QUIZ strategic management concepts &cases 11th edition by Fred R. David

1. The Nature of Strategic Management
The term _________ is used to refer to strategy formulation,
implementation, and evaluation, with _________referring only to
strategy formulation.
strategic planning; strategic management
assessment; planning
strategic management; strategic planning
management cycle; brainstorming
Which of these requires a firm to establish annual objectives,
devise policies, and allocate resources?
Strategy formulation
Strategy implementation
Strategy manipulation
Strategy evaluation
The rationale for periodically conducting strategic-management
meetings away from the work site is to encourage more
_____________ and ____________ among participants.
feedback; rigidity
creativity; candor
confidence; self-interest
strategy evaluation; candor
Anything that a firm does especially well compared to rival firms is
referred to as:
competitive advantage.
comparative advantage.
an external opportunity.
opportunity cost.
Both military and business organizations do all of the following
except:
use of the element of surprise.
aim "to gain competitive advantage."
use the assumption of conflict to develop strategies.
use their own strengths to exploit competitors' weaknesses.
__________ help an organization gather, analyze, and organize
information.
Ethics officers
Operatives
Lobbyists
Strategists
A disadvantage of international operations is:
foreign operations can allow firms to establish low-cost production
facilities in locations close to raw materials and/or cheap labor.
economies of scale can be achieved from operation in global
rather than solely domestic markets.
competitors in foreign markets may not exist.
language, culture, and value systems differ among countries,
causing communication barriers and problems managing
people.
_________ are especially critical for successful strategy
implementation.
Interpersonal skills
Technical plans
Long-range plans
Short-range plans
9. All of these are pitfalls an organization should avoid in strategic
planning except:
using strategic planning to gain control over decisions and
resources.
failing to involve key employees in all phases of planning.
hastily moving from mission development to strategy formulation.
using plans as a standard for measuring performance.
____________ and __________ refer to economic, social,
cultural, demographic, environmental, political, legal,
governmental, technological, and competitive trends and events
that could significantly benefit or harm an organization in the
future.
Internal strengths; external threats
External opportunities; external threats
Internal weaknesses; external opportunities
Internal strengths; internal weaknesses
Strategic management can be defined as the art and science of
formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives.
True
The action stage of strategic management is called strategy
formulation.
False
Three fundamental strategy evaluation activities are reviewing
external and internal factors, measuring performance, and taking
corrective actions.
True
Strategies can be defined as specific results that an organization
seeks to achieve in pursuing its basic mission.
False
Strategies are the means by which long-term objectives will be
achieved.
Reasons for poor or no strategic planning on part of firms include
overconfidence, too expensive, suspicion, and laziness.
True
Objectives are an organization's statements that answer the
question "what do we want to become?"
False
An organization can pursue any and/or all strategies that
potentially could benefit the firm.
False
No organization can pursue all the strategies that potentially could
benefit the firm.
Communication is an act of strengthening employees' sense of

2. effectiveness by encouraging them to participate in decision
making and to exercise initiative and imagination, and rewarding
them for doing so.http://www.vuzs.net/
False
Empowerment is the act of strengthening employees' sense of
effectiveness by encouraging and rewarding them to participate in
decision making and exercise initiative and imagination.
Strategic management must be a self-reflective learning process.
True
One pitfall to avoid in strategic planning is top management
making many intuitive decisions that conflict with formal planning.
True
Sample Comprehensive Exam
Chapters 1 – 5
True/False
1. A vision statement answers the question, “What is our
business?,” whereas a mission statement answers, “What do we
want to become?”
Ans: F Page: 10-11
2. The changes that occurred at Disney after Robert Iger took over
as CEO exemplifies the fact that more and more organizations are
centralizing the strategic-management process.
Ans: F Page: 16
3. In multidivisional organizations, each division should develop a
mission statement independent of the parent company.
Ans: F Page: 63
4. According to Vern McGinnis, to be effective, all a mission
statement need to do is define what the organization is and what
the organization aspired to be.
Ans: F Page: 63
5. It is predicted that, by 2025, over 18% of the population in the
United States will be over 65 years old.
Ans: T Page 88
6. The first step for using Porter’s Five-Forces Model is to
evaluate the relative strength of each competitive force.
Ans: F Page 101
7. Metaphors are handed-down narratives of some wonderful
event that is based on history but has been embellished with
fictional detail.
Ans: F Page 127
8. Benchmarking is an analytical tool used to determine whether a
firm’s value chain activities are competitive compared to rivals.
Ans: T Page 157
9. Since a combination strategy is not risky, many organizations
pursue a combination of two or more strategies simultaneously.
Ans: F Page: 171
10. Most companies favor related diversification strategies in
order to exploit common use of a well-known brand name.
Ans: T Page 180
Multiple Choice
11. What can be defined as the art and science of formulating,
implementing and evaluating cross-functional decisions that
enable an organization to achieve its objectives?
a. Strategy formulation
b. Strategy evaluation
c. Strategy implementation
d. Strategic management
e. Strategic leading
12. During what stage of strategic management are a firm’s
specific internal strengths and weaknesses determined?
a. Formulation
b. Implementation
c. Evaluation
d. Feedback
e. Goal-setting
13. Anything that a firm does especially well compared to rival
firms is referred to as _____.
a. competitive advantage
b. comparative advantage
c. opportunity cost
d. sustainable advantage
e. an external opportunity
14. The trends in newspaper circulation in the United States
provide support for which statement?
a. Sustainable competitive advantage is easy to maintain.
b. Several firms can have similar competitive advantages.
c. Some products are relatively immune to changes in the external
environment
d. Most competitive advantages are hard to sustain
e. Competition is generally good for companies and consumers
15. In which phase of strategic management are annual objectives
especially important?
a. Formulation
b. Control
c. Evaluation
d. Implementation
e. Management
16. Principles of conduct that guide decision-making are known as
_____.
a. human rights
b. the Constitution
c. business ethics
d. nonprofit organization policies
e. social responsibility requirements

3. 17. Which of these basic questions should a vision statement
answer?
a. What is our business?
b. Who are our employees?
c. Why do we exist?
d. What do we want to become?
e. Who are our competitors?
18. What is the first step in the comprehensive strategic-
management model?
a. Developing vision and mission statements
b. Performing external audits
c. Performing internal audits
d. Measuring and evaluating performance
e. Establishing long-term objectives
19. According to the comprehensive strategic-management
model, which step needs to be completed immediately following
the establishment of long-term objectives?
a. Developing vision and mission statements
b. Performing external audits
c. Performing internal audits
d. Generating, evaluating, and selecting strategies
e. Measuring and evaluating performance
20. What is the best time to develop a mission statement?
a. Before a business is opened
b. When the firm is successful
c. When the firm is in financial trouble
d. When the firm is in legal trouble
e. When the firm encounters competition
21. A proactive environmental policy is likely to lead to _____.
a. higher cleanup costs
b. conservation of energy
c. reduced customer loyalty
d. numerous liability suits
e. higher medical costs
22. Which of these examples of a mission statement’s focus area
is not effective?
a. AT&T focuses on communication rather than telephones.
b. Exxon/Mobil focuses on oil and gas rather than energy.
c. Union Pacific focuses on transportation rather than railroads.
d. Universal Studios focuses on entertainment rather than movies.
e. Starbucks focuses on the café experience rather than coffee.
23. Which type of trend is exemplified by the increasing numbers
of two-income households in America?
a. Social
b. Economic
c. Cultural
d. Technological
e. Historical
24. In general, what happens to American goods in overseas
markets when there is a strong dollar?
a. Less expensive
b. More attractive
c. Cheaper
d. More expensive
e. Desirable
25. 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
26. Who is the largest exporter to the United States?
a. Mexico
b. China
c. Canada
d. United Kingdom
e. Japan
27. The term that refers to the EU’s effort to end competitive tax
breaks among member countries is _____.
a. double taxation
b. taxation bias
c. equity taxation
d. tax reconciliation
e. tax harmonization
28. According to Porter, what is usually the most powerful of the
five competitive forces?
a. Potential development of substitute products
b. Bargaining power of suppliers
c. Bargaining power of consumers
d. Rivalry among competing firms
e. Potential entry of new competitors
29. A standardized, detailed set of techniques and behaviors that
manage anxieties, but seldom produce intended, technical
consequences of practical results are called _____.
a. folktales
b. rites
c. metaphors
d. rituals
e. values
30. What are historical narratives describing the unique
accomplishments of a group and its leaders, usually in heroic
terms?
a. Rites
b. Sagas
c. Stories
d. Myths
e. Folktales
31. Which function of management includes areas such as job
design, job specification, job analysis and unity of command?

4. a. Planning
b. Organizing
c. Motivating
d. Staffing
e. Controlling
32. Which of the following is the process of influencing people to
accomplish specific objectives?
a. Staffing
b. Motivating
c. Planning
d. Controlling
e. Organizing
33. Which decision concerns determining the best capital
structure for the firm and includes examining various methods by
which the firm can raise capital?
a. Investment
b. Dividends
c. Financing
d. Capital budgeting
e. Implementation
34. What category of ratios measures how effectively a firm can
maintain its economic position in the growth of the economy and
industry?
a. Profitability
b. Liquidity
c. Leverage
d. Activity
e. Growth
35. Budget Rent-a-Car opening car rental shops in Wal-Mart
stores is an example of which type of strategy?
a. Forward integration
b. Backward integration
c. Horizontal integration
d. Related diversification
e. Unrelated diversification
36. Advanced Medical Optics using acquisitions to obtain all
medical aspects of eye care, from laser surgery to contacts to
implants for all ages is an example of which type of strategy?
a. Forward integration
b. Backward integration
c. Horizontal integration
d. Market development
e. Product development
37. In which situation would horizontal integration be an especially
effective strategy?
a. When an organization can gain monopolistic
characteristics in a particular area or region without being
challenged by the federal government for “tending
substantially” to reduce competition.
b. When an organization competes in a slowing industry.
c. When decreased economies of scale provide major competitive
advantages.
d. When an organization has neither the capital nor human talent
needed to successfully manage an expanded organization.
e. When competitors are succeeding due to managerial expertise
or having particular resources an organization possesses.
38. Win-Dixie closing one-third of its stores and eliminating 22,000
jobs in an attempt to emerge from bankruptcy would be an
example of _____.
a. divestiture
b. backward integration
c. liquidation
d. retrenchment
e. forward integration
39. According to Porter, which strategy offers products or services
to a small range of customers at the lowest price available on the
market?
a. Low-cost
b. Best-value
c. Low-cost focus
d. Best-value focus
e. Differentiation
40. Which strategy would be most appropriate when the distinctive
competencies of two or more firms complement each other
especially well?
a. Conglomerate diversification
b. Divestiture
c. Joint venture
d. Retrenchment
e. Integration
59.The term “environment” includes all of the following except:
a.air.
b.water.
c.firms.
d.natural resources.
e.fauna.
Ans: c Page: 4
60. The one factor that has most significantly impacted the nature
and core of buying and selling in nearly all industries has been
a.the Internet.
b.political borders.
c.corporate greed.
d.customer and employee focus.
e.the government.
Ans: a Page: 4
What Is Strategic Management?
61. What can be defined as the art and science of formulating,
implementing and evaluating cross-functional decisions that
enable an organization to achieve its objectives?
a.Strategy formulation
b.Strategy evaluation

5. c.Strategy implementation
d.Strategic management
e. Strategic leading
Ans: d Page: 5
62. ____________ is used to refer to strategic formulation,
implementation and evaluation, with ______________ referring
only to strategic formulation.
a.Strategic planning; strategic management
b.Strategic planning; strategic processing
c.Strategic management; strategic planning
d.Strategic management; strategic processing
e.Strategic implementation; strategic focus
Ans: c Page: 5
63. During what stage of strategic management are a firm’s
specific internal strengths and weaknesses determined?
a.Formulation
b.Implementation
c.Evaluation
d.Feedback
e.Goal-setting
Ans: a Page: 5
64. An important activity in __________ is taking corrective action.
a.strategy evaluation
b.strategy implementation
c.strategy formulation
d.strategy leadership
e.all of the above
Ans: a Page: 6
65. What step in the strategic development process involves
mobilizing employees and managers to put strategies into action?
a.Formulating strategy
b.Strategy evaluation
c.Implementing strategy
d.Strategic advantage
e.Competitive advantage
Ans: c Page: 6
66. What types of skills are especially critical for successful
strategy implementation?
a.Interpersonal
b.Marketing
c.Technical
d.Conceptual
e.Thinking
Ans: a Page: 6
67. Which phase of strategic management is called the action
phase?
a.Strategy formulation
b.Strategy implementation
c.Strategy evaluation
d.Allocating resources
e.Measuring performance
Ans: b Page: 6
68. __________ is not a strategy-implementation activity.
a.Taking corrective actions
b.Establishing annual objectives
c.Devising policies
d.Allocating resources
e.Motivating employees
Ans: a Page: 6
69. Strategy evaluation is necessary because
a.internal and external factors are constantly changing.
b.the SEC requires strategy evaluation.
c.competitors change their strategies.
d.the IRS requires strategy evaluation.
e.firms have limited resources.
Ans: a Page: 6
70. Which statement best describes intuition?
a.It represents the marginal factor in decision-making.
b.It represents a minor factor in decision-making integrated with
analysis.
c.It should be coupled with analysis in decision-making.
d.It is better than analysis in decision-making.
e.It is management by ignorance.
Ans: c Page: 7
71. _________ and _________ are external forces transforming
business and society today.
a.E-commerce; strategy
b.E-commerce; globalization
c.Strategy; globalization
d.Corporate culture; stakeholders
e.Stakeholders; strategy
Ans: b Page: 8
72. Anything that a firm does especially well compared to rival
firms is referred to as:
a.competitive advantage.
b.comparative advantage.
c.opportunity cost.
d.sustainable advantage.
e.an external opportunity.
Ans: a Page: 8
Key Terms in Strategic Management
73. The trends in newspaper circulation in the United States
provide support for which statement?
a.Sustainable competitive advantage is easy to maintain.
b.Several firms can have similar competitive advantages.
c.Some products are relatively immune to changes in the external
environment
d.Most competitive advantages are hard to sustain
e.Competition is generally good for companies and consumers
Ans: d Page 9
74. Which individuals are most responsible for the success and

6. failure of an organization?
a.Strategists
b.Financial planners
c.Personnel directors
d.Stakeholders
e.Human resource managers
Ans: a Page: 10
75. The first step in strategic planning is generally:
a.Developing a vision statement
b.Establishing goals and objectives
c.Making a profit
d.Developing a mission statement
e.Determining opportunities and threats
Ans: a Page: 10
76. What are enduring statements of purpose that distinguish one
business from other similar firms?
a.policies
b.mission statements
c.objectives
d.rules
e.employee conduct guidelines
Ans: b Page: 10
77. The largest company in the world is:
a.Honda Motor
b.ING Group
c.Wal-Mart
d.Ford Motor Company
e.Royal Dutch/Shell Group
Ans: d Page: 10
78. Usually, external opportunities and threats are:
a.uncontrollable by a single organization.
b.controlled by governments.
c.not as important as internal strengths and weaknesses.
d.key functions in strategy implementation.
e.key functions in strategy exploitation.
Ans: a Page: 12
79. Specific results an organization seeks to achieve in pursuing
its basic mission are:
a.strategies
b.rules
c.objectives
d.policies
e.mission
Ans: c Page: 13
80. Internal __________ are activities in an organization that are
performed especially well.
a.opportunities
b.competencies
c.strengths
d.management
e.factors
Ans: c Page: 13
81. What are the means by which long-term objectives will be
achieved?
a.strategies.
b.strengths.
c.weaknesses.
d.policies.
e.opportunities.
Ans: a Page: 13
82. Long-term objectives should be all of the following except:
a.measurable.
b.continually changing.
c.reasonable.
d.challenging.
e.consistent.
Ans: b Page: 13
83. __________ can best be described as short-term in nature.
a.Mission statements
b.Tenure
c.Annual objectives
d.Strategies
e.Management
Ans: c Page: 13
84. In which phase of strategic management are annual objectives
especially important?
a.formulation
b.control
c.evaluation
d.implementation
e.management
Ans: d Page: 13
85. What are guides to decision making?
a.laws
b.rules
c.policies
d.procedures
e.goals
Ans: c Page: 13
The Strategic-Management Model
86. The strategic-management process
a.occurs once a year.
b.is a sequential process.
c.is a continuous process.
d.applies mostly to companies with sales greater than $100
million.
e.applies mostly to small businesses
Ans: c Page: 13
87. Which of the following is not included in the strategic
management model?

7. a.Measure and evaluate performance.
b.Perform internal research to identify customers.
c.Establish long-term objectives.
d.Implement strategies.
e.Develop mission and vision statements.
Ans: b Page: 14
Benefits of Strategic Management
88. Strategic management enables an organization to
__________, instead of companies just responding to threats in
their business environment.
a.be proactive
b.determine when the threat will subside
c.avoid the threats
d.defeat their competitors
e.foresee into the future
Ans: a Page: 16
89. The act of strengthening employees’ sense of effectiveness by
encouraging and rewarding them to participate in decision-making
and exercise initiative and imagination is referred to as:
a.Authoritarianism
b.Proaction
c.Empowerment
d.Transformation
e.Delegation
Ans: c Page: 16
90. How do line managers become “owners” of the strategy?
a.by attending top manager meetings
b.by gathering information about competitors
c.by involvement in the strategic-management process
d.by becoming a shareholder of the firm
e.by buying off top managers
Ans: c Page: 16
91. The changes that occurred when Robert Iger took over the
reigns at Disney, demonstrate which current trend in
organizations?
a.increased formalization of the strategic management process
b.increased structuring of strategic management
c.increased decentralizing of strategic management
d.increased emphasis on strategic planning
e.increased central planning of the strategic management process
Ans: c Page 16
92. According to research, organizations using strategic
management are __________ than those that do not.
a.more profitable
b.more complex
c.less profitable
d.less static
e.less complex
Ans: a Page: 17
93. According to Greenley, strategic management offers all of
these benefits except that
a.it provides an objective view of management problems.
b.it creates a framework for internal communication among
personnel.
c.it encourages a favorable attitude toward change.
d.it maximizes the effects of adverse conditions and changes.
e.it gives a degree of discipline and formality to the management
of a business.
Ans: d Page: 17- 18
Why Some Firms Do No Strategic Planning
94. What is not a reason given for poor or no strategic planning in
organizations?
a.Wasting of time
b.Being content with success
c.Fire-fighting
d.Poor reward structure
e.Trust of management
Ans: e Page: 18-19
Pitfalls in Doing Strategic Planning
95. All of these are pitfalls an organization should avoid in
strategic planning except:
a.using plans as a standard for measuring performance.
b.using strategic planning to gain control over decisions and
resources.
c.failing to involve key employees in all phases of planning.
d.too hastily moving from mission development to strategy
formulation.
e.being so formal in planning that flexibility and creativity are
stifled.
Ans: a Page: 19
96. What is not a pitfall an organization should avoid in strategic
planning?
a.Failing to communicate the plan to employees
b.Involving all managers rather than delegating planning to a
“planner”
c.Top managers not actively supporting the strategic planning
process
d.Doing strategic planning only to satisfy accreditation or
regulatory requirements
Ans: b Page: 19
97. Which of the following statements is false?
a.Open-mindedness is an important guideline for effective
strategic management.
b.Strategic management must become a self-perpetuating
socialist mechanism.
c.No organization has unlimited resources.
d.Strategic decisions require trade-offs.
e.Strategic management must be a self-reflective learning
process.
Ans: b Page: 20
Business Ethics and Strategic Management
98. Principles of conduct that guide decision-making are known as

8. a.human rights.
b.the Constitution.
c.business ethics.
d.nonprofit organization policies.
e.social responsibility requirements.
Ans: c Page: 20
99. A (n) ____________ can provide a basis on which policies can
be devised to guide daily decisions and behavior at the work site.
a.list of guidelines
b.policy for safety
c.vision statement
d.code of business ethics
e.annual objective
Ans: d Page: 23
100.Because they must take the __________ of the firm,
strategists’ salaries are high compared to those of other
individuals in the organization.
a.moral risks
b.social risks
c.environmental risks
d. societal criticism
e. employee criticism
Ans: a Page: 23
101.What can be created by ethics training and an ethics culture?
a.Competitive responsibility
b.Competitive advantage
c.Strategic advantage
d.Employee cooperation
e.Comparative advantage
Ans: c Page: 25
102.Which of these business actions is (are) always considered to
be unethical?
a.poor product or service safety
b.using nonunion labor in a union shop
c.dumping flawed products in a foreign market
d.insider trading
e.all of the above
Ans: e Page: 25
103.Ethical standards come out of __________ in a final analysis.
a.government
b.competitors
c.history and heritage
d.stakeholder analysis
e.community involvement
Ans: c Page: 25
Comparing Business and Military Strategy
104.A strong __________ heritage underlies the study of strategic
management.
a.military
b.government
c.political
d.social
e.cultural
Ans: a Page: 25
105.Military strategy is based on an assumption of __________,
whereas business strategy is based on an assumption of
__________.
a.conflict; cooperation
b.conflict; competition
c.cooperation; conflict
d.competition; conflict
e.cooperation; competition
Ans: b Page: 26
The Nature of Global Competition
106.____________ are organizations that conduct business
operations across national borders.
a.Domestic firms
b.Multinational corporations
c.Parent companies
d.Government-backed companies
e.Franchises
Ans: b Page: 28
107.A(n) __________ refers to a firm investing in international
operations, while the _________ is the country where that
business is conducted.
a.parent company; host country
b.home country; parent company
c.parent country; host company
d.host company; home country
e.exporting company; importing company
Ans: a Page: 28
108.The greatest advantage of international operations is:
a.Reduced tariffs and taxes
b.Spreading economic risks over a wider number of markets
c.Access to global technology, culture and business practices
d.Gaining new customers
e.Less-intense competition
Ans: d Page: 28
109.All of these are potential disadvantages of an international
operation except:
a.overestimated weaknesses and underestimated strengths of
competitors.
b.differing languages, cultures and value systems.
c.reduced tariffs and taxes.
d.complexity due to a multiple monetary system.
e.all of these are potential disadvantages.
Ans: c Page: 29