chapter 1 practice questions

Question 1

A CEO made a lot of mistakes in assessing the market and the competitive conditions
and improperly redesigning the organization into numerous business units. Such errors led to
significant performance declines. According to the text, this example illustrates the ________
perspective of leadership.

A) external control
B) romantic
C) internal mechanism
D) operational

Answer 1

B) romantic

Question 2

Management innovations such as total quality, benchmarking, and business process
reengineering cannot lead to sustainable competitive advantage because

A) companies that have implemented these techniques have lost money.
B) there is no proof that these techniques work.
C) they cost too much money and effort to implement.
D) many companies are trying to implement them

Answer 2

D) many companies are trying to implement them

Question 3

The four key attributes of strategic management include all of the following except

A) including multiple stakeholder interests in decision making.
B) incorporating both short-term and long-term perspectives.
C) recognizing the trade-offs between effectiveness and efficiency.
D) emphasis on the attainment of short-term objectives

Answer 3

D) emphasis on the attainment of short-term objectives

Question 4

Effectiveness is often defined as

A) doing things right.
B) stakeholder satisfaction.
C) doing the right thing.
D) productivity enhancement.

Answer 4

C) doing the right thing.

Question 5

All the following are ambidextrous behaviors except

A) taking initiative and being alert to opportunities beyond the job description.
B) being cooperative and seeking opportunities to combine personal efforts with that of
others.
C) intensely focusing on the responsibilities of one individual and maximizing the output of the
department in the organization in which that individual works.
D) being brokers, always looking to build internal linkages

Answer 5

C) intensely focusing on the responsibilities of one individual and maximizing the output of the
department in the organization in which that individual works.

Question 6

Corporate level strategy focuses on what businesses to compete in and

A) how business can be managed to achieve synergy.
B) how business can be managed to reduce synergy.
C) how the firm can work as a stand-alone entity.
D) how the firm can create more value by operating alone.

Answer 6

A) how business can be managed to achieve synergy.

Question 7

Entering foreign markets requires firms to ascertain foremost how they will attain

A) market share.
B) low costs.
C) competitive advantage.
D) low returns on investment

Answer 7

C) competitive advantage.

Question 8

An organization is responsible to many different entities. In order to meet the demands
of these groups, organizations must participate in stakeholder management. Stakeholder
management means that

A) interests of the stockholders are not the only interests that matter.
B) stakeholders are second in importance to the stockholders.
C) stakeholders and managers inevitably work at cross-purposes.
D) all stakeholders receive financial rewards

Answer 8

A) interests of the stockholders are not the only interests that matter.

Question 9

Procter and Gamble has perfected a technique for compacting cleaning powder into a
liquid concentration. Consumers, retailers, shipping and wholesalers, and environmentalists all
have benefited from the resulting change in consumer shopping habits and the revolution in
industry supply-chain economics. According to the text, this is an example of

A) zero-sum relationship among stakeholders.
B) stakeholder symbiosis.
C) rewarding stakeholders.
D) emphasizing financial returns

Answer 9

B) stakeholder symbiosis.

Question 10

Employee stakeholders are concerned with

A) taxes, warranties, and regulations.
B) wages, benefits, and job security.
C) good citizenship behavior.
D) dividends.

Answer 10

B) wages, benefits, and job security.

Question 11

According to the text, the triple bottom line approach to corporate accounting includes which three components?

A) financial, environmental, and customer
B) financial, organizational, and customer
C) financial, environmental, and social
D) financial, organizational, and psychological

Answer 11

C) financial, environmental, and social

Question 12

A key stakeholder group that is particularly susceptible to corporate social responsibility
(CSR) initiatives is

A) suppliers.
B) rivals.
C) government agencies.
D) consumers

Answer 12

D) consumers

Question 13

Sustainability programs often find their success beyond company boundaries, thus
________ systems and ________ metrics cannot capture all of the relevant numbers.

A) external; bio
B) internal; process
C) external; external
D) internal; internal

Answer 13

B) internal; process

Question 14

Many organizations have a large number of functional areas with very diverse and
sometimes competing interests. Such organizations will be most effective if

A) each functional area focuses on achieving their own goals.
B) goals are defined at the bottom and implemented at the top.
C) functional areas work together to attain overall goals.
D) management and employees have separate goals.

Answer 14

C) functional areas work together to attain overall goals.

Question 15

The text argues that a strategic perspective in an organization should be emphasized

A) at the top of the organization.
B) at the middle of the organization.
C) throughout the organization.
D) from the bottom up

Answer 15

C) throughout the organization.

Question 16

Peter Senge, of MIT, recognized three types of leaders. ________ are individuals that,
although having little positional power and formal authority, generate their power through the
conviction and clarity of their ideas.

A) Local line leaders
B) Executive leaders
C) Internal networkers
D) Shop floor leaders

Answer 16

C) Internal networkers

Question 17

Richard Branson, founder of the Virgin Group, empowers his companies through a(n)
________ structure in which anyone can bring forth new ideas.

A) formal
B) hierarchal
C) multi-level
D) informal

Answer 17

D) informal

Question 18

To inculcate a strategic management perspective, managers must create management
________ to foster change.

A) processes
B) buy-back
C) structures
D) edicts

Answer 18

A) processes

Question 19

Which of the following is not an example of a financial strategic objective?

A) Increase sales growth 6 percent to 8 percent and accelerate core net earnings growth from
13 percent to 15 percent per share in each of the next 5 years. (Procter & Gamble)
B) Reduce volatile air emissions 15 percent by 2015 from 2010 base year, indexed to net sales.
(3M)
C) Generate Internet-related revenue of $1.5 billion. (AutoNation)
D) Cut corporate overhead costs by $30 million per year. (Fortune Brands)

Answer 19

B) Reduce volatile air emissions 15 percent by 2015 from 2010 base year, indexed to net sales.
(3M)

Question 20

Boards of directors (BOD) as elected representatives of the shareholders are charged
with ensuring that the interests and motives of management are aligned with those of the
owners. Which one of the following is not part of their general practices?

A) Follow guidelines on the selection of director candidates.
B) Follow guidelines to ensure that its members are independent.
C) Provide detailed procedures for formal evaluations of directors and top officers of the firm.
D) Refrain from strategic support for management efforts to create long-term value.

Answer 20

D) Refrain from strategic support for management efforts to create long-term value.