Multiple Choice Questions
1. A firm pursuing market development would likely increase investments in:
A. Product development
B. Basic R&D
C. Process development
D. A new sales force
E. Applications development
2. Which of the following organizations is most likely to actively seek growth?
A. Family owned businesses
B. Businesses which are content with their current market share
C. Defender firms
D. Reactor firms
E. Prospector firms
3. Firms often remain in a low-growth industry in which efforts to increase sales cost more than they are worth if the industry:
A. Has low profits
B. Has high exit barriers
C. Has high entry barriers
D. Has dynamic equilibrium
E. Is unsegmented
4. Strategy formulation responsibilities at the business level include all of the following except:
A. Establishment and communication of goals
B. Identification of strengths and weaknesses
C. Identification of opportunities and threats
D. Management of the corporate portfolio
E. Establishment of a strategic posture
5. Which of the following is an accurate statement about economies of scale?
A. Production costs per unit are less in a large facility than in a small facility
B. The more products a company makes, the lower its variable production costs
C. Economies of scale are identical to throughput
D. Doubling factory size typically doubles fixed costs
E. Companies with economies of scale have high capacity utilization
6. A learning curve implies:
A. An employee can easily learn to do several different jobs within a firm
B. Employees learn to do jobs more efficiently with repetition
C. Employees who are slow to learn new tasks will require additional training time
D. The time required to complete a task will decrease as a predictable function of the number of times the task is repeated
E. B and D are both correct
7. Which of the following is an advantage of pursuing cost leadership?
A. Sales always increase with increasing amounts of output
B. Loss of sales does not reduce scale benefits
C. The strategy easily accommodates changes in the market
D. Firms invest heavily in differentiating their products
E. A firm may charge the same price as its competitors but make a higher profit
8. Which of the following typically is a corporate level strategy formulation responsibility?
A. Establishment of short term operating goals
B. Choice of generic strategy for each business unit
C. Selection of businesses in which to compete
D. Direct supervision of research and development programs
E. None of the above
9. As corporate-level strategies develop, any of the following strategies might be expected to follow a concentration strategy except:
A. Vertical integration
B. Diversification of markets
C. Diversification of products/services
D. Diversification of resource conversion processes
E. Restructuring
10. Which of the following is not considered a corporate-level strategy?
A. Focus through differentiation.
B. Concentration
C. Related diversification
D. Unrelated diversification
E. None of the above. These are all corporate-level strategies.
11. Which of the following is strength of a concentration strategy?
A. Product obsolescence will rarely affect the firm
B. Executives can develop in-depth knowledge of the business
C. Industry maturity will rarely affect the firm
D. Firms pursuing this strategy are rarely acquired by another firm
E. Bankruptcy risk is minimal
12. Which of the following is a weakness of a concentration strategy?
A. The organization cannot develop a distinctive competence
B. Organizational resources are severely strained
C. External stakeholders are easily confused by the firm's strategic agenda
D. There is high ambiguity regarding strategic direction
E. The strategy is risky when the environment is unstable
13. According to the theory of transaction cost economics, a market is likely to fail if:
A. There are a large number of suppliers
B. All parties to the transaction have the same level of knowledge
C. The future is highly uncertain
D. The future is highly certain
E. Assets may be used to produce a variety of products or services
14. Related diversification differs from unrelated diversification in which of the following ways?
A. Related diversification is connected to the organization's dominant business; unrelated diversification is not
B. Unrelated diversification is connected to the organization's dominant business; related diversification is not
C. Single business firms use related diversification and never use unrelated diversification
D. Single business firms use unrelated diversification and never use related diversification
E. A firm that uses related diversification always uses vertical integration; a firm that uses unrelated diversification never uses vertical integration
15. When an organization can use the same physical resources for multiple purposes, it is taking advantage of:
A. Intangible relatedness
B. Tangible relatedness
C. Limited scope
D. Dominant industry relationships
E. Goodwill
16. Which types of strategies are used to implement the growth and competitive strategies of the firm?
A. Focus strategies
B. Generic strategies
C. Functional strategies
D. Corporate strategies
E. Indirect strategies
17. Which functional area is largely responsible for spanning the boundary of the organization to interact with customers?
A. Marketing
B. Finance
C. Operations
D. Information systems
E. Human resources
18. In most organizations, research and development strategy deals with all of the following except:
A. Product development
B. Applications development
C. Basic research
D. Human resource development
E. Process development
19. The _____________ addresses the plan for aligning product and service operations with business strategies.
A. Information systems strategy
B. R&D strategy
C. Operations strategy
D. Marketing strategy
E. Human resources strategy
20. Well-developed functional strategies should have all of the following characteristics except:
A. They are inexpensive to implement
B. Decisions made within each functional area should represent a consistent pattern
C. They should be consistent with the strategies of the business.
D. Decisions made in one functional area should be consistent with decisions made in other functional areas.
E. These are all true. There is no exception.
21. If a firm is very decentralized and has a web of independent offices in each region, with little or no formal hierarchy, which business-level structure is it likely to have?
A. Functional
B. Product/market
C. Project matrix
D. Network
E. Manufacturing
22. Which business-level structure is organized around outputs and has a high level of centralization?
A. Functional
B. Product/market
C. Project matrix
D. Network
E. TQM
23. A strategic control system helps managers to assess the relevance of the organization's strategy:
A. To its profitability
B. To its progress in the accomplishment of its goals
C. To the needs of its employees
D. In order to specify product line extensions
E. To its competitors' strategies
24. When managers are trying to anticipate changes in the internal and external environments, they are using:
A. Feedforward control
B. Vertical control
C. Feedback control
D. Horizontal control
E. Integrative control
25. Which type of control provides managers with information concerning outcomes from organizational activities?
A. Feedforward control
B. Vertical control
C. Feedback control
D. Horizontal control
E. Integrative control
26. Common feedback control systems include all of the following except:
A. Strategic surveillance
B. Ratio analysis
C. Financial audits
D. Budgets
E. Social audits
27. Feedforward control systems are especially important because of:
A. Environmental discontinuities
B. Stability in the environment
C. High profits
D. The decreasing role of government regulation in the world economy
E. Social audits
28. A control system that consists of policies and guidelines to guide the behavior of organizational members is:
A. Bureaucratic control
B. Output control
C. Clan control
D. Process control
E. Human resources systems
29. A control system that is based on socialization of organizational members is:
A. Bureaucratic control
B. Output control
C. Clan control
D. Process control
E. Human resources systems
30. Mental models:
A. Are valid as long as the premises that underlie them remain the same
B. Are derived from experiences
C. May prevent executives from recognizing the need for change
D. All of the above
E. A and B are correct but not C