Question 1

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 first gather competitive intelligence and information about external trends. This will help the company understand their market and industry better, identify potential threats and opportunities, and determine the effectiveness of their current strategies. While performing an internal audit and hiring a consultant to develop a strategic plan are also important steps in the overall process of analyzing a company's operations, they are not prerequisites for conducting an external audit. Additionally, approval from the Securities and Exchange Commission would not be necessary for this type of audit.

Question 2

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, which decreases consumer spending overall. This means that the demand for discretionary goods, which are items that are not necessary for survival, decreases. Therefore, the correct answer is D - The demand for discretionary goods decreases.

Question 3

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 4

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

I/O theorists focus on external factors like market structure and competition, rather than internal resources, as primary determinants of a firm's performance.

Question 5

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 a significant impact on companies in different industries and locations. For example, a stronger dollar can positively affect industries that rely on imported raw materials or goods, while negatively affecting export-oriented industries. Companies located in countries with weaker currencies may also be negatively impacted by a stronger dollar. Thus, the impact can be significant and unequal across different industries and locations.

Question 6

________ 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

The answer of ________ is NOT part of an external...

Question 7

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 8

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 9

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 for overseas markets because it takes more of the foreign currency to purchase the same amount of dollars. This makes them less attractive to foreign buyers and can lead to a decrease in exports.

Question 10

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

By the year 2075, the United States is predicted to become a minority-majority country, meaning that no single racial or ethnic group will be in the majority. Therefore, option A, "none," is the correct answer.

Question 11

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 12

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 statement is true. In an EFE matrix, opportunities are generally given higher weights because they represent potential areas for growth and success. However, if a threat is particularly severe or poses a significant risk to the company, it may be given a higher weight than some of the opportunities.

Question 13

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 United States' population is getting older and less white. The median age has increased from 35.3 in 2000 to 38.4 in 2018, and the percentage of non-Hispanic white individuals has decreased from 69.1% in 2000 to 60.1% in 2019.

Question 14

The high unemployment 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 unemployment rate is directly related to economic conditions and can impact many aspects of business, such as consumer spending and demand for goods and services. The other forces listed (social, cultural, technological, historical) may also impact business, but are not directly connected to the unemployment rate.

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 performing an external audit, which involves analyzing the external environment to identify opportunities and threats for the organization. Developing an effective mission statement, conducting an internal audit, formulating strategy, and implementing strategy are all important components of the strategic management process, but they do not specifically involve analyzing the external environment.

Question 16

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 17

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

Accepted Answer

The answer of A Competitive Profile Matrix allows strategists to...

Question 18

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 suggests that external factors, such as the industry environment, are more important than internal factors in a firm achieving competitive advantage. This is because the industry environment determines the rules of competition and firms must adapt to these rules to succeed. In contrast, internal factors, such as resources and capabilities, are seen as necessary but not sufficient for competitive advantage.

Question 19

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

An external audit involves assessing an organization's performance and operations from an external perspective. It is therefore essential to involve as many managers and employees as possible to gather diverse viewpoints and obtain a comprehensive overview of the organization's activities.

Question 20

The critical success factors in a Competitive Profile Matrix are often the same as those in an EFE Matrix.

Accepted Answer

The answer of The critical success factors in a Competitive...

Quiz 3: The External Assessment

To perform an external audit, a company first must

What happens when interest rates rise?

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.

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

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

________ is NOT part of an external audit.

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

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.

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

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

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

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.

The United States' population is ________.

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

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

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

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

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

The process of performing an external audit needs to include

The critical success factors in a Competitive Profile Matrix are often the same as those in an EFE Matrix.