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
A positive feature of QSPM is that sets of strategies can be examined sequentially or
simultaneously.
T
One positive feature of QSPM is that it does not require intuitive judgments and educated
assumptions.
F
Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes
and heroines that describe a firm.
T
45) Strategy changes may be highly effective and productive if a supportive culture does not exist.
F
Whenever two firms merge, it becomes especially important to evaluate and consider
culture-strategy linkages.
T
uccessful strategists minimize their own political exposure on issues that are highly
controversial, and in circumstances where opposition from major power centers is likely.
T
Focusing on Higher-Order Issues means it is often possible to achieve similar results using
different means or paths.
F
Shifting focus from specific issues to more general ones may increase strategists’ options for gaining organizational commitment.
T
The trend in many Arab states is towards greater board member accountability, with larger boards averaging 18 members.
F
Boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management.
T
The Sarbanes-Oxley Act put an end to the “country-club” atmosphere of most boards, and has shifted power from CEOs to directors.
T
Strategy analysis and choice largely involves making ________ decisions based on ________
information.
A) long-term; short-term
B) subjective; short-term
C) subjective; objective
D) objective; subjective
E) short-term; long-term
C
Which stage in the strategy-formulation framework focuses on generating feasible alternative
strategies?
A) Output
B) Input
C) Matching
D) Decision
E) Throughput
C
Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning
Matrix?
A) Stage 4
B) Stage 1
C) Stage 2
D) Stage 3
E) Stage 5
D
Which strategy formulation technique reveals the relative attractiveness of alternative strategies,
and thus provides an objective basis for selecting specific strategies?
A) SWOT
B) SPACE
C) IFE
D) QSPM
E) CPM
D
Each of the nine techniques included in the strategy formulation framework rely on the use of
A) financial formulas and statistics.
B) intuition and analysis.
C) luck.
D) synergy.
E) strictly factual data.
B
Which stage of the strategy formulation framework includes an Internal Factor Evaluation
Matrix and a Competitive Profile Matrix?
A) Decision
B) Research
C) Penetration
D) Input
E) Matching
D
Which stage of the strategy formulation framework contains the Internal-Factor Evaluation
Matrix?
A) Output
B) Matching
C) Analysis
D) Input
E) Decision
D
The match an organization makes between its internal resources and skills, and the opportunities and risks created by its external factors, can be defined as
A) input.
B) strategy.
C) concept formulation.
D) an opportunity.
E) SWOT
B
Which section of the SWOT Matrix involves matching internal strengths with external
opportunities?
A) The ST cell
B) The SW cell
C) The SO cell
D) The WO cell
E) The WT cell
C
Which strategies, defined by the SWOT matrix, aim at improving internal weaknesses by taking
advantage of external opportunities?
A) SO
B) SW
C) WO
D) WT
E) ST
C
Which strategies, defined by the SWOT matrix, use a firm’s strengths to avoid or reduce the
impact of external threats?
A) SW
B) SW
C) ST
D) WO
E) WT
C
Which strategies, defined by the SWOT matrix, are defensive tactics directed at reducing internal
weaknesses and avoiding environmental threats?
A) ST
B) SO
C) WO
D) WT
E) SW
D
How many cells are in a SWOT Matrix?
A) Four
B) Eight
C) Six
D) Two
E) Nine
E
Which of the following is not a step of a SWOT Matrix?
A) List the firm’s external weaknesses.
B) List the firm’s key external threats.
C) Match internal weaknesses with external threats and record the resultant WT strategies.
D) Match strengths with external opportunities and record the resultant SO strategies in the
appropriate cell.
E) List the firm’s external opportunities.
A
Which of the following is a weakness associated with a SWOT Matrix?
A) Other variables besides relative market share position and industry growth rate in sales
need to be considered.
B) Many businesses fall right in the middle of the matrix.
C) Viewing every business as a Star, Cash Cow, Dog, or Question Mark is an
oversimplification.
D) The matrix does not reflect whether or not various divisions or their industry are growing
over time.
E) The matrix has no temporal qualities.
E
Which of these is not a SPACE Matrix quadrant?
A) Competitive
B) Defensive
C) Offensive
D) Conservative
E) Aggressive
C
What type of strategy would divestiture be classified as?
A) Aggressive
B) Conservative
C) Competitive
D) Offensive
E) Defensive
E
The two internal dimensions represented on the axes of the SPACE Matrix are
A) industry strength and internationalization.
B) financial strength and environmental stability.
C) competitive advantage and financial strength.
D) environmental stability and industry strength.
E) internationalization and competitive advantage.
C
What are the two external dimensions of the SPACE Matrix?
A) Competitive advantage and financial strength
B) Environmental stability and competitive advantage
C) Industry strength and competitive advantage
D) Environmental stability and industry strength
E) Financial strength and industry strength
D
) The two positive-rated dimensions on SPACE Matrix are
A) CA and ES.
B) FS and CA.
C) FS and ES.
D) FS and IS.
E) IS and ES.
D
What type of strategies would you recommend when a firm’s SPACE Matrix directional vector
has the coordinates (-2, +3)?
A) Defensive
B) Conservative
C) Competitive
D) Aggressive
E) Integrative
B
74) In a SPACE analysis, what does a (+6, +3) strategy profile portray?
A) A weak financial position
B) A weak industry
C) A stable environment
D) A strong industry
E) An unstable environment
D
For what type of company is the BCG Matrix ideal for analyzing?
A) Large companies
B) Companies with annual sales greater than $1 million
C) Companies with annual sales of less than $1 million
D) All companies
E) Companies with more than one division
E
) In the BCG Matrix, which element represents the industry growth rate in sales, measured in
percentage terms?
A) First quadrant
B) Third quadrant
C) x-axis
D) Second quadrant
E) y-axis
E
How would a division with a low relative market share position in a high growth industry be
described?
A) Stuck-in-the-middle
B) Question mark
C) Cash cow
D) Dog
E) Star
B
) When a division of an organization has a high relative market share and is in a fast-growing
industry, it is called a
A) star.
B) question mark.
C) dog.
D) cash cow.
E) cat.
A
A division with a high relative market share position in a low-growth industry can be described
as a
A) failure.
B) cash cow.
C) dog.
D) star.
E) question mark.
B
Which strategy would be most appropriate for a company classified as a Dog?
A) Market development
B) Retrenchment
C) Market penetration
D) Forward integration
E) Product development
B
Which of the following is likely to have been a cash cow in the past?
A) Question mark
B) Cat
C) Dog
D) Failure
E) Star
E
An organization that has a low relative market share position and competes in a slow-growth
industry is referred to as a
A) star.
B) cowboy.
C) dog.
D) cash cow.
E) question mark.
C
) The limitations of a BCG Matrix include all of these except
A) not allowing a company to be classified as somewhere in between two categories.
B) other variables such as size of market and competitive advantage are not considered.
C) viewing every business as a star, cash cow, dog or question mark can be an
oversimplification.
D) requiring at least three years’ worth of data.
E) not reflecting divisional or industry growth over time.
D
Which of the following analytical tools consists of a nine-cell matrix?
A) SPACE Matrix
B) Matching Matrix
C) Competitive Profile Matrix
D) Internal-External Matrix
E) Grand Strategy Matrix
D
What analytical tool has four quadrants based on two dimensions: competitive position and
market growth?
A) QSPM
B) SPACE Matrix
C) Grand Strategy Matrix
D) Internal-External Matrix
E) Competitive Profile Matrix
C
Which quadrant of the Grand Strategy Matrix contains firms that are in an excellent strategic
position?
A) V
B) II
C) III
D) IV
E) I
E
According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid
market growth and a strong competitive position?
A) Retrenchment
B) Joint venture
C) Conglomerate diversification
D) Liquidation
E) Market penetration
E
For companies located in Quadrant III of the Grand Strategy Matrix, the first strategy
recommended is
A) immediate liquidation of assets.
B) divestiture.
C) asset expansion.
D) employee expansion.
E) extensive cost and asset reduction.
E
According to the Grand Strategy Matrix, although Quadrant ________ companies are growing,
they are unable to compete effectively, so they need to determine why the firm’s current
approach is ineffective and how the company can best change to improve its competitiveness.
A) I
B) II
C) IV
D) V
E) III
B
According to the Grand Strategy Matrix, organizations in which quadrant have a strong
competitive position but are in a slow-growth industry?
A) I
B) III
C) IV
D) II
E) V
C
) Which matrix is included in the decision stage of the strategy formulation framework?
A) SPACE Matrix
B) Grand Strategy Matrix
C) BCG Business Portfolio Matrix
D) Internal Factor Evaluation Matrix
E) Quantitative Strategic Planning Matrix
E
The top row of a Quantitative Strategic Planning Matrix consists of alternative strategies derived
from all of these except
A) Space Matrix.
B) CPM Matrix.
C) BCG Matrix.
D) IE Matrix.
E) Grand Strategy Matrix.
B
Which analytical tool determines the relative attractiveness of various strategies based on theextent to which key external and internal critical success factors are capitalized?
A) IE
B) SPACE
C) BCG
D) TOWS
E) QSPM
E
Which of the following is the first step in developing the QSPM?
A) Compute the Total Attractiveness Scores.
B) Assign weights to each key external and internal factor.
C) Determine the Attractiveness Scores.
D) Examine the Stage 2 matrices and identify the alternative strategies which the organization
should consider implementing.
E) Make a list of the firm’s key external opportunities/threats and internal
strengths/weaknesses in the left column of the QSPM.
E
What term is defined as the product of multiplying the weights by attractiveness scores in each
row of the QSPM?
A) Weighted scores
B) Factors
C) Total weighted scores
D) Sum total attractiveness scores
E) Total attractiveness scores
E
What is the highest number of strategies that can be examined at one time with the QSPM?
A) 2
B) 1
C) 5
D) 10
E) There is no limit.
E
Which of these is a limitation of QSPM?
A) Sets of strategies must be examined in reverse order.
B) It requires equal participation from everyone.
C) Only a few strategies can be evaluated simultaneously.
D) The cost of doing the analysis.
E) Intuitive judgments and educated guesses are required.
E
Which of the following terms is defined by the set of shared values, beliefs, attitudes, customs,
norms, personalities, heroes and heroines that describe a firm?
A) Culture
B) Mission
C) Strategy
D) Objectives
E) QSPM
A
What tactic involves shifting focus from specific issues to more general ones?
A) Generalization
B) Satisfying
C) Focus on higher-order issues
D) Equifinality
E) none of the above
A
Through which tactic is it possible to achieve similar results using different means or paths?
A) Generalization
B) Specialization
C) Focus on higher-order issues
D) Satisfying
E) Equifinality
E
The act of oversight and direction for an organization is referred to as
A) establishing norms.
B) governance.
C) centralized control.
D) corporate lawmaking.
E) organizational direction.
B
Today, what are boards of directors composed mostly of?
A) Outsiders
B) Stockholders
C) Union
D) Management
E) Employees
A
All of the following are part of the Corporate Governance Code that was jointly issued by the
Ministry of Industry and Commerce with the Central Bank in Bahrain in 2010, except
A) at least two directors are current or former company executives.
B) the board shall establish a clear and efficient management structure.
C) the company shall remunerate directors and officers fairly and responsibly.
D) the company shall be headed by an effective, collegial and informed board.
E) the company shall disclose its corporate governance.
A
