Test bank of fred r david – strategic management, 13th edition ch07

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Exam Name _ TRUE/FALSE Write 'T' if the statement is true and 'F' if the statement is false 1) An organization's present strategies, objectives and mission provide a basis for generating and evaluating feasible alternative strategies, coupled with the external and internal audit information 1) _ 2) A sustainability report provides information on a firm's social-responsibility practices 2) _ 3) Sustainability is the idea that a business can meet its financial goals without hurting customers 3) _ 4) The first stage of the strategy-formulation framework (the input stage), is followed by the decision stage 4) _ 5) Stage in the strategy-formulation framework involves the Quantitative Strategic Planning Matrix 5) _ 6) Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices 6) _ 7) The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework 7) _ 8) When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be completed before the SPACE Matrix 8) _ 9) The purpose of matching key factors is to generate feasible alternative strategies 9) _ 10) Strengths-opportunities strategies are based on using a firm's internal strengths to take advantage of external opportunities and threats 10) 11) A SWOT Matrix is composed of four cells for the four types of strategies it creates 11) 12) One of the steps of the SWOT Matrix is to list the firm's key external opportunities 12) 13) The SWOT matrix is widely used as an organizational tool and, if used appropriately, does not have any significant weaknesses 13) 14) The most important determinants of an organization's overall strategic position are considered to be the two internal dimensions, financial strength (FS) and competitive advantage (CA), and the two external dimensions, industry strength (IS) and environmental stability (ES) 14) 15) The four strategies of the SPACE Matrix are aggressive, conservative, offensive and defensive 15) 16) Market penetration can be classified as either a conservative, aggressive, or competitive strategy 16) 17) The ES and CA dimension variables in a SPACE Matrix are assigned a numerical value ranging from -1 (best) to -6 (worst) 17) 18) Conservative strategies in a SPACE Matrix most often include product development, market development, market penetration and concentric diversification 18) 19) The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (1,4) 19) 20) A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (2,3) 20) 21) The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are (5,4) 21) 22) Relative market share position is given on the x-axis of the BCG Matrix 22) 23) The midpoint on the x-axis of a BCG Matrix is typically set at 0.05 23) 24) The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit 24) 25) In a BCG Matrix, the pie slice indicates the proportion of corporate profits generated by that division 25) 26) Star, question mark, cash cow and dogs are the four quadrants exhibited by the SPACE Matrix 26) 27) Cash cows represent the organization's best long-run opportunities for growth and profitability 27) 28) The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization's various divisions 28) 29) Viewing businesses as star, cash cow, dog or question mark is an oversimplification 29) 30) The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time 30) 31) Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time 31) 32) Both IE and BCG Matrices are called portfolio matrices 32) 33) BCG Matrix requires more information about the divisions than the IE Matrix 33) 34) On the x-axis of the IE Matrix, an internal factor evaluation score of 2.5 represents a weak internal position 34) 35) The IE Matrix can be divided into three major regions that have different strategy implications grow and build, hold and maintain, and harvest or divest 35) 36) The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth 36) 37) According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily committed to a single product, then concentric diversification may reduce the risks associated with a narrow product line 37) 38) According to the Grand Strategy Matrix, Quadrant III organizations compete in rapid-growth industries and have weak competitive positions 38) 39) To objectively evaluate feasible alternative strategies identified in Stage 2, the QSPM uses input information derived from Stage 39) 40) Step of a QSPM assigns weights to each key external and internal factor 40) 41) Total attractiveness scores are defined as the sum of the attractiveness scores in a given column of the QSPM and are computed in the second step of the QSPM 41) 42) A positive feature of QSPM is that sets of strategies can be examined sequentially or simultaneously 42) 43) One positive feature of QSPM is that it does not require intuitive judgments and educated assumptions 43) 44) Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm 44) 45) Strategy changes may be highly effective and productive if a supportive culture does not exist 45) 46) Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategy linkages 46) 47) Successful strategists minimize their own political exposure on issues that are highly controversial, and in circumstances where opposition from major power centers is likely 47) 48) Focusing on Higher-Order Issues means it is often possible to achieve similar results using different means or paths 48) 49) Shifting focus from specific issues to more general ones may increase strategists' options for gaining organizational commitment 49) 50) The trend in many Arab states is towards greater board member accountability, with larger boards averaging 18 members 50) 51) Boards of directors are composed mostly of outsiders who are becoming more involved in an organization's strategic management 51) 52) The Sarbanes-Oxley Act put an end to the "country-club" atmosphere of most boards, and has shifted power from CEOs to directors 52) MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 53) Strategy analysis and choice largely involves making decisions based on information 53) A) long-term; short-term B) subjective; short-term C) subjective; objective D) objective; subjective E) short-term; long-term 54) Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies? 54) A) Output B) Input C) Matching D) Decision E) Throughput 55) Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning Matrix? 55) A) Stage B) Stage C) Stage D) Stage E) Stage 56) Which strategy formulation technique reveals the relative attractiveness of alternative strategies, and thus provides an objective basis for selecting specific strategies? 56) A) SWOT B) SPACE C) IFE D) QSPM E) CPM 57) Each of the nine techniques included in the strategy formulation framework rely on the use of 57) A) financial formulas and statistics B) intuition and analysis C) luck D) synergy E) strictly factual data 58) Which stage of the strategy formulation framework includes an Internal Factor Evaluation Matrix and a Competitive Profile Matrix? 58) A) Decision B) Research C) Penetration D) Input E) Matching 59) Which stage of the strategy formulation framework contains the Internal-Factor Evaluation Matrix? 59) E) I 87) According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market growth and a strong competitive position? 87) A) Retrenchment B) Joint venture C) Conglomerate diversification D) Liquidation E) Market penetration 88) For companies located in Quadrant III of the Grand Strategy Matrix, the first strategy recommended is 88) A) immediate liquidation of assets B) divestiture C) asset expansion D) employee expansion E) extensive cost and asset reduction 89) According to the Grand Strategy Matrix, although Quadrant companies are growing, they are unable to compete effectively, so they need to determine why the firm's current approach is ineffective and how the company can best change to improve its competitiveness 89) A) I B) II C) IV D) V E) III 90) According to the Grand Strategy Matrix, organizations in which quadrant have a strong competitive position but are in a slow-growth industry? 90) A) I B) III C) IV D) II E) V 91) Which matrix is included in the decision stage of the strategy formulation framework? 91) A) SPACE Matrix B) Grand Strategy Matrix C) BCG Business Portfolio Matrix D) Internal Factor Evaluation Matrix E) Quantitative Strategic Planning Matrix 92) The top row of a Quantitative Strategic Planning Matrix consists of alternative strategies derived from all of these except 92) A) Space Matrix B) CPM Matrix C) BCG Matrix D) IE Matrix E) Grand Strategy Matrix 93) Which analytical tool determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized? 93) A) IE B) SPACE C) BCG D) TOWS E) QSPM 94) Which of the following is the first step in developing the QSPM? 94) A) Compute the Total Attractiveness Scores B) Assign weights to each key external and internal factor C) Determine the Attractiveness Scores D) Examine the Stage matrices and identify the alternative strategies which the organization should consider implementing E) Make a list of the firm's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM 95) What term is defined as the product of multiplying the weights by attractiveness scores in each row of the QSPM? 95) A) Weighted scores B) Factors C) Total weighted scores D) Sum total attractiveness scores E) Total attractiveness scores 96) What is the highest number of strategies that can be examined at one time with the QSPM? 96) A) B) C) D) 10 E) There is no limit 97) Which of these is a limitation of QSPM? 97) A) Sets of strategies must be examined in reverse order B) It requires equal participation from everyone C) Only a few strategies can be evaluated simultaneously D) The cost of doing the analysis E) Intuitive judgments and educated guesses are required 98) Which of the following terms is defined by the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm? 98) A) Culture B) Mission C) Strategy D) Objectives E) QSPM 99) What tactic involves shifting focus from specific issues to more general ones? 99) A) Generalization B) Satisfying C) Focus on higher-order issues D) Equifinality E) none of the above 100) Through which tactic is it possible to achieve similar results using different means or paths? 100) _ A) Generalization B) Specialization C) Focus on higher-order issues D) Satisfying E) Equifinality 101) The act of oversight and direction for an organization is referred to as 101) _ A) establishing norms B) governance C) centralized control D) corporate lawmaking E) organizational direction 102) Today, what are boards of directors composed mostly of? 102) _ A) Outsiders B) Stockholders C) Union D) Management E) Employees 103) All of the following are part of the Corporate Governance Code that was jointly isssued by the Ministry of Industry and Commerce with the Central Bank in Bahrain in 2010, except 103) _ A) at least two directors are current or former company executives B) the board shall establish a clear and efficient management structure C) the company shall remunerate directors and officers fairly and responsibly D) the company shall be headed by an effective, collegial and informed board E) the company shall disclose its corporate governance ESSAY Write your answer in the space provided or on a separate sheet of paper 104) Explain the concept of matching in the strategy formulation framework Give at least three examples of matching 105) If you construct a SPACE Matrix and the directional vector points to the lower left quadrant, what type of strategies would you recommend? Give several examples 106) In a BCG Matrix, all divisions are called question marks, stars, cash cows or dogs Define each of these terms 107) Explain the benefits and limitations of developing a Boston Consulting Group Matrix 108) Using a Grand Strategy Matrix approach, what strategies are recommended for a firm that is a weak competitor in a slow-growing market? Elaborate on what these strategies could mean for a college or university 109) Describe the positive features and limitations of QSPM 110) Describe the tactics that have been used by politicians that can also aid strategists 111) Discuss the role of NGOs in promoting and enhancing good governance practices 112) The roles of a board of directors can be divided into four broad categories List these categories and explain what roles and responsibilities come under each 1) TRUE 2) TRUE 3) FALSE 4) FALSE 5) FALSE 6) TRUE 7) TRUE 8) FALSE 9) TRUE 10) FALSE 11) FALSE 12) TRUE 13) FALSE 14) TRUE 15) FALSE 16) TRUE 17) TRUE 18) TRUE 19) TRUE 20) FALSE 21) TRUE 22) TRUE 23) FALSE 24) TRUE 25) TRUE 26) FALSE 27) FALSE 28) TRUE 29) TRUE 30) TRUE 31) TRUE 32) TRUE 33) FALSE 34) FALSE 35) TRUE 36) FALSE 37) TRUE 38) FALSE 39) TRUE 40) FALSE 41) FALSE 42) TRUE 43) FALSE 44) TRUE 45) FALSE 46) TRUE 47) TRUE 48) FALSE 49) TRUE 50) FALSE 51) TRUE 52) TRUE 53) C 54) C 55) D 56) D 57) B 58) D 59) D 60) B 61) C 62) C 63) C 64) D 65) E 66) A 67) E 68) C 69) E 70) C 71) D 72) D 73) B 74) D 75) E 76) E 77) B 78) A 79) B 80) B 81) E 82) C 83) D 84) D 85) C 86) E 87) E 88) E 89) B 90) C 91) E 92) B 93) E 94) E 95) E 96) E 97) E 98) A 99) A 100) E 101) B 102) A 103) A 104) Matching external and internal critical success factors is the key to effectively generating feasible alternative strategies Students could provide examples from Table 7-1 105) If the directional vector points to the lower-left quadrant of the SPACE Matrix, firms should focus on rectifying internal weaknesses and avoiding external threats Defensive strategies include retrenchment, divestiture, liquidation and concentric diversification 106) Question Marks have a low relative market share position, yet they compete in a high-growth industry Stars have a high relative market share and a high industry growth rate, and represent the organization's best long-term opportunities for growth and profitability Cash Cows have a high relative market share position but compete in a low-growth industry Dogs have a low relative market share position and compete in a slow- or no-market-growth industry 107) The BCG Matrix has one major benefit it draws attention to the cash flow, investment characteristics and needs of an organization's various divisions The BCG Matrix has some limitations 1) viewing every business as either a star, cash cow, dog or question mark is an oversimplification; many businesses fall right in the middle and thus are not easily classified; 2) the BCG Matrix does not reflect whether or not various divisions or their industries are growing over time; that is, the matrix has no temporal qualities, but is instead a snapshot of an organization at a given point in time; and 3) other variables besides relative market share position and industry growth rate in sales are important in making strategic decisions about various divisions 108) A firm that is a weak competitor in a slow-growing market would be located in Quadrant III Quadrant III strategies include retrenchment, concentric diversification, horizontal diversification, conglomerate diversification, divestiture and liquidation Student answers will vary when elaborating on what these strategies could mean for a college or university However, students should mention that the college or university might possibly have to be closed, or facilities and staff may have to be drastically reduced, which leads to unhappy students in very large classes 109) Positives 1) sets of strategies can be examined sequentially or simultaneously and there is no limit to the number of strategies that can be evaluated or the number of sets of strategies that can be examined at once using the QSPM; 2) it requires strategists to integrate pertinent external and internal factors into the decisionmaking process; 3) Developing a QSPM makes it less likely that key factors will be overlooked or weighted inappropriately; 4)A QSPM draws attention to important relationships that affect strategy decisions; 5) It requires making a number of decisions along the way, which enhanses the probability that the decisions will be best for the organization.; 6) It can be applied to virtually any type of organization; 7) It can enhance strategic choice in multinational firms because many key factors can be considered at once Limitations 1) it always requires intuitive judgments and educated assumptions; 2) it can be only as good as the prerequisite information and matching analyses upon which it is based 110) Equifinality It is often possible to achieve similar results using different means or paths Strategists should recognize that achieving a successful outcome is more important than imposing the method of achieving it It may be possible to generate new alternatives that give equal results but with far greater potential for gaining commitment Satisfying Achieving satisfactory results with an acceptable strategy is far better than failing to achieve optimal results with an unpopular strategy Generalization Shifting focus from specific issues to more general ones may increase strategists' options for gaining organizational commitment Focus on Higher-Order Issues By raising an issue to a higher level, many short-term interests can be postponed in favor of long-term interests For instance, by focusing on issues of survival, the airline and automotive industries were able to persuade unions to make concessions on wage increases Provide Political Access on Important Issues Strategy and policy decisions with significant negative consequences for middle managers will motivate intervention behavior from them If middle managers not have an opportunity to take a position on such decisions in appropriate political forums, they are capable of successfully resisting the decisions after they are made Providing such political access provides strategists with information that otherwise might not be available and that could be useful in managing intervention behavior 111) The role of NGOs in promoting and enhancing good governance practices has become imperative due to the increasing role of the private sector in the economy, the call for tranparency, openness, and integration in the world economy, along with government encouragement for sound development NGOs are now called upon to participate in the political effort of development, alongside the government and the corporate and business world since the state is no longer considered to be the sole instrument for development In recent years, NGOs have become fully-fledged actors on a par with the state and private sector in the development and regulation of societies 112) Students should list the four categories (control and oversight of Management, adherence to legal prescriptions, considerations of stakeholders' interests, and advancement of stockholder's rights) and an outline the roles and responsibilities can be taken from table 7-7 in the textbook ... SPACE Matrix C) Grand Strategy Matrix D) Internal-External Matrix E) Competitive Profile Matrix 86) Which quadrant of the Grand Strategy Matrix contains firms that are in an excellent strategic. .. larger boards averaging 18 members 50) 51) Boards of directors are composed mostly of outsiders who are becoming more involved in an organization's strategic management 51) 52) The Sarbanes-Oxley... size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit 24) 25) In a BCG Matrix, the pie slice indicates the proportion of corporate
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