a firm achieving competitive advantage.

The world population is expected to grow to an estimated ________ billion in 2054.

What effect do trends in the dollar's value have on companies in different industries and in different locations?

In general, what happens to American goods in overseas markets when there is a strong dollar?