Strategic Management
Assignment # 1
Please select the best
answer choice to each of the following questions.
1. The principal driver(s) of shareholder
value is (are)
A) profitability.
B) profit growth.
C) market share.
D) profitability and profit growth.
E) all of the above.
2. Which of the following is the
organization’s principal general manager?
A) Board of directors
B) Division head
C) CFO
D) CEO
E) Controller
3. Within a diversified company, the
responsibilities of corporate-level strategic managers include
A) translating the corporate mission
statement into concrete strategies for individual business units.
B) closely supervising the formulation of strategies
at the functional level that support the company’s business- and
corporate-level strategies.
C) allocating resources to functions within
business units.
D) overseeing the development of strategies
for the total organization and allocating resources among its different
business areas.
E) identifying and establishing
relationships with supplier firms.
4. Profit growth is best measured
A) by theincrease
in shareholder value.
B) by the return on investment.
C) month by month.
D) over time.
E) byincreases
in liquidity.
5. Functional managers
A) are responsible for the specific business
functions or operations that constitute a company or one of its divisions.
B) look at the overall picture of a
corporation.
C) have no strategic role.
D) formulate generic strategies.
E) execute business-level decisions.
6. The first step in the strategic
management process is
A) defining the mission and major goals of
the organization.
B) analyzing the macroenvironment.
C) analyzing the industry environment.
D) determining the firm’s strengths and
weaknesses.
E) deciding on a fit between the
organization’s strengths and weaknesses and the environment’s opportunities and
threats.
7. Maximizing shareholder value is
A) a byproduct of a company’s cost reduction
programs.
B) not generally a viable goal for a company.
C) not the responsibility of a company’s managers.
D) the ultimate goal of profit-making
companies.
E) not required to attract risk capital.
8. Aaron planned to cut prices at his
bicycle shop, but when a competing shop began to offer free repairs, Aaron decided
to copy them. Aaron’s new strategy (offer free repairs) is an example of a(n)
A) mistake.
B) emergent strategy.
C) deliberate strategy.
D) intended strategy.
E) unrealized strategy.
9. When considering emergent strategies, it
is important for a firm’s managers to
A) ensure that the chosen strategies are the
result of deliberate plans.
B) ignore strategies that are not the result
of a formal planning process.
C) evaluate each one carefully, using only
those that show the most promise.
D) substitute emergent strategies for formal
plans whenever possible.
E) develop the emergent strategies
themselves.
10. The scenario approach to strategic planning
involves
A) devising strategies for coping with a
number of different possible future states of the world.
B) homing in on a single prediction of future
demand conditions using an iterative planning process.
C) functional managers setting key corporate
objectives.
D) using computers to build virtual worlds
for top-level managers.
E) making planning the exclusive domain of
top-level managers.
11. A sustained competitive advantage
A) enables a company to maintain
above-average projects for a number of years.
B) cannot be maintained for more than three
years.
C) is seldom possible in today’s highly
competitive environment.
D) typically arises out of unforeseen
economic events.
E) A and D.
12. Which of the following cognitive biases
occurs when decisionmakers commit even more resources if they receive feedback
that the project is failing?
A) Prior hypothesis bias
B) Reasoning by analogy
C) Illusion of control
D) Escalating commitment
E) Representativeness
13. Which of the following cognitive biases
refers to the fact that decisionmakers who have strong prior beliefs about the
relationship between two variables tend to make decisions on the basis of these
beliefs, even when presented with evidence that their beliefs are wrong?
A) Prior hypothesis bias
B) Reasoning by analogy
C) Illusion of control
D) Escalating commitment
E) Representativeness
14. Feelings of personal responsibility for a
project are most likely to lead to
A) prior hypothesis biases.
B) escalating commitment.
C) reasoning by analogy.
D) representativeness.
E) groupthink.
15. Groupthink occurs when a group of
decisionmakers
A) engages in a brainstorming session
designed to produce strategic options.
B) deliberately attempts to bring critical
information to bear on the strategic decision process.
C) coalesces around commitment to a person or
a policy for emotional rather than rational reasons.
D) uses a devil’s advocate approach to
question strategic assumptions.
E) is composed ofexperts
in the decision they are facing.
16. Which of the following isnot a
characteristic of well-constructed goals?
A) They are precise and measurable.
B) They are the result of a group decision
process.
C) They specify a time period.
D) They are challenging but realistic.
E) They address critical issues.
17. A group of firms all make writing
implementspens, pencils, and markers. This group should be referred to as a(n)
A) substitute.
B) market segment.
C) sector.
D) supplier.
E) industry.
18. An industry can be defined as a group of
A) companies offering products or services
that are close substitutes for each other.
B) twenty or more companies offering products
or services that are close substitutes for each other.
C) companies.
D) companies that offer dissimilar products
or services.
E) companies that offer products or services
to dissimilar customers.
19. Which of the following isnot one of
Porter’s five forces, as proposed in his original model?
A) Threat of complementors
B) Bargaining power of suppliers
C) Rivalry among established companies
D) Threat of new entrants
E) Threat of market changes
20. Which of the following isnot a
barrier to entry?
A) Economies of scale
B) Brand loyalty
C) Absolute cost advantages
D) High customer bargaining power
E) High customer switching costs
21. If economies of scale are an industry’s
primary entry barrier, a new entrant’s major risk is
A) its inability to access labor and
materials.
B) theinferior
quality of its products.
C) its inability to match the innovation of
the established firm.
D) its inability to produce in sufficient
volume to match the cost advantages of established producers.
E) its inability to get buyers to switch to
its product.
22. As a barrier to new entry, absolute cost
advantages can be based on
A) continuous advertising of brand and
company names.
B) high product quality, service-oriented
innovations, and good after-sales service.
C) cost reductions that arise from the mass
production of standardized output.
D) the unique ability of established
companies to spread fixed costs over a large volume.
E) control over low-cost inputs required for
production, be they labor, materials, equipment, or management skills.
23. The extent of rivalry among established
companies is lowest when
A) the industry’s product is a commodity.
B) demand is growing rapidly.
C) exit barriers are substantial.
D) the industry is entering a decline stage.
E) the industry is dominated by a small
number of large companies.
24. The risk of a price war is greatest in
which of the following circumstances?
A) A high-growth industry
B) An industry characterized by falling
demand, high exit barriers, and excess productive capacity
C) An industry characterized by a
commodity-type product, strong demand, and low exit barriers
D) A mature industry during an economic
upturn
E) An industry characterized by tacit price
agreements
25. The bargaining power of an industry’s
suppliers is greater when
A) the supply industry is fragmented.
B) switching costs are high.
C) the industry buys in large quantities.
D) many substitutes are available.
E) firms in the industry can threaten
backward vertical integration.
26. Sales of complementors’ products tend to
A) increase sales of the industry’s product.
B) decrease sales of the industry’s product.
C) have no effect on sales of the industry’s
product.
D) increase sales of substitute products.
E) decrease sales of substitute products.
27. Economies of scale may arise from
A) cost reductions gained through mass
production.
B) discounts on bulk purchases of raw
material inputs and component parts.
C) advantages gained by spreading production
costs over a large production volume.
D) cost savings associated with spreading
marketing and advertising costs over a large volume of output.
E) all of the above.
28. Members of a strategic group
A) compete directly with members of other
strategic groups.
B) are affected by Porter’s five competitive
forces to the same degree that members of other strategic groups are affected.
C) follow a business model that is similar to
that pursued by other companies in the group.
D) earn the same rate of return.
E) move easily to other groups as desired.
29. A market segment is a group of
A) customers within a market that can be
different from each other on the basis of their distinct attributes and
specific demands.
B) companies that produce similar goods or
services.
C) customers within a market that purchase
goods or services in similar quantities.
D) customers within a market that have
similar levels of profitability.
E) none of the above.
30. Switching costs may arise when
A) changing from one computer system to
another.
B) substitute products are available at a
lower unit cost.
C) when there are a large number of interchangeable
products.
D) products are commodity-like in nature.
E) all of the above.
31. Common exit barriers include
A) investments in specific assets.
B) emotional attachments to an industry.
C) high fixed costs associated with leaving
the industry.
D) bankruptcy regulations.
E) all of the above.
32. Entry barriers in the embryonic stage are
frequently based on
A) brand loyalty.
B) economies of scale.
C) absolute cost advantages.
D) economies of scope.
E) technological know-how.
33. Growth industries
A) typically suffer from high mobility
barriers.
B) tend to be characterized by weak rivalry.
C) have high rivalry among established
companies.
D) increase prices because customers are more
aware of the industry’s product.
E) provide economies of scale to existing
companies.
34. An industry’s buyers have high bargaining
power when
A) buyers purchase in large quantities.
B) switching costs are low.
C) it is economically feasible for buyers to
purchase inputs from several companies at once.
D) buyers can threaten to enter an industry
and produce the product themselves.
E) all of the above.
35. Demand reaches total saturation in the
___________ stage of the industry life cycle.
A) embryonic
B) growth
C) shakeout
D) maturity
E) decline
36. The threat from new entrants is greatest in
the _________ stage of the industry life cycle.
A) embryonic
B) growth
C) shakeout
D) maturity
E) decline
37. Which of the following isnotone of
the factors in the economic forces of the macroenvironment?
A) Interest rates
B) Inflation
C) Regulation
D) Currency exchange rates
E) Economic growth rate
38. Suppliers in an industry are most powerful
when
A) there are few substitutes for the product
suppliers sell.
B) switching costs are low.
C) companies in the industry can threaten to
enter the suppliers’ industry.
D) substitute products are readily available.
E) all of the above.
39. Beverage makers are finding that water
sales are increasing due to consumers’ preferences for healthy drinks. Which
part of the macroenvironment does this represent?
A) Economic forces
B) Demographic forces
C) Embryonic forces
D) Political forces
E) Social forces
40. Eventually most industries enter a decline
stage where
A) growth becomes negative.
B) rivalry among established companies
usually decreases.
C) competitive pressures abate.
D) excess capacity declines.
E) demand continues to hold steady.
Strategic ManagementAssignment # 1Please select the best
answer choice to each of the following questions.1. The principal driver(s) of shareholder
value is (are)A) profitability.B) profit growth.C) market share.D) profitability and profit growth.E) all of the above.2. Which of the following is the
organization’s principal general manager?A) Board of directorsB) Division headC) CFOD) CEOE) Controller3. Within a diversified company, the
responsibilities of corporate-level strategic managers includeA) translating the corporate mission
statement into concrete strategies for individual business units.B) closely supervising the formulation of strategies
at the functional level that support the company’s business- and
corporate-level strategies.C) allocating resources to functions within
business units.D) overseeing the development of strategies
for the total organization and allocating resources among its different
business areas.E) identifying and establishing
relationships with supplier firms.4. Profit growth is best measuredA) by theincrease
in shareholder value.B) by the return on investment.C) month by month.D) over time.E) byincreases
in liquidity.5. Functional managersA) are responsible for the specific business
functions or operations that constitute a company or one of its divisions.B) look at the overall picture of a
corporation.C) have no strategic role.D) formulate generic strategies.E) execute business-level decisions.6. The first step in the strategic
management process isA) defining the mission and major goals of
the organization.B) analyzing the macroenvironment.C) analyzing the industry environment.D) determining the firm’s strengths and
weaknesses.E) deciding on a fit between the
organization’s strengths and weaknesses and the environment’s opportunities and
threats.7. Maximizing shareholder value isA) a byproduct of a company’s cost reduction
programs.B) not generally a viable goal for a company.C) not the responsibility of a company’s managers.D) the ultimate goal of profit-making
companies.E) not required to attract risk capital.8. Aaron planned to cut prices at his
bicycle shop, but when a competing shop began to offer free repairs, Aaron decided
to copy them. Aaron’s new strategy (offer free repairs) is an example of a(n)A) mistake.B) emergent strategy.C) deliberate strategy.D) intended strategy.E) unrealized strategy.9. When considering emergent strategies, it
is important for a firm’s managers toA) ensure that the chosen strategies are the
result of deliberate plans.B) ignore strategies that are not the result
of a formal planning process.C) evaluate each one carefully, using only
those that show the most promise.D) substitute emergent strategies for formal
plans whenever possible.E) develop the emergent strategies
themselves.10. The scenario approach to strategic planning
involvesA) devising strategies for coping with a
number of different possible future states of the world.B) homing in on a single prediction of future
demand conditions using an iterative planning process.C) functional managers setting key corporate
objectives.D) using computers to build virtual worlds
for top-level managers.E) making planning the exclusive domain of
top-level managers.11. A sustained competitive advantageA) enables a company to maintain
above-average projects for a number of years.B) cannot be maintained for more than three
years.C) is seldom possible in today’s highly
competitive environment.D) typically arises out of unforeseen
economic events.E) A and D.12. Which of the following cognitive biases
occurs when decisionmakers commit even more resources if they receive feedback
that the project is failing?A) Prior hypothesis biasB) Reasoning by analogyC) Illusion of controlD) Escalating commitmentE) Representativeness13. Which of the following cognitive biases
refers to the fact that decisionmakers who have strong prior beliefs about the
relationship between two variables tend to make decisions on the basis of these
beliefs, even when presented with evidence that their beliefs are wrong?A) Prior hypothesis biasB) Reasoning by analogyC) Illusion of controlD) Escalating commitmentE) Representativeness14. Feelings of personal responsibility for a
project are most likely to lead toA) prior hypothesis biases.B) escalating commitment.C) reasoning by analogy.D) representativeness.E) groupthink.15. Groupthink occurs when a group of
decisionmakersA) engages in a brainstorming session
designed to produce strategic options.B) deliberately attempts to bring critical
information to bear on the strategic decision process.C) coalesces around commitment to a person or
a policy for emotional rather than rational reasons.D) uses a devil’s advocate approach to
question strategic assumptions.E) is composed ofexperts
in the decision they are facing.16. Which of the following isnot a
characteristic of well-constructed goals?A) They are precise and measurable.B) They are the result of a group decision
process.C) They specify a time period.D) They are challenging but realistic.E) They address critical issues.17. A group of firms all make writing
implementspens, pencils, and markers. This group should be referred to as a(n)A) substitute.B) market segment.C) sector.D) supplier.E) industry.18. An industry can be defined as a group ofA) companies offering products or services
that are close substitutes for each other.B) twenty or more companies offering products
or services that are close substitutes for each other.C) companies.D) companies that offer dissimilar products
or services.E) companies that offer products or services
to dissimilar customers.19. Which of the following isnot one of
Porter’s five forces, as proposed in his original model?A) Threat of complementorsB) Bargaining power of suppliersC) Rivalry among established companiesD) Threat of new entrantsE) Threat of market changes20. Which of the following isnot a
barrier to entry?A) Economies of scaleB) Brand loyaltyC) Absolute cost advantagesD) High customer bargaining powerE) High customer switching costs21. If economies of scale are an industry’s
primary entry barrier, a new entrant’s major risk isA) its inability to access labor and
materials.B) theinferior
quality of its products.C) its inability to match the innovation of
the established firm.D) its inability to produce in sufficient
volume to match the cost advantages of established producers.E) its inability to get buyers to switch to
its product.22. As a barrier to new entry, absolute cost
advantages can be based onA) continuous advertising of brand and
company names.B) high product quality, service-oriented
innovations, and good after-sales service.C) cost reductions that arise from the mass
production of standardized output.D) the unique ability of established
companies to spread fixed costs over a large volume.E) control over low-cost inputs required for
production, be they labor, materials, equipment, or management skills.23. The extent of rivalry among established
companies is lowest whenA) the industry’s product is a commodity.B) demand is growing rapidly.C) exit barriers are substantial.D) the industry is entering a decline stage.E) the industry is dominated by a small
number of large companies.24. The risk of a price war is greatest in
which of the following circumstances?A) A high-growth industryB) An industry characterized by falling
demand, high exit barriers, and excess productive capacityC) An industry characterized by a
commodity-type product, strong demand, and low exit barriersD) A mature industry during an economic
upturnE) An industry characterized by tacit price
agreements25. The bargaining power of an industry’s
suppliers is greater whenA) the supply industry is fragmented.B) switching costs are high.C) the industry buys in large quantities.D) many substitutes are available.E) firms in the industry can threaten
backward vertical integration.26. Sales of complementors’ products tend toA) increase sales of the industry’s product.B) decrease sales of the industry’s product.C) have no effect on sales of the industry’s
product.D) increase sales of substitute products.E) decrease sales of substitute products.27. Economies of scale may arise fromA) cost reductions gained through mass
production.B) discounts on bulk purchases of raw
material inputs and component parts.C) advantages gained by spreading production
costs over a large production volume.D) cost savings associated with spreading
marketing and advertising costs over a large volume of output.E) all of the above.28. Members of a strategic groupA) compete directly with members of other
strategic groups.B) are affected by Porter’s five competitive
forces to the same degree that members of other strategic groups are affected.C) follow a business model that is similar to
that pursued by other companies in the group.D) earn the same rate of return.E) move easily to other groups as desired.29. A market segment is a group ofA) customers within a market that can be
different from each other on the basis of their distinct attributes and
specific demands.B) companies that produce similar goods or
services.C) customers within a market that purchase
goods or services in similar quantities.D) customers within a market that have
similar levels of profitability.E) none of the above.30. Switching costs may arise whenA) changing from one computer system to
another.B) substitute products are available at a
lower unit cost.C) when there are a large number of interchangeable
products.D) products are commodity-like in nature.E) all of the above.31. Common exit barriers includeA) investments in specific assets.B) emotional attachments to an industry.C) high fixed costs associated with leaving
the industry.D) bankruptcy regulations.E) all of the above.32. Entry barriers in the embryonic stage are
frequently based onA) brand loyalty.B) economies of scale.C) absolute cost advantages.D) economies of scope.E) technological know-how.33. Growth industriesA) typically suffer from high mobility
barriers.B) tend to be characterized by weak rivalry.C) have high rivalry among established
companies.D) increase prices because customers are more
aware of the industry’s product.E) provide economies of scale to existing
companies.34. An industry’s buyers have high bargaining
power whenA) buyers purchase in large quantities.B) switching costs are low.C) it is economically feasible for buyers to
purchase inputs from several companies at once.D) buyers can threaten to enter an industry
and produce the product themselves.E) all of the above.35. Demand reaches total saturation in the
___________ stage of the industry life cycle.A) embryonicB) growthC) shakeoutD) maturityE) decline36. The threat from new entrants is greatest in
the _________ stage of the industry life cycle.A) embryonicB) growthC) shakeoutD) maturityE) decline37. Which of the following isnotone of
the factors in the economic forces of the macroenvironment?A) Interest ratesB) InflationC) RegulationD) Currency exchange ratesE) Economic growth rate38. Suppliers in an industry are most powerful
whenA) there are few substitutes for the product
suppliers sell.B) switching costs are low.C) companies in the industry can threaten to
enter the suppliers’ industry.D) substitute products are readily available.E) all of the above.39. Beverage makers are finding that water
sales are increasing due to consumers’ preferences for healthy drinks. Which
part of the macroenvironment does this represent?A) Economic forcesB) Demographic forcesC) Embryonic forcesD) Political forcesE) Social forces40. Eventually most industries enter a decline
stage whereA) growth becomes negative.B) rivalry among established companies
usually decreases.C) competitive pressures abate.D) excess capacity declines.E) demand continues to hold steady.
