CH 7 Flashcards
) An organization’s present strategies, objectives and mission provide a basis for generating and
evaluating feasible alternative strategies, coupled with the external and internal audit
information.
T
2) A sustainability report provides information on a firm’s social-responsibility practices.
T
3) Sustainability is the idea that a business can meet its financial goals without hurting customers.
F
The first stage of the strategy-formulation framework (the input stage), is followed by the decision stage.
F
Stage 2 in the strategy-formulation framework involves the Quantitative Strategic Planning
Matrix.
F
Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices.
T
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the
Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.
T
When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be completed before the SPACE Matrix.
F
9) The purpose of matching key factors is to generate feasible alternative strategies.
T
Strengths-opportunities strategies are based on using a firm’s internal strengths to take
advantage of external opportunities and threats.
F
11) A SWOT Matrix is composed of four cells for the four types of strategies it creates.
F
12) One of the steps of the SWOT Matrix is to list the firm’s key external opportunities.
T
13) The SWOT matrix is widely used as an organizational tool and, if used appropriately, does not have any significant weaknesses.
F
The most important determinants of an organization’s overall strategic position are considered to be the two internal dimensions, financial strength (FS) and competitive advantage (CA), and the two external dimensions, industry strength (IS) and environmental stability (ES).
T
15) The four strategies of the SPACE Matrix are aggressive, conservative, offensive and defensive.
F
16) Market penetration can be classified as either a conservative, aggressive, or competitive strategy.
T
he ES and CA dimension variables in a SPACE Matrix are assigned a numerical value ranging
from -1 (best) to -6 (worst).
T
Conservative strategies in a SPACE Matrix most often include product development, market development, market penetration and concentric diversification.
T
The firm should pursue conservative strategies if the coordinates of a SPACE directional vector
are (1,4).
T
A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are
(2,3).
F
The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are
(5,4).
T
22) Relative market share position is given on the x-axis of the BCG Matrix.
T
23) The midpoint on the x-axis of a BCG Matrix is typically set at 0.05.
F
The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue
generated by that business unit.
T
In a BCG Matrix, the pie slice indicates the proportion of corporate profits generated by that
division.
T
26) Star, question mark, cash cow and dogs are the four quadrants exhibited by the SPACE Matrix.
F
27) Cash cows represent the organization’s best long-run opportunities for growth and profitability.
F
The major overall benefit of the BCG Matrix is that it draws attention to the cash flow,
investment characteristics and needs of an organization’s various divisions
T
29) Viewing businesses as star, cash cow, dog or question mark is an oversimplification.
T
The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time
T
Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time.
T
32) Both IE and BCG Matrices are called portfolio matrices.
T
33) BCG Matrix requires more information about the divisions than the IE Matrix.
F
On the x-axis of the IE Matrix, an internal factor evaluation score of 2.5 represents a weak internal position
F
35) The IE Matrix can be divided into three major regions that have different strategy implications: grow and build, hold and maintain, and harvest or divest.
T
The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth.
F
According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily committed to a single product, then concentric diversification may reduce the risks associated with a narrow product line.
T
According to the Grand Strategy Matrix, Quadrant III organizations compete in rapid-growth industries and have weak competitive positions.
F
To objectively evaluate feasible alternative strategies identified in Stage 2, the QSPM uses input information derived from Stage 1.
T
40) Step 1 of a QSPM assigns weights to each key external and internal factor.
F
Total attractiveness scores are defined as the sum of the attractiveness scores in a given column of the QSPM and are computed in the second step of the QSPM.
F