Chapter 1

Quiz
1. 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 Correct
Answer: Strategic management; strategic planning
2. Which of these requires a firm to establish annual objectives, devise policies, and allocate resources?
Strategy formulation
Strategy implementation
Strategy manipulation
Strategy evaluation
3. 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
4. Anything that a firm does especially well compared to rival firms is referred to as:
Competitive advantage
Comparative advantage
An external opportunity
Opportunity cost.
5. 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.
6.__________ are the individuals who are most responsible for the success or failure of an organization.
Ethics officers
Operatives
Consultants
Strategists
7. 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.
8. The problem of limited resources within a firm makes ______________ particularly important as the firm
decides how to allocate its resources.
Strategy formulation
Strategy implementation
Long-range planning
Short-range planning
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.
10. The process of conducting research and gathering and assimilating external information is called:
Lobbying
Industry analysis
Long-range planning
Mission development
11. The term strategic planning refers only to strategy formulation.
True/False
12. The action stage of strategic management is called strategy formulation.
True/False
13. Three fundamental strategy evaluation activities are reviewing external and internal factors, measuring
performance, and taking corrective actions.
True/False
14. Strategies can be defined as specific results that an organization seeks to achieve in pursuing its basic
mission.
True/False
15. Reasons for poor or no strategic planning on part of firms include overconfidence, too expensive, suspicion,
and laziness.
True/False
16. In a multidivisional firm, objectives should be established for the overall company and not for each division
True/False
17.An organization can pursue any and/or all strategies that potentially could benefit the firm.
True/False
18. Communication is an act of strengthening employees' sense of effectiveness by encouraging them to
participate in decision making and to exercise initiative and imagination, and rewarding them for doing so.
True/False
19. Given that formality creates flexibility and creativity, managers must be very formal in strategic planning.
True/False
20. One pitfall to avoid in strategic planning is top management making many intuitive decisions that conflict
with formal planning.
True/False
Answers
1. Correct Answer: strategic management; strategic planning
2. Correct Answer: Strategy implementation.
3. Correct Answer: creativity; candor
4. Correct.: competitive advantage.
5. Correct Answer: use the assumption of conflict to develop strategies.
6. Correct Answer: Strategists
7. Correct Answer: language, culture, and value systems differ among countries, causing communication
barriers and problems managing people.
8 . Your Answer: strategy formulation Correct.
9. Correct Answer: using plans as a standard for measuring performance.
1 0 . Correct Answer: industry analysis.
11. True Correct.
12. Correct Answer: False Incorrect. Strategy implementation is called the action stage.
13. True Correct.
14. Correct Answer: False
15. Incorrect. Strategies are the means by which long-term objectives will be achieved. Correct Answer: True
16. Incorrect. Some firms do not engage in strategic planning due to overconfidence, too expensive, suspicion,
and laziness. False Correct.
17. Correct Answer: False Incorrect. No organization can pursue all the strategies that potentially could benefit
the firm.
18. Correct Answer: False Incorrect. 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.
19. Correct Answer: False Incorrect. Managers that are very formal in strategic planning can stifle flexibility
and creativity.
20. True Correct.
2 1 . Identify and describe the three stages of the strategic-management process. Give reasons within your
answer to describe why each of these stages is important in strategic management.
Your Answer: (blank)
2 2 . What is sustained competitive advantage? Define this concept and explain how a firm can achieve it. Why
is it important in strategic management?
You’re Answer :( blank)
2 3 . How do external opportunities and threats differ in their strategic implications from those of internal
strengths and weaknesses? Be sure to include in your answer a brief description of each of these four terms.
You’re Answer :( blank)
2 4 . What is the strategic-management model? What does it represent? Describe several characteristics of the
strategic-management process based on what you understand about the strategic-management model.
You’re Answer :( blank)
25. Describe the concept of empowerment. How is empowerment related to the decentralization of the strategic-
management process?
You’re Answer :( blank)