Test bank of fred r david – strategic management, 13th edition ch11

Exam
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)
Most strategists believe that an organization's wellbeing depends on evaluation of the strategicmanagement process.
1)
_______
2)
Adequate, timely feedback is important to effective strategy evaluation.
2)
_______
3)
Too much emphasis on evaluating strategies may be expensive and counterproductive.
3)
_______
4)
Strategy evaluation should have a long-run focus and avoid a short-run focus.
4)
_______
5)
According to Richard Rumelt, consonance and consistency are based on a firm's external assessment.
5)
_______
6)
According to Rumelt, consistency and feasibility are largely based on a firm's internal assessment.
6)
_______
7)
Consistency, distinctiveness, advantage and feasibility are Richard Rumelt's four criteria for evaluating a
strategy.
7)

_______


8)
Strategy evaluation is becoming increasingly easier with the passage of time, given the technological
advances.
8)
_______
9)
The decreasing time span for which planning can be done with any degree of certainty is a reason why
strategy evaluation is more difficult today.
9)
_______
10)
Strategies may be inconsistent if policy problems and issues continue to be brought to the top for
resolution.
10)
______
11)
Competitive advantages are normally the result of superiority in one of three areas feasibility, consistency,
or consonance.
11)
______
12)
Regardless of the size of the organization, a certain amount of management by wandering around at all
levels is essential to effective strategy evaluation.
12)
______
13)
Because large companies have more at stake, it is more important for them to conduct strategy evaluation

than it is for small companies.
13)
______
14)
The end of the fiscal year is the best time to do a strategy evaluation.
14)


______
15)
Changes in the organization's management, marketing, finance, R&D and CIS strengths and weaknesses
should all be the focus of a revised EFE matrix in strategy evaluation.
15)
______
16)
In strategy evaluation, a revised IFE matrix should indicate how effective a firm's strategies have been in
response to key opportunities and threats.
16)
______
17)
Strengths, weaknesses, opportunities and threats should continually be monitored for change, because it is
less a question of whether these factors will change but rather when they will change and in what ways.
17)
______
18)
When taking corrective action, you need to compare expected results to actual results.
18)
______
19)
Criteria for evaluating strategies should be measurable and easily verifiable.

19)
______
20)
Specific financial ratios are rarely used criteria to evaluate strategies.
20)
______
21)
Measuring organizational performance includes comparing expected results to actual results, investigating
deviations from plans, evaluating individual performance and examining progress being made toward
meeting stated objectives.
21)


______
22)
Intuitive judgments are almost always involved in deriving quantitative criteria.
22)
______
23)
Most quantitative evaluation criteria are geared to long-term objectives rather than annual objectives.
23)
______
24)
Measuring organizational performance requires making changes to reposition a firm competitively for the
future.
24)
______
25)
Taking corrective action does not necessarily mean that existing strategies will be abandoned, or even that
new strategies must be formulated.

25)
______
26)
Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving
stated objectives.
26)
______
27)
In his books entitled Future Shock and The Third Wave, Alvin Toffler argued that environments are
becoming so dynamic and complex that they threaten people and organizations with future shock.
27)
______
28)
Future shock occurs when the type and speed of changes overpower an individual or organization's ability
and capacity to adapt.
28)


______
29)
According to research, participation in strategy-evaluation activities is one of the best ways to overcome
individuals' resistance to change.
29)
______
30)
The basic form of a Balanced Scorecard is the same for all organizations and industries.
30)
______
31)
The Balanced Scorecard approach deals with the question, "How satisfied are the firm's customers."

31)
______
32)
Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm's
objectives.
32)
______
33)
Timely approximate information is generally more desirable as a basis for strategy evaluation than
accurate information that does not depict the present.
33)
______
34)
The test of an effective evaluation system is its usefulness and complexity.
34)
______
35)
Small organizations require a more elaborate and detailed strategy-evaluation system because they are
still evolving.
35)
______


36)
There is no one ideal strategy-evaluation system for all organizations.
36)
______
37)
Contingency plans are alternative plans that can be put into effect if certain key events do not occur as
expected.

37)
______
38)
Organizations should prepare contingency plans only for unfavorable events.
38)
______
39)
Strategies should try to cover all bases by planning for all possible contingencies.
39)
______
40)
Contingency plans should be as simple as possible.
40)
______
41)
Alternative strategies not selected for implementation should be discarded, as they have a tendency to
contaminate the contingency plans.
41)
______
42)
Identifying both beneficial and unfavorable events that could possibly derail the strategy or strategies is
the first step of effective contingency planning.
42)
______


43)
Independent auditors, government auditors and IRS auditors are the three groups of people who perform
audits.
43)

______
44)
Independent auditors are basically CPAs who provide their services to organizations for a fee.
44)
______
45)
Public accounting firms usually avoid strategy evaluation services.
45)
______
46)
The Middle East is considered to be one of the regions most vulnerable to climate change impact because
of its water scarcity.
46)
______
47)
Arab countries in sub-Saharan Africa are particularly vulnerable to the risk of environmental changes due
to global warming.
47)
______
48)
Public accounting firms, especially foreign ones operating mostly in the GCC area, often have a consulting
arm that provides strategy-evaluation services.
48)
______
49)
Moving environmental affairs from the line side of the organization to the staff side is required when
instituting an environmental audit.
49)
______

50)
The strategic management process should be completely open because participation and openness
enhance understanding, commitment, and communication within the firm.
50)
______
51)
Increased education and diversity of the workforce at all levels are reasons why the top-down approach
should be favored in organizations.
51)
______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
52)
Which of these is/are a basic activity of strategy evaluation?
52)
______
A)
both B and C
B)
Taking corrective actions
C)
Reviewing the underlying internal and external factors that represent the bases of current strategies
D)
all of the above
E)
Measuring organizational performance
53)
The purpose of strategy evaluation is to
53)

______

A)

alert management to problems or potential problems.
B)
increase the budget annually.
C)
evaluate employees' performance.
D)


make budget changes.
E)
improve R&D programs.
54)
What is the cornerstone of effective strategy evaluation?
54)
______

A)

Quality and quantity of managers
B)
Adequate and timely feedback
C)
Evaluation preceding implementation stage
D)
Smaller ratio of top- to lower-level management
E)

Taking corrective actions
55)
All of these are Richard Rumelt's criteria to evaluate a strategy except
55)
______
A)
consistency.

B)

consonance.
C)
distinctiveness.
D)
feasibility.
E)
advantage.
56)
What is happening to strategy evaluation with the passage of time?
56)
______

A)

It is becoming increasingly difficult.


B)
It is becoming an unnecessary activity.
C)

It is becoming less important.
D)
It is becoming very convenient.
E)
It is becoming much simpler.
57)
All of the following are reasons strategy evaluation is more difficult today except
57)
______

A)

the rapid rate of obsolescence of even the best plans.
B)
the decreasing difficulty of predicting the future with accuracy.
C)
the increasing number of variables.
D)
a dramatic increase in the environment's complexity.
E)
the increase in the number of both domestic and world events affecting organizations.
58)
Which of the following is not a reason for the increasing difficulty of evaluating strategies?
58)
______
A)
Product development cycles are longer than ever.
B)
Product life cycles are longer today than ever.
C)

Domestic and world economies are less stable than ever.
D)
Change is occurring more frequently than ever.
E)
Technological advancement is more rapid.
59)


Which of the following is important because organizations face dynamic environments in which key
external and internal factors often change quickly and dramatically?
59)
______

A)

Strategy implementation
B)
Strategy evaluation
C)
Strategy formulation
D)
Strategy simplification
E)
Strategy modification
60)
A final broad test of strategy is its
60)
______
A)
consistency.

B)

feasibility.
C)
distinctiveness.
D)
consonance.
E)
advantage.
61)
Competitive advantage normally is the result of superiority in resources, skills and
61)
______

A)

position.
B)
feasibility.
employees.

C)


D)
governance.
E)
consistency.
62)

What term refers to the need for strategists to examine sets of trends, as well as individual trends in
evaluating strategies?
62)
______
A)
Synergy

B)

Feasibility
C)
Consistency

D)

Advantage
E)
Coherence
63)
In evaluating strategies, which one of Rumelt's criteria for evaluating strategies refers to the need for
strategists to examine sets of trends?
63)
______
A)
Advantage

B)

Consistency
C)

Coherence

D)

Empowerment
E)
Feasibility
64)
If success for one organizational department means failure for another department, then strategies may
be


64)
______
A)
inconsistent.
B)
advantageous.
C)
inconsonant.
D)
failures.
E)
synergistic.
65)
When empowered employees are held accountable for and pressured to achieve specific goals and are
given wide latitude in their actions to achieve them, there can be
65)
______
A)

increased productivity.
B)
a decreased number of complaints.
C)
dysfunctional behavior.
D)
a decreased turnover.
E)
an increased number of litigations.
66)
Strategy-evaluation activities should be performed
66)
______

A)

on a periodic basis.
B)
at the onset of a problem.
C)
on a continuous basis.
D)


every two years.
E)
upon completion of major projects.
67)
Corrective actions are not needed when
67)

______

A)

the industry is slowing down.
B)
competitive factors are on the rise.
C)
the firm is not progressing satisfactorily toward achieving stated objectives.
D)
external and internal factors have not significantly changed.
E)
changes have occurred in the firm's internal strategic position.
68)
When you discover major changes have occurred in the firm's internal strategic position while conducting
strategy evaluation, you should
68)
______

A)

immediately discontinue all aspects of the present strategic course.
B)
copy the actions of major competitors.
C)
add additional funds to the present strategic plan.
D)
continue on the present strategic course.
E)
take corrective actions.

69)
Changes in the organization's management, marketing, finance/accounting, R&D and CIS strengths and
weaknesses should be the focus of a revised
69)
______


A)
EFE matrix.
B)
vision.

C)

IFE matrix.
D)
mission.

E)

EPM matrix.
70)
A revised ________ should indicate how effective a firm's strategies have been in response to key
opportunities and threats.
70)
______

A)

IFE matrix

B)
mission

C)

vision
D)
EFE matrix

E)

CPM matrix
71)
Which of the following is not included in measuring organizational performance?
71)
______
A)
Comparing results to competitors' expectations.
B)
Investigating deviations from plans.
C)
Comparing expected results to actual results.
D)
Examining progress being made toward meeting stated objectives.
E)


Evaluating individual performance.
72)
Ineffectiveness and/or inefficiencies indicate the need for

72)
______
A)
reductions in pay.
B)
more synergy.
C)
layoffs.

D)

some form of corrective action.
E)
consultants.
73)
What is the basis for quantitative financial evaluation?
73)
______

A)

Financial ratios
B)
Present value analysis
C)
The EPS/EBIT Analysis
D)
Capital Asset Pricing Model
E)
Reduction in costs

74)
Which of these is not a key financial ratio?
74)
______
A)
Market share
B)
Asset growth


C)
Earnings per share
D)
Return on equity
E)
Production quality
75)
Strategy evaluation is based on
75)
______
A)
qualitative criteria.
B)
qualitative and quantitative criteria.
C)
intuition.

D)

empirical data.

E)
objective data.
76)
Financial ratios are used to compare a firm's performance over different time periods, compare the firm's
performance to industry averages, and compare a firm's performance with
76)
______
A)
the performance of competitors.
B)
overall business standards.
C)
the performance of international firms.
D)
the performance of suppliers.
E)
non-financial ratios.
77)
Most quantitative criteria are geared to ________ objectives rather than ________ objectives.


77)
______
A)
annual; long-term
B)
top-management; employee
C)
environmental; community
D)

short-term; annual
E)
profit; social
78)
What corrective actions should a firm take during strategy evaluation?
78)
______

A)

Revising the business mission
B)
Revising objectives
C)
Issuing stock
D)
Selling a division
E)
all of the above
79)
What occurs when the nature, types and speed of changes overpower an individual's or organization's
ability and capacity to adapt?
79)
______

A)

Corrective actions
B)
Measuring performance

C)
Corporate agility
D)


Future shock
E)
Corporate downfall
80)
Corrective actions should
80)
______

A)

strengthen an organization's competitive position in its industry.
B)
involve abandoning existing strategies.
C)
reduce the staff size.
D)
streamline asset holdings.
E)
all of the above
81)
What is the best way to overcome individuals' resistance to change in strategy evaluation?
81)
______
A)
Participation

B)
Command-and-control
C)
Laissez-faire
D)
Emotional reactions
E)
Rational argument
82)
An organization's ability to adapt successfully to changing circumstances refers to its
82)
______
dynamism.

A)


B)
corporate agility.
C)
future shock.
D)
revision power.
E)
liquidity.
83)
Corrective action should do all of the following except
83)
______

A)

capitalize upon internal strengths.
B)
avoid external opportunities.
C)
avoid external threats.
D)
strengthen an organization's competitive position.
E)
improve internal weaknesses.
84)
Which of the following is not a component of the Balanced Scorecard?
84)
______
A)
Internal business processes
B)
Customer knowledge
C)
Financial performance
D)
Learning and growth
E)
Social responsibility
85)


What aims to balance long term with short term concerns, financial with non-financial concerns, and
internal with external concerns?

85)
______

A)

Contingency planning
B)
Measuring performance
C)
Reviewing Bases of Strategy
D)
Taking corrective action
E)
The Balanced Scorecard approach
86)
In the important publication used to evaluate a firm's strategy, the Fortune 50 includes all of the following
except
86)
______

A)

the top retailers.
B)
the top banks.
C)
the top transportation companies.
D)
the top utilities.
E)

the top hospitals.
87)
What is not a characteristic of an effective evaluation system?
87)
______
A)
Meaningful

B)

Economical
C)


Timely
D)
Information-oriented
E)
Providing a true picture of what is happening.
88)
Controls need to be ________ rather than ________.
88)
______
A)
universal; diverse
B)
cultural; political
C)
measurable; timely
D)

qualitative; quantitative
E)
action oriented; information oriented
89)
The strategy-evaluation process should foster
89)
______

A)

profit centers.
B)
mutual understanding.
C)
corporate culture.
D)
contingency plans.
E)
implementation.
90)
What factor determines the final design of a firm's strategy-evaluation and control system?
90)
______


A)
Threats
B)
The organization's characteristics
C)

The competition's characteristics
D)
Opportunities
E)
External characteristics
91)
Familiarity with local environments usually makes gathering and evaluating information much easier for
________ organizations than for ________ ones.
91)
______

A)

small; large
B)
for-profit; non-profit
C)
large; small
D)
non-profit; for-profit
E)
foreign; domestic
92)
What activity is defined as having alternative plans that can be put into effect if certain key events do not
occur as expected?
92)
______

A)

Corporate agility
B)
Strategy evaluation
C)
Contingency planning
D)
Scenario planning


E)
Forecasting
93)
Which of the following statements about contingency plans is not true?
93)
______
A)
Contingency plans should be developed for favorable and unfavorable events.
B)
Develop contingency plans for all contingent events.
C)
Contingency plans minimize the impact of potential threats.
D)
Only high-priority areas require the insurance of contingency plans.
E)
Contingency plans should be as simple as possible.
94)
What permits quick response to change, prevents panic in crisis situations, and makes managers more
adaptable?
94)
______

A)
Taking corrective actions
B)
Measuring performance
C)
Contingency planning
D)
Auditing
E)
Implementing a balanced scorecard
95)
What term refers to a systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of correspondence between these
assertions and established criteria, and communicating the results to interested users?
95)
______


A)
R&D
B)
Innovation

C)

Accounting
D)
Strategic Management
E)
Auditing

96)
Climate models are projecting hotter, drier, and less predictable climates, resulting in a significant drop in
water run-off in most of the Middle East and North Africa by
96)
______

A)

2040.
B)
2060.
C)
2050.
D)
2030.
E)
2020.
97)
By 2050, the water run-off in the Middle East and North Africa region is predicted to drop by ________
percent.
97)
______

A)

20 to 30
B)
30 to 40
10 to 20

C)