Chapter 1 Basic Concepts of Strategic Management MCQ & ESSAY

MCQ
1) What was strategic management originally called?

A) Business policy

B) Planning

C) Marketing strategy

D) Short-term planning

E) Operational planning

2) Research suggests that strategic management evolves through four sequential phases in
corporations. The first phase is

A) externally oriented planning.

B) basic financial planning.

C) internally oriented planning.

D) forecast-based planning.

E) strategic management.

3) The time horizon involved with regard to forecast-based planning is usually

A) one year.

B) one quarter.

C) three to five years.

D) less than one month.

E) five to ten years.

4) A difference between basic financial planning and forecast-based planning is

A) the time horizon is shorter in forecast-based planning.

B) forecast-based planning incorporates environmental data and extrapolates current trends.

C) basic financial planning utilizes consultants with sophisticated techniques.

D) basic financial planning utilizes scenarios and contingency strategies.

E) basic financial planning relies heavily on input from lower levels in the organization.

5) Top-down planning that emphasizes formal strategy formulation and leaves the
implementation issues to lower management levels is known as

A) forecast-based planning.

B) externally oriented planning.

C) strategic management.

D) basic financial planning.

E) none of the above.

6) In the final phase of strategic management, strategic information is available to

A) people throughout the organization.

B) the top management responsible for decision-making.

C) middle management.

D) operational personnel.

E) only those responsible for implementing the strategy.

7) In a survey of 50 corporations, which of the following was rated as one of the three top
benefits of strategic management?

A) Clearer sense of strategic direction for the firm

B) Higher levels of employee motivation

C) Higher levels of job satisfaction

D) Improved productivity

8) When an organization is involved in formal strategic planning, which is not one of the
strategic questions that an organization generally may ask itself?

A) Where is the organization now?

B) Are we on target to hit our financial objectives next year?

C) If no changes are made, where will the organization be in one year?

D) If the evaluation is negative, what specific actions should management take?

E) If no changes are made, where will the organization be in 10 years?

9) In the Bain & Company survey of executives from more than 70 countries, which of the
following was the number one tool used by decision makers?

A) Customer relationship management

B) Strategic planning

C) Marketing planning

D) Financial management

E) Budgeting
10) Strategic planning within a small organization

A) may be informal and irregular.

B) must be elaborate to allow for future growth.

C) should always be formalized and explicitly stated.

D) should be done by the president only.

E) is unnecessary and a waste of time.

11) Strategic planning in a large firm

A) should be informal to allow complete understanding by the many participants.

B) should be instigated only from the main corporate office.

C) should be accomplished quickly to decrease the likelihood of it becoming outdated.

D) should encourage a clear delineation between top management and lower-level managers.

E) should be a formalized and sophisticated system.

17) The integrated internationalization of markets and corporations is called

A) normalization.

B) economic integration.

C) globalization.

D) nationalization.

E) regionalization.
18) The term used to describe new products, services, methods, and organizational approaches
that allow businesses to achieve extraordinary returns is

A) ROI.

B) innovation.

C) competitive advantage.

D) sustainability.

E) profit maximization.

19) The agreement between El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica, and the
United States is called

A) EU.

B) ASEAN.

C) NAFTA.

D) Mercosur.

E) CAFTA.

20) Members of the European Union (EU) include all of the following EXCEPT

A) Ireland.

B) the United Kingdom.

C) Belgium.

D) France.

E) Slovakia.
21) Argentina is part of which trade alliance?

A) ASEAN

B) Mercosur

C) EU

D) NAFTA

E) CAFTA

22) The currency used to integrate the monetary systems of the European Union (EU) is called
the

A) peso.

B) dollar.

C) euro.

D) franc.

E) pound.

23) The triple bottom line refers to which of the following responsibilities of an organization?

A) Responsibilities in the conservation of water, air, and oil

B) Responsibilities in impacting footprints, finance, and environment

C) Responsibilities with respect to the physical environment, traditional profit/loss, and air

D) Traditional profit/loss, social responsibility, and environmental responsibility

E) Traditional social responsibility, responsibility to people, and to ethics

24) During the worldwide Covid-19 pandemic, supply lines that were tightly managed for
minimal stock-on-hand unraveled as the world went into repeated lockdowns and then surges
of consumer demand. This is an example of the downside of

A) containerization.

B) internationalization.

C) globalization.

D) localization.

E) regionalization.

33) Which theory proposes that once an organization is successfully established in a particular
environmental niche, it is unable to adapt to changing conditions?

A) Population ecology

B) Institution

C) Citizenship

D) Strategic choice

E) Organizational learning

34) The theory that proposes organizations can and do adapt to changing conditions by
imitating other successful organizations is known as

A) population ecology.

B) institution theory.

C) citizenship theory.

D) strategic theory.

E) sample theory.
35) The theory that proposes that organizations adjust defensively to a changing environment
and use knowledge offensively to improve the fit between themselves and their environment is
known as

A) population ecology theory.

B) institution theory.

C) the strategic choice perspective.

D) organizational learning theory.

E) organizational citizenship theory.

37) When Apple cuts into the sales of its own offerings with periodic introduction of new
products, it is demonstrating

A) strategy implementation.

B) chaos formulation.

C) contingency management.

D) logical incrementalism.

E) strategic flexibility.

38) An organization skilled at creating, acquiring, and transferring knowledge, aimed at

modifying its behavior to reflect new knowledge and insights is a(n)

A) learning organization.

B) strategically managed corporation.

C) innovative organization.

D) hypercompetitive competitor.
39) All of the following reflect activities of a learning organization EXCEPT

A) experimenting with new approaches.

B) learning from its own experiences and past history.

C) solving problems systematically.

D) alienating competitors in the industry.

E) transferring knowledge quickly and efficiently throughout the organization.

40) According to Alfred Chandler, what type of industries are defined by "paths of learning" in
which organizational strengths derive from learned capabilities?

A) Consumer products

B) Automotive

C) High-technology

D) Infrastructure

E) Personal services

44) Which one of the following is not one of the basic elements of the strategic management
process?

A) Strategy formulation

B) Strategy implementation

C) Statistical process control

D) Evaluation and re-assessment

E) Environmental analysis
45) SWOT is a part of the component of the strategic management process.

A) environmental analysis

B) business strategy

C) functional strategy

D) strategy formulation

E) strategy implementation

46) The S in SWOT stands for

A) strategies.

B) scanning.

C) strengths.

D) societal.

E) sociocultural.

47) A firm's task environment is also called its

A) internal environment.

B) technical environment.

C) terminal environment.

D) industry.

E) customers.
48) The variables structure, culture, and resources pertain to the

A) external environment.

B) internal environment.

C) sociocultural forces.

D) task environment.

E) societal environment.

49) The task environment

A) includes those elements or groups within an organization's industry.

B) encompasses the physical working areas of the organization.

C) is an accounting of the many jobs within an organization.

D) is an advisory committee to top-management.

E) includes general forces that only indirectly affect an organization's activities.

50) Which one of the following is included in the firm's internal environment?

A) Competitors

B) Economic forces

C) Resources

D) Governments

E) Special interest groups

51) Key in the internal environment form a set of core competencies that the organization can
use to gain competitive advantage.

A) opportunities

B) trends

C) weaknesses

D) strengths

E) threats

52) The Strategic Management Model presents the following process for strategy formulation:

A) Objectives — Policies — Strategies — Mission.

B) Mission — Policies — Strategies — Objectives.

C) Policies — Mission — Strategies — Objectives.

D) Policies — Strategies — Objectives — Mission.

E) Mission — Objectives — Strategies — Policies.

53) The process of investigation, analysis, and structured decision making that provides an
organization with the criteria for attaining a competitive advantage is known as

A) strategy formulation.

B) strategy implementation.

C) strategy control.

D) strategic analysis.

E) strategy evaluation.
54) The corporate mission is best described by which one of the following?

A) A description of the activities carried out by the organization

B) The purpose or reason for the corporation's existence

C) A description of top management's responsibilities

D) A statement of corporate objectives

E) A statement of what the organization would like to become

55) Which one of the following is an example of a mission with a narrow scope?

A) Transportation (vs. railroads)

B) Computers (vs. office equipment)

C) Health care (vs. hospitals)

D) Real estate (vs. apartments)

E) Telecommunications (vs. television)

56) Mission describes what the organization is now, while describe(s) what the organization
would like to become.

A) planning

B) vision

C) budgeting

D) decisions

E) strategizing
57) Which of the following is an example of a mission statement?

A) Diversify product line to appeal to more people

B) Increase sales by ten percent over last year

C) Pay highest salaries to keep high quality employees

D) Develop and sell quality appliances worldwide

E) Divide a sales region into a group of sales districts

58) A goal differs from an objective because a goal

A) is open-ended.

B) is quantified.

C) specifies measurable results.

D) is clearly specified.

E) provides a time horizon.

59) Which of the following is an example of an objective?

A) To diversify product line to appeal to more people

B) To increase sales by ten percent over last year

C) To pay highest salaries to keep high quality employees

D) To develop and sell quality appliances worldwide

E) To divide a sales region into a group of sales districts

60) The categories of stability, growth, and retrenchment fit what type of strategy?

A) Corporate

B) Business

C) Functional

D) Operational

E) Tactical

61) The type of strategy, which describes a company's overall direction in terms of its general
attitude toward growth and the management of its various businesses is

A) functional.

B) operational.

C) business.

D) product.

E) corporate.

62) The type of strategy, which emphasizes the improvement of the competitive position of a
corporation's products or services in a particular industry or market segment served by a
business unit is

A) functional.

B) operational.

C) business.

D) environmental.

E) corporate.
63) The type of strategy, which achieves corporate and business unit objectives and strategies
by maximizing resource productivity is

A) functional.

B) operational.

C) business.

D) product.

E) corporate.

64) A large business has three levels in its hierarchy of strategy:

A) Corporate — Business — Functional.

B) Environmental — Corporate — Functional.

C) Environmental — Enterprise — Corporate.

D) Business — Divisional — Functional.

E) Industry — Corporate — Divisional.

65) In the hierarchy of strategies, functional strategies support strategies.

A) corporate

B) tactical

C) business

D) master

E) organizational
66) Which of the following is an example of a policy?

A) Diversify product line to appeal to more people.

B) Increase sales by ten percent over last year.

C) Only acquire companies of 75 employees or more; 75 percent must be engineers.

D) Develop and sell quality appliances worldwide.

E) Diversify from retailing into delivery.

67) The process by which strategies and policies are put into action through the development of
programs, budgets, and procedures is

A) strategy formulation.

B) strategy control.

C) strategy implementation.

D) strategy development.

E) strategy evaluation.

68) Which of the following makes a strategy action oriented?

A) Mission

B) Vision

C) Goal

D) Program

E) Objective
69) Which of the following is an example of a program?

A) Diversify product line to appeal to more people

B) Increase sales by ten percent over last year

C) Must be "number one" wherever we compete

D) Develop and sell quality appliances worldwide

E) Reduce final assembly time to three days by having suppliers build plan sections

70) A program or tactic is

A) a detailed cost statement in terms of dollars.

B) a system of sequential steps.

C) a statement of the activities needed to support a strategy.

D) the process by which strategies and policies are put into action.

E) none of the above.

71) Which is not true of the budgetary function?

A) It is used in planning and control.

B) It serves as a detailed plan of strategy in action.

C) Only one budget is necessary to capture all programs.

D) It details the impact on the firm's future financial situation.

E) It is used as a means of measuring success based on certain criteria.

72) Home Depot changed the way it restocked shelves and priced products to reduce clogging in
aisles. This is an example of a

A) program.

B) budget.

C) procedure.

D) policy.

E) control.

73) Which of the following is the final major element of strategic management?

A) Goal setting

B) Strategy formulation

C) Internal analysis

D) External analysis

E) Evaluation and re-assessment

74) A set of sequential steps or techniques that describe in detail how a particular task or job is
to be done is referred to as

A) a standard operating procedure.

B) a systems operating procedure.

C) a standard operating program.

D) a standard outside procedure.

E) a systems operating plan.

86) Research done by Henry Mintzberg suggests that strategy formulation

A) is typically an irregular and a discontinuous process.

B) should be followed unswervingly to ensure success of the plan.

C) is a process to which organizations find they must make significant yearly changes.

D) should be reviewed after a specific interval of time to make sure it is still applicable.

E) is merely a checklist of actions following a logical process.

87) The phenomenon that describes large organizations as evolving through relatively long
periods of stability punctuated by relatively short bursts of fundamental change (revolutionary
change) is known as

A) revolution.

B) equilibrium.

C) punctuated equilibrium.

D) logical incrementalism.

E) discontinuity.

88) Which of the following is not one of the four discontinuities listed in the text that is the
stimulus for a change in strategy?

A) Intervention by the organization's bank

B) Annual strategic planning conference

C) Threat of a takeover

D) New CEO

E) Awareness by management of decreased profitability

89) When outcomes do not meet expectations, such as sales and profits are no longer
increasing or may even be falling, it is referred to as a(n)

A) strategic inflection point.

B) performance gap.

C) budgetary failure.

D) pricing issue.

E) operational failure.

90) Which of the following statements is not true of a strategic inflection point?

A) The term was coined by Andy Grove, past CEO of Intel Corporation.

B) This represents what happens to a business when a major change takes place due to the
introduction of new technology.

C) This represents what happens to a business when a major change takes place due to a
change in customers' values or a change in customers' preferences.

D) This represents what happens to a business when a major change takes place due to a
different regulatory environment.

E) A new CEO is an example of a strategic inflection point.

94) Which of the following is not a characteristic of strategic decisions as mentioned in the text?

A) Directive

B) Consequential

C) Rare

D) Continuous

E) Future-oriented
95) Which characteristic of strategic decisions addresses the fact that such decisions set
precedents for lesser decisions and future actions throughout an organization?

A) Rare

B) Long-term

C) Consequential

D) Directive

E) Resource outlay

96) Which of the following is not one of Mintzberg and Quinn's four approaches to strategic
decision making?

A) Entrepreneurial

B) Adaptive

C) Planning

D) Logical incrementalism

E) Reactive

97) Tesla and SpaceX, founded by Elon Musk and reflecting his vision, are examples of which
mode of strategic decision-making?

A) Adaptive

B) Entrepreneurial

C) Logical incrementalism

D) Planning

E) Customer relationship management

98) What characterizes the planning mode of strategy formulation?

A) Top management believes that the environment is a force to be used and controlled.

B) It assumes the environment is too complex to be completely comprehended.

C) It involves the systematic gathering of appropriate information for situation analysis, the
generation of feasible alternative strategies, and the rational selection of the most appropriate
strategy.

D) Rather than utilizing a proactive search for new opportunities, it only has the opportunity for
reactive behavior.

E) It is based on vision and large-picture strategy.

99) Which of the following modes of strategic decision making is sometimes referred to as
"muddling through?"

A) Adaptive

B) Entrepreneurial

C) Logical incrementalism

D) Planning

E) Budgeting

100) The mode of strategic decision-making typical of most universities, many large hospitals, a
large number of governmental agencies, and a surprising number of large organizations is

A) adaptive.

B) entrepreneurial.

C) logical incrementalism.

D) planning.

E) reactive.
101) The mode of strategy formulation used when top management has a reasonably clear idea
of the corporation's mission and objectives, but chooses to use "an interactive process in which
the organization probes the future, experiments, and learns from a series of partial
(incremental) commitments rather than through global formulations of total strategies" is called

A) planning mode.

B) logical incrementalism.

C) entrepreneurial mode.

D) adaptive mode.

E) strategic mode.

102) Which approach to decision-making is most useful when the environment is changing
rapidly and when it is important to build consensus and develop needed resources before
committing the entire corporation to a specific strategy?

A) Planning mode

B) Entrepreneurial mode

C) Logical incrementalism

D) Adaptive mode

E) Strategic flexibility mode

107) A checklist of questions, by area or issue, that enables a systematic analysis to be made of
various corporate functions and activities is referred to as a(n)

A) scenario.

B) portfolio.

C) strategic audit.

D) social responsibility audit.

E) SOP.
111) Which of the following is not a clear employment path that relies on the study of strategic
management?

A) Business development

B) Consulting

C) Copywriting

D) Mergers and acquisitions (M&A)

E) Business analysis

112) In an organization, the group is traditionally charged with developing and reporting on the
Strategic Plan for the organization.

A) business analysis

B) mergers and acquisitions (M&A)

C) strategy

D) budgeting

E) board of directors