‫الي عليه استفهام غالبا مو معانا‬

‫وتأكدو بنفسكم افضل‬

Strategic Management & Business Policy, 12e (Wheelen/Hunger)

Chapter 8 Strategy Formulation: Functional Strategy and Strategic Choice

1) The orientation of the functional strategy is dictated by its parent business unit's strategy.
Answer: TRUE
Diff: 1 Page Ref: 189
Topic: Functional Strategy

2) Each business unit has its own set of departments, each with its own functional strategy.
Answer: TRUE
Diff: 1 Page Ref: 238
Topic: Functional Strategy

3) A product strategy deals with pricing, selling, and distributing a product.

Answer: FALSE
Diff: 1 Page Ref: 238 Marketing strategy
Topic: Functional Strategy

4) Using a market development strategy, a company can develop new products for existing
markets or develop new products for new markets.
Answer: FALSE Product development strategy
Diff: 2 Page Ref: 238
Topic: Functional Strategy

5) When Colgate-Palmolive and Unilever take a successful product that they marketed in one
part of the world and market it elsewhere, they are following a market development strategy.
Answer: TRUE
Diff: 2 Page Ref: 238
Topic: Functional Strategy
AACSB: Analytic Skills

6) Sara Lee Corporation uses the line extension strategy when they put the Sara Lee name on
various new food products.
.‫ على العديد من املنتجات الغذائية الجديدة‬Sara Lee ‫ استراتيجية تمديد الخط عندما يضعون اسم‬Sara Lee Corporation ‫تستخدم شركة‬
Answer: TRUE
Diff: 2 Page Ref: 238
Topic: Functional Strategy
AACSB: Analytic Skills
Pull strategy
7) When the Kellogg Company changed to a push strategy, they spent more money on consumer
advertising designed to build brand awareness so that shoppers will ask for the products.
Answer: FALSE
Diff: 2 Page Ref: 239
Topic: Functional Strategy
AACSB: Analytic Skills

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8) Penetration pricing attempts to hasten market development and offers the pioneer the
opportunity to use the experience curve to gain market share with a low price and dominate the
industry.
Answer: TRUE
Diff: 3 Page Ref: 239
Topic: Functional Strategy

9) The use of the Internet to market goods directly to the customer allows a company to use
dynamic pricing.
Answer: TRUE
Diff: 2 Page Ref: 239
Topic: Functional Strategy

10) A financial strategy examines the financial implications of corporate and business-level
strategic options and identifies the best financial course of action.
Answer: TRUE
Diff: 1 Page Ref: 239
Topic: Functional Strategy

11) Equity financing is preferred for related diversification while debt financing is preferred for
unrelated diversification.
Answer: TRUE
Diff: 3 Page Ref: 240
Topic: Functional Strategy

12) In a leveraged buy-out, the acquired company, in effect, pays for its own acquisition.
Answer: TRUE
Diff: 2 Page Ref: 240
Topic: Functional Strategy

13) An example of the use of the leader R&D functional strategy to achieve a low-cost
competitive advantage is Dean Foods Company.
Answer: FALSE follower
Diff: 2 Page Ref: 241
Topic: Functional Strategy
AACSB: Analytic Skills

14) An operations strategy determines how and where a product or service is to be manufactured,
the level of vertical integration in the production process, the deployment of physical resources,
and relationships with suppliers.
Answer: TRUE
Diff: 2 Page Ref: 242
Topic: Functional Strategy

15) The continuous improvement system was developed in China.

Answer: FALSE Japanese
Diff: 2 Page Ref: 243
Topic: Functional Strategy
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 modular manufacturing
16) The automobile industry is currently experimenting with the strategy of mass customization
in which pre-assembled sub-assemblies are delivered as they are needed to a company's
assembly line workers.
Answer: FALSE
Diff: 3 Page Ref: 243
Topic: Functional Strategy

17) The importance of sole sourcing was supported by Michael Porter to obtain high supplier
quality. W. Edwards Deming
Answer: FALSE
Diff: 2 Page Ref: 244
Topic: Functional Strategy

18) Two suppliers are the sole suppliers of two different parts, but they are also backup suppliers
for each others parts in parallel sourcing.
Answer: TRUE
Diff: 3 Page Ref: 245
Topic: Functional Strategy

19) Logistics strategy deals with the flow of products into and out of the manufacturing process.
Answer: TRUE
Diff: 2 Page Ref: 246
Topic: Functional Strategy

20) Research indicates that the use of work teams leads to increased quality and productivity as
well as higher employee satisfaction and commitment.
Answer: TRUE
Diff: 2 Page Ref: 246
Topic: Functional Strategy

21) The follow-the-moon management philosophy allows project team members living in one
country to pass their work to team members in another country in which the work day is just
beginning.
Follow-the-sun management
Answer: FALSE
Diff: 1 Page Ref: 247
Topic: Functional Strategy

22) Outsourcing is the reverse of vertical integration.

Answer: FALSE True ‫الجواب‬
Diff: 2 Page Ref: 247
Topic: The Sourcing Decision: Location of Functions
AACSB: Reflective Thinking

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23) The key to outsourcing is to purchase from outside only those activities that are not key to
the company's distinctive competencies.
Answer: TRUE
Diff: 2 Page Ref: 249
Topic: The Sourcing Decision: Location of Functions
1990 ‫ في عام‬IBM ‫أظهر فوجيتسو إستراتيجية يجب تجنبها عندما قلدت إستراتيجية‬

24) Fujitsu demonstrated a strategy to avoid when it imitated IBM's strategy in 1990.
Answer: TRUE
Diff: 2 Page Ref: 250
Topic: Strategies to Avoid

25) Corporate scenarios are pro forma balance sheets and income statements that forecast the
effect each alternative strategy and its various programs will likely have on division and
corporate return on investment.
Answer: TRUE
Diff: 1 Page Ref: 251
Topic: Strategic Choice: Selecting the Best Strategy

26) Risk is composed not only of the probability that the strategy will be effective, but also of the
amount of assets the corporation must allocate to that strategy and the length of time the assets
will be unavailable for other uses.
Answer: TRUE
Diff: 2 Page Ref: 253
Topic: Strategic Choice: Selecting the Best Strategy

27) Chevron uses the real-options approach for bidding on petroleum reserves.
Answer: TRUE
Diff: 2 Page Ref: 254
Topic: Strategic Choice: Selecting the Best Strategy
AACSB: Reflective Thinking

28) The attractiveness of a strategic alternative is seldom affected by its perceived compatibility
with the key stakeholders in a corporation's task environment.
Answer: FALSE
Diff: 1 Page Ref: 254
Topic: Strategic Choice: Selecting the Best Strategy

29) If the strategy is incompatible with the corporate culture, the likelihood of its success is very
low.
Answer: TRUE
Diff: 2 Page Ref: 255
Topic: Strategic Choice: Selecting the Best Strategy

30) Even the most attractive strategic alternative might not be selected if it is contrary to the
needs and desires of important top managers.
Answer: TRUE
Diff: 1 Page Ref: 256
Topic: Strategic Choice: Selecting the Best Strategy
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31) Some executives show a self-serving tendency to attribute the firm's problems not to their
own poor decisions, but to environmental events out of their control such as government policies
or a poor economic climate.
Answer: TRUE
Diff: 2 Page Ref: 256
Topic: Strategic Choice: Selecting the Best Strategy

32) There is mounting evidence that when an organization is facing a dynamic environment, the
best strategic decisions are arrived at through consensus when everyone agrees on one
alternative.
Answer: FALSE
Diff: 3 Page Ref: 257
Topic: Strategic Choice: Selecting the Best Strategy

33) "The customer is always right" is an example of a policy in Nordstrom's.

Answer: TRUE
Diff: 2 Page Ref: 258
Topic: Developing Policies
AACSB: Analytic Skills

34) Which strategy is developed to pull together the various activities and competencies of each
department so that corporate and business unit performance improves and resource productivity
is maximized?
A) business strategy
B) competitive strategy
C) generic strategy
D) enterprise strategy
E) functional strategy
Answer: E
Diff: 2 Page Ref: 238
Topic: Functional Strategy

35) The pricing, selling, and distributing of a product is referred to as a(n) ________ strategy.
A) marketing
B) functional
C) operations
D) financial
E) human resource management
Answer: A
Diff: 1 Page Ref: 238
Topic: Functional Strategy

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36) The type of marketing strategy in which a company captures a larger share of an existing
market for current products through market saturation or market penetration or develops new
markets for current products is called
A) market development.
B) push strategy.
C) product development.
D) pull strategy.
E) skimming the cream.
Answer: A
Diff: 2 Page Ref: 238
Topic: Functional Strategy

37) When Smith & Wesson puts its name on others' products like men's cologne, it is using
which marketing strategy?
A) demand pricing
B) brand pricing
C) line extension
D) penetration extension
E) demand extension
Answer: C
Diff: 3 Page Ref: 238
Topic: Functional Strategy
AACSB: Reflective Thinking

38) A company may use which of the following trade promotions to "push" their products
through the distribution system?
A) discounts
B) in-store special offers
C) advertising allowances
D) coupons
E) brand advertising
Answer: E
Diff: 2 Page Ref: 239
Topic: Functional Strategy

39) When a company spends a large amount of money on trade promotion in order to gain or
hold shelf space in retail outlets, a company is using a ________ strategy.
A) pull
B) push
C) lengthening
D) knot
E) hold
Answer: B
Diff: 2 Page Ref: 239
Topic: Functional Strategy

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40) Which type of pricing takes advantage of the demand curve while the product is still novel
and competitors are few?
A) demand pricing
B) competitive pricing
C) skim pricing
D) penetration pricing
E) loss-leader pricing
Answer: C
Diff: 2 Page Ref: 239
Topic: Functional Strategy

41) Which type of pricing attempts to hasten market development and offers the pioneer the
opportunity to utilize the experience curve to gain market share and dominate the industry?
A) demand pricing
B) competitive pricing
C) skim pricing
D) penetration pricing
E) loss-leader pricing
Answer: D
Diff: 2 Page Ref: 239
Topic: Functional Strategy

42) Which of the following is NOT a goal of financial strategies?

A) Examine the financial implication of corporate and business level strategic options and
identify the best financial course of action.
B) Provide the corporation with the appropriate financial structure and funds to achieve its
overall objectives.
C) Institute a new product development plan to generate profit potential.
D) Provide competitive advantage through a lower cost of funds and a flexible ability to raise
capital to support a business strategy.
E) Attempt to maximize the financial value of the firm.
Answer: C
Diff: 1 Page Ref: 239
Topic: Functional Strategy

43) All of the following are benefits for a company to raising its debt levels EXCEPT
A) deterrent to takeover by other firms.
B) improvement in productivity.
C) improvement in cash flows.
D) force management to focus on core businesses.
E) increase in shareholder value.
Answer: E
Diff: 2 Page Ref: 240
Topic: Functional Strategy

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44) A popular financial strategy in which a company is acquired in a transaction financed largely
by debt ∙ eventually paid off with money generated from the acquired company's operations or by
sale of its assets is
A) illegal in most countries.
B) a good way to build a core competency.
C) an application of the capital asset pricing model.
D) the leveraged buyout.
E) an example of internal financing.
Answer: D
Diff: 2 Page Ref: 240
Topic: Functional Strategy

45) Leveraged buyouts are also referred to as

A) leveraged bargains.
B) management buyouts.
C) management bargains.
D) coordinated buyouts.
E) debt buyouts.
Answer: B
Diff: 1 Page Ref: 240
Topic: Functional Strategy

46) When a company exchanges 100 shares of stock worth $10 each for 50 shares worth $20
each, they are using
A) tracking stock.
B) holding stock.
C) an LBO.
D) reverse stock split.
E) split stock.
Answer: D
Diff: 2 Page Ref: 240
Topic: Functional Strategy
AACSB: Analytic Skills

47) The strategy that deals with product and process innovation and improvement is known as a
________ strategy.
A) marketing
B) R&D
C) operations
D) financial
E) human resource management
Answer: B
Diff: 1 Page Ref: 241
Topic: Functional Strategy

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48) A company which pioneers an innovation is called a(n)
A) technological follower.
B) technological opportunist.
C) technological leader.
D) technological manufacturer.
E) technological entrepreneur.
Answer: C
Diff: 1 Page Ref: 241
Topic: Functional Strategy

49) A company which imitates the products of competitors is referred to as a(n)

A) technological follower.
B) technological opportunist.
C) technological leader.
D) technological manufacturer.
E) technological entrepreneur.
Answer: A
Diff: 1 Page Ref: 241
Topic: Functional Strategy

50) When Intel opened four small-scale research facilities adjacent to universities to promote the
cross-pollination of ideas, they were using which approach to R&D?
A) open innovation
B) differentiation
C) technology scouts
D) continuous improvement
E) technological leadership
Answer: A
Diff: 3 Page Ref: 241
Topic: Functional Strategy
AACSB: Analytic Skills

51) According to Porter, to achieve a cost advantage by following the functional strategy of
technological followership, a business unit should
A) pioneer the lowest-cost product design.
B) innovate in other activities to increase buyer value.
C) avoid R&D costs through imitation.
D) create low-cost ways of performing value activities.
E) be the first firm down the learning curve.
Answer: C
Diff: 2 Page Ref: 241
Topic: Functional Strategy

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52) According to Porter, to achieve a differentiation competitive strategy by following the
functional strategy of technological leadership a business unit should
A) pioneer the lowest-cost product design.
B) innovate in other activities to increase buyer value.
C) avoid R&D costs through imitation.
D) create low-cost ways of performing value activities.
E) be the first firm down the learning curve.
Answer: B
Diff: 2 Page Ref: 241
Topic: Functional Strategy

53) If a company wishes to be a technological leader and also maintain a cost advantage, the
appropriate R&D strategy would be to
A) increase the cost of the product.
B) lower the cost of the product or value activities by learning from the leader's experience.
C) avoid R&D costs through imitation.
D) create low-cost ways of performing value activities.
E) innovate in other activities to increase buyer value.
Answer: D
Diff: 3 Page Ref: 241
Topic: Functional Strategy

54) If a company wishes to be a technological follower and also pursue a differentiation strategy,
the appropriate R&D strategy would be to
A) adapt the product or delivery system more closely to buyer needs by learning from the
leader's experience.
B) value activities by learning from the leader's experience.
C) avoid R&D costs through imitation.
D) create low-cost ways of performing value activities.
E) innovate in other activities to increase buyer value.
Answer: A
Diff: 3 Page Ref: 241
Topic: Functional Strategy

55) When a company determines how and where a product or service is to be manufactured, the
level of vertical integration in the production process, the deployment of physical resources, and
relationships with suppliers, the company is developing its ________ strategy.
A) marketing
B) R&D
C) operations
D) financial
E) human resource management
Answer: C
Diff: 2 Page Ref: 242
Topic: Functional Strategy

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56) A flexible manufacturing system is defined by the text as
A) one-of-a-kind production using skilled labor.
B) highly automated assembly lines making one mass-produced product using little human labor.
C) the grouping of parts into manufacturing families to produce a wide variety of mass-produced
items.
D) a process utilizing the just-in-time (JIT) method of manufacturing.
E) standardization of components with each machine functioning like a job shop, but is
positioned in the same order as the parts are processed.
Answer: C
Diff: 1 Page Ref: 242
Topic: Functional Strategy

57) When components are standardized and each machine functions like a job shop but is
positioned in the same order as the parts are processed, this setup is known as
A) mass customization.
B) connected line batch flow.
C) connected job flow.
D) mass batch flow.
E) mass job flow.
Answer: B
Diff: 2 Page Ref: 242
Topic: Functional Strategy

58) When there are highly automated assembly lines making one mass-produced product using
little human labor, this setup is called
A) dedicated transfer lines.
B) connected line batch flow.
C) connected job flow.
D) mass batch lines.
E) mass job flow.
Answer: A
Diff: 2 Page Ref: 242
Topic: Functional Strategy

59) As it relates to operations, AMT stands for

A) Automated Manufacturing Technology.
B) Advanced Manufacturing Technology.
C) Asymptotic Manufacturing Technology.
D) Advanced Monotone Technology.
E) Automated Manufacturing Technician.
Answer: B
Diff: 1 Page Ref: 242
Topic: Functional Strategy

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60) Continuous improvement is an operations concept developed in
A) the United States.
B) Sweden.
C) Japan.
D) Germany.
E) Canada.
Answer: C
Diff: 1 Page Ref: 243
Topic: Functional Strategy

61) When Dell Computer's customers use the Internet to design their own computers, this
demonstrates which manufacturing strategy?
A) continuous improvement
B) mass production
C) job shop
D) mass customization
E) just-in-time
Answer: D
Diff: 3 Page Ref: 244
Topic: Functional Strategy
AACSB: Reflective Thinking

62) When a company deals with obtaining raw materials, parts, and supplies needed to perform
the operations function, the company is developing its ________ strategy.
A) operations
B) purchasing
C) R&D
D) financial
E) human resource management
Answer: B
Diff: 1 Page Ref: 244
Topic: Functional Strategy

63) The purchasing strategy in which the purchasing company orders a particular part from
several vendors is
A) sole sourcing.
B) multiple sourcing.
C) just-in-time sourcing.
D) backup sourcing.
E) parallel sourcing.
Answer: B
Diff: 1 Page Ref: 244
Topic: Functional Strategy

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64) The concept of ________ was taken one step further in JITII, in which vendor sales
representatives usually have desks next to the purchasing company's factory floor, attend
production status meetings, visit the R&D lab, and analyze the purchasing company's sales
forecasts.
A) multiple sourcing
B) outsourcing
C) sole sourcing
D) parallel sourcing
E) all of the above
Answer: C
Diff: 2 Page Ref: 244
Topic: Functional Strategy

65) The purchasing strategy in which two suppliers are the sole suppliers of different parts, but
are also the backup suppliers for each other's parts is
A) sole sourcing.
B) multiple sourcing.
C) just-in-time sourcing.
D) backup sourcing.
E) parallel sourcing.
Answer: E
Diff: 2 Page Ref: 245
Topic: Functional Strategy

66) Three trends are evident in logistics: outsourcing, the use of the Internet, and
A) centralization.
B) downsizing.
C) logistical partnerships.
D) computerization.
E) containerized shipping.
Answer: A
Diff: 2 Page Ref: 246
Topic: Functional Strategy

67) The flow of products into and out of the manufacturing process is a factor when developing a
________ strategy.
A) marketing
B) logistics
C) operations
D) financial
E) human resource management
Answer: B
Diff: 2 Page Ref: 246
Topic: Functional Strategy

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68) Many companies have found that outsourcing logistics
A) helps centralize logistics.
B) reduces costs and improves delivery time.
C) is an effective business-level strategy.
D) helps the company differentiate themselves.
E) all of the above
Answer: B
Diff: 2 Page Ref: 246
Topic: Functional Strategy

69) Avon is an example of a company that demonstrated having a diverse workforce

A) can be a competitive advantage. HRM strategy
B) can lower productivity.
C) can be an effective IT strategy.
D) can hinder quality.
E) hinders growth.
Answer: A
Diff: 2 Page Ref: 246
Topic: Functional Strategy
AACSB: Multicultural and Diversity

70) A recent trend in information systems strategy is

A) computerizing accounting.
B) automating customer service.
C) practicing follow-the-sun management.
D) replacing Fortran with Cobol in order to boost productivity.
E) replacing mainframe computers with robots.
Answer: C
Diff: 3 Page Ref: 247
Topic: Functional Strategy

71) Purchasing a product or service from an outside contractor that had been previously provided
internally is called
A) vertical integration.
B) horizontal integration.
C) transaction costing.
D) outsourcing.
E) geographic integration.
Answer: D
Diff: 1 Page Ref: 247
Topic: The Sourcing Decision: Location of Functions

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72) A study of 30 firms revealed that outsourcing can lead to a ________ percent reduction in
costs.
A) 3
B) 9
C) 20
D) 30
E) 50
Answer: B
Diff: 2 Page Ref: 248
Topic: The Sourcing Decision: Location of Functions

73) According to an American Management Association survey, the most heavily outsourced
activities were
A) manufacturing and marketing.
B) customer service and sales.
C) finance and manufacturing.
D) R&D and customer service.
E) general and administrative.
Answer: E
Diff: 2 Page Ref: 248
Topic: The Sourcing Decision: Location of Functions

74) Which of the following is NOT one of the major outsourcing errors that should be avoided?
A) failure to keep core activities in house
B) selecting the wrong vendor
C) writing a poor contract
D) micromanaging the outsourced activity to maintain control
E) overlooking personnel issues
Answer: D
Diff: 2 Page Ref: 249
Topic: The Sourcing Decision: Location of Functions

75) The key to outsourcing is to purchase from the outside only those activities that
A) are not key to the company's distinctive competence.
B) are very expensive.
C) provide the company competitive advantage.
D) are provided by an important supplier.
E) are not very expensive.
Answer: A
Diff: 2 Page Ref: 249
Topic: The Sourcing Decision: Location of Functions

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76) A company which has previously found great success pioneering an extremely successful
product that is presently trying to turn another "long-shot" into a likely success would be an
example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand
Answer: B
Diff: 2 Page Ref: 250
Topic: Strategies to Avoid
AACSB: Analytic Skills

77) A company which keeps up by imitating a leading company's strategy while ignoring its own
strengths and weaknesses is an example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand
Answer: A
Diff: 2 Page Ref: 250
Topic: Strategies to Avoid

78) A company which enters into a spirited battle for market share by cutting prices and offering
special deals would be an example of which strategy to avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand
Answer: C
Diff: 2 Page Ref: 250
Topic: Strategies to Avoid

79) A company which has invested so heavily in a particular strategy that it will not consider a
change in this strategy even if it is not successful, would be an example of which strategy to
avoid?
A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand
Answer: E
Diff: 2 Page Ref: 251
Topic: Strategies to Avoid

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80) When considering acceptable alternative strategies, the most important criterion is the ability
of the proposed strategy to deal with
A) the prospects of ensuring profitable return on investment.
B) the specific strategic factors developed in the S.W.O.T. analysis.
C) defining the competitive environment in which the firm is competing.
D) the future long-term prospects of the industry.
E) governmental regulations and requirements placed on the industry.
Answer: B
Diff: 2 Page Ref: 251
Topic: Strategic Choice: Selecting the Best Strategy

81) The technique used to help strategic managers choose among alternative choices by defining
the task environment, developing a set of various forecasts, and using pro forma financial
statements is called
A) decision trees.
B) S.W.O.T. analysis.
C) industry scenarios.
D) corporate scenarios.
E) Capital Asset Pricing Model.
Answer: D
Diff: 1 Page Ref: 251
Topic: Strategic Choice: Selecting the Best Strategy

82) The first step in constructing a corporate scenario is to

A) develop a common-sized financial statement.
B) construct detailed pro forma financial statements.
C) decide upon how much risk management is willing to accept.
D) analyze the societal environment.
E) use industry scenarios to develop a set of assumptions about the task environment.
Answer: E
Diff: 1 Page Ref: 252
Topic: Strategic Choice: Selecting the Best Strategy

83) Which one of the following is NOT true of risk?

A) It is composed of the length of time the asset will be unavailable for other uses.
B) It is the probability that the strategy will be effective.
C) Managers who own a significant amount of stock in their firms are less likely to engage in
risk-taking actions.
D) It is the amount of assets the corporation must allocate to that strategy.
E) The greater the assets involved, the more likely top management is to demand a high
probability of success.
Answer: C
Diff: 3 Page Ref: 253-254
Topic: Strategic Choice: Selecting the Best Strategy

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84) According to the text, which one of the following is NOT one of the reasons why innovations
seem to occur more often in small firms rather than in large, established corporations?
A) An entrepreneur in a small firm is more willing to accept greater risk than would a larger
firm.
B) Small firms are completely ignorant of risk management.
C) The greater the assets involved and the longer they are tied up, the more likely top
management in large firms is to demand a high probability of success.
D) Companies operating in global industries must deal with a greater amount of risk than firms
operating only in one country.
E) If the corporation's stock is widely held as in the case of large firms and experiences stock
price declines due to some external assessment, it places the firm in jeopardy of being acquired.
Answer: B
Diff: 3 Page Ref: 254
Topic: Strategic Choice: Selecting the Best Strategy

85) A new approach to evaluating alternatives under conditions of high environmental

uncertainty that proposes it pays to have a broad range of options open is the
A) net present value.
B) real options approach.
C) stakeholder priority matrix.
D) risk assessment approach.
E) hurdle rate approach.
Answer: B
Diff: 1 Page Ref: 254
Topic: Strategic Choice: Selecting the Best Strategy

86) The most commonly used political strategies include which of the following?
A) constituency building
B) political action committee contributions
C) advocacy advertising
D) lobbying
E) all of the above
Answer: E
Diff: 2 Page Ref: 255
Topic: Strategic Choice: Selecting the Best Strategy

87) Which one of the following is NOT one of the questions that management should raise in
their attempt to assess the importance to the corporation of stakeholders' concerns?
A) Which stakeholder group should be represented on the board of directors?
B) How will this decision affect each stakeholder?
C) How much of what the stakeholders want are they likely to get under a certain alternative?
D) What are the stakeholders likely to do if they don't get what they want?
E) What is the probability that the stakeholders will follow through on their demand?
Answer: A
Diff: 2 Page Ref: 255
Topic: Strategic Choice: Selecting the Best Strategy

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88) The type of strategy used to influence a corporation's key stakeholders in order to increase
their support of corporate activities is
A) cooperative strategy.
B) political strategy.
C) competitive strategy.
D) marketing strategy.
E) profit strategy.
Answer: B
Diff: 1 Page Ref: 255
Topic: Strategic Choice: Selecting the Best Strategy

89) If there is little fit between a strategic alternative under consideration and the corporate
culture, which of the following is one of the considerations that must be taken into account?
A) Take a chance on ignoring the culture by implementing the strategic alternative.
B) Manage around the culture and change the implementation plan.
C) Try to change the culture to fit the strategy.
D) Change the strategy to fit the culture.
E) All of the above.
Answer: E
Diff: 2 Page Ref: 256
Topic: Strategic Choice: Selecting the Best Strategy

90) Cultural backgrounds affect strategic choices. Korean executives emphasize ________ in
their decisions; whereas U.S. executives emphasize ________.
A) projected demand, discounted cash flow, and ROI; industry attractiveness, sales and market
share
B) Industry attractiveness, sales and market share; projected demand, discounted cash flow, and
ROI
C) Ego; industry attractiveness
D) Maintaining the status quo; change
E) none of the above
Answer: B
Diff: 3 Page Ref: 256
Topic: Strategic Choice: Selecting the Best Strategy
AACSB: Multicultural and Diversity

91) The evaluation of alternative strategies and selection of the best alternative is referred to as
A) alternative generation.
B) strategic implementation.
C) strategic choice.
D) strategic selection.
E) evaluation.
Answer: C
Diff: 1 Page Ref: 257
Topic: Strategic Choice: Selecting the Best Strategy

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92) According to the text, unanimous agreement is not the best way to determine the merits of a
proposed alternative strategy. To avoid this consensus trap, which technique assigns a group or
individual to identify potential pitfalls and problems with a proposed alternative strategy in a
formal presentation?
A) devil's advocate
B) Sloan's judgment
C) sales presentation
D) dialectical inquiry
E) scenario construction
Answer: A
Diff: 2 Page Ref: 257
Topic: Strategic Choice: Selecting the Best Strategy

93) According to the text, unanimous agreement is NOT the best way to determine the merits of
a proposed alternative strategy. To avoid this consensus trap, which technique involves
presenting two conflicting views (the thesis and the antithesis) presented in a debate format?
A) devil's advocate
B) Sloan's judgment
C) sales presentation
D) dialectical inquiry
E) scenario construction
Answer: D
Diff: 1 Page Ref: 257
Topic: Strategic Choice: Selecting the Best Strategy

94) Once the best strategic alternative is selected, the broad guidelines for its implementation are
then defined by
A) trade-offs.
B) policies.
C) procedures.
D) resource allocation.
E) strategic options.
Answer: B
Diff: 1 Page Ref: 258
Topic: Developing Policies

95) When crafted correctly, an effective policy accomplished all but which of the following?
A) It forces trade-offs between competing resource demands.
B) It tests the strategic soundness of a particular action.
C) It grants employees freedom to experiment within its constraints.
D) It sets boundaries within which employee must operate while granting them freedom to
experiment within those constraints.
E) All of the above
Answer: E
Diff: 3 Page Ref: 258
Topic: Developing Policies
AACSB: Reflective Thinking

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96) What is a functional strategy?
Answer: Functional strategy is the approach a functional area takes to achieve corporate and
business unit objectives and strategies by maximizing resource productivity. It is concerned with
developing and nurturing a distinctive competence to provide a company or business unit with a
competitive advantage
Diff: 1 Page Ref: 238
Topic: Functional Strategy

97) Distinguish between a market development and a product development strategy.

Answer: Using a market development strategy, a company or business unit can (1) capture a
larger share of an existing market for current products through market saturation and market
penetration or (2) develop new markets for current products.

Using the product development strategy, a company or unit can (1) develop new products for
existing markets or (2) develop new products for new markets.
Diff: 2 Page Ref: 238
Topic: Functional Strategy

98) What does a financial strategy examine?

Answer: A financial strategy examines the financial implications of corporate and business-level
strategic options and identifies the best financial course of action. It can also provide
competitive advantage through a lower cost of funds and a flexible ability to raise capital to
support a business strategy. Financial strategy usually attempts to maximize the financial value
of the firm.
Diff: 2 Page Ref: 239
Topic: Functional Strategy

99) Give an example of a technological leader and a technological follower.

Answer: A technological leader is a company that pioneers an innovation. An example of a
technological leader is Nike. They spend more than most in the industry on R&D to differentiate
the performance of its athletic shoes from that of its competitors.

A technological follower is a company that imitates the products of competitors. An example is

Dean Foods Company. They achieve a low-cost competitive advantage by imitating what the
competitors do.
Diff: 3 Page Ref: 241
Topic: Functional Strategy
AACSB: Reflective Thinking

100) Discuss W. Edward Deming's position on sole sourcing.

Answer: W. Edward Deming strongly recommended sole sourcing as the only manageable way
to obtain high supplier quality. Sole sourcing relies on only one supplier for a particular part.
Deming argued that the buyer should work closely with the supplier at all stages. This reduces
both cost and time spent on product design as well as improving quality.
Diff: 2 Page Ref: 244
Topic: Functional Strategy

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101) What is outsourcing? What are the seven major outsourcing errors that should be avoided?
Answer: Outsourcing is purchasing from someone else a product or service that had been
previously provided internally. It is the reverse of vertical integration. Outsourcing is becoming
an increasingly important part of strategic decision making and an important way to increase
efficiency and often quality.

The seven major outsourcing errors that should be avoided are as follows:
1. Companies failed to keep core activities in house.
2. Companies selected the wrong vendor - those that were not trustworthy or lacked
state-of-the-art processes.
3. Companies failed to write an effective contract establishing the balance of power in the
relationship.
4. Companies overlooked personnel issues - resulting in employees losing commitment to the
firm.
5. Management lost control over the outsourced activity.
6. Companies overlooked the hidden costs of outsourcing
7. Companies failed to plan an exit strategy (such as reversibility clauses).
Diff: 3 Page Ref: 247-249
Topic: The Sourcing Decision: Location of Functions

102) What are the strategies to avoid proposed by the authors?

Answer: The strategies to avoid are as follows:
1. Follow the leader. Imitating a leading competitor's strategy might seem to be a good idea, but
it ignores a firm's particular strengths and weaknesses and the possibility that the leader may be
wrong.
2. Hit another home run. If a company is successful because it pioneered an extremely
successful product, it tends to search for another super product that will ensure growth and
prosperity.
3. Arms race. Entering into a spirited battle with another firm for increased market share might
increase sales revenue, but that increase will probably be more than offset by increases in
advertising, promotion, R&D, and manufacturing costs.
4. Do everything. When faced with several interesting opportunities, management might tend to
leap at all of them. At first, a corporation might have enough resources to develop each idea into
a project, but money, time, and energy are soon exhausted as the many projects demand large
infusions of resources.
5. Losing hand. A corporation might have invested so much in a particular strategy that top
management is unwilling to accept its failure. Believing that it has too much invested to quit, the
corporation continues to throw "good money after bad."
Diff: 3 Page Ref: 250-251
Topic: Strategies to Avoid

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103) What is a corporate scenario? What are the three steps in their construction?
Answer: Corporate scenarios are pro forma balance sheets and income statements that forecast
the effect each alternative strategy and its various programs will likely have on division and
corporate return on investment. To construct a corporate scenario, the following three steps
should be taken.
1. Use industry scenarios to develop a set of assumptions about the task environment.
2. Develop common-size financial statements for the company's or business unit's previous
years, to serve as the basis for the trend projections of pro forma financial statements.
3. Construct detailed pro forma financial statements for each strategic alternative.
Diff: 2 Page Ref: 251-253
Topic: Strategic Choice: Selecting the Best Strategy

104) In evaluating a strategic alternative, if there is little fit with the company's culture, what are
management's options?
Answer: In evaluating a strategic alternative, management must consider corporate culture
pressures and assess the strategy's compatibility with the corporate culture. If there is little fit,
management must decide if it should take a chance on ignoring the culture, manage around the
culture and change the implementation plan, try to change the culture to fit the strategy, or
change the strategy to fit the culture.
Diff: 2 Page Ref: 256
Topic: Strategic Choice: Selecting the Best Strategy

105) In a dynamic environment, using consensus to arrive at a strategic decision is not

recommended. Why? What two techniques can strategic managers use to avoid the consensus
trap?
Answer: The best decisions actually involve a certain amount of heated disagreement, and even
conflict. Many diverse opinions are presented, participants trust in one another's abilities and
competencies, and conflict is task-oriented, not personal. Two techniques to help strategic
managers avoid the consensus trap are the devil's advocate and dialectical inquiry. A devil's
advocate is assigned to identify potential pitfalls and problems with a proposed alternative
strategy in a formal presentation. The dialectical inquiry involves combining two conflicting
views - the thesis and the antithesis - into a synthesis. It requires that two proposals using
different assumptions be generated for each alternative strategy under consideration.
Diff: 2 Page Ref: 257
Topic: Developing Policies

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