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MBA Strategic Management - Quiz - David 16th Edition - 2017 - Chapter 4

MBA Business Strategy/Strategic Management

MBA Strategic Management - Quiz and Case Study Guides

David 16th Edition - 2017

Chapter 4   The Internal Assessment

 

 

Strategic Management: A Competitive Advantage Approach, 16e (David)

Chapter 4   The Internal Assessment

 

1) A firm's strengths that cannot be easily matched or imitated by competitors are called

  1. A) internal audits.
  2. B) distinctive competencies.
  3. C) external audits.
  4. D) interrelated properties.
  5. E) internal properties.

Answer:  B

Diff: 1

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

2) Who should perform an internal audit?

  1. A) A private auditing firm
  2. B) The organization's accounting department
  3. C) Representative managers and employees from throughout the firm
  4. D) A small team of top-level managers
  5. E) The chief executive officer

Answer:  C

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

3) ________ exemplifies the complexity of relationships among the functional areas of business.

  1. A) Government auditing
  2. B) External auditing
  3. C) Financial ratio analysis
  4. D) Environmental scanning
  5. E) Distribution strategy

Answer:  C

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

4) The three all-encompassing internal resource categories used in the resource-based view are physical resources, human resources, and

  1. A) financial resources.
  2. B) shareholder resources.
  3. C) organizational resources.
  4. D) non-renewable resources.
  5. E) technological resources.

Answer:  C

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

5) Organizational resources include all of the following EXCEPT

  1. A) employee training.
  2. B) firm structure.
  3. C) planning processes.
  4. D) information systems.
  5. E) copyrights.

Answer:  A

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

 

6) A resource is valuable if it is rare, hard to imitate, or

  1. A) expensive.
  2. B) inexpensive.
  3. C) easily substitutable.
  4. D) not easily substitutable.
  5. E) inefficient.

Answer:  D

Diff: 1

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

7) Opportunities are a firm's distinctive competencies that cannot be easily matched or imitated by competitors.

Answer:  FALSE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

8) The process of performing an internal audit, compared to the external audit, provides more opportunity for participants to understand how their jobs, departments and divisions fit into the whole organization.

Answer:  TRUE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

9) According to William King, a task force of managers from different units of the organization should be charged with determining the 20 most important strengths and weaknesses that should influence the future of the organization.

Answer:  TRUE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

 

10) Proponents of the resource-based view argue that external factors are more important than internal factors for a firm in achieving and sustaining competitive advantage.

Answer:  FALSE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

11) The basic premise of the research-based view is that the mix, type, amount, and nature of a firm's internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage.

Answer:  TRUE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

12) For a resource to be valuable, it must be either rare, hard to imitate, or not easily substitutable.

Answer:  TRUE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

13) Successful strategy formulation generally rests upon the ability of an organization to sell some product or service.

Answer:  FALSE

Diff: 2

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Analytical thinking

 

14) Explain the resource-based view and its relation to strategic management.

Answer:  The resource-based view (RBV) approach to competitive advantage contends that internal resources are more important than external factors for a firm in achieving and sustaining competitive advantage, in contrast to the I/O theory. According to the RBV, organizational performance is determined by physical resources, human resources, and organizational resources. RBV theory asserts that resources are actually what help a firm exploit opportunities and neutralize threats. The theory also asserts that in order to maintain a competitive advantage, a resource must either be rare, not easily substitutable, or hard to imitate.

Diff: 3

LO:  4.1: Describe the nature and role of an internal assessment in formulating strategies.

AACSB:  Written and oral communication

 

 

15) A pattern of behavior developed by an organization as it learns to cope with its problems of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel is called

  1. A) dysfunctional behavior.
  2. B) groupthink.
  3. C) behavior modification.
  4. D) organizational culture.
  5. E) internal audit effect.

Answer:  D

Diff: 2

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

16) Which of the following are NOT mentioned as an example of cultural products?

  1. A) Rites
  2. B) Emotions
  3. C) Rituals
  4. D) Sagas
  5. E) Symbols

Answer:  B

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

17) A standardized set of behaviors used to manage anxieties is called a

  1. A) folktale.
  2. B) rite.
  3. C) metaphor.
  4. D) ritual.
  5. E) value.

Answer:  D

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

18) What is the term for a historical narrative describing the unique accomplishments of a group and its leaders?

  1. A) Rite
  2. B) Saga
  3. C) Story
  4. D) Myth
  5. E) Folktale

Answer:  B

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

19) Life-directing attitudes that serve as behavioral guidelines are called

  1. A) values.
  2. B) rites.
  3. C) beliefs.
  4. D) metaphors.
  5. E) legends.

Answer:  A

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

20) Any object, act, event, quality, or relation used to convey meaning is known as a

  1. A) myth.
  2. B) rite.
  3. C) value.
  4. D) symbol.
  5. E) metaphor.

Answer:  D

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

21) Metaphors are

  1. A) several rites connected together.
  2. B) shorthand of words used to capture a vision or to reinforce old or new values.
  3. C) narratives based on true events.
  4. D) fictional stories.
  5. E) any objects, acts, events, qualities, or relations used to convey meaning.

Answer:  B

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

22) The subtle, elusive and largely unconscious forces that shape the workplace are captured by the organizational culture.

Answer:  TRUE

Diff: 2

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Interpersonal relations and teamwork

 

23) Cultural products include values, beliefs, stories, and language.

Answer:  TRUE

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

 

24) Metaphors are handed-down narratives of some wonderful event that are based on history but which have been embellished with fictional detail.

Answer:  FALSE

Diff: 2

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

25) A ritual is a standardized set of behaviors used to manage anxieties.

Answer:  TRUE

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

26) Linkages between a firm's culture and strategies often determine success.

Answer:  TRUE

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

27) An organization's culture compares to an individual's personality in the sense that no two organizations have the same culture and no two individuals have the same personality.

Answer:  TRUE

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

28) At Google the culture is very rigid, while in contrast the culture at Proctor & Gamble is very informal.

Answer:  FALSE

Diff: 2

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

29) While interesting, organizational culture does not significantly affect business decisions.

Answer:  FALSE

Diff: 1

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

30) Define cultural products and give six examples of them.

Answer:  Cultural products are levers that strategists can use to influence and direct strategy formulation, implementation, and evaluation activities. Students can list any six of the following: rites, ceremonies, rituals, myths, sagas, legends, stories, folktales, symbols, language, metaphors, values, beliefs, and heroes/heroines.

Diff: 2

LO:  4.2: Discuss why organizational culture is so important in formulating strategies.

AACSB:  Written and oral communication

 

31) What is the essential bridge between the present and the future that increases the likelihood of achieving desired results?

  1. A) Motivating
  2. B) Planning
  3. C) Controlling
  4. D) Staffing
  5. E) Organizing

Answer:  B

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

32) All of the following are basic activities of management EXCEPT

  1. A) staffing.
  2. B) planning.
  3. C) consolidating.
  4. D) organizing.
  5. E) motivating.

Answer:  C

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

33) Which of the following does the text call an up-front investment in success?

  1. A) Planning
  2. B) Organizing
  3. C) Motivating
  4. D) Staffing
  5. E) Controlling

Answer:  A

Diff: 1

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

 

34) Which function of management includes areas such as job design, job specifications, job analysis, and unity of command?

  1. A) Planning
  2. B) Organizing
  3. C) Motivating
  4. D) Staffing
  5. E) Controlling

Answer:  B

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

35) Synergy

  1. A) is the 2 + 2 = 5 effect.
  2. B) can result in powerful competitive advantages.
  3. C) can be developed by an organization through planning.
  4. D) exists when everyone pulls together as a team that knows what it wants to achieve.
  5. E) all of the above

Answer:  E

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Interpersonal relations and teamwork

 

36) Which management function includes breaking tasks into jobs, combining jobs to form departments, and delegating authority?

  1. A) Motivating
  2. B) Staffing
  3. C) Organizing
  4. D) Controlling
  5. E) Planning

Answer:  C

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

37) Which function of management is concerned with span of control and chain of command?

  1. A) Planning
  2. B) Organizing
  3. C) Controlling
  4. D) Staffing
  5. E) Motivating

Answer:  B

Diff: 3

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Analytical thinking

 

38) Which of the following is the process of influencing people to accomplish specific objectives?

  1. A) Staffing
  2. B) Motivating
  3. C) Planning
  4. D) Controlling
  5. E) Organizing

Answer:  B

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

39) Staffing involves all of these activities EXCEPT

  1. A) recruiting employees.
  2. B) rewarding employees.
  3. C) analyzing customers.
  4. D) managing union relations.
  5. E) training and developing employees.

Answer:  C

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

 

40) Which function of management includes all of those activities undertaken to ensure actual operations conform to planned operations?

  1. A) Planning
  2. B) Organizing
  3. C) Motivating
  4. D) Staffing
  5. E) Controlling

Answer:  E

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

41) Allocating resources is one of the five basic activities (functions) performed by managers.

Answer:  FALSE

Diff: 3

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

42) The only certain thing about the future of any organization is change.

Answer:  TRUE

Diff: 1

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

43) Organizing is the cornerstone of effective strategy formulation.

Answer:  FALSE

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

44) The controlling function of management is especially important for effective strategy evaluation.

Answer:  TRUE

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

 

45) The purpose of organizing is to achieve coordinated effort by defining task and authority relationships.

Answer:  TRUE

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

46) Motivation can explain why some people work hard and others do not.

Answer:  TRUE

Diff: 1

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

47) The management function of organizing is included in human resource management.

Answer:  FALSE

Diff: 3

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Analytical thinking

48) The controlling function of management is synonymous with strategy formulation.

Answer:  FALSE

Diff: 3

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Analytical thinking

 

 

49) Identify the five basic functions of management, and describe each function.

Answer:  The five basic functions of management are planning, organizing, motivating, staffing, and controlling. Planning consists of all those managerial activities related to preparing for the future, such as forecasting, establishing objectives, devising strategies, and developing policies. Organizing includes all those managerial activities that result in a structure of task and authority relationships, such as organizational design, job specialization, job descriptions, span of control, coordination, job design, and job analysis. Motivating involves efforts directed toward shaping human behavior. Specific topics include leadership, communication, work groups, behavior modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial morale. Staffing refers to human resource (HR) activities, such as wage and salary administration, employee benefits, interviewing, hiring, firing, training, management development, employee safety, equal employment opportunity, and union relations. Controlling refers to all those managerial activities directed toward ensuring that actual results are consistent with planned results. Key areas of concern include quality control, financial control, sales control, inventory control, expense control, analysis of variances, rewards, and sanctions.

Diff: 3

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

50) Describe the controlling function of management. Include the four basic steps that comprise this function in your description.

Answer:  The controlling function of management includes all of those activities undertaken to ensure that actual operations conform to planned operations, and is particularly important for effective strategy evaluation. Controlling consists of four basic steps: 1) establishing performance standards; 2) measuring individual and organizational performance; 3) comparing actual performance to planned performance standards; and 4) taking corrective actions.

Diff: 2

LO:  4.3: Identify the basic functions (activities) that make up management and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

51) Pricing is one of the basic functions of

  1. A) marketing.
  2. B) finance/accounting.
  3. C) management information systems.
  4. D) production/operations.
  5. E) research and development.

Answer:  A

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

52) ________ can reveal the demographic characteristics of an organization's customers.

  1. A) Customer profiling
  2. B) Test marketing
  3. C) Market development
  4. D) The vision statement
  5. E) Telemarketing

Answer:  A

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

53) All of the following are basic functions of marketing EXCEPT

  1. A) value chain analysis.
  2. B) customer analysis.
  3. C) product and service planning.
  4. D) pricing.
  5. E) distribution.

Answer:  A

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

54) Selling includes all of these marketing activities EXCEPT

  1. A) advertising.
  2. B) dealer relations.
  3. C) customer analysis.
  4. D) publicity.
  5. E) sales promotion.

Answer:  C

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

55) What marketing function includes test marketing?

  1. A) Selling products and services
  2. B) Pricing
  3. C) Customer analysis
  4. D) Product and service planning
  5. E) Distribution

Answer:  D

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

56) The Robinson-Patman Act affects a company's

  1. A) pricing.
  2. B) product/service planning.
  3. C) customer analysis.
  4. D) marketing research.
  5. E) distribution.

Answer:  A

Diff: 3

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

57) Distribution includes

  1. A) customer analysis.
  2. B) pricing.
  3. C) warehousing.
  4. D) advertising.
  5. E) test marketing.

Answer:  C

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

58) Which of the following is NOT a key question that can reveal internal strengths and weaknesses regarding a firm's marketing function?

  1. A) Does the firm have an effective sales organization?
  2. B) Has the firm's market share been increasing?
  3. C) Are markets segmented effectively?
  4. D) Are the firm's products and services priced appropriately?
  5. E) Does the firm have good liquidity?

Answer:  E

Diff: 3

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

59) There are seven basic functions of marketing: customer analysis, selling products and services, product and service planning, pricing, distribution, marketing research, and opportunity analysis.

Answer:  TRUE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

60) A form of customer analysis is administering customer surveys.

Answer:  TRUE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

61) During the 2015 Super Bowl, a 30-second advertisement cost over $4 million.

Answer:  TRUE

Diff: 1

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

62) Chief marketing officers now spend more than 50 percent of their budgets on technology to manage activities like online marketing and social media.

Answer:  TRUE

Diff: 1

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Information technology

 

63) Test marketing is used more frequently by industrial companies than consumer goods companies.

Answer:  FALSE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

64) Five major stakeholders that affect pricing decisions are consumers, governments, suppliers, distributors, and competitors.

Answer:  TRUE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

65) Most producers today sell their goods directly to consumers.

Answer:  FALSE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

66) Distribution becomes especially important when a firm is striving to implement a product development or diversification.

Answer:  FALSE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

67) Marketing research is the systematic gathering, recording and analyzing, of data about problems relating to the marketing of goods and services.

Answer:  TRUE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

68) In the area of marketing, a cost/benefit analysis is an appraisal of the costs, benefits, and risks associated with marketing decisions.

Answer:  TRUE

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

69) What are the seven basic functions of marketing?

Answer:  (1) customer analysis, (2) selling products and services, (3) product and service planning, (4) pricing, (5) distribution, (6) marketing research, and (7) cost/benefit analysis.

Diff: 2

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

70) Discuss how technology has affected advertising and other marketing activities.

Answer:  Recent research reveals that the most effective marketing methods for firms with fewer than 500 employees is the company website (50 percent), Facebook and/or other social media sites such as Twitter (27 percent), and yellow pages and other (23 percent). Advertising on television is on a downward spiral, according to Time Warner, Discovery Communications, and CoEssayast. Heavy marketers, such as Allstate and Mondelez International, now openly speak about shifting TV ad dollars to digital platforms. Chief marketing officers (CMOs), such as Eduardo Conrado at Motorola, now spend more than 50 percent of the budget on technology to manage activities such as online marketing and social media. Marketing is becoming technical, with software to track and target customers and manage customer relationships, predict consumer behavior, run online storefronts, analyze social media, manage websites, and craft targeted advertisements. With the proliferation of e-books, marketers are experimenting more and more with advertising to consumers as they read e-books.

Diff: 3

LO:  4.4: Identify the basic functions of marketing and their relevance in formulating strategies.

AACSB:  Written and oral communication

 

71) The ________ decision is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization.

  1. A) investment
  2. B) dividend
  3. C) financing
  4. D) restructuring
  5. E) benchmark

Answer:  A

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

 

72) Which of the three finance and accounting decisions involves determining the best capital structure for the firm?

  1. A) Investment
  2. B) Dividend
  3. C) Financing
  4. D) Capital budgeting
  5. E) Implementation

Answer:  C

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

73) What category of ratios measures a firm's ability to meet its short-term obligations?

  1. A) Profitability
  2. B) Liquidity
  3. C) Leverage
  4. D) Activity
  5. E) Growth

Answer:  B

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

74) What category of ratios includes return on total assets and return on stockholders' equity?

  1. A) Leverage
  2. B) Activity
  3. C) Profitability
  4. D) Growth
  5. E) Liquidity

Answer:  C

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

75) What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry?

  1. A) Profitability
  2. B) Liquidity
  3. C) Leverage
  4. D) Revenue Growth
  5. E) Growth

Answer:  E

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Analytical thinking

 

 

76) Which ratio would be considered an activity ratio?

  1. A) Debt-to-equity
  2. B) Net profit margin
  3. C) Average collection period
  4. D) Earnings per share
  5. E) Current ratio

Answer:  C

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

77) Which ratio is calculated by dividing profits before interest and taxes by total interest charges?

  1. A) Inventory turnover
  2. B) Fixed assets turnover
  3. C) Total assets turnover
  4. D) Debt-to-equity ratio
  5. E) Times-interest-earned ratio

Answer:  E

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

78) The times-interest-earned ratio would be classified as a(n)

  1. A) activity ratio.
  2. B) leverage ratio.
  3. C) profitability ratio.
  4. D) liquidity ratio.
  5. E) growth ratio.

Answer:  B

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

79) If total fixed costs are $10,000, variable costs per unit are $5, and the price per unit is $15, what is the breakeven quantity?

  1. A) 500
  2. B) 667
  3. C) 1,000
  4. D) 2,000
  5. E) 5,000

Answer:  C

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Application of knowledge

 

 

80) According to James Van Horne the functions of finance & accounting comprise three decisions: the investment decision, the financing decision, and the dividend decision.

Answer:  TRUE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

81) Financial ratios are not applicable to nonprofit organizations.

Answer:  FALSE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

82) Dividend decisions concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase of stock.

Answer:  TRUE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

83) The idea that paying dividends results in a higher stock price is a myth.

Answer:  TRUE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

84) In 2014-2016, companies are aggressively boosting their dividends paid to shareholders.

Answer:  TRUE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

85) Activity ratios measure how effectively a firm is using its resources.

Answer:  TRUE

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Analytical thinking

 

86) Leverage ratios measure a firm's ability to meet maturing short-term obligations.

Answer:  FALSE

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Analytical thinking

 

 

87) The total assets turnover ratio is calculated by dividing sales by fixed assets.

Answer:  FALSE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

88) Financial ratio analysis becomes less useful if one goes beyond the actual calculation and interpretation of each individual ratio.

Answer:  FALSE

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Analytical thinking

 

89) A limitation of financial ratios is the fact that they are based on accounting data.

Answer:  TRUE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

90) The quantity or number of units of product that a firm must sell to break even is total fixed costs divided by (price per unit + variable costs per unit).

Answer:  FALSE

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

91) According to James Van Horne, what are the three decisions that comprise the functions of finance? Describe each function.

Answer:  The three basic functions of finance, according to James Van Horne, are the investment decision, the financing decision, and the dividend decision. The investment decision is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization. The financing decision determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital. Dividend decisions concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time and the repurchase of stock.

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

 

92) Discuss the three separate fronts on which an effective financial ratio analysis is conducted.

Answer:  The analysis should be conducted on three separate fronts:

  1. How has each ratio changed over time? This information provides a means of evaluating historical trends. It is important to note whether each ratio has been increasing, decreasing, or nearly constant historically. For example, a 10 percent profit margin could be bad if the trend has been down 20 percent each of the last three years. But a 10 percent profit margin could be excellent if the trend has been up. Therefore, calculate the percentage change in each ratio from one year to the next to assess historical financial performance on that dimension. Identify and examine large percent changes in a financial ratio from one year to the next.
  2. How does each ratio compare to industry norms? A firm's inventory turnover ratio may appear impressive at first glance, but may pale when compared to industry standards or norms. Industries can differ dramatically on certain ratios. For example, grocery companies such as Kroger have a high inventory turnover whereas automobile dealerships have a lower turnover. Therefore, comparison of a firm's ratios within its particular industry can be essential in determining strength/weakness.
  3. How does each ratio compare with key competitors? Oftentimes competition is more intense between several competitors in a given industry or location than across all rival firms in the industry. When this is true, financial ratio analysis should include comparison to those key competitors. For example, if a firm's profitability ratio is trending up over time and compares favorably to the industry average, but it is trending down relative to its leading competitor, there may be reason for concern.

Diff: 3

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

 

93) Discuss the limitations of financial ratio analysis.

Answer:  There are some limitations of financial ratio analysis. The first is that financial ratios are based on accounting data, and firms differ in their treatment of such items as depreciation, inventory valuation, R&D expenditures, pension plan costs, mergers, and taxes. Second, seasonal factors can influence comparative ratios. A third limitation is that departures from industry averages do not always indicate a firm is doing especially well or badly.

Diff: 2

LO:  4.5: Discuss the nature and role of finance/accounting in formulating strategies.

AACSB:  Written and oral communication

94) According to Roger Schroeder, which basic function within production and operations deals with aggregate planning and scheduling?

  1. A) Capacity
  2. B) Inventory
  3. C) Workforce
  4. D) Process
  5. E) Quality

Answer:  A

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

95) ________ management deals with inputs, transformations, and outputs that vary across industries and markets.

  1. A) Marketing
  2. B) Financial
  3. C) Research and development
  4. D) Production and operations
  5. E) Information systems

Answer:  D

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

96) In most industries, the major costs of producing a product or service are incurred within

  1. A) marketing.
  2. B) management.
  3. C) research and development.
  4. D) operations.
  5. E) management information systems.

Answer:  D

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

97) ________ is a commonly used approach to determine R&D budget allocations.

  1. A) Financing as many project proposals as possible
  2. B) Using a percentage-of-sales method
  3. C) Budgeting for R&D about what competitors spend
  4. D) Deciding how many successful new products are needed and working backward to estimate the required R&D investment
  5. E) All of the above

Answer:  E

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

98) Capacity decisions concern distances from raw materials to production sites to customers.

Answer:  FALSE

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

99) In most industries, only minor costs of producing a product or service are incurred within operations, so production and operations does not have great value as a competitive weapon in a company's overall strategy.

Answer:  FALSE

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

100) Increased efficiency, quality, productivity, and job satisfaction can come from cross-training workers.

Answer:  TRUE

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

101) Research and Development (R&D) Management is focused on managing inputs, transformations, and outputs that vary across industries and markets.

Answer:  FALSE

Diff: 2

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

102) According to Roger Schroeder, there are five basic functions or decision areas in production. Describe these five functions.

Answer:  The five basic functions or decision areas in production are: 1) Process: These decisions include choice of technology, facility layout, process flow analysis, facility location, line balancing, process control, and transportation analysis. Distances from raw materials to production sites to customers are a major consideration; 2) Capacity: These decisions include forecasting, facilities planning, aggregate planning, scheduling, capacity planning, and queuing analysis. Capacity utilization is a major consideration; 3) Inventory: These decisions involve managing the level of raw materials, work-in-process, and finished goods, especially considering what to order, when to order, how much to order, and materials handling; 4) Workforce: These decisions involve managing the skilled, unskilled, clerical, and managerial employees by caring for job design, work measurement, job enrichment, work standards, and motivation techniques; and 5) Quality: These decisions are aimed at ensuring that high-quality goods and services are produced by caring for quality control, sampling, testing, quality assurance, and cost control.

Diff: 3

LO:  4.6: Discuss the nature and role of production/operations in formulating strategies.

AACSB:  Written and oral communication

 

 

103) Which is NOT one of the four common approaches to determine R&D budget allocations?

  1. A) Finance as many project proposals as possible.
  2. B) Budget for R&D about what competitors spend.
  3. C) Use a percentage-of-costs method.
  4. D) Decide how many successful new products are needed and work backwards to estimate the required R&D investment.
  5. E) Use a percentage-of-sales method.

Answer:  C

Diff: 2

LO:  4.7: Discuss the nature and role of research and development (R&D) in formulating strategies.

AACSB:  Written and oral communication

104) For many firms a key decision with great bearing on Research and Development (R&D) spending is whether to be a "first mover" or a

  1. A) "first activator."
  2. B) "second mover."
  3. C) "average player."
  4. D) "tech leader."
  5. E) "late follower."

Answer:  E

Diff: 2

LO:  4.7: Discuss the nature and role of research and development (R&D) in formulating strategies.

AACSB:  Written and oral communication

 

105) Four common approaches to determine R&D budget allocations are: 1) finance as many project proposals as possible; 2) use a percentage-of-sales method; 3) budget for R&D about what competitors spend; or 4) decide how many successful new products are needed and work backwards to estimate the required R&D investment.

Answer:  TRUE

Diff: 2

LO:  4.7: Discuss the nature and role of research and development (R&D) in formulating strategies.

AACSB:  Written and oral communication

 

106) A recent study reported that the stock price appreciation of technology companies in the lowest third of R&D spending have consistently outperformed companies in the highest third over 1-, 3-, 5-, and 10-year periods since 1977.

Answer:  TRUE

Diff: 3

LO:  4.7: Discuss the nature and role of research and development (R&D) in formulating strategies.

AACSB:  Written and oral communication

 

 

107) Four basic approaches exist to determine R&D budget allocations. What are these approaches?

Answer:  The four commonly-used approaches to determining R&D budget allocations are: 1) financing as many project proposals as possible; 2) using a percentage-of-sales method; 3) budgeting about the same amount competitors spend for R&D; and 4) deciding how many successful new products are needed and working backward to estimate the required R&D investment.

Diff: 2

LO:  4.7: Discuss the nature and role of research and development (R&D) in formulating strategies.

AACSB:  Written and oral communication

 

108) ________ ties all business functions together and provides the basis for all managerial decisions.

  1. A) Management
  2. B) Marketing
  3. C) Information
  4. D) Technology
  5. E) Workforce

Answer:  C

Diff: 2

LO:  4.8: Discuss the nature and role of management information systems (MIS) in formulating strategies.

AACSB:  Information technology

109) An effective information management system ________ information in such a way that it answers important operating and strategic questions.

  1. A) collects
  2. B) codes
  3. C) stores
  4. D) synthesizes
  5. E) all of the above

Answer:  E

Diff: 2

LO:  4.8: Discuss the nature and role of management information systems (MIS) in formulating strategies.

AACSB:  Information technology

 

110) The heart of an information system is a database containing the kinds of records and data important to managers.

Answer:  TRUE

Diff: 2

LO:  4.8: Discuss the nature and role of management information systems (MIS) in formulating strategies.

AACSB:  Information technology

 

 

111) Technology ties all business functions together and provides the basis for all managerial decisions.

Answer:  FALSE

Diff: 2

LO:  4.8: Discuss the nature and role of management information systems (MIS) in formulating strategies.

AACSB:  Written and oral communication

 

112) In analyzing big data, there is a shift from focusing largely on outliers to also focusing on aggregates.

Answer:  FALSE

Diff: 3

LO:  4.8: Discuss the nature and role of management information systems (MIS) in formulating strategies.

AACSB:  Information technology

 

113) The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called

  1. A) The Resource-Based Approach.
  2. B) Value Chain Analysis.
  3. C) Strategic Cost Analysis.
  4. D) The Internal Factor Evaluation Matrix.
  5. E) Cost-Benefit Analysis.

Answer:  B

Diff: 2

LO:  4.9: Explain value chain analysis and its relevance in formulating strategies.

AACSB:  Written and oral communication

114) The initial step to implementing value chain analysis is

  1. A) attaching a cost to each discrete activity.
  2. B) establishing costs in terms of time.
  3. C) establishing costs in terms of money.
  4. D) converting the cost data into information by looking for competitive cost strengths and weaknesses.
  5. E) dividing a firm's operations into specific activities or business processes.

Answer:  E

Diff: 2

LO:  4.9: Explain value chain analysis and its relevance in formulating strategies.

AACSB:  Written and oral communication

 

115) Value chain analysis can enable a firm to better identify its own strengths and weaknesses especially as compared to competitors' value chain analyses and their own data over time.

Answer:  TRUE

Diff: 2

LO:  4.9: Explain value chain analysis and its relevance in formulating strategies.

AACSB:  Written and oral communication

 

116) Although a useful step in the strategic management process, value chain analysis does little to help a firm monitor whether its prices and costs are competitive.

Answer:  FALSE

Diff: 2

LO:  4.9: Explain value chain analysis and its relevance in formulating strategies.

AACSB:  Written and oral communication

 

117) Benchmarking is an analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals.

Answer:  TRUE

Diff: 3

LO:  4.9: Explain value chain analysis and its relevance in formulating strategies.

AACSB:  Analytical thinking

 

118) Which of the following is the first step in developing an IFE Matrix?

  1. A) Determining the organization's structure
  2. B) Summing the weighted scores for each variable
  3. C) Listing key internal strengths and weaknesses
  4. D) Identifying the organization's functions of business
  5. E) Assigning a weight to each factor

Answer:  C

Diff: 2

LO:  4.10: Develop and use an Internal Factor Evaluation (IFE) Matrix.

AACSB:  Written and oral communication

119) The IFE Matrix should be ________ in multidivisional firms.

  1. A) constructed for each autonomous division
  2. B) all-inclusive
  3. C) constructed only for the major divisions
  4. D) developed before the EFE Matrix
  5. E) revised monthly

Answer:  A

Diff: 2

LO:  4.10: Develop and use an Internal Factor Evaluation (IFE) Matrix.

AACSB:  Written and oral communication

 

120) Constructing an Internal Factor Evaluation Matrix is a summary step when conducting an internal strategic-management audit.

Answer:  TRUE

Diff: 1

LO:  4.10: Develop and use an Internal Factor Evaluation (IFE) Matrix.

AACSB:  Written and oral communication

 

 

121) The Internal Factor Evaluation Matrix should use a total of 20 internal factors.

Answer:  TRUE

Diff: 1

LO:  4.10: Develop and use an Internal Factor Evaluation (IFE) Matrix.

AACSB:  Written and oral communication

 

122) The Internal Factor Evaluation (IFE) Matrix should be developed on a multiple business unit basis in multidivisional firms.

Answer:  FALSE

Diff: 2

LO:  4.10: Develop and use an Internal Factor Evaluation (IFE) Matrix.

AACSB:  Written and oral communication

 

123) Discuss the five steps involved in performing an Internal Factor Evaluation (IFE) Matrix.

Answer:  The first step is to list 20 internal factors, including strengths and weaknesses, using percentages, ratios and comparative numbers. The second step is to assign a weight that ranges from 0.00 (not important) to 1.0 (all-important) to each factor based on its relative importance to being successful in the firm's industry. The third step is to assign a 1 to 4 rating to each factor to indicate whether that factor represents a major weakness, a minor weakness, a major strength, or a minor strength. Next, multiply each factor's weight by its rating to determine a weighted score for each variable. Finally, sum the weighted scores for each variable to determine the total weighted score for the organization.

Diff: 2

LO:  4.10: Develop and use an Internal Factor Evaluation (IFE) Matrix.

AACSB:  Written and oral communication

 

 

 

 

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Strategic Management: A Competitive Advantage Approach, Concepts and Cases, 16th Edition, Fred R. David, 2017
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