MGT195 Midterm Exam

Q1. According to Henry Mintzberg, decisions flowing from a firm's strategic analysis are its:
a. Emergent strategy
b. Deliberate strategy
c. Intended strategy
d. Realized strategy

Q2. Strategic objectives are more specific than vision statements.
a. true
b. false

Q3. According to Michael Porter, management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because:
a. Companies that have implemented these techniques have lost money
b. There is no proof that these techniques work
c. They cost too much money and effort to implement
d. Every company is trying to implement them and hence it does not make a company different from others

Q4. Effective vision statements include:
a. All strategic directions of the organization
b. A brief statement of the company's direction
c. Strategic posturing and future objectives
d. Financial objectives and projected figures

Q5. According to the text, formulating strategy includes taking into consideration strategy at the business, international, and corporate levels. In addition managers must formulate effective entrepreneurial initiatives.
a. true
b. false

Q6. Objectives in organizations should be clear, stated, and known by employees throughout the organization.
a. true
b. false

Q7. Decisions by Boards of Directors are always consistent with shareholder interests.
a. true
b. false

Q8. Strategic management should only include short-term objectives. Long-term objectives are covered in the organization's vision statement.
a. true
b. false

Q9. Members of Boards of Directors are:
a. Appointed by the Securities and Exchange Commission
b. Elected by the shareholders as their representatives
c. Elected by the public
d. Only allowed to serve one term of four years

Q10. To illustrate interrelationships among different segments of the general environment: The persistence of large U.S. trade deficits (__________) has led to greater demand for protectionist measures, such as trade barriers and quotas (__________). These measures lead to higher prices for U.S. consumers and fuel inflation (__________).
a. Macroeconomic, sociocultural, political/legal
b. Macroeconomic, political/legal, macroeconomic
c. Macroeconomic, technological, macroeconomic
d. Macroeconomic, global, macroeconomic

Q11. Rivalry will be most intense when there is a lack of differentiation or switching costs.
a. true
b. false

Q12. Which of the following would be considered part of a firm's general environment?
a. Decreased entry barriers
b. Higher unemployment rates
c. Increased bargaining power of the firm's suppliers
d. Increased competitive intensity

Q13. An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of:
a. Threat of entry
b. Backward integration
c. Forward integration
d. Threat of substitute products

Q14. Because the Internet lowers barriers to entry in most industries, it:

Q15. The most intense rivalry results from:

Q16. A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of:
a. Backward integration
b. Economies of scale
c. Forward integration
d. Product differentiation

Q17. Environmental scanning and competitor intelligence provide important inputs for forecasting activities.
a. true
b. false

Q18. Competitor Intelligence (CI) is a tool that can provide management with 'early warnings' about both threats and opportunities.
a. true
b. false

Q19. Historical comparisons are most appropriate during periods of recession or economic boom.
a. true
b. false

Q20. Value chain analysis can only be applied to manufacturing operations.
a. true
b. false

Q21. Customer service would include:
a. Product promotion
b. Product distribution
c. Parts supply
d. Procurement of critical supplies

Q22. Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses.
a. true
b. false

Q23. One strength of the balanced scorecard is that it is very easy to implement and that there is little need for executive sponsorship.
a. true
b. false

Q24. For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution.
a. true
b. false

Q25. In value chain analysis, finance and accounting are considered part of a firm's general
administration.
a. true
b. false

Q26. Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if:

Q27. Tacit knowledge:
a. Is the same as explicit knowledge
b. Is found mostly at the lower levels of the organization
c. Can be codified but not reproduced
d. Can be accessed only with the consent of the employees because it is in the minds of the employees

Q28. In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets.


Q29. Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should:

Q30. The text suggests that talented professionals are typically most concerned about financial rewards. Money is the top reason why such employees take and leave jobs.
a. true
b. false

Q31. The difference between the market value and book value of a firm is its social capital.
a. true
b. false

Q32. Social capital is found in the knowledge, skills, and abilities of individual employees.
a. true
b. false

Q33. The least effective way to retain human capital is:

Q34. According to the text, effective e-teams identified group members with a proper balance of technical and interpersonal skills.
a. true
b. false

Q35. The experience curve concept suggests that production costs tend to increase as production increases regardless of where an industry is at in its life cycle.
a. true
b. false

Q36. Which of the following phrases best completes this sentence: Because of the Internet, firms that use a focus strategy have new opportunities to:

Q37. Focus, by itself, often constitutes a competitive advantage.
a. true
b. false

Q38. During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a product going without significantly reducing marketing support, technological development or other investments, while hoping that competitors will exit the market.
a. true
b. false

Q39. As markets mature, competition on the basis of differentiation is preferable to price
competition.
a. true
b. false

Q40. Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.
a. true
b. false
Q41. An important advantage of first movers or 'pioneers' in a market is that they may establish brand recognition that may later serve as an important switching cost.
a. true
b. false

Q42. One way the Internet and digital technologies are creating opportunities for firms with differentiation strategies is by enabling mass customization.
a. true
b. false

Q43. One of the risks of vertical integration is that there may be problems associated with
unbalanced capacities or unfilled demands along a firm's value chain.
a. true
b. false

Q44. Which of the following statements regarding internal development as a means of
diversification is false?


Q45. Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as:
a. Utilizing common infrastructures
b. Capitalizing on core competencies
c. Reducing corporate risk
d. Using portfolio analysis

Q46. A firm that incorporates more processes toward the original source of raw materials is an example of forward integration.
a. true
b. false
Q47. Portfolio management should be considered as the primary basis for formulating corporate level strategies.
a. true
b. false

Q48. According to the text, the two main sources of synergy in unrelated diversification are
parenting and financial synergies.
a. true
b. false

Q49. Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business.
a. true
b. false

Q50. A firm should consider vertical integration when:
a. The competitive situation is highly volatile
b. Customer needs are evolving
c. The firm's suppliers willingly cooperate with the firm
d. The firm's suppliers of raw materials are often unable to maintain quality standards


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