Testbank Strategic Management Chapter 1

PART VI: TEST ITEM FILE

CHAPTER 1

The Nature of Strategic Management

True/False

Introduction

1. The underpinnings of strategic management hinge on managers gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors, shareholders and customers worldwide.

(t; easy; p. 4)

What Is Strategic Management?

1. Optimizing for tomorrow the trends of today is the purpose of strategic management.

        (f; easy; p. 5)

1. Even though useful, strategic planning has been cast aside by corporate America since the early 1990s.

        (f; medium; p. 5; AACSB Reflective thinking skills)

1. Resource allocation is included in strategy-formulation activities.

        (t; medium; p. 5)

1. The terms strategic management and strategy implementation are synonymous.

(t; easy; p. 5)

1. A vision statement is, in essence, a company’s game plan.

(f; easy; p. 5)

1. Strategy implementation is often considered to be the most difficult stage in the strategic-management process because it requires personal discipline, commitment and sacrifice.

(t; difficult; p. 6; AACSB: Reflective thinking skills)

1. The final stage in strategic management is strategy implementation.
   
   (f; medium; p. 6)

1. Strategy formulation, implementation and evaluation activities occur at three hierarchical levels in a large diversified organization: corporate, divisional and functional.

(t; medium; p. 6; AACSB: Reflective thinking skills)

1. One of the fundamental strategy evaluation activities is reviewing external and internal factors that are the bases for current strategies.

(t; medium; p. 6)

1. An objective, logical, systematic approach for making major decisions in an organization is a way to describe the strategic-management process.

(t; medium; p. 7; AACSB: Reflective thinking skills)

1. Strategic management is an attempt to organize qualitative and quantitative information in a way that allows effective decisions to be made under conditions of uncertainty.

(t; medium; p. 7; AACSB: Analytic skills)

1. Analytical and intuitive thinking should complement each other.

(t; easy; p. 7)

1. According to Albert Einstein, “Knowledge is far more important than intuition.”
   
   (f; difficult; p. 7)

1. Management by intuition can be defined as operating from the “I’ve-already-made-up-my-mind-don’t-bother- me-with-the-facts mode.”
   
   (f; medium; p. 7; AACSB: Reflective thinking skills)

1. By monitoring external events, companies should be able to identify when change is required.
   
   (f; easy; p. 8)

1. In 2007, Toyota surpassed General Motors as the world’s top producer of cars
   
   (t; medium; p. 8)

1. As of 2006, the largest company in the world was ExxonMobil.  
   
   (f; medium; p. 8)

Key Terms in Strategic Management

1. Anything the firm does especially well compared to rival firms could be considered a competitive advantage.

(t; easy; p. 8)

1. Once a firm acquires a competitive advantage, they are usually able to sustain the competitive advantage for an extended period of time.
   
   (f; medium; p. 9)

1. Newspaper companies in the United States provide a good example of how a company can sustain a competitive advantage over the long term.
   
   (f; difficult; p. 9; AACSB: Reflective thinking skills)

1. Although the Internet has increased in popularity, it has actually led to increases in company expenses.
   
   (f; medium; p. 10; AACSB: Reflective thinking skills)

1. Consumer e-commerce is five times greater than business-to-business e-commerce.
   
   (f; medium; p. 10; AACSB: Analytic skills)

1. Currently, online shopping accounts for almost 15 percent of all shopping.
   
   (f; medium; p. 10)

1. Customers spent more money online for clothes than they did on computers.  
   
   (t; easy; p. 10)

1. In order for a firm to achieve sustained competitive advantage, a firm must continually adapt to changes in external trends and events and effectively formulate, implement, and evaluate strategies that capitalize upon those factors.

(t; difficult; p. 9)

1. Strategists are usually found in higher levels of management and have considerable authority for decision-making in the firm.

(t; easy; p. 10)