Management A Practical Introduction 6th

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06
Student:

1. Managers must be willing to make large, painful decisions to suddenly alter strategy.
True False
2. In a world of rapid and discontinuous change, the ability to please nonmanagerial employees has been
called the golden trait among managers.
True False
3. A business plan is a document with the purpose of outlining a proposed firm's profit and loss statements
for its first operating cycle.
True False
4. Formal business plans can be dangerous to the survival of new businesses; many who try them fail
because of the resources required to write and agree upon the plan.
True False
5. A strategy is a large-scale action plan that sets direction for an organization.
True False
6. Strategic management is the process of involving nonmanagerial employees in the formulation and
implementation of strategies and strategic goals.
True False
7. An organization should adopt strategic management and strategic planning to encourage new ideas.
True False
8. Bad planning is usually a result of top managers' inability to gather enough information.
True False
9. Planning is usually a straightjacket for new ideas, since it effectively blocks peripheral vision in favor of
a predetermined course.
True False
10. A sustainable competitive advantage is the ability of an organization to produce goods or services more
effectively than its competitors and outperform them.
True False
11. Ford's Sync in-dash communications platform, despite its high level of technology, has been unable to
provide the company with a distinct competitive advantage.
True False
 True False
12. Harvard Business School professor Michael Porter is a leading authority on competitive strategy.
True False
13. Strategic conservation attempts to achieve sustainable competitive advantage by preserving what is
distinctive about a company.
True False
14. Strategic positioning can be achieved by performing similar activities to rivals, but in different ways.
True False
15. A strategic position may be based on serving the few needs of a few customers.

True False
16. Good strategy allows a company to be everything to everyone.
True False
17. Strategic planning is appropriate for large companies, but does not help the performance of small
companies.
True False
18. Management of a small company in an industry that is not very competitive should not engage in strategic
planning because the small gains in performance may not be worth the effort.
True False
19. Organizations may turn to the strategic-management process after a crisis.
True False
20. The first step of the strategic-management process is to establish the grand strategy.
True False
21. The strategic-management process has five steps and a feedback loop.
True False
22. A vision will be demoralizing to employees if it describes a future state that appears beyond the reach of
the organization.
True False
23. Many good mission statements include descriptions of an organization's customers, as well as its major
products or services.
True False
24. According to Burt Nanus, good vision statements are useful because they help people to consider all
interesting elements in their environments.
True False
25. A good vision statement should describe a company's major strengths and competitive advantage in its
industry.
True False
26. A mission statement should be ambitious.
True False
27. After the assessment of current organizational performance, the subsequent explanation of how its
mission is to be accomplished is called a comprehensive strategy.
True False
28. A defensive strategy is sometimes called a retrenchment strategy.
True False
29. A development strategy is the common grand strategy that involves expansion.
True False
30. A continuity strategy is the common grand strategy that involves little or no significant change.
True False
31. Alaska Airline was profitable in 2011, prompting is to decide to remain a "smallish, specialized, regional
airline in a world of global giants," which is an example of a stability strategy.
True False
32. A grand strategy can be established using tools like SWOT analysis and forecasting.

True False
33. Strategy formulation is the process of choosing among different strategies and altering them to best fit the
organization's needs.
True False
34. The starting point in establishing a grand strategy is usually an analysis of Porter's competitive forces.
True False
35. Strategy actualization is the term for putting strategic plans into effect.
True False
36. A common challenge to strategy implementation is resistance by people within the organization.
True False
37. One of the ways to keep a strategic plan on track is to make it very comprehensive, covering as many
scenarios for the future as you can.
True False
38. The primary purpose of competitive intelligence is to challenge the thinking of employees to make them
better equipped to produce novel ideas for business.
True False
39. SWOT analysis helps management to develop a realistic understanding of the organization in relation to
internal and external environments.
True False
40. Obsolete technology and outdated facilities are examples of organizational threats.
True False
41. Guthrie Community College has done a SWOT analysis and discovered that the number of college-bound
high-school juniors in its state has grown by nearly 20% in the past few years. This is a strength for
Guthrie.
True False
42. Organizational threats are the environmental factors that hinder an organization's ability to achieve a
competitive advantage.
True False
43. Forecasting is a strategic-planning tool used to make long-term strategy.
True False
44. Two types of forecasting are trend analysis and competitive intelligence.
True False
45. Contingency planning is a hypothetical extension of a past series of events into the future.
True False
46. Too little or unreliable historical data may result in erroneous trend analyses.
True False
47. Contingency planning can also be called scenario analysis.
True False
48. The use of hedging to manage the cost of aviation fuel is an example of trend analysis.
True False
49. In Porter's model for industry analysis, there are three primary competitive forces in a firm's
environment.

True False
50. Kraft Macaroni & Cheese is now challenged by new competitors such as Annie's and other store brands,
which Porter's model for industry analysis calls the threat of new entrants.
True False
51. In a cost-leadership strategy, an organization targets a wide market and offers products or services of
unique and superior value compared to competitors.
True False
52. Luxury carmaker Rolls-Royce has a focused-differentiation strategy.
True False
53. A single-product strategy can be described as focused but vulnerable.
True False
54. A small florist most likely follows a diversification strategy.
True False
55. General Electric sells lighting products and is also involved in plastics, broadcasting, and financial
services. GE uses a related diversification strategy.
True False
56. Burberry makes outerwear, accessories like umbrellas, and children's clothing, which is called a related
diversification strategy.
True False
57. Synergy is one of the benefits of a single-product strategy.
True False
58. The BCG matrix is a means of evaluating strategic business units on the basis of both their business
growth rates and their profitability.
True False
59. Cash cows in the BCG matrix have slow growth but high market share.
True False
60. Execution is tactical in nature, rather than part of a company's strategy.
True False
61. A company must be able to execute three core processes of business including people, products, and
administration.
True False
62. Insisting on realism is among the leader behaviors that help a manager successfully execute a
strategy.
True False
63. Managers who execute well insist on constant optimism.
True False
64. A represents an "educated guess" about what must be done in the long term for survival or the
prosperity of the organization or its principal parts.
A. trend analysis
B. mission
C. strategy
D. forecast
E. contingency plan
65. "Find out what customers want, then provide it to them as cheaply and quickly as possible" is
Walmart's
A. growth plan.
B. technical plan.
C. synergy.
D. strategy.
E. forecast.
66. Effective strategic management involves
A. only top management.
B. only top and middle management.
C. only middle and lower management levels.
D. only lower management level.
E. managers from all parts of the organization.
67. Which of the following would be considered a reason for adopting strategic management and strategic
planning?
A. To enhance employee loyalty.
B. To keep corporate taxes at a minimum.
C. To develop independent work from the staff.
D. To provide develop a sustainable competitive advantage.
E. To increase market dominance with repeat purchase.
68. Which of the following statements about strategic planning and strategic management is true?
A. Strategic planning is rarely used in the current environment of fast change because it does not allow for
flexibility.
B. Strategic management is a process completed by top managers.
C. Both should be implemented because they can provide direction and momentum.
D. Middle managers need not understand strategies; they simply follow them.
E. Strategic planning is used to accomplish tactical goals.
69. Which of the following is not a typical cause of bad planning?
A. Information overload.
B. Inadequate planning budgets.
C. Ineffective group dynamics.
D. Poor assessment of an organization's capabilities.
E. Faulty assumptions about the future.
70. Which of the following is not an area in which a company needs to get and stay ahead in order to sustain
a competitive advantage?
A. Talented employees
B. Quality
C. Effectiveness
D. Being responsive to customers
E. Innovating
71. means performing different activities from rivals or performing similar ones in different
ways.
A. Competitive planning
B. Distinctive positioning
C. Collaborative planning
D. Strategic segmentation
E. Strategic positioning
72. Which of the following statements about strategy and strategic positioning is false?
A. Many customers with broad needs can be a source of strategic position.
B. A company has to choose not only what strategy to follow but what strategy not to follow.
C. Few customers with broad needs can be a source of strategic position.
D. Strategy involves creating a "fit" among activities.
E. Few customers with narrow needs can be a source of strategic position.
73. Consumers can use a national company called Service Magic to receive bids from quality providers of a
variety of services, including home remodel, landscaping, plumbing, and housecleaning. Service Magic
charges service providers for the leads it provides to them monthly. Which of the following is the source
of Service Magic's strategic position?
A. Low-profit margin and many customers.
B. Broad needs and few customers.
C. Broad needs and many customers.
D. High-profit margin and many customers.
E. High-profit margin and few customers.
74. A small firm is likely to benefit significantly from strategic planning
A. regardless of the nature of its industry or market.
B. when it is in a very competitive industry.
C. when it is in a very new industry.
D. when it is in a very stable industry.
E. when it has a very small market.
75. Anne runs a small bakery on the main street of a resort town. Though hers was the only bakery around,
the business had been suffering during the economic slowdown, and she was contemplating whether she
should attempt strategic planning. Anne should be aware of what research finding regarding strategic
planning?
A. Only large firms show performance gains from strategic planning.
B. Only small firms show performance gains from strategic planning.
C. Performance gains from strategic planning are equal among small and large firms.
D. Both small and large firms benefit from strategic planning, but small firms get a larger boost in
performance.
E Both small and large firms benefit from strategic planning, but the small improvement in performance
. may not be worth the effort for small firms.
76. Milo owns and manages a small bike repair store. In order to determine if strategic planning will be likely
to help his business, Milo should primarily assess
A. how many competitors he has.
B. foot traffic by his location.
C. his profitability in the prior six months.
D. industry trends.
E. how much he intends to grow in the next five years.
77. Which of the following best represents a currently popular strategy among big companies like Apple,
Google, and Amazon?
A. Become involved in the community.
B. Seek niches where there is less competition.
C. Get consumers tightly connected to the company's ecosystem.
D. Offer personal or emotional connections to customers.
E. Discourage price comparisons.
78. Which of the following steps of the strategic-management process is the source of its feedback loop?
A. Carry out the strategic plan.
B. Maintain strategic control.
C. Establish the grand strategy.
D. Establish the mission and vision.
E. Formulate the strategic plans.
79. Which of the following is not a stage in the strategic-management process?
A. Conduct a trend analysis.
B. Maintain strategic control.
C. Establish the grand strategy.
D. Establish the mission and vision.
E. Carry out the strategic plans.
80. Which of the following should be included in a good vision statement?
A. Firm's attitude toward its employees.
B. Geographical areas in which the firm will compete.
C. Firm's basic technology.
D. Firm's standards of excellence and high ideals.
E. Firm's major products or services.
81. Which of the following is a question that should be answered by a company's mission statement?
A. Will it inspire enthusiasm and encourage commitment?
B. Does it set standards of excellence?
C. Is it appropriate for the organization?
D. Is it well articulated?
E. Who is our customer?
82. The common grand strategies are
A. star, question mark, cash cow, and dog.
B. cost-leadership, differentiation, cost focus, and focused differentiation.
C. growth, stability, and defensive.
D. strengths, weaknesses, opportunities, and threats.
E. defender, prospector, analyzer, and reactor.
83. Computer technology corporation Dell recently acquired Quest software, an IT management software
provider, in order to expand upon its software expertise and offerings. Dell is pursuing a(n)
strategy.
A. escalation
B. growth
C. stability
D. merger
E. defensive
84. High Peaks Skate and Snowboard is a small shop that provides equipment for Utah snowboarders in
winter months. It has decided to increase advertising during this period in the Salt Lake Tribune and the
Park Record in Park City, as well as to sponsor a new on-mountain competition. It is following which
strategy?
A. Inducement
B. Defensive
C. Growth
D. Stability
E. Enhancement
85. Faisal has been running a commercial real estate business for nearly 30 years. As he approaches
retirement, he is content to simply lease the commercial space he currently has, rather than make new
deals to develop additional properties. Faisal is using which grand strategy?
A. Stability
B. Retrenchment
C. Inducement
D. Defensive
E. Growth
86. A grand strategy that involves reduction in the organization's efforts is the strategy.
A. retrenchment
B. reorganization
C. downsizing
D. growth
E. stability
87. An Iowa ethanol production company has been suffering from a combination of lower demand for
gasoline (into which its product is mixed) and higher corn prices (which is the largest input cost). It has
responded by selling off land, buildings, and some of its reserve product inventory. This is a variation of
which of these grand strategies?
A. Right-size
B. Growth C.
Stability D.
Defensive
E. Reorganization
88. Recently ConocoPhillips, America's third-biggest oil company, spun off its refineries, pipelines, and
chemicals division to form a new company called Phillips 66. Now ConocoPhillips will concentrate on its
upstream operations. This is a variation of which of these grand strategies?
A. Right-size
B. Growth C.
Stability D.
Defensive
E. Reorganization
89. A fine luggage maker was struggling with heavy debt and a sharp decline in customers, and it eventually
declared bankruptcy. The company followed which grand strategy?
A. Growth
B. Stability
C. Defensive
D. Reduction
E. Reactive
90. After film manufacturer Kodak failed to reinvent itself and declared bankruptcy in 2012, it decided to
focus on its business of making inkjet printers as part of a strategy.
A. growth
B. stability
C. defensive
D. reorganization
E. reactor
91. The process of choosing among different strategies and altering them to best fit the organization is
called
A. strategy formulation.
B. contingency planning.
C. strategic control.
D. strategy implementation.
E. trend analysis.
92. Actively selling strategic plans to middle and supervisory managers, rather than just announcing them, is
helpful for
A. situation analysis.
B. strategy formulation.
C. strategy implementation.
D. contingency planning.
E. strategic control.
93. consists of monitoring the execution of strategy and making adjustments, if necessary.
A. Mission translation
B. Strategic control
C. Strategy implementation
D. Contingency planning
E. SWOT analysis
94. Which of the following is not one of Bryan Barry's recommendations to keep a strategic plan on track?

A. Keep moving.
B. Engage people.
C. Keep it simple.
D. Avoid compromise.
E. Stay focused.
95. Gaining information about one's competitors' activities so that you can anticipate their moves and react
appropriately is called
A. strategic forecasting.
B. corporate espionage.
C. contingency planning.
D. trend analysis.
E. competitive intelligence.
96. Which of the following is not a likely source of information for competitive intelligence?
A. Competitors' press releases
B. Industry gossip
C. Competitors' annual reports
D. Competitor's customer records
E. Sales visits to customers
97. Rafaela is interested in learning more about what one of her competitors is doing so that she can
anticipate its upcoming moves and react quickly. Which of the following would you suggest to her for
this purpose?
A. Go through the competitor's trash on its property.
B. Pose as an applicant for a job with the competitor.
C. Use investor information.
D. Call the competitor, explain who you are, and ask directly.
E. Pay the competitor's customers for information.
98. Careful monitoring of an organization's internal and external environment to detect early signs of
opportunities and threats that may influence the firm's plans is called
A. competitive intelligence.
B. forecasting.
C. contingency planning.
D. trend analysis.
E. environmental scanning.
99. A situational analysis is also known as
A. strategic control.
B. SWOT analysis.
C. trend analysis.
D. contingency planning.
E. forecasting.
100.When analyzing the "S" in a SWOT analysis, a manager might take note of
A. a decrease in the size of the market.
B. competitors' new products.
C. high turnover of employees.
D. strong financial resources of the firm.
E. lifting of governmental regulations.
101.When analyzing the "W" in SWOT analysis, a manager might take note of
A. a decrease in consumer demand.
B. a competitor's bankruptcy.
C. high turnover of employees.
D. good financial resources of the firm.
E. institution of a tariff on foreign competitors.
102.When analyzing the "O" in SWOT analysis, a manager might take note of
A. favorable government regulations.
B. absenteeism among employees.
C. good morale among workers.
D. high service levels.
E. good financial position.
103.When analyzing the "T" in SWOT analysis, a manager might take note of
A. the firm's cash flow problems.
B. a competitor's new product.
C. employee absenteeism.
D. strong corporate culture.
E. high service levels.
104.Analysis of changing demographics of the U.S. population would be part of the assessment of a
company's
A. strengths.
B. weaknesses.
C. opportunities.
D. threats.
E. opportunities or threats depending on the outcome of the analysis.
105.A manager assessing the organization's access to capital is involved in analysis of
A. strengths.
B. weaknesses.
C. opportunities.
D. threats.
E. strengths or weaknesses depending on the outcome of the assessment.
106.Amanda has just determined that her employees will require extensive training if they are to acquire the
necessary technological expertise to produce a new product line. She has discovered one of her firm's
A. strengths.
B. weaknesses.
C. opportunities.
D. threats.
E. market challenges.
107.The skills and capabilities that give the organization advantages in executing strategies in pursuit of its
mission are known as
A. organizational strengths.
B. organizational opportunities.
C. organizational threats.
D. organizational weaknesses.
E. competitive strategies.
108.Environmental factors that the organization may exploit for a competitive advantage are known as
A. organizational strengths.
B. organizational opportunities.
C. organizational threats.
D. organizational weaknesses.
E. competitive strategies.
109.Alexis has prepared a report that details how prices for several raw materials her firm uses in production
have risen by up to 30% in the last year. Her report would be an input into the part of a
SWOT analysis.
A. strengths
B. weaknesses
C. opportunities
D. threats
E. structure
110.A vision or projection of the future is called a(n)
A. trend.
B. forecast.
C. contingency.
D. strategy.
E. opportunity.
111.A time-series forecast, which is used to predict long-term trends, cyclic patterns, and seasonal variations,
is one type of
A. organizational strength.
B. contingency planning.
C. trend analysis.
D. balanced scorecard.
E. strategy formulation.
112.Creation of alternative hypothetical but equally likely future conditions is called
A. contingency planning.
B. trend analysis.
C. balancing the scorecard.
D. strategy formulation.
E. forecasting.
113.Which of the following is not one of the forces that affects industry competition, according to Porter's
model for industry analysis?
A. Threats of new entrants.
B. Threats of substitute products and services.
C. Bargaining power of buyers.
D. Threats of government interference.
E. Bargaining power of suppliers.
114.Oil companies must be aware of other firms' development of ethanol products since this is an example of
which one force in Porter's model for industry analysis?
A. Bargaining power of buyers.
B. Rivalry among competitors.
C. Bargaining power of suppliers.
D. Threats of new entrants.
E. Threats of substitute products and services.
115.Porter's competitive strategies include
A. prospector, defender, analyzer, and reactor.
B. growth, stability, and retrenchment.
C. cost leadership, differentiation, cost focus, and focused differentiation.
D. strengths, weaknesses, opportunities, and threats.
E. stars, questions marks, cash cows, and dogs.
116.An organization is developing a low-cost line of environmentally friendly cleaning products that it
intends to distribute internationally. Here, the organization is following a strategy.
A. cost leadership
B. differentiation
C. cost focus
D. retrenchment
E. focused-differentiation
117.An organization that is offering unique, superior products or services to a wide market is pursuing a
strategy of
A. cost leadership.
B. differentiation.
C. cost focus.
D. diversification.
E. focused differentiation.
118.An example of a firm that pursues a differentiation strategy is
A. Cartier.
B. Lexus.
C. Bic.
D. A regional discount gas station chain.
E. Home Depot.
119.Timex Group USA makes inexpensive but reliable watches sold throughout the United States and is an
example of an organization pursuing a strategy.
A. cost-leadership
B. differentiation
C. cost-focus
D. focused-differentiation
E. retrenchment
120.An organization that keeps costs and prices low in targeting a narrow market is pursuing a strategy of
A. cost leadership.
B. differentiation.
C. cost focus.
D. stability.
E. focused differentiation.
121.An organization that offers unique, superior products or services to a narrow market is pursuing a strategy
of
A. cost leadership.
B. differentiation.
C. cost focus.
D. diversification.
E. focused differentiation.
122.Which of the following carmakers pursues a focused-differentiation strategy?
A. Ferrari
B. Ford
C. Volkswagen
D. Honda
E. Kia
123.The benefit of the single-product strategy for a company is
A. synergy.
B. focus.
C. isolated systems.
D. differentiation.
E. lower costs.
124.Time Warner runs different divisions specializing in television, music, and publishing. Time Warner is
using a(n) strategy.
A. stability
B. defensive
C. diversification
D. differentiation
E. infiltration
125.Which of the following is most likely to use a diversification strategy?
A. A tax preparation business
B. A flower shop
C. A lawn service
D. A grocery store
E. A shoe store
126. refers to the idea that the economic value of separate, related businesses under one
ownership and management is greater together than the businesses are worth separately.
A. Structural benefit
B. Synergy
C. Selective function
D. Alignment
E. Consolidation
127.Which of the following strategy tools suggests that an organization will do better in fast-growing markets
in which it has a high market share rather than in slow-growing markets in which it has a low market
share?
A. SWOT analysis
B. Porter's model for industry analysis
C. Porter's competitive strategies
D. The BCG matrix
E. Trend analysis
128.Daniel is assessing his company's portfolio of products. One of them is the best-selling brand of
mayonnaise, although this is now a slow-growing market. If Daniel uses the BCG matrix, he would
classify this product as a
A. star.
B. cloud.
C. question mark.
D. cash cow.
E. dog.
129.Apple's iPad has a very high percentage of the market for tablet computers, and this is also a quickly
growing market. Thus, using the BCG matrix, the iPad would be classified as a
A. star.
B. cloud.
C. question mark.
D. cash cow.
E. dog.
130.A recent survey found that the top concern among CEOs worldwide is
A. profit growth.
B. customer loyalty.
C. excellence in execution.
D. stimulating innovation.
E. finding qualified employees.
131.According to Bossidy and Charan, effective requires managers to build a foundation for it within
three core process: people, strategy, and operations.
A. tactical planning
B. strategy
C. follow-through
D. execution
E. controlling
132.According to Bossidy and Charan, which business process is most important for effective execution?
A. Strategy
B. People
C. Alignment
D. Operations
E. Research
133.Which of the following is not a question that Bossidy and Charan believe a strong strategic plan must
address?
A. How will deviations from the plan be handled?
B. What is the assessment of the external environment?
C. What are the critical issues facing the business?
D. Can the business execute the strategy?
E. Are the short term and long term balanced?
134.Which of the following is not a behavior of a leader who executes?
A. Reward the doers.
B. Insist on realism.
C. Follow through.
D. Know yourself.
E. Respect others' limitations.
135.Bossidy and Charan believe that to excel at execution, a leader should
A. be hands-off once the strategy is set.
B. micromanage the tactics.
C. empower employees to take over the execution.
D. probe for weaknesses in the substance and details.
E. let the plan run its course before attempting to revise it.
136.Define strategic positioning. Explain the three principles that underlie strategic positioning.
137.Describe the strategic management process. Explain what the "feedback loop" is and why it is
important.

138.Name the three common grand strategies and provide an example of how a company might use each.

139.Explain strategy implementation, including the role of resistance.

140.Define competitive intelligence and explain how you might go about obtaining it legally.

141.What are the fundamental differences in examining internal and external environments when conducting
a situation analysis?

142.Give examples of what managers might look at in performing each element of a SWOT analysis.
143.Define forecasting and discuss its importance. Describe the two types of forecasting described in the
text.

144.Describe what determines competitiveness within a particular industry using Porter's model for industry
analysis. Provide an example for at least three of the five forces in the model.

145.Describe Porter's four competitive strategies and explain how they differ from each other. Provide an
example of a firm that might use each.

146.Explain the positive and negative aspects of pursuing a single-product strategy versus a diversification
one. Provide an example of a company that uses each type of strategy.

147.Explain the three core processes of business and how they relate to execution.

148.List at least five of the seven essential types of leader behaviors that are needed to fuel the engine of
execution.
 06 Key
1. Managers must be willing to make large, painful decisions to suddenly alter strategy.
TRUE

One of the lessons of successful managers is that they must be willing to make large, painful decisions
to suddenly alter strategy.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #1
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
2. In a world of rapid and discontinuous change, the ability to please nonmanagerial employees has been
called the golden trait among managers.
FALSE

Because of fast-spreading world conditions, such as the threat of products becoming commodities,
rapidly increasing productivity, and global overcapacity, managers must be able to make difficult
decisions. The writer Geoffrey Colvin puts it as, "The future will demand ever more people with the
golden trait, the fortitude to accept and even seek psychic pain."

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #2
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
3. A business plan is a document with the purpose of outlining a proposed firm's profit and loss
statements for its first operating cycle.
FALSE

A business plan is a document that outlines a proposed firm's goals, the strategy for achieving them,
and the standards for measuring success.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #3
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
4. Formal business plans can be dangerous to the survival of new businesses; many who try them fail
because of the resources required to write and agree upon the plan.
FALSE

Evidence suggests that firms with formal business plans are more apt to survive. For example,
research examined 396 entrepreneurs in Sweden and found that a greater number of firms that failed
never had a formal business plan.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #4
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
5. A strategy is a large-scale action plan that sets direction for an organization.
TRUE

A strategy is a large-scale action plan that sets the direction for an organization.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #5
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
6. Strategic management is the process of involving nonmanagerial employees in the formulation and
implementation of strategies and strategic goals.
FALSE

Strategic management is a process that involves managers from all parts of the organization in the
formulation and the implementation of strategies and strategic goals.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #6
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
7. An organization should adopt strategic management and strategic planning to encourage new
ideas.
TRUE

An organization should adopt strategic management and strategic planning for three reasons: They can
(1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable
competitive advantage.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #7
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
8. Bad planning is usually a result of top managers' inability to gather enough information.
FALSE

Bad planning usually results from faulty assumptions about the future, poor assessment of an
organization's capabilities, ineffective group dynamics, and information overload.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #8
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
9. Planning is usually a straightjacket for new ideas, since it effectively blocks peripheral vision in favor
of a predetermined course.
FALSE

Some people object that planning can foster rigidity, that it creates blinders that block out peripheral
vision and reduces creative thinking and action. Actually, far from being a straitjacket for new ideas,
strategic planning can help encourage them by stressing the importance of innovation in achieving
long-range success.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #9
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
10. A sustainable competitive advantage is the ability of an organization to produce goods or services
more effectively than its competitors and outperform them.
TRUE

A sustainable competitive advantage is the ability of an organization to produce goods or services

more effectively than its competitors do, thereby outperforming them.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #10
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
11. Ford's Sync in-dash communications platform, despite its high level of technology, has been unable to
provide the company with a distinct competitive advantage.
FALSE

"Right now (using Sync)," says an automotive analyst, "Ford has redefined this market, and it has
made it very difficult for anybody to enter the space and compete." In other words, Sync is a distinct
competitive advantage for the car company, at least so far.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #11
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
12. Harvard Business School professor Michael Porter is a leading authority on competitive strategy.
TRUE

Certainly Michael Porter's status as a leading authority on competitive strategy is unchallenged. The
Strategic Management Society, for instance, voted him the most influential living strategist.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #12
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
13. Strategic conservation attempts to achieve sustainable competitive advantage by preserving what is
distinctive about a company.
FALSE

Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is

distinctive about a company.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #13
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
14. Strategic positioning can be achieved by performing similar activities to rivals, but in different
ways.
TRUE

Strategic positioning means performing different activities from rivals, or performing similar activities
in different ways.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #14
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
15. A strategic position may be based on serving the few needs of a few customers.
FALSE

Strategic position emerges from three sources: Few needs and many customers, broad needs and few
customers, and lastly, broad needs and many customers.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #15
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
16. Good strategy allows a company to be everything to everyone.
FALSE

Strategy requires trade-offs in competing. Some strategies are incompatible. Thus a company has to
choose not only what strategy to follow but what strategy not to follow.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #16
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
17. Strategic planning is appropriate for large companies, but does not help the performance of small
companies.
FALSE

One analysis of several studies found that strategic planning was appropriate not just for large firms.
Companies with fewer than 100 employees could benefit as well, although the improvement in
financial performance was small.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #17
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
18. Management of a small company in an industry that is not very competitive should not engage in
strategic planning because the small gains in performance may not be worth the effort.
TRUE

Research results indicate that for small companies strategic planning is probably not worth the effort
unless the company is in a highly competitive industry where small differences in performance may
affect the firm's survival potential.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #18
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
19. Organizations may turn to the strategic-management process after a crisis.
TRUE

When is a good time to begin the strategic-management process? Often it's touched off by some
crisis, such as the one Toyota faced regarding claims of uncontrolled acceleration problems in its
automobiles.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #19
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
20. The first step of the strategic-management process is to establish the grand strategy.
FALSE

The first step of the strategic-management process is to establish the mission and the vision.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #20
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
21. The strategic-management process has five steps and a feedback loop.
TRUE

The strategic-management process has five steps, plus a feedback loop (see Figure 6.1).

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #21
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
22. A vision will be demoralizing to employees if it describes a future state that appears beyond the reach
of the organization.
FALSE

A vision should be positive and inspiring, and it should stretch the organization and its employees to
achieve a desired future state that appears beyond its reach.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #22
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
23. Many good mission statements include descriptions of an organization's customers, as well as its
major products or services.
TRUE

Mission statements may include information about customers and products or services.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #23
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
24. According to Burt Nanus, good vision statements are useful because they help people to consider all
interesting elements in their environments.
FALSE

Burt Nanus says that a good vision statement helps align people's energies in a common direction, and
prevents people from being overwhelmed by immediate problems because the vision statement helps
distinguish what is truly important from what is merely interesting.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #24
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
25. A good vision statement should describe a company's major strengths and competitive advantage in its
industry.
FALSE

Descriptions of major strengths and competitive advantage should be included in a mission statement.
See Table 6.1.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #25
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
26. A mission statement should be ambitious.
FALSE

Good vision statements are typically ambitious. See Table 6.1.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #26
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
27. After the assessment of current organizational performance, the subsequent explanation of how its
mission is to be accomplished is called a comprehensive strategy.
FALSE

A grand strategy, after an assessment of current organizational performance, explains how the
organization's mission is to be accomplished.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #27
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
28. A defensive strategy is sometimes called a retrenchment strategy.
TRUE

A defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #28
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
29. A development strategy is the common grand strategy that involves expansion.
FALSE

A growth strategy is a grand strategy that involves expansion, as in sales revenues, market share,
number of employees, or number of customers or (for nonprofits) clients served.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #29
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
30. A continuity strategy is the common grand strategy that involves little or no significant change.
FALSE

A stability strategy is a grand strategy that involves little or no significant change.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #30
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
31. Alaska Airline was profitable in 2011, prompting is to decide to remain a "smallish, specialized,
regional airline in a world of global giants," which is an example of a stability strategy.
TRUE

A stability strategy is a grand strategy that involves little or no significant change. Example: Alaska
Airlines, which enjoyed a profitable year in 2011, following a decade in which other carriers went
bankrupt, decided to remain a "smallish, specialized, regional airline in a world of global giants," says
one report, and to avoid cross-continental alliances and megamergers. Its stability strategy is simply to
focus on lowering the cost per available seat mile.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #31
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
32. A grand strategy can be established using tools like SWOT analysis and forecasting.
TRUE

Among the strategic-planning tools and techniques used to establish a grand strategy are (1) SWOT
analysis and (2) forecasting.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #32
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
33. Strategy formulation is the process of choosing among different strategies and altering them to best fit
the organization's needs.
TRUE

Strategy formulation is the process of choosing among different strategies and altering them to best fit
the organization's needs.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #33
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
34. The starting point in establishing a grand strategy is usually an analysis of Porter's competitive
forces.
FALSE

Among the techniques used in strategy formulation, rather than a grand strategy, is Porter's
competitive forces and strategies.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #34
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
35. Strategy actualization is the term for putting strategic plans into effect.
FALSE

Putting strategic plans into effect is strategy implementation.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #35
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
36. A common challenge to strategy implementation is resistance by people within the organization.
TRUE

Often implementation means overcoming resistance by people who feel the plans threaten their
influence or livelihood. This is particularly the case when the plans must be implemented rapidly,
since delay is the easiest kind of resistance there is.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #36
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
37. One of the ways to keep a strategic plan on track is to make it very comprehensive, covering as many
scenarios for the future as you can.
FALSE

To keep a strategic plan on track, you need to engage people, keep it simple, stay focused, and keep
moving toward your vision of the future.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #37
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
38. The primary purpose of competitive intelligence is to challenge the thinking of employees to make
them better equipped to produce novel ideas for business.
FALSE

Practicing competitive intelligence means gaining information about one's competitors' activities so
that you can anticipate their moves and react appropriately. If you are a manager, one of your worst
nightmares is that a competitor will surprise you with a service or product.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #38
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
39. SWOT analysis helps management to develop a realistic understanding of the organization in relation
to internal and external environments.
TRUE

SWOT analysis should provide a realistic understanding of the organization in relation to its internal
and external environments so you can better formulate strategy in pursuit of the firm's mission.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #39
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
40. Obsolete technology and outdated facilities are examples of organizational threats.
FALSE

Does your organization have obsolete technology? outdated facilities? a shaky marketing operation?
These are examples of organizational weaknesses, the drawbacks that hinder an organization in
executing strategies in pursuit of its mission.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #40
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
41. Guthrie Community College has done a SWOT analysis and discovered that the number of college-
bound high-school juniors in its state has grown by nearly 20% in the past few years. This is a strength
for Guthrie.
FALSE

The increased number of college-bound high-school juniors represents an opportunity for Guthrie
because it is an environmental factor that the organization may exploit for competitive advantage.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #41
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
42. Organizational threats are the environmental factors that hinder an organization's ability to achieve a
competitive advantage.
TRUE

Organizational threats are environmental factors that hinder an organization's achieving a competitive
advantage.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #42
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
43. Forecasting is a strategic-planning tool used to make long-term strategy.
TRUE

Once they've analyzed their organization's Strengths, Weaknesses, Opportunities, and Threats,
planners need to do forecasting for making long-term strategy. A forecast is a vision or projection of
the future.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #43
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
44. Two types of forecasting are trend analysis and competitive intelligence.
FALSE

Two types of forecasting are trend analysis and contingency planning.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #44
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
45. Contingency planning is a hypothetical extension of a past series of events into the future.
FALSE

A trend analysis is a hypothetical extension of a past series of events into the future.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #45
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
46. Too little or unreliable historical data may result in erroneous trend analyses.
TRUE

The basic assumption of a trend analysis is that the picture of the present can be projected into the
future. This is not a bad assumption, if you have enough historical data, but it is always subject to
surprises. And if your data are unreliable, they will produce erroneous trend projections.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #46
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
47. Contingency planning can also be called scenario analysis.
TRUE

Contingency planning, also known as scenario planning and scenario analysis, is the creation of
alternative hypothetical but equally likely future conditions.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #47
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
48. The use of hedging to manage the cost of aviation fuel is an example of trend analysis.
FALSE

In the past several years, Southwest Airlines has been able to effectively use hedging to hold down its
costs for aviation fuel. This is an example of contingency planning.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #48
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
49. In Porter's model for industry analysis, there are three primary competitive forces in a firm's
environment.
FALSE

Strategic-management expert Michael Porter suggested in his Porter's model for industry analysis that
business-level strategies originate in five primary competitive forces in the firm's environment: (1)
threats of new entrants, (2) bargaining power of suppliers, (3) bargaining power of buyers, (4) threats
of substitute products or services, and (5) rivalry among competitors.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #49
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
50. Kraft Macaroni & Cheese is now challenged by new competitors such as Annie's and other store
brands, which Porter's model for industry analysis calls the threat of new entrants.
TRUE

New competitors can take away customers from existing organizations, which is called the threat of
new entrants in the model. Example: Kraft Macaroni & Cheese is a venerable, well-known brand but
is threatened from the low end by store brands, such as Walmart's brand, and from the high end by
Annie's Creamy Macaroni and Cheese with Real Aged Wisconsin Cheddar.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #50
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
51. In a cost-leadership strategy, an organization targets a wide market and offers products or services of
unique and superior value compared to competitors.
FALSE

The cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those
of competitors and to target a wide market. The differentiation strategy is to offer products or services
that are of unique and superior value compared with those of competitors but to target a wide market.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #51
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
52. Luxury carmaker Rolls-Royce has a focused-differentiation strategy.
TRUE

The focused-differentiation strategy is to offer products or services that are of unique and superior
value compared to those of competitors and to target a narrow market. Some luxury cars, like the
Rolls-Royce, Ferrari, and Lamborghini, are so expensive that only a few car buyers can afford them.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #52
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
53. A single-product strategy can be described as focused but vulnerable.
TRUE

In a single-product strategy, a company makes and sells only one product within its market. This
allows you to focus your manufacturing and marketing efforts just on that product. The risk, of course,
is that you are vulnerable if a rival gets the jump on you, or if an act of God intervenes, and your
entire business may go under.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #53
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
54. A small florist most likely follows a diversification strategy.
FALSE

A single-product strategy is followed by the small florist who sells only one product within its market.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #54
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
55. General Electric sells lighting products and is also involved in plastics, broadcasting, and financial
services. GE uses a related diversification strategy.
FALSE

Unrelated diversification means operating several businesses under one ownership that are not related
to one another. GE, which began by making lighting products, diversified into such unrelated areas as
plastics, broadcasting, and financial services.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #55
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
56. Burberry makes outerwear, accessories like umbrellas, and children's clothing, which is called a
related diversification strategy.
TRUE

An example of a related diversification strategy is the famous British raincoat maker Burberry. It
started by making and marketing outerwear clothing but since then has expanded into related business
lines, including accessories such as umbrellas, children's clothing, and even fragrances, which it sells
in its own stores.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #56
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
57. Synergy is one of the benefits of a single-product strategy.
FALSE

Synergy is characteristic of a related diversification strategy. The concept of synergy is that the
economic value of separate, related businesses under one ownership and management is greater
together than the businesses are worth separately.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #57
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
58. The BCG matrix is a means of evaluating strategic business units on the basis of both their business
growth rates and their profitability.
FALSE

The BCG matrix is a means of evaluating strategic business units on the basis of (1) their business
growth rates and (2) their share of the market.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #58
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
59. Cash cows in the BCG matrix have slow growth but high market share.
TRUE

Cash cows in the BCG matrix have slow growth but high market share, and income from them
finances stars and question marks.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #59
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
60. Execution is tactical in nature, rather than part of a company's strategy.
FALSE

Execution is not simply tactics; it is a central part of any company's strategy. It consists of using
questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and
achieve results promised.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #60
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 1 Easy
Topic: Implementing & Controlling Strategy: Execution
61. A company must be able to execute three core processes of business including people, products, and
administration.
FALSE

A company's overall ability to execute is a function of effectively executing according to three

processes: people, strategy, and operations.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #61
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 1 Easy
Topic: Implementing & Controlling Strategy: Execution
62. Insisting on realism is among the leader behaviors that help a manager successfully execute a
strategy.
TRUE

Bossidy and Charan propose that there are seven essential types of leader behaviors that are needed to
fuel the engine of execution. Insisting on realism is among them. Many people want to avoid or shade
reality, hiding mistakes or avoiding confrontations. Making realism a priority begins with the leaders
being realistic themselves, and making sure realism is the goal of all dialogues in the organization.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #62
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
63. Managers who execute well insist on constant optimism.
FALSE

Bossidy and Charan propose that there are seven essential types of leader behaviors that are needed to
fuel the engine of execution. Insisting on realism is among them. Many people want to avoid or shade
reality, hiding mistakes or avoiding confrontations. Making realism a priority begins with the leaders
being realistic themselves, and making sure realism is the goal of all dialogues in the organization.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #63
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
64. A represents an "educated guess" about what must be done in the long term for survival or the
prosperity of the organization or its principal parts.
A. trend analysis
B. mission
C. strategy
D. forecast
E. contingency plan

A strategy is a large-scale action plan that sets the direction for an organization. It represents
an "educated guess" about what must be done in the long term for the survival or the prosperity of the
organization or its principal parts.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #64
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
65. "Find out what customers want, then provide it to them as cheaply and quickly as possible" is
Walmart's
A. growth plan.
B. technical plan.
C. synergy.
D. strategy.
E. forecast.

A strategy is a large-scale action plan that sets the direction for an organization. An example is "Find
out what customers want, then provide it to them as cheaply and quickly as possible," the strategy of
Walmart.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #65
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
66. Effective strategic management involves
A. only top management.
B. only top and middle management.
C. only middle and lower management levels.
D. only lower management level.
E. managers from all parts of the organization.

Strategic management is a process that involves managers from all parts of the organization in the
formulation and the implementation of strategies and strategic goals. Precisely because middle and
first-line managers are the ones who will be asked to understand and implement the strategies, they
should also help to formulate them.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #66
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
67. Which of the following would be considered a reason for adopting strategic management and strategic
planning?
A. To enhance employee loyalty.
B. To keep corporate taxes at a minimum.
C. To develop independent work from the staff.
D. To provide develop a sustainable competitive advantage.
E. To increase market dominance with repeat purchase.

There are three reasons why an organization should adopt strategic management and strategic
planning: (1) to provide direction and momentum, (2) to encourage new ideas, and above all (3) to
develop a sustainable competitive advantage.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #67
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 1 Easy
Topic: The Dynamics of Strategic Planning
68. Which of the following statements about strategic planning and strategic management is true?
A. Strategic planning is rarely used in the current environment of fast change because it does not allow
for flexibility.
B. Strategic management is a process completed by top managers.
C. Both should be implemented because they can provide direction and momentum.
D. Middle managers need not understand strategies; they simply follow them.
E. Strategic planning is used to accomplish tactical goals.

There are three reasons why an organization should adopt strategic management and strategic
planning: (1) to provide direction and momentum, (2) to encourage new ideas, and above all (3) to
develop a sustainable competitive advantage.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #68
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
69. Which of the following is not a typical cause of bad planning?
A. Information overload.
B. Inadequate planning budgets.
C. Ineffective group dynamics.
D. Poor assessment of an organization's capabilities.
E. Faulty assumptions about the future.

Bad planning usually results from faulty assumptions about the future, poor assessment of an
organization's capabilities, ineffective group dynamics, and information overload.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #69
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
70. Which of the following is not an area in which a company needs to get and stay ahead in order to
sustain a competitive advantage?
A. Talented employees
B. Quality
C. Effectiveness
D. Being responsive to customers
E. Innovating

Sustainable competitive advantage occurs when an organization is able to get and stay ahead in four
areas: (1) in being responsive to customers, (2) in innovating, (3) in quality, and (4) in effectiveness.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #70
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
71. means performing different activities from rivals or performing similar ones in different
ways.
A. Competitive planning
B. Distinctive positioning
C. Collaborative planning
D. Strategic segmentation
E. Strategic positioning

According to Porter, strategic positioning attempts to achieve sustainable competitive advantage by

preserving what is distinctive about a company. "It means," he says, "performing different activities
from rivals, or performing similar activities in different ways."

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #71
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
72. Which of the following statements about strategy and strategic positioning is false?
A. Many customers with broad needs can be a source of strategic position.
B. A company has to choose not only what strategy to follow but what strategy not to follow.
C. Few customers with broad needs can be a source of strategic position.
D. Strategy involves creating a "fit" among activities.
E. Few customers with narrow needs can be a source of strategic position.

Three key principles underlie strategic positioning: (1) strategy is the creation of a unique and
valuable position which emerges from three sources (few needs and many customers, broad needs and
few customers, broad needs and many customers). (2) Strategy requires trade-offs in competing; a
company has to choose not only what strategy to follow but what strategy not to follow. (3) Strategy
involves creating a "fit" among activities.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #72
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
73. Consumers can use a national company called Service Magic to receive bids from quality providers
of a variety of services, including home remodel, landscaping, plumbing, and housecleaning. Service
Magic charges service providers for the leads it provides to them monthly. Which of the following is
the source of Service Magic's strategic position?
A. Low-profit margin and many customers.
B. Broad needs and few customers.
C. Broad needs and many customers.
D. High-profit margin and many customers.
E. High-profit margin and few customers.

According to Porter, strategic positioning attempts to achieve sustainable competitive advantage by

preserving what is distinctive about a company. "It means," he says, "performing different activities
from rivals, or performing similar activities in different ways."

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #73
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 3 Hard
Topic: The Dynamics of Strategic Planning
74. A small firm is likely to benefit significantly from strategic planning
A. regardless of the nature of its industry or market.
B. when it is in a very competitive industry.
C. when it is in a very new industry.
D. when it is in a very stable industry.
E. when it has a very small market.

Researchers conclude that "it may be that the small improvement in performance is not worth the
effort involved in strategic planning unless a firm is in a very competitive industry where small
differences in performance may affect the firm's survival potential."

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #74
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
75. Anne runs a small bakery on the main street of a resort town. Though hers was the only bakery
around, the business had been suffering during the economic slowdown, and she was contemplating
whether she should attempt strategic planning. Anne should be aware of what research finding
regarding strategic planning?
A. Only large firms show performance gains from strategic planning.
B. Only small firms show performance gains from strategic planning.
C. Performance gains from strategic planning are equal among small and large firms.
D. Both small and large firms benefit from strategic planning, but small firms get a larger boost in
performance.
E Both small and large firms benefit from strategic planning, but the small improvement in
. performance may not be worth the effort for small firms.

One analysis of several studies found that strategic planning was appropriate not just for large firms.
Companies with fewer than 100 employees could benefit as well, although the improvement in
financial performance was small. Nevertheless, the researchers concluded, "it may be that the small
improvement in performance is not worth the effort involved in strategic planning unless a firm is
in a very competitive industry where small differences in performance may affect the firm's survival
potential."

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #75
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 3 Hard
Topic: The Dynamics of Strategic Planning
76. Milo owns and manages a small bike repair store. In order to determine if strategic planning will be
likely to help his business, Milo should primarily assess
A. how many competitors he has.
B. foot traffic by his location.
C. his profitability in the prior six months.
D. industry trends.
E. how much he intends to grow in the next five years.

Strategic planning is not likely to result in a significant improvement unless Milo is in a highly
competitive industry.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #76
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 3 Hard
Topic: The Dynamics of Strategic Planning
77. Which of the following best represents a currently popular strategy among big companies like Apple,
Google, and Amazon?
A. Become involved in the community.
B. Seek niches where there is less competition.
C. Get consumers tightly connected to the company's ecosystem.
D. Offer personal or emotional connections to customers.
E. Discourage price comparisons.

With big companies, especially big-tech companies such as Amazon, Google, or Apple, the strategy
is to get consumers tied not just to a brand or device or platform but to make them captive of the
company's ecosystem and to get them connected "as tightly as possible so they and their content are
locked into one system," says analyst Michael Gartenberg.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #77
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
78. Which of the following steps of the strategic-management process is the source of its feedback loop?

A. Carry out the strategic plan.

B. Maintain strategic control.
C. Establish the grand strategy.
D. Establish the mission and vision.
E. Formulate the strategic plans.

The feedback loop, which provides an opportunity to revise actions, originates at the final step of the
strategic-management process, to maintain strategic control (see Figure 6.1).

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #78
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
79. Which of the following is not a stage in the strategic-management process?
A. Conduct a trend analysis.
B. Maintain strategic control.
C. Establish the grand strategy.
D. Establish the mission and vision.
E. Carry out the strategic plans.

The steps of the strategic-management process are establishing the mission and vision, establishing
the grand strategy, formulating the strategic plans, carrying out the strategic plans and maintaining
strategic control (see Figure 6.1).

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #79
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
80. Which of the following should be included in a good vision statement?
A. Firm's attitude toward its employees.
B. Geographical areas in which the firm will compete.
C. Firm's basic technology.
D. Firm's standards of excellence and high ideals.
E. Firm's major products or services.

Good vision statements should set standards of excellence and reflect high ideals (see Table 6.1).

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #80
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
81. Which of the following is a question that should be answered by a company's mission statement?
A. Will it inspire enthusiasm and encourage commitment?
B. Does it set standards of excellence?
C. Is it appropriate for the organization?
D. Is it well articulated?
E. Who is our customer?

Good mission statements should answer the question, "Who is our customer?" (see Table 6.1).
AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #81
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process

82. The common grand strategies are

A. star, question mark, cash cow, and dog.
B. cost-leadership, differentiation, cost focus, and focused differentiation.
C. growth, stability, and defensive.
D. strengths, weaknesses, opportunities, and threats.
E. defender, prospector, analyzer, and reactor.

Three common grand strategies are growth, stability, and defensive.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #82
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
83. Computer technology corporation Dell recently acquired Quest software, an IT management software
provider, in order to expand upon its software expertise and offerings. Dell is pursuing a(n)
strategy.
A. escalation
B. growth
C. stability
D. merger
E. defensive

A growth strategy is a grand strategy that involves expansion, as in expanding sales revenues, market
share, number of employees, or number of customers or (for nonprofits) clients served. In a variation
of this strategy, it can acquire similar or complementary businesses.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #83
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
84. High Peaks Skate and Snowboard is a small shop that provides equipment for Utah snowboarders in
winter months. It has decided to increase advertising during this period in the Salt Lake Tribune and
the Park Record in Park City, as well as to sponsor a new on-mountain competition. It is following
which strategy?
A. Inducement
B. Defensive
C. Growth
D. Stability
E. Enhancement

A growth strategy is a grand strategy that involves expansion, as in expanding sales revenues, market
share, number of employees, or number of customers or (for nonprofits) clients served. In a variation
of this strategy, it can increase its promotion and marketing efforts to try to expand its market share.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #84
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
85. Faisal has been running a commercial real estate business for nearly 30 years. As he approaches
retirement, he is content to simply lease the commercial space he currently has, rather than make new
deals to develop additional properties. Faisal is using which grand strategy?
A. Stability
B. Retrenchment
C. Inducement
D. Defensive
E. Growth

A stability strategy is a grand strategy that involves little or no significant change.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #85
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
86. A grand strategy that involves reduction in the organization's efforts is the strategy.
A. retrenchment
B. reorganization
C. downsizing
D. growth
E. stability

A defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #86
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
87. An Iowa ethanol production company has been suffering from a combination of lower demand for
gasoline (into which its product is mixed) and higher corn prices (which is the largest input cost).
It has responded by selling off land, buildings, and some of its reserve product inventory. This is a
variation of which of these grand strategies?
A. Right-size
B. Growth
C. Stability
D. Defensive
E. Reorganization

A defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in

the organization's efforts. In a variation of this strategy, it can sell off (liquidate) assets like land,
buildings, inventories, and the like.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #87
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
88. Recently ConocoPhillips, America's third-biggest oil company, spun off its refineries, pipelines, and
chemicals division to form a new company called Phillips 66. Now ConocoPhillips will concentrate
on its upstream operations. This is a variation of which of these grand strategies?
A. Right-size
B. Growth
C. Stability
D. Defensive
E. Reorganization

A defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts. In a variation of this strategy, it can divest part of its business, as in selling off
entire divisions or subsidiaries.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #88
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
89. A fine luggage maker was struggling with heavy debt and a sharp decline in customers, and it
eventually declared bankruptcy. The company followed which grand strategy?
A. Growth
B. Stability
C. Defensive
D. Reduction
E. Reactive

A defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts. In a variation of this strategy, it can declare bankruptcy.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #89
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
90. After film manufacturer Kodak failed to reinvent itself and declared bankruptcy in 2012, it decided to
focus on its business of making inkjet printers as part of a strategy.
A. growth
B. stability
C. defensive
D. reorganization
E. reactor

A defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts. In variations of this strategy, it can declare bankruptcy or gradually phase out
product lines or services.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #90
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
91. The process of choosing among different strategies and altering them to best fit the organization is
called
A. strategy formulation.
B. contingency planning.
C. strategic control.
D. strategy implementation.
E. trend analysis.

Strategy formulation is the process of choosing among different strategies and altering them to best fit
the organization's needs.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #91
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
92. Actively selling strategic plans to middle and supervisory managers, rather than just announcing them,
is helpful for
A. situation analysis.
B. strategy formulation.
C. strategy implementation.
D. contingency planning.
E. strategic control.

Often strategy implementation means overcoming resistance by people who feel the plans threaten
their influence or livelihood. Thus, top managers can't just announce the plans; they have to actively
sell them to middle and supervisory managers.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #92
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
93. consists of monitoring the execution of strategy and making adjustments, if necessary.
A. Mission translation
B. Strategic control
C. Strategy implementation
D. Contingency planning
E. SWOT analysis

Strategic control consists of monitoring the execution of strategy and making adjustments, if
necessary.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #93
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 1 Easy
Topic: The Strategic-Management Process
94. Which of the following is not one of Bryan Barry's recommendations to keep a strategic plan on
track?
A. Keep moving.
B. Engage people.
C. Keep it simple.
D. Avoid compromise.
E. Stay focused.

To keep a strategic plan on track, suggests Bryan Barry, you need to do the following: Engage people.
Keep it simple. Stay focused. Keep moving.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #94
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
95. Gaining information about one's competitors' activities so that you can anticipate their moves and
react appropriately is called
A. strategic forecasting.
B. corporate espionage.
C. contingency planning.
D. trend analysis.
E. competitive intelligence.

Practicing competitive intelligence means gaining information about one's competitors' activities so
that you can anticipate their moves and react appropriately.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #95
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
96. Which of the following is not a likely source of information for competitive intelligence?
A. Competitors' press releases
B. Industry gossip
C. Competitors' annual reports
D. Competitor's customer records
E. Sales visits to customers

Gaining competitive intelligence isn't always easy, but there are several avenues and, surprisingly,
most of them are public sources including the public prints and advertising, investor information, and
informal sources. A competitor's customer records are not available publicly, nor would they yield
much information about upcoming plans.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #96
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
97. Rafaela is interested in learning more about what one of her competitors is doing so that she can
anticipate its upcoming moves and react quickly. Which of the following would you suggest to her for
this purpose?
A. Go through the competitor's trash on its property.
B. Pose as an applicant for a job with the competitor.
C. Use investor information.
D. Call the competitor, explain who you are, and ask directly.
E. Pay the competitor's customers for information.

Gaining competitive intelligence isn't always easy, but there are several avenues and, surprisingly,
most of them are public sources including the public prints and advertising, investor information, and
informal sources such as trade show gossip and tidbits from salespeople.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #97
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
98. Careful monitoring of an organization's internal and external environment to detect early signs of
opportunities and threats that may influence the firm's plans is called
A. competitive intelligence.
B. forecasting.
C. contingency planning.
D. trend analysis.
E. environmental scanning.

Environmental scanning is careful monitoring of an organization's internal and external environments

to detect early signs of opportunities and threats that may influence the firm's plans.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #98
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
99. A situational analysis is also known as
A. strategic control.
B. SWOT analysis.
C. trend analysis.
D. contingency planning.
E. forecasting.

SWOT analysis, also known as a situational analysis, is a search for the strengths, weaknesses,
opportunities, and threats affecting the organization.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #99
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
100. When analyzing the "S" in a SWOT analysis, a manager might take note of
A. a decrease in the size of the market.
B. competitors' new products.
C. high turnover of employees.
D. strong financial resources of the firm.
E. lifting of governmental regulations.

Strengths of a company can include financial resources and requirements, which are an internal factor.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #100
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
101. When analyzing the "W" in SWOT analysis, a manager might take note of
A. a decrease in consumer demand.
B. a competitor's bankruptcy.
C. high turnover of employees.
D. good financial resources of the firm.
E. institution of a tariff on foreign competitors.

High turnover of employees is an internal matter that is a weakness.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #101
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
102. When analyzing the "O" in SWOT analysis, a manager might take note of
A. favorable government regulations.
B. absenteeism among employees.
C. good morale among workers.
D. high service levels.
E. good financial position.

A manager may be able to discover an opportunity in favorable government regulations.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #102
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
103. When analyzing the "T" in SWOT analysis, a manager might take note of
A. the firm's cash flow problems.
B. a competitor's new product.
C. employee absenteeism.
D. strong corporate culture.
E. high service levels.

A competitor's new product may be a threat if it is likely to capture market share.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #103
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
104. Analysis of changing demographics of the U.S. population would be part of the assessment of a
company's
A. strengths.
B. weaknesses.
C. opportunities.
D. threats.
E. opportunities or threats depending on the outcome of the analysis.

Changing demographics may be either an opportunity or a threat in the environment. For example, the
aging population may help some firms but hurt others.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #104
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
105. A manager assessing the organization's access to capital is involved in analysis of
A. strengths.
B. weaknesses.
C. opportunities.
D. threats.
E. strengths or weaknesses depending on the outcome of the assessment.

Access to capital may be either an internal strength or weakness, since some firms have this and others
don't.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #105
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
106. Amanda has just determined that her employees will require extensive training if they are to acquire
the necessary technological expertise to produce a new product line. She has discovered one of her
firm's
A. strengths.
B. weaknesses.
C. opportunities.
D. threats.
E. market challenges.

The lack of technological expertise is a weakness of the organization.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #106
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
107. The skills and capabilities that give the organization advantages in executing strategies in pursuit of its
mission are known as
A. organizational strengths.
B. organizational opportunities.
C. organizational threats.
D. organizational weaknesses.
E. competitive strategies.

Organizational strengths are the skills and capabilities that give the organization special competencies
and competitive advantages in executing strategies in pursuit of its mission.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #107
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
108. Environmental factors that the organization may exploit for a competitive advantage are known as
A. organizational strengths.
B. organizational opportunities.
C. organizational threats.
D. organizational weaknesses.
E. competitive strategies.

Organizational opportunities are environmental factors that the organization may exploit for
competitive advantage.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #108
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
109. Alexis has prepared a report that details how prices for several raw materials her firm uses in
production have risen by up to 30% in the last year. Her report would be an input into the
part of a SWOT analysis.
A. strengths
B. weaknesses
C. opportunities
D. threats
E. structure

Rising costs for raw materials in an external threat to a company.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #109
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
110. A vision or projection of the future is called a(n)
A. trend.
B. forecast.
C. contingency.
D. strategy.
E. opportunity.

A forecast is a vision or projection of the future.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #110
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
111. A time-series forecast, which is used to predict long-term trends, cyclic patterns, and seasonal
variations, is one type of
A. organizational strength.
B. contingency planning.
C. trend analysis.
D. balanced scorecard.
E. strategy formulation.

An example of trend analysis is a time-series forecast, which predicts future data based on patterns of
historical data. Time-series forecasts are used to predict long-term trends, cyclic patterns (as in the up-
and-down nature of the business cycle), and seasonal variations (as in Christmas sales versus summer
sales).

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #111
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
112. Creation of alternative hypothetical but equally likely future conditions is called
A. contingency planning.
B. trend analysis.
C. balancing the scorecard.
D. strategy formulation.
E. forecasting.

Contingency planning, also known as scenario planning and scenario analysis, is the creation of
alternative hypothetical but equally likely future conditions.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #112
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 1 Easy
Topic: Establishing the Grand Strategy
113. Which of the following is not one of the forces that affects industry competition, according to Porter's
model for industry analysis?
A. Threats of new entrants.
B. Threats of substitute products and services.
C. Bargaining power of buyers.
D. Threats of government interference.
E. Bargaining power of suppliers.

Strategic-management expert Michael Porter suggested in his Porter's model for industry analysis that
business-level strategies originate in five primary competitive forces in the firm's environment: (1)
threats of new entrants, (2) bargaining power of suppliers, (3) bargaining power of buyers, (4) threats
of substitute products or services, and (5) rivalry among competitors.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #113
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
114. Oil companies must be aware of other firms' development of ethanol products since this is an example
of which one force in Porter's model for industry analysis?
A. Bargaining power of buyers.
B. Rivalry among competitors.
C. Bargaining power of suppliers.
D. Threats of new entrants.
E. Threats of substitute products and services.

In an example of the threats of substitute products or services, oil companies might worry that Brazil
is close to becoming energy self-sufficient because it is able to meet its growing demand for vehicle
fuel by substituting ethanol derived from sugarcane for petroleum.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #114
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
115. Porter's competitive strategies include
A. prospector, defender, analyzer, and reactor.
B. growth, stability, and retrenchment.
C. cost leadership, differentiation, cost focus, and focused differentiation.
D. strengths, weaknesses, opportunities, and threats.
E. stars, questions marks, cash cows, and dogs.

Porter's four competitive strategies (also called four generic strategies) are (1) cost leadership, (2)
differentiation, (3) cost-focus, and (4) focused-differentiation.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #115
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
116. An organization is developing a low-cost line of environmentally friendly cleaning products that it
intends to distribute internationally. Here, the organization is following a strategy.
A. cost leadership
B. differentiation
C. cost focus
D. retrenchment
E. focused-differentiation

The cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those
of competitors and to target a wide market.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #116
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
117. An organization that is offering unique, superior products or services to a wide market is pursuing a
strategy of
A. cost leadership.
B. differentiation.
C. cost focus.
D. diversification.
E. focused differentiation.

The differentiation strategy is to offer products or services that are of unique and superior value
compared to those of competitors but to target a wide market.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #117
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
118. An example of a firm that pursues a differentiation strategy is
A. Cartier.
B. Lexus.
C. Bic.
D. A regional discount gas station chain.
E. Home Depot.

The differentiation strategy is to offer products or services that are of unique and superior value
compared to those of competitors but to target a wide market. Because products are expensive,
managers may have to spend more on R&D, marketing, and customer service. This is the strategy
followed by Ritz-Carlton hotels and the makers of Lexus automobiles.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #118
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
119. Timex Group USA makes inexpensive but reliable watches sold throughout the United States and is
an example of an organization pursuing a strategy.
A. cost-leadership
B. differentiation
C. cost-focus
D. focused-differentiation
E. retrenchment

The cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those
of competitors and to target a wide market.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #119
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
120. An organization that keeps costs and prices low in targeting a narrow market is pursuing a strategy
of
A. cost leadership.
B. differentiation.
C. cost focus.
D. stability.
E. focused differentiation.

The cost-focus strategy is to keep the costs, and hence prices, of a product or service below those of
competitors and to target a narrow market.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #120
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
121. An organization that offers unique, superior products or services to a narrow market is pursuing a
strategy of
A. cost leadership.
B. differentiation.
C. cost focus.
D. diversification.
E. focused differentiation.

The focused-differentiation strategy is to offer products or services that are of unique and superior
value compared to those of competitors and to target a narrow market.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #121
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
122. Which of the following carmakers pursues a focused-differentiation strategy?
A. Ferrari
B. Ford
C. Volkswagen
D. Honda
E. Kia

The focused-differentiation strategy is to offer products or services that are of unique and superior
value compared to those of competitors and to target a narrow market.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #122
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
123. The benefit of the single-product strategy for a company is
A. synergy.
B. focus.
C. isolated systems.
D. differentiation.
E. lower costs.

Making just one product allows you to focus your manufacturing and marketing efforts just on
that product. This means that your company can become savvy about repairing defects, upgrading
production lines, scouting the competition, and doing highly focused advertising and sales.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #123
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
124. Time Warner runs different divisions specializing in television, music, and publishing. Time Warner
is using a(n) strategy.
A. stability
B. defensive
C. diversification
D. differentiation
E. infiltration

Diversification strategy means operating several businesses in order to spread the risk. Major
entertainment/media companies follow this strategy.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #124
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
125. Which of the following is most likely to use a diversification strategy?
A. A tax preparation business
B. A flower shop
C. A lawn service
D. A grocery store
E. A shoe store

Diversification strategy means operating several businesses in order to spread the risk. A grocery store
sells food, toiletries, pharmaceuticals, cards, flowers, and often more.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #125
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
126. refers to the idea that the economic value of separate, related businesses under one
ownership and management is greater together than the businesses are worth separately.
A. Structural benefit
B. Synergy
C. Selective function
D. Alignment
E. Consolidation

Synergy is the economic value of separate, related businesses under one ownership, and management
is greater together than the businesses are worth separately.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #126
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 1 Easy
Topic: Formulating Strategy
127. Which of the following strategy tools suggests that an organization will do better in fast-growing
markets in which it has a high market share rather than in slow-growing markets in which it has a low
market share?
A. SWOT analysis
B. Porter's model for industry analysis
C. Porter's competitive strategies
D. The BCG matrix
E. Trend analysis

In general, the BCG matrix suggests that an organization will do better in fast-growing markets in
which it has a high market share rather in slow-growing markets in which it has a low market share.
These concepts are illustrated in Figure 6.4.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #127
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 2 Medium
Topic: Formulating Strategy
128. Daniel is assessing his company's portfolio of products. One of them is the best-selling brand of
mayonnaise, although this is now a slow-growing market. If Daniel uses the BCG matrix, he would
classify this product as a
A. star.
B. cloud.
C. question mark.
D. cash cow.
E. dog.

In the BCG matrix, cash cows have slow growth but high market share, and income from them often
finances stars and question marks.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #128
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
129. Apple's iPad has a very high percentage of the market for tablet computers, and this is also a quickly
growing market. Thus, using the BCG matrix, the iPad would be classified as a
A. star.
B. cloud.
C. question mark.
D. cash cow.
E. dog.

In the BCG matrix, stars have high growth and high market share, and are definite keepers.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #129
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
130. A recent survey found that the top concern among CEOs worldwide is
A. profit growth.
B. customer loyalty.
C. excellence in execution.
D. stimulating innovation.
E. finding qualified employees.

How important is execution to organizational success in today's global economy? A survey of 769
global CEOs from 40 countries revealed that "excellence in execution" was their most important
concern, more important than "profit growth," "customer loyalty," "stimulating innovation,"
and "finding qualified employees."

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #130
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
131. According to Bossidy and Charan, effective requires managers to build a foundation for it
within three core process: people, strategy, and operations.
A. tactical planning
B. strategy
C. follow-through
D. execution
E. controlling

Bossidy and Charan outline how organizations and managers can improve the ability to execute.
Effective execution requires managers to build a foundation for execution within three core processes
found in any business: people, strategy, and operations.

AACSB: Analytic
Blooms: Remember
Kinicki - Chapter 06 #131
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 1 Easy
Topic: Implementing & Controlling Strategy: Execution
132. According to Bossidy and Charan, which business process is most important for effective execution?

A. Strategy
B. People
C. Alignment
D. Operations
E. Research

A company's overall ability to execute is a function of effectively executing according to three

processes: people, strategy, and operations. Because all work ultimately entails some human
interaction, effort, or involvement, Bossidy and Charan believe that the people process is the most
important.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #132
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
133. Which of the following is not a question that Bossidy and Charan believe a strong strategic plan must
address?
A. How will deviations from the plan be handled?
B. What is the assessment of the external environment?
C. What are the critical issues facing the business?
D. Can the business execute the strategy?
E. Are the short term and long term balanced?

According to Bossidy and Charan, a strong strategic plan addresses nine questions, among
them: What is the assessment of the external environment? What are the critical issues facing
the business? Can the business execute the strategy? Are the short term and long term balanced?

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #133
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
134. Which of the following is not a behavior of a leader who executes?
A. Reward the doers.
B. Insist on realism.
C. Follow through.
D. Know yourself.
E. Respect others' limitations.

According to Bossidy and Charan, there are seven essential leader behaviors that fuel the engine of
execution. Rather than understand their limitations, you should expand people's capabilities.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #134
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
135. Bossidy and Charan believe that to excel at execution, a leader should
A. be hands-off once the strategy is set.
B. micromanage the tactics.
C. empower employees to take over the execution.
D. probe for weaknesses in the substance and details.
E. let the plan run its course before attempting to revise it.

Bossidy and Charan point out, "The leader who boasts of her hands-off style or puts her faith in
empowerment is not dealing with the issues of the day. Leading for execution is not about
micromanaging. Leaders who excel at execution immerse themselves in the substance of execution
and even some of the key details. They use their knowledge of the business to constantly probe and
question. They bring weaknesses to light and rally their people to correct them."

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #135
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
136. Define strategic positioning. Explain the three principles that underlie strategic positioning.

Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is

distinctive about a company. It means, according to Porter, "performing different activities from
rivals, or performing similar activities in different ways."

Three key principles underlie strategic positioning:

Strategy is the creation of a unique and valuable position, which emerges from three sources: few
needs, many customers; broad needs, few customers; or broad needs, many customers.
Strategy requires trade-offs in competing. A company has to choose not only what strategy to follow
but what strategy not to follow.
Strategy involves creating a "fit" among activities. "Fit" has to do with the ways a company's activities
interact and reinforce one another.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #136
Learning Objective: 06-01 Am I really managing if I dont have a strategy?
Level of Difficulty: 2 Medium
Topic: The Dynamics of Strategic Planning
137. Describe the strategic management process. Explain what the "feedback loop" is and why it is
important.

The strategic management process involves five steps:

1. Establish the mission and vision.

2. Establish the grand strategy.
3. Formulate the strategic plans.
4. Carry out the strategic plans.
5. Maintain strategic control.
The feedback loop comes out of strategic control. Through control, managers monitor progress and
take corrective action early and rapidly when things go awry, returning to earlier steps to fix problems.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #137
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
138. Name the three common grand strategies and provide an example of how a company might use
each.

There are the three common grand strategies:

1. A growth strategy is a grand strategy that involves expansion—as in sales revenues, market share,
number of employees, or number of customers or (for nonprofits) clients served. Examples: It can
improve an existing product or service to attract more buyers. It can increase its promotion and
marketing efforts to try to expand its market share. It can expand into new products or services. It can
acquire similar or complementary businesses.
2. A stability strategy is a grand strategy that involves little or no significant change. Examples: It can
go for a no-change strategy (if, for example, it has found that too-fast growth leads to foul-ups with
orders and customer complaints). It can go for a little-change strategy (if, for example, the company
has been growing at breakneck speed and feels it needs a period of consolidation).
3. A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the
organization's efforts. Examples: It can reduce costs, as by freezing hiring or tightening expenses. It
can sell off (liquidate) assets—land, buildings, inventories, and the like. It can gradually phase out
product lines or services. It can declare bankruptcy.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #138
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 3 Hard
Topic: The Strategic-Management Process
139. Explain strategy implementation, including the role of resistance.

Putting strategic plans into effect is strategy implementation. Strategy implementation is the stage of
the strategic management process where managers determine possible roadblocks within the
organization and see if the right people and control systems are available to execute the plans.
Resistance may be encountered when people feel the plans threaten their livelihoods or their influence.
This is especially true when plans are being implemented quickly, as delays (a form of resistance)
can easily be constructed and these delays may heavily damage a plan. Thus, top managers can't just
announce the plans; they have to actively sell them to middle and supervisory managers.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #139
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process?
Level of Difficulty: 2 Medium
Topic: The Strategic-Management Process
140. Define competitive intelligence and explain how you might go about obtaining it legally.

Competitive intelligence means gaining information about one's competitors' activities so that one
can anticipate their moves and react appropriately. Gaining competitive intelligence isn't always easy,
but there are several avenues and most of them are public sources including (1) the public prints and
advertising, (2) investor information like corporate annual reports, and (3) informal sources such as
trade show gossip and information from company salespeople.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #140
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
141. What are the fundamental differences in examining internal and external environments when
conducting a situation analysis?

SWOT analysis, also called a situation analysis, looks at internal strengths and weaknesses and
external opportunities and threats. The internal environment looks at organizational strengths—the
skills and capabilities that give the organization special competencies and competitive advantages
in executing strategies in pursuit of its mission, and organizational weaknesses—the drawbacks that
hinder an organization in executing strategies in pursuit of its mission—are also part of the internal
environment.
The external environment includes organizational opportunities—environmental factors that the
organization may exploit for competitive advantage. It also includes organizational threats—
environmental factors that hinder an organization's achieving a competitive advantage.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #141
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
142. Give examples of what managers might look at in performing each element of a SWOT analysis.

SWOT analysis—also known as a situational analysis—is a search for the strengths, weaknesses,
opportunities, and threats affecting the organization.
Examples of a firm's strengths and weaknesses: work processes, organization, culture, staff, product
quality, production capacity, image, financial resources and requirements, service levels, other internal
matters.
Examples of a firm's opportunities and threats: market segment analysis, industry and competition
analysis, impact of technology on organization, product analysis, governmental impacts, other external
matters (see Figure 6.2).

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #142
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 3 Hard
Topic: Establishing the Grand Strategy
143. Define forecasting and discuss its importance. Describe the two types of forecasting described in the
text.

Forecasting is developing a vision or projection of the future, which is a necessary component of

strategic planning. The two types are trend analysis and contingency planning. Trend analysis is a
hypothetical extension of a past series of events into the future. Contingency planning is the creation
of alternative hypothetical but equally likely future conditions.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #143
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy?
Level of Difficulty: 2 Medium
Topic: Establishing the Grand Strategy
144. Describe what determines competitiveness within a particular industry using Porter's model for
industry analysis. Provide an example for at least three of the five forces in the model.

Competitiveness within a particular industry originates in the five primary competitive forces in the
firm's environment:

1. Threats of new entrants: for Kraft, new entrants might be store brands or Annie's.
2. Bargaining power of suppliers: companies without multiple suppliers are at the mercy of the one.
3. Bargaining power of buyers: customers who use the Internet to shop around are more able to
negotiate a better price.
4. Threats of substitute products or services: for big oil companies, firms making ethanol provide a
substitute product.
5. Rivalry among competitors: for Coca-Cola, Pepsi is an established rival.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #144
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
145. Describe Porter's four competitive strategies and explain how they differ from each other. Provide an
example of a firm that might use each.

Porter identified two "wide" strategies (cost-leadership and differentiation) that deal with broad
markets, and two "narrow" strategies (cost-focus and focused-differentiation) that target specific
markets.
1. Cost-leadership focuses on keeping costs and prices low for a wide market, and examples are Dell,
Timex, Home Depot, and Bic.
2. Differentiation stresses offering unique and superior products and services to a wide market and
examples include Ritz-Carlton, Lexus, and PepsiCo.
3. Cost-focus emphasizes keeping low costs and prices, but to a narrow market and examples include
low-cost products sold at discount store and discount regional gas station chains.
4. Focused-differentiation stresses unique and superior products to a narrow market and examples
include Rolls Royce, Cartier, Turnbull & Asser, and niche books.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #145
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
146. Explain the positive and negative aspects of pursuing a single-product strategy versus a diversification
one. Provide an example of a company that uses each type of strategy.

In a single-product strategy, a company makes and sells only one product within its market. Making
just one product allows you to focus your manufacturing and marketing efforts just on that product.
This means that your company can become savvy about repairing defects, upgrading production lines,
scouting the competition, and doing highly focused advertising and sales. The risk, of course, is that
if you do not focus on all aspects of the business, if a rival gets the jump on you, or if an act of God
intervenes (for a florist, roses suffer a blight right before Mother's Day), your entire business may go
under. The single-product strategy is seen all the time as you drive past the small retail businesses in a
small town: There may be one shop that sells only flowers, one that sells only security systems, and so
on.
Diversification is operating several businesses in order to spread the risk. Diversification may be
related or unrelated. Related diversification has three advantages: reduced risk—because if one
product is weak, others may take up the slack, management efficiencies—because administration
is spread over several businesses, and synergy, that the sum is greater than the parts. You see the
diversification strategy at the small retailer level when you drive past a store that sells gas and food
and souvenirs and rents DVD movies.

AACSB: Analytic
Blooms: Apply
Kinicki - Chapter 06 #146
Learning Objective: 06-04 How can four techniques-Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me
formulate strategy?
Level of Difficulty: 3 Hard
Topic: Formulating Strategy
147. Explain the three core processes of business and how they relate to execution.

A company's overall ability to execute is a function of effectively executing in terms of its people
processes, strategic processes, and operational processes.
People process: An effective leader tries to evaluate talent by linking people to particular strategic
milestones, developing future leaders, dealing with nonperformers, and transforming the mission and
operations of the human resource department.
Strategic processes: A good strategic plan addresses nine questions. In considering whether the
organization can execute the strategy, a leader must take a realistic and critical view of its capabilities
and competencies.
Operations processes: The strategy process defines where an organization wants to go, and the people
process defines who's going to get it done. Operations or the operating plan provides the path for
people to follow. The operating plan should address all the major activities in which the company will
engage and then define short-term objectives for these activities, to provide targets for people at which
to aim.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #147
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
148. List at least five of the seven essential types of leader behaviors that are needed to fuel the engine of
execution.

The seven essential types of leader behaviors are:

1. Know your people and your business: engage intensely with your employees.
2. Insist on realism: don't let others avoid reality.
3. Set clear goals and priorities: focus on a few rather than many goals.
4. Follow through: establish accountability and check on results.
5. Reward the doers: show top performers that they matter.
6. Expand people's capabilities: develop the talent.
7. Know yourself: do the hard work of understanding who you are.

AACSB: Analytic
Blooms: Understand
Kinicki - Chapter 06 #148
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process?
Level of Difficulty: 2 Medium
Topic: Implementing & Controlling Strategy: Execution
 06 Summary
Category # of Questions
AACSB: Analytic 148
Blooms: Apply 28
Blooms: Remember 43
Blooms: Understand 77
Kinicki - Chapter 06 148
Learning Objective: 06-01 Am I really managing if I dont have a strategy? 33
Learning Objective: 06-02 Whats the five-step recipe for the strategic-management process? 39
Learning Objective: 06-03 How can competitive intelligence; SWOT; and forecasting help me establish my strategy? 33
Learning Objective: 06-04 How can four techniques- 31
Porters competitive forces; competitive strategies; diversification and synergy; and the BCG matrix-help me formulate strategy?
Learning Objective: 06-05 How does effective execution help managers during the strategic-management process? 12
Level of Difficulty: 1 Easy 43
Level of Difficulty: 2 Medium 77
Level of Difficulty: 3 Hard 28
Topic: Establishing the Grand Strategy 33
Topic: Formulating Strategy 31
Topic: Implementing & Controlling Strategy: Execution 12
Topic: The Dynamics of Strategic Planning 33
Topic: The Strategic-Management Process 39