Test Bank Questions Flashcards
The balanced scorecard
An accounting report that connects the firm’s critical success factors determined in a strategic analysis with measures of its performance.
Critical success factors of balanced scorecard are assigned to four perspectives on the business
financial, customer service, internal business processes, and learning and growth
Nonconformance costs
Also known as failure of the system and - Include internal and external failure costs. External failure costs include environmental costs, e.g., fines for violations of environmental laws and loss of customer goodwill.
Conformance costs
Prevention cost e.g Costs of quality circles, system development
Appraisal cost e.g Costs of inspecting in-process items
Business strategies may be characterized by their effects on operations
1) A cost strategy is successful when the enterprise is the low-cost producer.
2) quality strategy involves competition based on product quality or process quality
3) exibility strategy entails offering many different products
4) service strategy seeks to gain a competitive advantage and maximize customer value by providing services, especially post-purchase services such as warranties on automobiles and home appliances
Social trend affecting the organisations
hanges in labor markets, reflect social, cultural, and demographic factors in the organization’s macroenvironment that may constitute opportunities or threats (identified in a SWOT analysis). The attributes of people (age, education, income, ethnicity, family status, etc.) and their beliefs, attitudes, and values shape and are shaped by social trends that in turn affect the organization. Thus, changes in the characteristics, sources, locations, and costs of labor resources supplied (a basic factor of production) have great effects on an organization’s strategic position.
Political trend affecting organisations
Tougher legislation to protect the environment
Economic trend affecting organisations
Rising inflation
Technological trend affect organisations
Replacements for steel in cars and appliances
Generic strategies of organisation
1) Differentiation strategy
2) Cost leadership strategy
3) Focus Differentiation strategy
4) Cocus Cost strategy
SWOT analysis
Tool used in the strategic planning process. It involves taking into consideration an organization’s strengths and weaknesses and the opportunities and threats facing the organization
Boston Consulting Group (BCG) Growth Share Matrix segments
Star - High growth, high cash generating
Cash Cow - Low growth, high cash generating
? - High growth, low cash generating
Dog - low growth, low cash generating
Appraisal cost
Detects products that do not conform to specifications. (1) statistical quality control programs, (2) inspection, and (3) testing
Prevention costs
attempts to avoid defective products (1) preventive maintenance, (2) employee training, (3) review of equipment design, and (4) evaluation of suppliers (Supplier education)
Internal failure costs
Occur when defective products are detected BEFORE shipment
External failure costs
Occur when defective products are detected AFTER shipment
Product differentiation
Work to develop products and services that are better than or different from competitors’ products (for example, higher quality or with additional features not available elsewhere)
Price differentiation
Competing on the basis of a product being cheaper
What strategy is followed when a company drops one product as a way to reduce total costs.
Cost leadership strategy, cost focus is dropping all except 1
Generic strategy favored by firms that seek competitive advantage through providing a unique product or service and that have a broad competitive scope.
Differentiation strategy
Generic strategy favored by firms that seek competitive advantage through providing a unique product and that have a narrow competitive scope, e.g., a regional market or a specialized product line.
Focussed differentiation strategy
Generic strategy of a firm that seeks competitive advantage through lower costs. It has a broad competitive scope.
Cost Leadership Strategy
Generic strategy of a firm that seeks competitive advantage through lower costs. It has a narrow competitive scope
Focussed Cost Leadership Strategy
Strategic (organizational) planning
Process of setting the overall organizational goals and specifying the means to be used. It involves the drafting of strategic plans.
Four categories of quality costs
(1) prevention, (2) appraisal, (3) internal failure, and (4) external failure
Target market definition vs a strategic market definition
A target market for a ride share company may be transporting people, but a strategic market may be transporting items such as food and groceries.
Market-oriented definition vs the product-oriented definition.
Defined in market terms needs and customer groups
A mission statement
a formal, written document that defines the organization’s purposes and values, for example, to produce and distribute certain goods of high quality in a manner beneficial to the public, employees, shareholders, and other constituencies. Thus, a mission statement does not announce specific operating plans.
Strategic management
a set of decisions and activities needed to create strategies, allocate resources, and succeed in a competitive environment. The first step is to draft the organization’s mission statement. The second step is a situational analysis that considers organizational strengths and weaknesses (a capability profile) and their interactions with environmental opportunities and threats. This evaluation is a SWOT analysis. Strengths and weaknesses (the internal environment) are usually identified by considering the firm’s capabilities and resources. What the firm does particularly well or has in greater abundance are core competencies. Opportunities and threats (the external environment) are identified by considering macroenvironment factors (economic, demographic, political, legal, social, cultural, and technical) and microenvironment factors (suppliers, customers, distributors, competitors, and other competitive factors in the industry).
Boston Consulting Group’s portfolio model for competitive analysis a build strategy is used for
A question mark with the potential to be a star.
Boston Consulting Group’s portfolio model for competitive analysis, a divest strategy is used for
Question marks and dogs that reduce the firm’s profitability.
Boston Consulting Group’s portfolio model for competitive analysis, a harvest strategy is used for
Weak cash cows and possibly dogs.
Boston Consulting Group’s portfolio model for competitive analysis, a hold strategy is used for
Strong cash cows. It is necessary if the business is to continue to generate large net cash inflows. Harvesting might impair a strong cash cow’s ability to generate long-term positive net cash inflows.
Quality-related costs four categories:
external failure costs, internal failure costs (Nonconformance), prevention costs, and appraisal costs (Conformance)
strategic planning function
involves formulating its mission (ultimate firm purposes and directions), determining its strategic business units (SBUs), allocating resources to SBUs, planning to start new businesses, and downsizing or divesting old businesses.
mission statement
(ultimate firm purposes and directions). Address reasonably limited objectives, define the firm’s major policies and values, and state the firm’s primary competitive scopes (e.g., industries, products and services, applications, core competencies, market segments, degree of vertical integration, and geographic markets).
ethnocentric managerial attitude
Assumes that the home country’s people, practices, and ideas are superior to all others. Thus, nationality is the most important factor
geocentric managerial attitude
Truly internationally oriented, absorbing the best that various cultures offer. Talent, not nationality, determines personnel decisions throughout the firm.
polycentric managerial attitude
Assumes that cultural differences require local managers to make most decisions. Thus, talent is less of a factor than nationality
Strategic management is a five-step process:
The board of directors drafts the organization’s mission statement, a general statement of what the organization intends to accomplish and its reason for existing. The statement may be accompanied by one or more goals, which are concrete targets for measuring the organization’s success.
The organization performs a situational analysis, also called a SWOT analysis, involving identification of its strengths, weaknesses, opportunities, and threats.
Based on the results of the situational analysis, upper management develops a group of strategies describing how the mission statement will be fulfilled.
Strategic plans are implemented through the execution of component plans at each level of the entity.
Strategic controls and feedback are used to monitor progress, isolate problems, and take corrective action. Over the long term, feedback can be used to adjust the original mission and goals.
Strategic (organizational) planning establishes
the general direction of an organization by setting goals and specifying the means to be used. It embodies the concerns of senior management and is based specifically on (1) identifying and specifying organizational objectives; (2) evaluating the organization’s strengths and weaknesses; (3) assessing risk levels; (4) identifying and forecasting the effect of external (environmental) factors relevant to the organization; (5) deriving the best strategy for reaching the objectives, given the organization’s strengths and weaknesses and the relevant future trends; and (6) analyzing and reviewing the capital budgeting process and capacity planning
Managers at a consumer products company purchased personal computer software from only recognized vendors and prohibited employees from installing nonauthorized software on their personal computers. To minimize the likelihood of computer viruses infecting any of its systems, the company should also
Software from recognized sources should be tested in quarantine (for example, in a test/development machine or a stand-alone personal computer) because even vendor-supplied software may be infected with viruses. The software should be run with a vaccine program and tested for the existence of logic bombs, etc.
Which of the following is an encryption feature that can be used to authenticate the originator of a document and ensure that the message is intact and has not been tampered with
a) Heuristic terminal.
b) Perimeter switch.
c) Digital signatures.
d) Default settings.
Businesses and others require that documents sent over the Internet be authentic. To authenticate a document, a company or other user may transmit a complete plaintext document along with an encrypted portion of the same document or another standard text that serves as a digital signature. If the plaintext document is tampered with, the two will not match.
Encryption technology
Converts data into code. Uses a fixed algorithm to manipulate plain text and an encryption key (a set of random data bits used as a starting point for application of the algorithm) to introduce variation.
Webcrawler
(a spider or bot) is a computer program created to access and read information on websites. The results are included as entries in the index of a search engine.
A hoax virus
False notice about the existence of a computer virus. It is usually disseminated through use of distribution lists and is sent by email or via an internal network.
Killer application
One that is so useful that it may justify widespread adoption of a new technology.
Piggybacking
practice of establishing a wireless Internet connection by using another subscriber’s wireless Internet access service without the subscriber’s knowledge.
eavesdropping attack.
a network layer attack consisting of capturing packets from the network transmitted by others’ computers and reading the data content in search of sensitive information like passwords.
Spoofing
Occurs when a perpetrator sends out emails or documents that appear to be from a legitimate institution. Phishing scams are often initiated through email spoofing.
Privacy may encompass 4 types
(1) personal privacy (physical and psychological), (2) privacy of space (freedom from surveillance), (3) privacy of communication (freedom from monitoring), and (4) privacy of information (collection, use, and disclosure of personal information by others).
evaluation of the privacy framework, the internal auditor considers (4)
The various laws, regulations, and policies relating to privacy in the jurisdictions where the organization operates.
Conferring with in-house legal counsel to determine the exact nature of laws, regulations, and other standards and practices applicable to the organization and the countries where it operates.
Conferring with information technology specialists to determine that information security and data protection controls are in place and regularly reviewed and assessed for appropriateness.
The level or maturity of privacy practices.
Firewall
a combination of hardware and software that separates two networks and prevents passage of specific types of network traffic while maintaining a connection between the networks.
Objective of security software
to control access to information system resources, such as program libraries, data files, and proprietary software. Security software identifies and authenticates users, controls access to information, and records and investigates security related events and data.
Neural networks
a collection of processing elements that work together to process information like the human brain, including learning from previous situations and generalizing concepts.
Logical access controls
ensure that only those persons with a bona fide purpose and authorization have access to computer systems.
General IT Controls
relate to the organization’s information systems environment as a whole. Physical controls that limit physical access to computer equipment, data, and important documents (i.e., biometric devices) are an example of general controls.
Victor Vroom’s expectancy theory is based on
thought process that involves (1) subjective expectations of rewards, (2) beliefs as to what is valuable, and (3) expectations of receiving these rewards if effort is exerted
Victor Vroom’s expectancy theory addresses
individualized (1) motivations and (2) perceptions of the probability of success.
Expectancy of performance (E → P) is high if
an individual perceives that (s)he has the ability, experience, resources, and opportunity to perform. But if it is low, motivation also is low
Expectancy of outcome (P → O) is high if
Individual perceives that performance leads to desirable outcomes (rewards). But if it is low, motivation also is low.
