The Nature of Strategic Management __________ help an organi'ation gather, analy'e,

and organi'e 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? trategy formulation Strategy implementation trategy manipulation trategy
evaluation The rationale for periodically conducting strategic!management meetings
away from the wor" site is to encourage more _____________ and ____________ among
participants. feedbac"; rigidity creativity; candor confidence; self!interest
strategy evaluation; candor # disadvantage of international operations is$
information. *thics officers +peratives ,obbyists Strategists

External opportunities; external threats .nternal wea"nesses; e%ternal

opportunities .nternal strengths; internal wea"nesses trategic management can be
defined as the art and science of formulating, implementing, and evaluating cross!
functional decisions that enable an organi'ation to achieve its objectives. True
foreign operations can allow firms to establish low!cost production The action
stage of strategic management is called strategy 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 mar"ets. competitors in foreign mar"ets may
not e%ist. causing communication barriers and problems managing people. _________
are especially critical for successful strategy implementation. .nterpersonal
skills Technical plans ,ong!range plans hort!range plans trategies can be defined
as specific results that an organi'ation see"s to achieve in pursuing its basic
mission. 0alse trategies are the means by which long!term objectives will be
achieved. Three fundamental strategy evaluation activities are reviewing corrective
actions. True language, culture, and value systems differ among countries, e%ternal
and internal factors, measuring performance, and ta"ing formulation. 0alse

/. #ll of these are pitfalls an organi'ation should avoid in strategic 1easons for
poor or no strategic planning on part of firms include #nything that a firm does
especially well compared to rival firms is planning e%cept$ referred to as$
competitive advantage. comparative advantage. an e%ternal opportunity. opportunity
cost. &oth military and business organi'ations do all of the following e%cept$ use
of the element of surprise. aim (to gain competitive advantage.( use the assumption
of conflict to develop strategies. use their own strengths to e%ploit competitors)
wea"nesses. using strategic planning to gain control over decisions and resources.
failing to involve "ey employees in all phases of planning. 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 organi'ation in the future. .nternal strengths; e%ternal threats
3ommunication is an act of strengthening employees) sense of +bjectives are an
organi'ation)s statements that answer the 0alse #n organi'ation can pursue any and-
or all strategies that potentially could benefit the firm. 0alse 2o organi'ation
can pursue all the strategies that potentially could benefit the firm. hastily
moving from mission development to strategy formulation. question (what do we want
to become?( overconfidence, too e%pensive, suspicion, and la'iness. True
effectiveness by encouraging them to participate in decision ma"ing and to e%ercise
initiative and imagination, and rewarding them for doing [Link]$--
[Link]'s.net0alse *mpowerment is the act of strengthening employees) sense of
decision ma"ing and e%ercise initiative and imagination.

6. .t is predicted that, by ;:;6, over 4CD of the population in the Enited tates
will be over =6 years old. #ns$ T 9age CC =. The first step for using 9orterFs
0ive!0orces Aodel is to

b. .mplementation c. *valuation d. 0eedbac" e. Boal!setting 4>. #nything 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 e%ternal opportunity

effectiveness by encouraging and rewarding them to participate in evaluate the

relative strength of each competitive force. #ns$ 0 9age 4:4

trategic management must be a self!reflective learning process. G. Aetaphors are

handed!down narratives of some wonderful True +ne pitfall to avoid in strategic
planning is top management ma"ing many intuitive decisions that conflict with
formal planning. True ample 3omprehensive *%am 3hapters 4 5 6 True-0alse 4. #
vision statement answers the question, 7What is our business?,8 whereas a mission
statement answers, 7What do we want to become?8 #ns$ 0 9age$ 4:!44 ;. The changes
that occurred at <isney after 1obert .ger too" over as 3*+ e%emplifies the fact
that more and more organi'ations are centrali'ing the strategic!management process.
#ns$ 0 9age$ 4= Aultiple 3hoice 44. What can be defined as the art and science of
formulating, implementing and evaluating cross!functional decisions that >. .n
multidivisional organi'ations, each division should develop a enable an
organi'ation to achieve its objectives? a. trategy formulation mission statement
independent of the parent company. #ns$ 0 9age$ => ?. #ccording to @ern AcBinnis,
to be effective, all a mission the organi'ation aspired to be. #ns$ 0 9age$ => 4;.
<uring what stage of strategic management are a firmFs specific internal strengths
and wea"nesses determined? a. 0ormulation b. trategy evaluation c. trategy
implementation d. trategic management statement need to do is define what the
organi'ation is and what e. trategic leading 4:. Aost companies favor related
diversification strategies in order to e%ploit common use of a well!"nown brand
name. #ns$ T 9age 4C: /. ince a combination strategy is not ris"y, many
organi'ations pursue a combination of two or more strategies simultaneously. #ns$ 0
9age$ 4G4 event that is based on history but has been embellished with fictional
detail. #ns$ 0 9age 4;G

C. &enchmar"ing is an analytical tool used to determine whether a 4?. The trends in

newspaper circulation in the Enited tates firmFs value chain activities are
competitive compared to rivals. #ns$ T 9age 46G provide support for which
statement? a. ustainable competitive advantage is easy to maintain. b. everal firms
can have similar competitive advantages. c. ome products are relatively immune to
changes in the e%ternal environment d. Aost competitive advantages are hard to
sustain e. 3ompetition is generally good for companies and consumers 46. .n which
phase of strategic management are annual objectives especially important? a.
0ormulation b. 3ontrol c. *valuation d. mplementation e. Aanagement 4=. 9rinciples
of conduct that guide decision!ma"ing are "nown as _____. a. human rights b. the
3onstitution c. business ethics d. nonprofit organi'ation policies e. social
responsibility requirements
4G. Which of these basic questions should a vision statement answer? a. What is our
business? b. Who are our employees? c. Why do we e%ist? d. !hat do "e "ant to
become? e. Who are our competitors? 4C. What is the first step in the comprehensive
strategic! management model? a. #eveloping vision and mission statements b.
9erforming e%ternal audits c. 9erforming internal audits d. Aeasuring and
evaluating performance e. *stablishing long!term objectives 4/. #ccording to the
comprehensive strategic!management model, which step needs to be completed
immediately following the establishment of long!term objectives? a. <eveloping
vision and mission statements b. 9erforming e%ternal audits c. 9erforming internal
audits d. $enerating, evaluating, and selecting strategies e. Aeasuring and
evaluating performance ;:. What is the best time to develop a mission statement? a.
&efore a business is opened b. !hen 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 ;4. # proactive environmental policy is li"ely to lead to _____. a.
higher cleanup costs b. conservation of energy c. reduced customer loyalty d.
numerous liability suits e. higher medical costs ;=. Who is the largest e%porter to
the Enited tates? a. Ae%ico b. %hina c. 3anada d. Enited Kingdom ;?. .n general,
what happens to #merican goods in overseas mar"ets when there is a strong dollar?
a. ,ess e%pensive b. Aore attractive c. 3heaper d. Aore e%pensive e. <esirable ;>.
Which type of trend is e%emplified by the increasing numbers of two!income
households in #merica? a. ocial b. *conomic c. 3ultural d. Technological e.
Jistorical ;;. Which of these e%amples of a mission statementFs focus area is not
effective? a. #THT focuses on communication rather than telephones. b. *%%on-Aobil
focuses on oil and gas rather than energy. c. Enion 9acific focuses on
transportation rather than railroads. e. tarbuc"s focuses on the cafI e%perience
rather than coffee.

e. Lapan ;G. The term that refers to the *EFs effort to end competitive ta% brea"s
among member countries is _____. a. double ta%ation b. ta%ation bias d. ta%
reconciliation e. ta% harmoni'ation ;C. #ccording to 9orter, what is usually the
most powerful of the five competitive forces? a. 9otential development of
substitute products b. &argaining power of suppliers c. &argaining power of
consumers d. 1ivalry among competing firms e. 9otential entry of new
competitors ;/. # standardi'ed, detailed set of techniques and behaviors that
manage an%ieties, but seldom produce intended, technical consequences of practical
results are called _____. a. fol"tales b. rites c. metaphors d. rituals ;6. .t is
predicted that the Enited tates will have how many racial e. values or ethnic
majorities by the year ;:G6? a. None b. +ne c. Two d. Three e. 0ive >:. What are
historical narratives describing the unique accomplishments of a group and its
leaders, usually in heroic terms? a. 1ites b. Sagas c. tories d. Ayths e. 0ol"tales
>4. Which function of management includes areas such as job design, job
specification, job analysis and unity of command?

d. Eniversal tudios focuses on entertainment rather than movies. c. equity ta%ation

a. 9lanning b. &rgani'ing c. Aotivating d. taffing e. 3ontrolling >;. Which of the
following is the process of influencing people to accomplish specific objectives?
a. taffing b. Motivating c. 9lanning d. 3ontrolling e. +rgani'ing >>. Which
decision concerns determining the best capital which the firm can raise capital? a.
.nvestment b. <ividends c. 0inancing d. %apital budgeting e. .mplementation >?.
What category of ratios measures how effectively a firm can maintain its economic
position in the growth of the economy and industry? a. 9rofitability b. ,iquidity
c. ,everage d. #ctivity e. $ro"th >6. &udget 1ent!a!3ar opening car rental shops in
Wal!Aart stores is an e%ample of which type of strategy? a. (or"ard integration b.
&ac"ward integration c. Jori'ontal integration d. 1elated diversification

e. Enrelated diversification >=. #dvanced Aedical +ptics using acquisitions to

obtain all medical aspects of eye care, from laser surgery to contacts to implants
for all ages is an e%ample of which type of strategy? a. 0orward integration b.
&ac"ward integration c. Jori'ontal integration d. Market development e. 9roduct
development

b. &est!value c. +o",cost focus d. &est!value focus e. <ifferentiation ?:. Which

strategy would be most appropriate when the distinctive competencies of two or more
firms complement each other especially well? a. 3onglomerate diversification b.
<ivestiture c. -oint venture

>G. .n which situation would hori'ontal integration be an especially d.

1etrenchment effective strategy? a. !hen an organi'ation can gain monopolistic
characteristics in a particular area or region "ithout being 6/.The term
7environment8 includes all of the following e%cept$ [Link]. [Link]. [Link]
resources. #ns$ c 9age$ ? =:. The one factor that has most significantly impacted
the nature and core of buying and selling in nearly all industries has been >C.
Win!<i%ie closing one!third of its stores and eliminating ;;,::: [Link] .nternet.
jobs in an attempt to emerge from ban"ruptcy would be an e%ample of _____. a.
divestiture b. bac"ward integration c. liquidation d. retrenchment e. forward
integration What .s trategic Aanagement? =4. What can be defined as the art and
science of formulating, >/. #ccording to 9orter, which strategy offers products or
services implementing and evaluating cross!functional decisions that to a small
range of customers at the lowest price available on the enable an organi'ation to
achieve its objectives? mar"et? a. ,ow!cost a. trategy formulation b. trategy
evaluation [Link] borders. [Link] greed. [Link] and employee focus.
[Link] government. #ns$ a 9age$ ? substantially* to reduce competition. b. When an
organi'ation competes in a slowing industry. advantages. needed to successfully
manage an e%panded organi'ation. e. When competitors are succeeding due to
managerial e%pertise or having particular resources an organi'ation possesses.
e. .ntegration

structure for the firm and includes e%amining various methods by challenged by the
federal government for )tending

c. When decreased economies of scale provide major competitive [Link]. d. When an

organi'ation has neither the capital nor human talent [Link].
c. trategy implementation d. trategic management e. trategic leading #ns$ d 9age$ 6
=;. ____________ is used to refer to strategic formulation, implementation and
evaluation, with ______________ referring only to strategic formulation. a.
trategic planning; strategic management b. trategic planning; strategic processing
c. trategic management; strategic planning d. trategic management; strategic
processing e. trategic implementation; strategic focus #ns$ c 9age$ 6 =>. <uring
what stage of strategic management are a firmFs specific internal strengths and
wea"nesses determined? a.0ormulation b..mplementation c.*valuation d.0eedbac"
[Link]!setting #ns$ a 9age$ 6

e.3ompetitive advantage #ns$ c 9age$ = ==. What types of s"ills are especially
critical for successful strategy implementation? a..nterpersonal [Link]"eting
[Link] d.3onceptual [Link]"ing #ns$ a 9age$ = =G. Which phase of strategic
management is called the action phase? a. trategy formulation b. trategy
implementation c. trategy evaluation d.#llocating resources [Link] performance
#ns$ b 9age$ = =C. __________ is not a strategy!implementation activity. [Link]"ing
corrective actions b.*stablishing annual objectives

a..t represents the marginal factor in decision!ma"ing. b..t represents a minor

factor in decision!ma"ing integrated with analysis. c..t should be coupled with
analysis in decision!ma"ing. d..t is better than analysis in decision!ma"ing. e..t
is management by ignorance. #ns$ c 9age$ G G4. _________ and _________ are e%ternal
forces transforming business and society today. a.*!commerce; strategy b.*!
commerce; globali'ation c. trategy; globali'ation d.3orporate culture; sta"eholders
e. ta"eholders; strategy #ns$ b 9age$ C G;. #nything that a firm does especially
well compared to rival firms is referred to as$ [Link] advantage.
[Link] advantage. [Link] cost. [Link] advantage. [Link] e%ternal
opportunity. #ns$ a 9age$ C

=?. #n important activity in __________ is ta"ing corrective action. c.<evising

policies [Link] evaluation [Link] implementation [Link] formulation
[Link] leadership [Link] of the above #ns$ a 9age$ = =6. What step in the
strategic development process involves a.0ormulating strategy b. trategy evaluation
c..mplementing strategy d. trategic advantage G:. Which statement best describes
intuition? =/. trategy evaluation is necessary because [Link] and e%ternal
factors are constantly changing. [Link] *3 requires strategy evaluation.
[Link] change their strategies. [Link] have limited resources. #ns$ a 9age$
= mobili'ing employees and managers to put strategies into action? [Link] .1
requires strategy evaluation. d.#llocating resources [Link] employees #ns$ a
9age$ =

Key Terms in trategic Aanagement G>. The trends in newspaper circulation in the
Enited tates provide support for which statement? a. ustainable competitive
advantage is easy to maintain. b. everal firms can have similar competitive
advantages. c. ome products are relatively immune to changes in the e%ternal
environment [Link] competitive advantages are hard to sustain e.3ompetition is
generally good for companies and consumers #ns$ d 9age / G?. Which individuals are
most responsible for the success and
failure of an organi'ation? a. trategists b.0inancial planners c.9ersonnel
directors d. ta"eholders [Link] resource managers #ns$ a 9age$ 4: G6. The first
step in strategic planning is generally$ a.<eveloping a vision statement
b.*stablishing goals and objectives [Link]"ing a profit d.<eveloping a mission
statement e.<etermining opportunities and threats #ns$ a 9age$ 4:

e."ey functions in strategy e%ploitation. #ns$ a 9age$ 4; G/. pecific results an

organi'ation see"s to achieve in pursuing its basic mission are$ [Link]
[Link] [Link] [Link] [Link] #ns$ c 9age$ 4>

C>. __________ can best be described as short!term in nature. [Link] statements

[Link] c.#nnual objectives d. trategies [Link] #ns$ c 9age$ 4> C?. .n which
phase of strategic management are annual objectives especially important?
[Link] [Link]

C:. .nternal __________ are activities in an organi'ation that are [Link]

performed especially well. [Link] [Link] [Link]
[Link] #ns$ d 9age$ 4> C6. What are guides to decision ma"ing? [Link] [Link]
[Link] C4. What are the means by which long!term objectives will be achieved?
[Link]. [Link]. [Link]"nesses. [Link]. [Link]. #ns$ a 9age$
4> C;. ,ong!term objectives should be all of the following e%cept$ [Link].
[Link] changing. [Link]. [Link]. [Link]. #ns$ b 9age$ 4>
CG. Which of the following is not included in the strategic management model? The
trategic!Aanagement Aodel C=. The strategic!management process [Link] once a
year. [Link] a sequential process. [Link] a continuous process. [Link] mostly to
companies with sales greater than M4:: million. [Link] mostly to small
businesses #ns$ c 9age$ 4> [Link] [Link] #ns$ c 9age$ 4>

G=. What are enduring statements of purpose that distinguish one [Link]
business from other similar firms? [Link] [Link] statements [Link]
[Link] [Link] conduct guidelines #ns$ b 9age$ 4: GG. The largest company in
the world is$ [Link] Aotor b..2B Broup [Link]!Aart d.0ord Aotor 3ompany e.1oyal
<utch- hell Broup #ns$ d 9age$ 4: GC. Esually, e%ternal opportunities and threats
are$ [Link] by a single organi'ation. [Link] by governments. [Link]
as important as internal strengths and wea"nesses. d."ey functions in strategy
implementation. [Link] [Link] #ns$ c 9age$ 4>
[Link] and evaluate performance. b.9erform internal research to identify
customers. c.*stablish long!term objectives. d..mplement strategies. e.<evelop
mission and vision statements. #ns$ b 9age$ 4? &enefits of trategic Aanagement CC.
trategic management enables an organi'ation to __________, instead of companies
just responding to threats in their business environment. [Link] proactive
[Link] when the threat will subside [Link] the threats [Link] their
competitors [Link] into the future #ns$ a 9age$ 4=

organi'ations? [Link] formali'ation of the strategic management process

[Link] structuring of strategic management [Link] decentrali'ing of
strategic management [Link] emphasis on strategic planning #ns$ c 9age 4= /;.
#ccording to research, organi'ations using strategic management are __________ than
those that do not. [Link] profitable [Link] comple% [Link] profitable [Link] static
[Link] comple% #ns$ a 9age$ 4G />. #ccording to Breenley, strategic management
offers all of

9itfalls in <oing trategic 9lanning /6. #ll of these are pitfalls an organi'ation
should avoid in strategic planning e%cept$ [Link] plans as a standard for
measuring performance. [Link] strategic planning to gain control over decisions
and [Link] to involve "ey employees in all phases of planning. [Link] hastily
moving from mission development to strategy formulation. [Link] so formal in
planning that fle%ibility and creativity are stifled. #ns$ a 9age$ 4/ /=. What is
not a pitfall an organi'ation should avoid in strategic planning? a.0ailing to
communicate the plan to employees b..nvolving all managers rather than delegating
planning to a 7planner8 [Link] managers not actively supporting the strategic
planning process d.<oing strategic planning only to satisfy accreditation or
regulatory requirements #ns$ b 9age$ 4/

[Link] central planning of the strategic management process resources.

C/. The act of strengthening employeesF sense of effectiveness by these benefits e

%cept that encouraging and rewarding them to participate in decision!ma"ing [Link]
provides an objective view of management problems. and e%ercise initiative and
imagination is referred to as$ a.#uthoritarianism b.9roaction c.*mpowerment
[Link] e.<elegation #ns$ c 9age$ 4= /:. Jow do line managers become
7owners8 of the strategy? [Link] attending top manager meetings [Link] gathering
information about competitors [Link] involvement in the strategic!management process
[Link] becoming a shareholder of the firm [Link] buying off top managers #ns$ c 9age$
4= /4. The changes that occurred when 1obert .ger too" over the reigns at <isney,
demonstrate which current trend in Why ome 0irms <o 2o trategic 9lanning [Link]
creates a framewor" for internal communication among personnel. [Link] encourages a
favorable attitude toward change. [Link] ma%imi'es the effects of adverse conditions
and changes.

[Link] gives a degree of discipline and formality to the management /G. Which of the
following statements is false? of a business. #ns$ d 9age$ 4G! 4C a.+pen!mindedness
is an important guideline for effective strategic management. b. trategic
management must become a self!perpetuating socialist mechanism. c.2o organi'ation
has unlimited resources. /?. What is not a reason given for poor or no strategic
planning in d. trategic decisions require trade!offs. organi'ations? e. trategic
management must be a self!reflective learning [Link] of time b.&eing content
with success c.0ire!fighting d.9oor reward structure [Link] of management #ns$ e
9age$ 4C!4/ /C. 9rinciples of conduct that guide decision!ma"ing are "nown as
&usiness *thics and trategic Aanagement process. #ns$ b 9age$ ;:
[Link] rights. [Link] 3onstitution. [Link] ethics. [Link] organi'ation
policies. [Link] responsibility requirements. #ns$ c 9age$ ;:

[Link] nonunion labor in a union shop [Link] flawed products in a foreign

mar"et [Link] trading [Link] of the above #ns$ e 9age$ ;6

operations across national borders. a.<omestic firms [Link] corporations

c.9arent companies [Link]!bac"ed companies e.0ranchises

4:>.*thical standards come out of __________ in a final analysis. #ns$ b 9age$

;C //. # NnO ____________ can provide a basis on which policies can [Link] be
devised to guide daily decisions and behavior at the wor" site. [Link]
[Link] of guidelines [Link] for safety [Link] statement [Link] of business
ethics [Link] objective #ns$ d 9age$ ;> 4::.&ecause they must ta"e the __________
of the firm, strategistsF salaries are high compared to those of other individuals
in the organi'ation. [Link] ris"s [Link] ris"s [Link] ris"s d. societal
criticism e. employee criticism #ns$ a 9age$ ;> 4:[Link] strategy is based on
an assumption of __________, whereas business strategy is based on an assumption of
4:[Link] can be created by ethics training and an ethics culture? __________.
a.3ompetitive responsibility b.3ompetitive advantage c. trategic advantage
d.*mployee cooperation e.3omparative advantage #ns$ c 9age$ ;6 4:;.Which of these
business actions is NareO always considered to be unethical? [Link] product or
service safety The 2ature of Blobal 3ompetition 4:=.____________ are organi'ations
that conduct business [Link]; cooperation [Link]; competition
[Link]; conflict [Link]; conflict [Link]; competition #ns$ b
9age$ ;= 4:/.#ll of these are potential disadvantages of an international operation
e%cept$ [Link] wea"nesses and underestimated strengths of competitors.
[Link] languages, cultures and value systems. [Link] tariffs and ta%es.
[Link]%ity due to a multiple monetary system. [Link] of these are potential
disadvantages. #ns$ c 9age$ ;/ 3omparing &usiness and Ailitary trategy management.
[Link] [Link] [Link] [Link] [Link] #ns$ a 9age$ ;6 4:[Link]
greatest advantage of international operations is$ a.1educed tariffs and ta%es b.
preading economic ris"s over a wider number of mar"ets c.#ccess to global
technology, culture and business practices [Link] new customers e.,ess!intense
competition #ns$ d 9age$ ;C [Link] and heritage [Link]"eholder analysis
[Link] involvement #ns$ c 9age$ ;6 4:G.#NnO __________ refers to a firm
investing in international operations, while the _________ is the country where
that business is conducted. [Link] company; host country [Link] country; parent
company [Link] country; host company [Link] company; home country #ns$ a 9age$ ;C
4:?.# strong __________ heritage underlies the study of strategic e.e%porting
company; importing company