David TIF Ch01
David TIF Ch01
David TIF Ch01
CHAPTER 1
The Nature of Strategic Management
True/False
Introduction
1.
2.
Although the Internet has increased in popularity, it has actually led to increases in
company expenses.
Ans: F
3.
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Page 4
Page 4
Optimizing for tomorrow the trends of today is the purpose of strategic management.
Ans: F
5.
Even though useful, strategic planning has been cast aside by corporate America
since the early 1990s.
Ans: F
6.
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7.
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Page: 5
256
8.
9.
10.
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16.
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15.
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14.
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13.
Page 6
12.
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11.
Page: 5
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Page 7
257
17.
Management by intuition can be defined as operating from the Ive-already-madeup-my-mind-dont-bother- me-with-the-facts mode.
Ans: F
18.
Page 7
Page: 8
Anything the firm does especially well compared to rival firms could be
considered a competitive advantage.
Ans: T
20.
Once a firm acquires a competitive advantage, they are usually able to sustain the
competitive advantage for an extended period of time.
Ans: F
21.
Page: 10
The middle manager is the most visible and critical strategic manager.
Ans: F
25.
Page: 9
24.
Page 9
23.
Page 9
22.
Page 8
Page: 10
All strategists have similar attitudes, values, ethics and concerns for social
responsibility.
Ans: F
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258
26.
A vision statement answers the question, What is our business?, whereas a mission
statement answers, What do we want to become?
Ans: F
27.
In the last five years, the position of chief strategy officer (CSO) has diminished
in comparison to other top management ranks of many organizations.
Ans: F
28.
Page: 13
35.
Page: 13
Annual objectives are long-term milestones that organizations must achieve to reach
short-term objectives.
Ans: F
34.
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33.
Page: 12
32.
Page 11
31.
Page: 10
30.
Page: 10
29.
Page: 10-11
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259
37.
38.
Page: 15
Page: 15
Page: 15
40.
The changes that occurred at Disney after Robert Iger took over as CEO exemplifies
the fact that more and more organizations are centralizing the strategic-management
process.
Ans: F
41.
Page: 17
43.
Page: 16
42.
Page: 16
Page: 17
Page: 18
260
The poor reward structure is one reason managers do not engage in strategic
planning.
Ans: T
45.
Page: 18
Crises and fires in an organization allows managers the training and time for
effective strategic planning.
Ans: F
Page: 17
Top managers making many intuitive decisions that conflict with the formal plan
is one pitfall managers should avoid in strategic planning.
Ans: T
47.
Page: 19
Page: 19
49.
Page: 19
Page: 20
Today, managers and employees can be found personally liable if they ignore,
conceal, or disregard a pollution problem.
Ans: T
51.
Page: 21
Merely having a code of ethics is not sufficient to ensure ethical business behavior.
Ans: T
Page: 23
261
52.
Page: 23
Page: 25
55.
Page: 28
One risk in international operations is that nationalistic factions could seize the
operations.
Ans: T
Page: 29
Conclusion
56.
All organizations have a strategy from their inception, even if the strategy is
informal, unstructured, and sporadic.
Ans: T
57.
Nonprofit organizations have less need for strategic management because they are
not interested in making a profit.
Ans: F
58.
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Page: 30
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262
Multiple Choice
Introduction
59. The term environment includes all of the following except:
a.
air.
b.
water.
c.
firms.
d.
natural resources.
e.
fauna.
Ans: c
60.
Page: 4
The one factor that has most significantly impacted the nature and core of buying
and selling in nearly all industries has been
a.
the Internet.
b.
political borders.
c.
corporate greed.
d.
customer and employee focus.
e.
the government.
Ans: a
Page: 4
What can be defined as the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an organization to achieve its
objectives?
a.
Strategy formulation
b.
Strategy evaluation
c.
Strategy implementation
d.
Strategic management
e.
Strategic leading
Ans: d
62.
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263
63.
During what stage of strategic management are a firms specific internal strengths
and weaknesses determined?
a.
Formulation
b.
Implementation
c.
Evaluation
d.
Feedback
e.
Goal-setting
Ans: a
64.
65.
Page: 6
What types of skills are especially critical for successful strategy implementation?
a.
Interpersonal
b.
Marketing
c.
Technical
d.
Conceptual
e.
Thinking
Ans: a
67.
Page: 6
What step in the strategic development process involves mobilizing employees and
managers to put strategies into action?
a.
Formulating strategy
b.
Strategy evaluation
c.
Implementing strategy
d.
Strategic advantage
e.
Competitive advantage
Ans: c
66.
Page: 5
Page: 6
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264
68.
69.
70.
Page: 7
_________ and _________ are external forces transforming business and society
today.
a.
E-commerce; strategy
b.
E-commerce; globalization
c.
Strategy; globalization
d.
Corporate culture; stakeholders
e.
Stakeholders; strategy
Ans: b
72.
Page: 6
71.
Page: 6
Page: 8
Anything that a firm does especially well compared to rival firms is referred to as:
a.
competitive advantage.
b.
comparative advantage.
c.
opportunity cost.
d.
sustainable advantage.
e.
an external opportunity.
Ans: a
Page: 8
265
The trends in newspaper circulation in the United States provide support for which
statement?
a.
Sustainable competitive advantage is easy to maintain.
b.
Several firms can have similar competitive advantages.
c.
Some products are relatively immune to changes in the external environment
d.
Most competitive advantages are hard to sustain
e.
Competition is generally good for companies and consumers
Ans: d
74.
Which individuals are most responsible for the success and failure of an
organization?
a.
Strategists
b.
Financial planners
c.
Personnel directors
d.
Stakeholders
e.
Human resource managers
Ans: a
75.
Page: 10
76.
Page 9
Page: 10
What are enduring statements of purpose that distinguish one business from other
similar firms?
a.
policies
b.
mission statements
c.
objectives
d.
rules
e.
employee conduct guidelines
Ans: b
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266
77.
Page: 10
Specific results an organization seeks to achieve in pursuing its basic mission are:
a.
strategies
b.
rules
c.
objectives
d.
policies
e.
mission
Ans: c
80.
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81.
Page: 12
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267
82.
83.
84.
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85.
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268
87.
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Page: 14
89.
Page: 16
Page: 16
269
90.
91.
The changes that occurred when Robert Iger took over the reigns at Disney,
demonstrate which current trend in organizations?
a.
increased formalization of the strategic management process
b.
increased structuring of strategic management
c.
increased decentralizing of strategic management
d.
increased emphasis on strategic planning
e.
increased central planning of the strategic management process
Ans: c
92.
Page 16
93.
Page: 16
Page: 17
According to Greenley, strategic management offers all of these benefits except that
a.
it provides an objective view of management problems.
b.
it creates a framework for internal communication among personnel.
c.
it encourages a favorable attitude toward change.
d.
it maximizes the effects of adverse conditions and changes.
e.
it gives a degree of discipline and formality to the management of a business.
Ans: d
Page: 17- 18
270
Page: 18-19
All of these are pitfalls an organization should avoid in strategic planning except:
a.
using plans as a standard for measuring performance.
b.
using strategic planning to gain control over decisions and resources.
c.
failing to involve key employees in all phases of planning.
d.
too hastily moving from mission development to strategy formulation.
e.
being so formal in planning that flexibility and creativity are stifled.
Ans: a
96.
97.
Page: 19
Page: 19
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271
99.
A (n) ____________ can provide a basis on which policies can be devised to guide
daily decisions and behavior at the work site.
a.
list of guidelines
b.
policy for safety
c.
vision statement
d.
code of business ethics
e.
annual objective
Ans: d
100.
Page: 23
Because they must take the __________ of the firm, strategists salaries are high
compared to those of other individuals in the organization.
a.
moral risks
b.
social risks
c.
environmental risks
d.
societal criticism
e.
employee criticism
Ans: a
101.
Page: 20
Page: 23
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272
102.
103.
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105.
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Page: 26
273
107.
108.
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109.
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Page: 29
274
Essay Questions
110.
111.
112.
275
113.
114.
Define and discuss the differences between vision and mission statements.
Many organizations today develop a vision statement that answers the question
What do we want to become? Developing a vision statement is often considered
the first step in strategic planning, preceding even development of a mission
statement. Many vision statements are a single sentence. For example, the vision
statement of Stokes Eye Clinic in Florence, South Carolina, is Our vision is to
take care of your vision. The vision of the Institute of Management Accountants
is Global leadership in education, certification, and practice of management
accounting and financial management. Mission statements are enduring
statements of purpose that distinguish one business from other similar firms. A
mission statement identifies the scope of a firms operations in product and
market terms. It addresses the basic question that faces all strategists: What is
our business? A clear mission statement describes the values and priorities of an
organization. Developing a mission statement compels strategists to think about
the nature and scope of present operations and to assess the potential
attractiveness of future markets and activities. A mission statement broadly charts
the future direction of an organization.
Page: 11
115.
276
116.
117.
118.
What are the pitfalls in strategic planning that management in an organization should
watch out for or avoid? Identify any five pitfalls.
There are 13 pitfalls. Students should list any five of the following: (1) using
strategic planning to gain control over decisions and resources; (2) doing strategic
planning only to satisfy accreditation or regulatory requirements; (3) too hastily
moving from mission development to strategy formulation; (4) failing to
communicate the plan to employees, who continue to work in the dark; (5) top
managers making many intuitive decisions that conflict with the formal plan; (6) top
managers not actively supporting the strategic-planning process; (7) failing to use
plans as a standard for measuring performance; (8) delegating planning to a
planner rather than involving all managers; (9) failing to involve key employees in
all phases of planning; (10) failing to create a collaborative climate supportive of
change; (11) viewing planning to be unnecessary or unimportant; (12) becoming so
engrossed in current problems that insufficient or no planning is done; and (13)
being so formal in planning that flexibility and creativity are stifled.
Page: 18
277
119.
120.
Explain what Drucker means when he says, Trees die from the top.
Trees die from the top, can be explained as top management creates
organizational spirit. When top managements spirit dies, so does the rest of the
companys spirit. This leads to the downfall, or death, of the company.
Page: 22-24
121.
278
122.