CH 11 Flashcards
Most strategists believe that an organization’s wellbeing depends on evaluation of the
strategic-management process.
T
2) Adequate, timely feedback is important to effective strategy evaluation.
T
3) Too much emphasis on evaluating strategies may be expensive and counterproductive.
T
4) Strategy evaluation should have a long-run focus and avoid a short-run focus.
F
According to Richard Rumelt, consonance and consistency are based on a firm’s external
assessment.
F
According to Rumelt, consistency and feasibility are largely based on a firm’s internal assessment.
T
Consistency, distinctiveness, advantage and feasibility are Richard Rumelt’s four criteria for evaluating a strategy.
F
Strategy evaluation is becoming increasingly easier with the passage of time, given the
technological advances.
F
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.
T
Strategies may be inconsistent if policy problems and issues continue to be brought to the top for
resolution.
T
Competitive advantages are normally the result of superiority in one of three areas: feasibility,
consistency, or consonance.
F
Regardless of the size of the organization, a certain amount of management by wandering
around at all levels is essential to effective strategy evaluation.
T
Because large companies have more at stake, it is more important for them to conduct strategy evaluation than it is for small companies.
F
14) The end of the fiscal year is the best time to do a strategy evaluation.
F
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.
F
In strategy evaluation, a revised IFE matrix should indicate how effective a firm’s strategies have
been in response to key opportunities and threats.
F
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.
T
18) When taking corrective action, you need to compare expected results to actual results.
F
19) Criteria for evaluating strategies should be measurable and easily verifiable.
T
20) Specific financial ratios are rarely used criteria to evaluate strategies.
F
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.
T
22) Intuitive judgments are almost always involved in deriving quantitative criteria.
T
Most quantitative evaluation criteria are geared to long-term objectives rather than annual
objectives.
F
Measuring organizational performance requires making changes to reposition a firm
competitively for the future.
F
Taking corrective action does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated.
T
Corrective action in strategy evaluation is necessary to keep an organization on track toward
achieving stated objectives.
T
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.
T
Future shock occurs when the type and speed of changes overpower an individual or
organization’s ability and capacity to adapt.
T
According to research, participation in strategy-evaluation activities is one of the best ways to overcome individuals’ resistance to change.
T
30) The basic form of a Balanced Scorecard is the same for all organizations and industries.
F
The Balanced Scorecard approach deals with the question, “How satisfied are the firm’s
customers.
T
Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm’s objectives.
T
Timely approximate information is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present.
T
34) The test of an effective evaluation system is its usefulness and complexity.
F
Small organizations require a more elaborate and detailed strategy-evaluation system because they are still evolving.
F
36) There is no one ideal strategy-evaluation system for all organizations.
T
Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.
T
38) Organizations should prepare contingency plans only for unfavorable events.
F
39) Strategies should try to cover all bases by planning for all possible contingencies.
F
40) Contingency plans should be as simple as possible.
T
Alternative strategies not selected for implementation should be discarded, as they have a tendency to contaminate the contingency plans.
F
Identifying both beneficial and unfavorable events that could possibly derail the strategy or strategies is the first step of effective contingency planning.
T
Independent auditors, government auditors and IRS auditors are the three groups of people who perform audits.
F
44) Independent auditors are basically CPAs who provide their services to organizations for a fee.
T
45) Public accounting firms usually avoid strategy evaluation services.
F
The Middle East is considered to be one of the regions most vulnerable to climate change impact because of its water scarcity.
T
Arab countries in sub-Saharan Africa are particularly vulnerable to the risk of environmental changes due to global warming.
T
Public accounting firms, especially foreign ones operating mostly in the GCC area, often have a consulting arm that provides strategy-evaluation services.
T
Moving environmental affairs from the line side of the organization to the staff side is required when instituting an environmental audit.
F
The strategic management process should be completely open because participation and
openness enhance understanding, commitment, and communication within the firm.
T
Increased education and diversity of the workforce at all levels are reasons why the top-down approach should be favored in organizations.
F
Which of these is/are a basic activity of strategy evaluation?
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
D
The purpose of strategy evaluation is to
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.
A
What is the cornerstone of effective strategy evaluation?
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
B
All of these are Richard Rumelt’s criteria to evaluate a strategy except
A) consistency.
B) consonance.
C) distinctiveness.
D) feasibility.
E) advantage.
C
What is happening to strategy evaluation with the passage of time?
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.
A
All of the following are reasons strategy evaluation is more difficult today except
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.
B
Which of the following is not a reason for the increasing difficulty of evaluating strategies?
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.
B
Which of the following is important because organizations face dynamic environments in which key external and internal factors often change quickly and dramatically?
A) Strategy implementation
B) Strategy evaluation
C) Strategy formulation
D) Strategy simplification
E) Strategy modification
B
A final broad test of strategy is its
A) consistency.
B) feasibility.
C) distinctiveness.
D) consonance.
E) advantage.
B
Competitive advantage normally is the result of superiority in resources, skills and
A) position.
B) feasibility.
C) employees.
D) governance.
E) consistency.
A
What term refers to the need for strategists to examine sets of trends, as well as individual trends in evaluating strategies?
A) Synergy
B) Feasibility
C) Consistency
D) Advantage
E) Coherence
E
In evaluating strategies, which one of Rumelt’s criteria for evaluating strategies refers to the need for strategists to examine sets of trends?
A) Advantage
B) Consistency
C) Coherence
D) Empowerment
E) Feasibility
C
If success for one organizational department means failure for another department, then
strategies may be
A) inconsistent.
B) advantageous.
C) inconsonant.
D) failures.
E) synergistic.
A
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
A) increased productivity.
B) a decreased number of complaints.
C) dysfunctional behavior.
D) a decreased turnover.
E) an increased number of litigations.
C
Strategy-evaluation activities should be performed
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.
C
Corrective actions are not needed when
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.
D
When you discover major changes have occurred in the firm’s internal strategic position while
conducting strategy evaluation, you should
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.
E
Changes in the organization’s management, marketing, finance/accounting, R&D and CIS
strengths and weaknesses should be the focus of a revised
A) EFE matrix.
B) vision.
C) IFE matrix.
D) mission.
E) EPM matrix.
C
A revised ________ should indicate how effective a firm’s strategies have been in response to key
opportunities and threats.
A) IFE matrix
B) mission
C) vision
D) EFE matrix
E) CPM matrix
D
Which of the following is not included in measuring organizational performance?
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.
A
Ineffectiveness and/or inefficiencies indicate the need for
A) reductions in pay.
B) more synergy.
C) layoffs.
D) some form of corrective action.
E) consultants.
D
What is the basis for quantitative financial evaluation?
A) Financial ratios
B) Present value analysis
C) The EPS/EBIT Analysis
D) Capital Asset Pricing Model
E) Reduction in costs
A
Which of these is not a key financial ratio?
A) Market share
B) Asset growth
C) Earnings per share
D) Return on equity
E) Production quality
E
Strategy evaluation is based on
A) qualitative criteria.
B) qualitative and quantitative criteria.
C) intuition.
D) empirical data.
E) objective data.
B
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
A) the performance of competitors.
B) overall business standards.
C) the performance of international firms.
D) the performance of suppliers.
E) non-financial ratios.
A
Most quantitative criteria are geared to ________ objectives rather than ________ objectives.
A) annual; long-term
B) top-management; employee
C) environmental; community
D) short-term; annual
E) profit; social
A
What corrective actions should a firm take during strategy evaluation?
A) Revising the business mission
B) Revising objectives
C) Issuing stock
D) Selling a division
E) all of the above
E
What occurs when the nature, types and speed of changes overpower an individual’s or organization’s ability and capacity to adapt?
A) Corrective actions
B) Measuring performance
C) Corporate agility
D) Future shock
E) Corporate downfall
D
Corrective actions should
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
A
What is the best way to overcome individuals’ resistance to change in strategy evaluation?
A) Participation
B) Command-and-control
C) Laissez-faire
D) Emotional reactions
E) Rational argument
A
An organization’s ability to adapt successfully to changing circumstances refers to its
A) dynamism.
B) corporate agility.
C) future shock.
D) revision power.
E) liquidity.
B
Corrective action should do all of the following except
A) capitalize upon internal strengths.
B) avoid external opportunities.
C) avoid external threats.
D) strengthen an organization’s competitive position.
E) improve internal weaknesses.
B
Which of the following is not a component of the Balanced Scorecard?
A) Internal business processes
B) Customer knowledge
C) Financial performance
D) Learning and growth
E) Social responsibility
E
What aims to balance long term with short term concerns, financial with non-financial concerns,
and internal with external concerns?
A) Contingency planning
B) Measuring performance
C) Reviewing Bases of Strategy
D) Taking corrective action
E) The Balanced Scorecard approaches
E
In the important publication used to evaluate a firm’s strategy, the Fortune 50 includes all of the Following except
A) the top retailers.
B) the top banks.
C) the top transportation companies.
D) the top utilities.
E) the top hospitals
E
What is not a characteristic of an effective evaluation system?
A) Meaningful
B) Economical
C) Timely
D) Information-oriented
E) Providing a true picture of what is happening.
D
Controls need to be ________ rather than ________.
A) universal; diverse
B) cultural; political
C) measurable; timely
D) qualitative; quantitative
E) action oriented; information oriented
E
The strategy-evaluation process should foster
A) profit centers.
B) mutual understanding.
C) corporate culture.
D) contingency plans
E) implementation.
B
What factor determines the final design of a firm’s strategy-evaluation and control system?
A) Threats
B) The organization’s characteristics
C) The competition’s characteristics
D) Opportunities
E) External characteristics
B
Familiarity with local environments usually makes gathering and evaluating information much
easier for ________ organizations than for ________ ones.
A) small; large
B) for-profit; non-profit
C) large; small
D) non-profit; for-profit
E) foreign; domestic
A
What activity is defined as having alternative plans that can be put into effect if certain key
events do not occur as expected?
A) Corporate agility
B) Strategy evaluation
C) Contingency planning
D) Scenario planning
E) Forecasting
C
Which of the following statements about contingency plans is not true?
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.
B
What permits quick response to change, prevents panic in crisis situations, and makes managers
more adaptable?
A) Taking corrective actions
B) Measuring performance
C) Contingency planning
D) Auditing
E) Implementing a balanced scorecard
C
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?
A) R&D
B) Innovation
C) Accounting
D) Strategic Management
E) Auditing
E
) 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
A) 2040. B) 2060. C) 2050. D) 2030. E) 2020.
C
By 2050, the water run-off in the Middle East and North Africa region is predicted to drop by
________ percent.
A) 20 to 30
B) 30 to 40
C) 10 to 20
D) less than 10
E) 50
A
Which type of auditors are specifically responsible for safeguarding the assets of a company?
A) Research auditors
B) Government auditors
C) Internal auditors
D) External auditors
E) Independent auditors
C
Product design, manufacturing, transportation, customer use, packaging, product disposal and
corporate rewards should reflect ________ considerations to develop constructive relations with
employees, consumers, suppliers and distributors.
A) profit
B) customer
C) environmental
D) top-management
E) union
C
Most strategy literature advocates that strategic management is
A) more of a science than an art.
B) based on intuition rather than analysis.
C) based on analysis rather than research.
D) more of an art than a science.
E) based on creativity rather than intuition.
A
All of the following are reasons to be completely open with the strategy process except
A) investors, creditors and other stakeholders have greater basis for supporting a firm that is
open.
B) openness limits rival firms from imitating or duplicating the firm’s strategies.
C) participation and openness enhances understanding, commitment and communication
within the firm.
D) visibility promotes democracy whereas secrecy promotes autocracy.
E) managers, employees and other stakeholders can readily contribute to the process.
B
Which of the following is not a reason why some firms prefer to conduct strategic-planning in
secret?
A) Participants in a visible strategy process become more attractive to rival firms, who may
lure them away.
B) It limits criticism, second-guessing and hindsight.
C) Dissemination of a firm’s strategies may translate into competitive intelligence for rival
firms.
D) It enhances understanding, commitment and communication within the firm.
E) Secrecy limits rival firms from imitating or duplicating the firm’s strategies.
D
