Strategy Managment

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Chapter 8 Strategic Management

True/False Questions

THE IMPORTANCE OF STRATEGIC MANAGEMENT

1. Strategic management is the set of managerial decisions and actions that determines the short-term performance of an organization. (False; moderate; p. 208)

2. “Strategic model” is a term that is often used in conjunction with strategic management and strategies. (False; easy; p. 209)

3. The most fundamental questions about strategy address why firms, facing the same environmental conditions, have varying levels of performance. (True; easy; p. 209)

THE STRATEGIC MANAGEMENT PROCESS

4. The first step in the strategic management process is analyzing the external environment. (False; difficult; p. 210)

5. Within an industry, an environment can present opportunities to one organization and pose threats to another. (True; moderate; p. 212)

6. Evaluating an organization’s intangible assets is part of doing an internal analysis in the strategic management process. (True; easy; p. 212)

7. Activities that an organization does well or resources that it has available are called capabilities. (False; easy; p. 212)

8. Exceptional or unique organizational resources are known as core capabilities. (False; moderate; p. 212)

9. A strong organizational culture may act as a significant barrier to accepting any changes in organizational strategies. (False; easy; p. 213)

10. SWOT analysis includes an analysis of an organization’s environmental opportunities and threats. (True; easy; p. 214)

11. The final step in the strategic management process is implementing the objectives. (False; easy; p. 216)

TYPES OF ORGANIZATIONAL STRATEGIES

12. Corporate-level strategies are developed for organizations that run more than one type of business. (True; moderate; p. 217)

13. One method of implementing a growth strategy is to increase production capacity. (True; moderate; p. 217)

14. A trucking company that grows by purchasing a chain of gasoline stations is engaged in horizontal integration. (False; moderate; p. 218)

15. Diversification is an example of a corporate retrenchment strategy. (False; moderate; p. 218)

16. If Burger King were to buy out Mom and Pop’s Burgers, Burger King would be growing by vertical consolidation. (False; difficult; p. 218)

17. A stability strategy is developed when management decides it will remain profitable by maintaining the status quo in a rapidly changing external environment. (False; difficult; p. 219)

18. A retrenchment strategy is a renewal strategy designed to address organizational weaknesses that are leading to performance declines. (True; moderate; p. 220)

19. Turnaround is one type of renewal strategy.
(True; moderate; p. 220)

20. The BCG matrix evaluates an organization’s various businesses to identify which ones offer high potential and which drain organizational resources. (True; moderate; p. 220)

21. Stars, one of the four business groups in the corporate portfolio mix, are characterized by low growth and low market share. (False; moderate; p. 221)

22. According to Porter’s competitive strategies framework, the cost leadership strategy would result in the best quality product at a justifiable cost. (False; difficult; p. 224)

23. Nordstrom is an example of a company that has used the low-cost leader strategy to compete in the computer industry. (False; moderate; p. 224)

24. According to Porter’s competitive strategies framework, a company using a focus strategy seeks to be unique in its product offering and in its industry in ways that are widely valued by customers. (True; moderate; p. 224)

25. The premise behind the rule of three is that three large “full-line generalists” dominate and hold the most market share in any industry. (True; easy; p. 225)

STRATEGIC MANAGEMENT IN TODAY’S ENVIRONMENT

26. Managers in all kinds of organizations face increasingly intense global competition and high...
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