Bus 4

Chapter 4: Foundations of Planning

1. All managers plan in some way, either formally or informally. Answer: True False Diff: 1 Page Ref: 110 Objective: 4.1

2. Informal plans are not recognized to be an effective form of planning. Answer: True False Diff: 2 Page Ref: 110 Objective: 4.1

3. At some point, all managers create formal plans. Answer: True False Diff: 2 Page Ref: 110 Objective: 4.1

4. Planning provides direction to managers and nonmanagers alike. Answer: True False Diff: 1 Page Ref: 110 Objective: 4.1

5. A key function of planning is to create goals. Answer: True False Diff: 2 Page Ref: 110 Objective: 4.1

6. Informal planning typically works better in large organizations. Answer: True False Diff: 2 Page Ref: 110 Objective: 4.1

7. The four reasons that organizations plan is to provide direction, set standards, minimize waste, and reduce uncertainty and the impact of change. Answer: True False Diff: 2 Page Ref: 110 Objective: 4.1

8. Planning rarely improves teamwork and cooperation among employees. Answer: True False Diff: 2 Page Ref: 110 Objective: 4.1

9. An organization that fails to plan will find it hard to assess progress. Answer: True False

Diff: 2 Page Ref: 110 Objective: 4.1

10. A major argument against formal plans is that they can't replace intuition and creativity. Answer: True False Diff: 2 Page Ref: 111 Objective: 4.1

11. Formal planning can increase creativity in an organization. Answer: True False Diff: 2 Page Ref: 111 Objective: 4.1

12. Managers who make formal plans are more likely to help an organization "break the mold" and carry out truly groundbreaking work that redefines an entire industry. Answer: True False Diff: 2 Page Ref: 111 Objective: 4.1

13. A major strength of formal planning is that it reinforces past successes and incorporates them into the future. Answer: True False Diff: 2 Page Ref: 111 Objective: 4.1

14. A major strength of formal planning is that it makes an organization rigid. Answer: True False Diff: 2 Page Ref: 112 Objective: 4.1

15. A major strength of formal planning is that it generally correlates with higher profits. Answer: True False Diff: 2 Page Ref: 112 Objective: 4.1

16. Successful planning depends more on what managers plan than the quality of their planning. Answer: True False Diff: 2 Page Ref: 112 Objective: 4.1

17. Research indicates that organizations that don't use formal planning always outperform organizations that do use formal planning. Answer: True False Diff: 2 Page Ref: 112 Objective: 4.1

18. Strategic management is the act of figuring out how an organization will compete in the marketplace and attract loyal customers. Answer: True False Diff: 2 Page Ref: 112 Objective: 4.3

19. The first step in the strategic management process is analyzing the external environment. Answer: True False Diff: 2 Page Ref: 113 Objective: 4.3

20. A mission statement for a kayak manufacturer might be: To make the highesthighest -quality kayaks and sell them at a competitive price. Answer: True False Diff: 2 Page Ref: 114 Objective: 4.3

21. An external analysis will identify the threats to a company's wellwell - being,  being, but not opportunities for success. Answer: True False Diff: 2 Page Ref: 114 Objective: 4.3

22. Core competencies include an organization's major capabilities and its resources. Answer: True False Diff: 2 Page Ref: 114 Objective: 4.3

23. Capabilities are "what" an organization has; resources are "how" it uses what it has. Answer: True False Diff: 2 Page Ref: 114 Objective: 4.3

24. SWOT analysis includes the identification of an organization's strengths, weaknesses, opportunities, and threats. Answer: True False Diff: 1 Page Ref: 111 Objective: 4.3

25. The final three steps in the strategic management process involve the creation and implementation of strategies for realizing organizational goals. Answer: True False Diff: 2 Page Ref: 113 113--115 Objective: 4.3

26. A corporate strategy may be a growth strategy, a stability strategy, or a renewal strategy. Answer: True False

Diff: 2 Page Ref: 116 Objective: 4.3

27. A diversification strategy focuses on a company becoming its own supplier of inputs. Answer: True False Diff: 2 Page Ref: 116 Objective: 4.3

28. A company with a stability strategy will plan to dramatically increase market share in a highly competitive market. Answer: True False Diff: 2 Page Ref: 116 Objective: 4.3

29. The most drastic renewal strategy an organization can carry out is a retrenchment strategy. Answer: True False Diff: 2 Page Ref: 117 Objective: 4.3

30. "Build a better mousetrap" is a way of describing a competitive advantage. Answer: True False Diff: 2 Page Ref: 117 Objective: 4.3

31. Innovation and supersuper -high quality are typically the keys to a costcost-leadership strategy. Answer: True False Diff: 2 Page Ref: 118 Objective: 4.3

32. A focus strategy seeks to appeal to a narrow segment segment of a market. Answer: True False Diff: 2 Page Ref: 118 Objective: 4.3

33. Customer service cannot be considered a strategic weapon for an organization. Answer: True False Diff: 2 Page Ref: 119 Objective: 4.3

34. Southwest Airlines studied race car pit crews as an example of benchmarking. Answer: True False Diff: 2 Page Ref: 121 Objective: 4.3

35. Goals are documents that outline how plans are to be carried out.

Answer:

True

False

Diff: 1 Page Ref: 121 Objective: 4.4

36. Traditional goal setting requires top managers to set goals that are carried out by the organizational levels  below. Answer: True False Diff: 2 Page Ref: 122 Objective: 4.4

37. The key to MBO, or management by objectives, is that managers managers and subordinates mutually agree on goals. Answer: True False Diff: 2 Page Ref: 123 Objective: 4.4

38. Goals typically should be reserved for managers only. Goals should not be shared with subordinates. Answer: True False Diff: 2 Page Ref: 124 Objective: 4.4

39. LongLong-term plans used to refer to plans that covered a period of over three years, but now it refers to any time period over one year. Answer: True False Diff: 2 Page Ref: 125 Objective: 4.4

40. A sixsix-month plan qualifies as a shortshort-term plan. Answer: True False Diff: 2 Page Ref: 125 Objective: 4.4

41. Directional plans leave no room for interpretation. Answer: True False Diff: 2 Page Ref: 125 Objective: 4.4

42. In general, upperupper -level managers focus on tactical or operational planning. Answer: True False Diff: 2 Page Ref: 126 Objective: 4.4

43. Buying a competitor's product for evaluation is a form of environmental scanning. Answer: True False Diff: 2 Page Ref: 130 Objective: 4.4

44. Which of the following is NOT a function of planning? A) defining goals B) settling disputes between employees C) coordinating organizational activities D) identifying a strategy for attaining goals Answer: B Diff: 2 Page Ref: 110 Objective: Objec tive: 4.1

45. Planning is concerned with ________. A) neither ends nor means B) means means only only C) ends only D) both ends and means Answer: D Diff: 1 Page Ref: 110 Objective: 4.1

46. In informal planning, goals are usually ________ shared with others in the organization. A) unwritten, but much is B) written, but little is C) unwritten and little is D) written and much is Answer: C Diff: 2 Page Ref: 110 Objective: 4.1

47. Informal planning is ________. A) general and usually lacks continuity B) performed exclusively by middle managers C) always performed at the lowest organizational level D) more specific than formal planning Answer: A Diff: 2 Page Ref: 110 Objective: 4.1

48. In formal planning, ________. A) very broad general goals are developed B) goals may be written or unwritten C) to maximize flexibility, specific goals are never spelled out D) specific goals covering a period of years are defined Answer: D Diff: 2 Page Ref: 110 Objective: 4.1

49. Which of the following is NOT a reason for managers to plan? A) to establish goals

B) to deal with change C) to establish responsibility for mistakes D) to give direction to an organization Answer: C Diff: 2 Page Ref: 110 Objective: 4.1

50. Planning gives organizations direction that primarily helps them ________. A) improve their image in the business community B) improve morale of all employees C) improve teamwork and coordinate activities D) improve morale of middle managers Answer: C Diff: 2 Page Ref: 110 Objective: 4.1

51. Planning gives organizations a way to deal with change that ________. A) reduces uncertainty B) reduces certainty C) increases ambiguity D) eliminates all uncertainty Answer: A Diff: 2 Page Ref: 110 Objective: 4.1

52. Organizations that don't formally plan may be more likely to have ________. A) legal problems B) a single department carrying out all company functions C) multiple departments performing the same task D) corrupt managers Answer: C Diff: 2 Page Ref: 110 Objective: 4.1

53. One effect of planning on managers is that it forces them to ________. A) fear change B) work to prevent change C) ignore any change that doesn't directly affect them D) anticipate and consider the effect of change Answer: D Diff: 2 Page Ref: 110 Objective: 4.1

54. Managers who fail to plan may ________. A) stimulate stimulate change B) be positively affected by change C) be adversely affected by change D) take advantage of change

Answer: C Diff: 2 Page Ref: 110 Objective: 4.1

55. Which of the following is a frequently cited criticism of formal planning? A) Formal planning works well only for smaller companies. B) Plans take too long to create. C) Plans lock organizations into rigid goals and timetables. D) Plans create resentment within different levels of the organization. Answer: C Diff: 3 Page Ref: 111 Objective: 4.1

56. One criticism of formal planning is that it focuses on how to beat the competition rather than how to ________. A) balance the organization's budget B) focus on new opportunities C) have cordial relationships with the competition D) cooperate with the competition Answer: B Diff: 2 Page Ref: 111 Objective: 4.1

57. Failing to discard successful plans from the past is likely to lead to ________. A) more success because conditions are unlikely to change in the future B) failure because conditions are likely to change in the future C) failure because of the low quality of the plans D) success because of the high quality of the plans Answer: B Diff: 3 Page Ref: 111 Objective: 4.1

58. Studies of performance in organizations that plan have reached ________ with respect to the benefits of formal planning. A) no conclusion B) generally positive conclusions C) somewhat negative conclusions D) extremely negative conclusions Answer: B Diff: 2 Page Ref: 112 Objective: 4.1

59. Studies of planning show that the key to successful planning is to make sure that the plans ________. A) are not shared with employees B) cover every possible detail C) are high in quality and insight D) are exceedingly simple to follow Answer: C

Diff: 3 Page Ref: 112 Objective: 4.1

60. In studies in which highhigh -quality formal planning did not lead to higher performance, ________ usually the culprit. A) demanding employees were B) stubborn ownership was C) unforeseen events or conditions were D) lack of communication was Answer: C Diff: 2 Page Ref: 112 Objective: 4.1

61. Formal planning typically leads to which of the following? A) tension between different management levels B) higher sales, but lower profits C) lower productivity D) higher profits Answer: D Diff: 1 Page Ref: 112 Objective: 4.1

62. The first step in the sixsix-step strategic management process is to ________. A) identify the organization's mission B) identify strategies to reach the organization's goals C) analyze the opportunities the organization has D) analyze the organization's strengths and weaknesses Answer: A Diff: 2 Page Ref: 113 Objective: 4.2

63. The first three steps of the strategic management process involve ________ strategies. A) evaluating B) planning C) implementing D) identifying Answer: B Diff: 2 Page Ref: 113 Objective: 4.2

64. A mission statement includes identification of an organization's ________. A) strengths and weaknesses B) assets and resources C) products and basic philosophy D) resources and strengths Answer: C Diff: 2 Page Ref: 114 Objective: 4.2

65. A mission statement does NOT include which of the following? A) strategy for success B) the company's basic beliefs C) why the company is in business and what it hopes to accomplish D) the customers of a company Answer: A Diff: 2 Page Ref: 114 Objective: 4.2

66. An external analysis, the second step of the strategic management process, helps identify ________. A) the longlong-term goals for a company B) the products that a company makes C) a company's opportunities and threats D) a company's concern for its employees Answer: C Diff: 2 Page Ref: 114 Objective: 4.2

67. An internal analysis, the third step of the strategic management process, helps identify ________. A) opportunities and possibilities B) values and philosophy C) opportunities and threats D) resources and capabilities Answer: D Diff: 2 Page Ref: 114 Objective: 4.2

68. Which term refers to an organization's capital, workers, and patents? A) capabilities B) abilities C) core competencies D) resources Answer: D Diff: 2 Page Ref: 114 Objective: 4.2

69. An organization's resources identify ________. A) where the organization operates B) when the organization operates C) what the organization has D) how the organization gets things done Answer: C Diff: 2 Page Ref: 114 Objective: 4.2

70. An organization's capabilities identify ________. A) what the organization can do

B) assets that the organization can rely on C) who the organization is D) what the organization has Answer: A Diff: 2 Page Ref: 114 Objective: 4.2

71. Together, an organization's resources and core competencies make up which of the following? A) core philosophy B) fundamental beliefs C) competitive weapons D) core assets Answer: C Diff: 2 Page Ref: 114 Objective: 4.2

72. SWOT analysis identifies and analyzes an organization's ________. A) human resource assets B) longlong-term goals C) strategy for competing in the market D) strengths, weaknesses, opportunities, and threats Answer: D Diff: 2 Page Ref: 114 Objective: 4.2

73. SWOT analysis combines ________. A) a company's mission with its goals B) profit with productivity C) external and internal analyses D) a company's philosophy with its ethics Answer: C Diff: 2 Page Ref: 114 Objective: 4.2

74. Once SWOT analysis is complete, managers ________ to address the issues that came up during the analysis. A) evaluate strategies B) formulate strategies C) implement strategies D) eliminate strategies Answer: B Diff: 2 Page Ref: 115 Objective: 4.2

75. Which of the following do managers NOT typically use to formulate strategies? A) find ways to protect the organization from external threats B) find ways to rule out existing organizational opportunities C) find ways to exploit the organization's strengths D) find ways to correct organizational weaknesses

Answer: B Diff: 2 Page Ref: 115 Objective: 4.2

76. The three different types of strategies that managers implement are ________. A) longlong-term, shortshort-term, public B) corporate, private, functional C) corporate, competitive, functional D) competitive, nonnon-competitive, corporate Answer: C Diff: 1 Page Ref: 115 Objective: 4.2

77. A corporate strategy focuses primarily on ________. A) an organization' organization'ss weaknesses weaknesses B) an organization's strengths C) an organization's mission D) an organization's people Answer: C Diff: 2 Page Ref: 115 Objective: 4.2

78. Which of the following make up the three main types of corporate strategies? A) growth, retrenchment, renewal B) renewal, retrenchment, diversification C) growth, stability, renewal D) growth, vertical integration, horizontal integration Answer: C Diff: 1 Page Ref: 116 Objective: 4.2

79. Growth strategies include ________. A) vertical integration, horizontal integration, lateral integration, horizontal concentration B) diversification, concentration, integration, stabilization C) integration, allocation, horizontal diversification, vertical diversification D) vertical integration, horizontal integration, concentration, diversification Answer: D Diff: 1 Page Ref: 116 Objective: 4.2

80. General Mills expanding its line so that it sells several different types of Cheerios is an example of which of the following? A) diversification B) vertical integration C) concentration D) horizontal integration Answer: C Diff: 3 Page Ref: 116 Objective: 4.2

81. A salad dressing company that buys a large olive grove to provide olive oil is practicing which of the following? A) horizontal integration B) concentration C) forward vertical integration D) backward vertical integration Answer: D Diff: 3 Page Ref: 116 Objective: 4.2

82. A sneaker company creating its own stores where it sells only its own brand is an example of which of the following? A) reverse vertical integration B) forward vertical integration C) backward horizontal integration D) forward horizontal integration Answer: B Diff: 3 Page Ref: 116 Objective: 4.2

83. In forward vertical integration, a company becomes its own ________, while in backward integration the company is its own ________. A) distributor; monitor B) supplier; distributor C) supplier; customer D) distributor; supplier Answer: D Diff: 2 Page Ref: 116 Objective: 4.2

84. Two movie studios combining to form one larger studio is an example of which of the following? A) diversification B) forward vertical integration C) backward vertical integration D) horizontal integration Answer: D Diff: 2 Page Ref: 116 Objective: 4.2

85. The U.S. Federal Trade Commission monitors horizontal integration carefully to make sure that consumers aren't harmed by which of the following? A) decreased competition B) too much competition C) deceptive ads D) increased competition Answer: A Diff: 2

Page Ref: 116

Objective: 4.2

86. When Google purchased YouTube, a company that featured different, but related products, Google was engaging in which of the following? A) backward vertical integration B) concentration C) diversification D) forward vertical integration Answer: C Diff: 2 Page Ref: 116 Objective: 4.2

87. Two companies that both sell fine time pieces combine. What are they doing? A) integrating vertically, because they both sell the same products B) diversifying, because they both sell the same products C) backward vertical integration, because they are sharing distribution D) integrating horizontally, because they both sell similar products Answer: D Diff: 3 Page Ref: 116 Objective: 4.2

88. A company whose goal is to retain its ideal size and market share is employing which kind of strategy? A) stability B) renewal C) nonnon-corporate D) growth Answer: A Diff: 2 Page Ref: 116 Objective: 4.2

89. Troubled companies seek ________ to address serious problems. A) vertical and horizontal strategies B) corporate strategies C) renewal strategies D) competitive strategies Answer: C Diff: 2 Page Ref: 117 Objective: 4.2

90. To address limited, shortshort -term problems a company is most likely to employ a ________ strategy. A) turnaround B) selfself-critical C) doomsday D) retrenchment Answer: D Diff: 2 Page Ref: 117 Objective: 4.2

91. A company that is on the verge of collapse or bankruptcy might employ this strategy. A) retrenchment B) turnaround C) hunker down D) incremental improvement Answer: B Diff: 2 Page Ref: 116 Objective: 4.2

92. Remedies that all renewal strategies employ include which of the following? A) hiring efficiency experts B) new ad campaigns C) cutting costs D) emulating competitors Answer: C Diff: 2 Page Ref: 117 Objective: 4.2

93. The ________ strategy occupies the level below the corporate strategy. A) business unit B) functional C) performance D) competitive Answer: D Diff: 1 Page Ref: 115, 117 Objective: 4.2

94. A diversified corporation is likely to have ________. A) thousands of competitive strategies B) no more than two competitive strategies C) a single competitive strategy D) multiple competitive strategies Answer: D Diff: 2 Page Ref: 117 Objective: 4.2

95. The thing that makes your product special is known as your ________. A) competitive advantage B) assets C) destruction device D) competitive strength Answer: A Diff: 2 Page Ref: 117 Objective: 4.2

96. Competitive advantages for a highhigh-prestige, premium coffee franchise like Starbucks are likely to include all of the following EXCEPT ________.

A) high quality B) pleasant venues C) wellwell-trained employees D) lowest prices Answer: D Diff: 3 Page Ref: 117 Objective: 4.2

97. A cost leadership competitive strategy focuses on which of the following? A) luxury B) elegant design C) efficiency D) innovation Answer: C Diff: 2 Page Ref: 118 Objective: 4.2

98. Which of the following would you expect to find in a clothing store that follows a cost leadership strategy? A) statestate-ofof-thethe-art design B) pampered, personalized service C) only finest, most expensive materials D) basic, no frills, practical items Answer: D Diff: 2 Page Ref: 118 Objective: 4.2

99. A company with a differentiation strategy focuses on making its products or services ________. A) unique and special B) familiar C) similar to its competitors D) affordable Answer: A Diff: 2 Page Ref: 118 Objective: 4.2

100. A differentiation strategy ________. A) must focus on price B) can focus on value, but not service C) usually focuses on price D) can focus on a brand brand image Answer: D Diff: 2 Page Ref: 118 Objective: 4.2

101. A company that looks for a niche in the market is following which strategy? A) differentiation B) turnaround C) cost leadership

D) focus Answer: D Diff: 2 Page Ref: 118 Objective: 4.2

102. Which of the following describes a company that is following a focus strategy? A) a software company that makes financial products for accountants only B) a software company that makes a wide variety of games and financial products C) a software company that makes games for a wide audience D) a software company that makes financial products for accountants, consumers, and businesses Answer: A Diff: 3 Page Ref: 118 Objective: Objec tive: 4.2

103. According to Michael Porter, a company with good products that has no clear competitive advantage is said to be ________. A) in the wheelhouse B) perfectly positioned C) stuck in the middle D) outside of the box Answer: C Diff: 2 Page Ref: 118 Objective: 4.2

104. Most successful companies find that ________ a competitive advantage is almost as difficult as developing a competitive advantage. A) eliminating B) modifying C) sustaining D) assessing Answer: C Diff: 2 Page Ref: 119 Objective: 4.2

105. All of the following are threats to a sustainable, longlong -term competitive advantage EXCEPT ________. A) market stability B) evolution of the industry C) new technology in the industry D) market instabilities and disturbances Answer: A Diff: 2 Page Ref: 118 118--119 Objective: 4.2

106. To gain a sustainable competitive advantage, a pharmaceutical company might ________. A) secure exclusive rights to produce a drug B) set high prices for its products C) produce as many generic drugs as possible D) market aggressively

Answer: A Diff: 3 Page Ref: 119 Objective: 4.2

107. A company's strategic weapon is any product, service, or other attribute it has that ________. A) identifies problems that the company has B) gives it an edge over its competitors C) identifies the potential of employees D) helps diversify the company Answer: B Diff: 2 Page Ref: 119 Objective: 4.2

108. To create a competitive advantage that is sustainable, a company can begin by focusing on quality, then ________ A) make sure quality doesn't decline at too rapid a pace B) change its entire product line frequently C) slowly diminish quality and raise the prices of its products D) make incremental improvements to keep quality levels high Answer: D Diff: 3 Page Ref: 119 Objective: 4.2

109. This term describes an electric shaver company that carefully observes its competitor's production line to look for ways to improve its own manufacturing process. A) benchmarking B) reverse marketing C) quality engineering D) trademarking Answer: A Diff: 2 Page Ref: 120 Objective: 4.2

110. Which of the following best defines plans defines  plans?? A) documents that define goals B) documents that describe how goals will be met C) documents that identify company problems D) documents that identify how goals from the past were met Answer: B Diff: 2 Page Ref: 121 Objective: 4.3

111. Which of the following best defines goals defines  goals?? A) likely outcomes for the future B) desired outcomes for the future C) shortshort-term targets D) unlikely outcomes for the future Answer: B

Diff: 1 Page Ref: 121 Objective: 4.3

112. In reality, all organizations have ________. A) the same single goal B) the same goals C) a single goal D) multiple goals Answer: D Diff: 2 Page Ref: 121 Objective: 4.3

113. In most cases, strategic goals include ________. A) some financial objectives B) all objectives, both financial and nonnon -financial C) all financial objectives D) all objectives that are not financial Answer: D Diff: 2 Page Ref: 121 Objective: 4.3

114. Which of the following is an example of a strategic goal for a professional baseball team? A) to increase television revenues over the next 5 years B) to average over 90 wins a year for the next 5 years C) to increase attendance by 5 percent over the next three years D) to decrease payroll by 20 million over the next 2 years Answer: B Diff: 2 Page Ref: 121 Objective: 4.3

115. An organization's real goals and priorities are best revealed by ________. A) its statements to the press B) its actions in the marketplace C) its mission statement D) its official stated goals Answer: B Diff: 2 Page Ref: 122 Objective: 4.3

116. ________ are important because they provide the standards against which all organizational accomplishments are measured. A) Guidelines B) Models C) Rules D) Goals Answer: D Diff: 2 Page Ref: 122 Objective: 4.3

117. In traditional goal setting, these individuals set goals. A) middle managers B) top managers C) middle and lowlow-level managers D) managers and employees Answer: B Diff: 2 Page Ref: 122 Objective: 4.3

118. In traditional goal setting, as they work their way from top management to employees, goals are likely to ________. A) be more rigorously followed B) become more clear C) be unchanged D) become less clear Answer: D Diff: 2 Page Ref: 123 Objective: 4.3

119. In a meansmeans -ends chain, a goal at a lower level ________. A) is the bridge to a goal at at the next higher higher level B) is attained only after higher level goals are fulfilled C) is ignored if goals at higher levels are attained D) is separate from the goal at the next higher level Answer: A Diff: 3 Page Ref: 123 Objective: 4.3

120. In management by objectives (MBO), goals ________. A) must be easily accomplished B) are determined by top management C) are developed by employees D) are jointly determined by employees and managers Answer: D Diff: 2 Page Ref: 123 123--124 Objective: 4.3

121. In addition to being made by by both managers and employees, MBO goals must be ________. A) nonnon-specific and include no time limit B) nonnon-specific and openopen-ended with regard to time C) specific and openopen-ended with regard to time D) specific and include an explicit time limit Answer: D Diff: 2 Page Ref: 123 123--124 Objective: 4.3

122. MBO programs are usually successful largely because they ________.

A) give managers a sense of ownership of goals B) free managers from the responsibility of setting goals C) free employees from responsibility if goals are not met D) give employees a sense of ownership of goals Answer: D Diff: 2 Page Ref: 123 123--124 Objective: 4.3

123. Which goal setting sequence is correct for the following steps? 1. Evaluate resources. 2. Identify goals. 3. Review the mission and job tasks. 4. Communicate goals. 5. Link rewards to goals. 6. Build feedback mechanisms. A) 4, 2, 5, 3, 1, 6 B) 1, 2, 4, 6, 3, 5 C) 3, 4, 2, 6, 5, 1 D) 3, 1, 2, 4, 6, 5 Answer: D Diff: 3 Page Ref: 124 Objective: 4.3

124. The breadth of a plan refers to ________ concerns. A) strategic versus tactical B) single use versus standing C) specific versus directional D) longlong-term versus shortshort-term Answer: A Diff: 2 Page Ref: 125 Objective: 4.3

125. The specificity of a plan refers to ________ concerns. A) strategic versus tactical B) single use versus standing C) longlong-term versus shortshort-term D) specific versus directional Answer: D Diff: 2 Page Ref: 125 Objective: 4.3

126. Strategic plans address ________. A) how a single goal is to be achieved B) goals for a single branch of the organization organization C) overall organizational goals D) how overall goals are to be achieved Answer: C Diff: 2 Page Ref: 125 Objective: 4.3

127. Tactical plans are operational plans that identify ________. A) overall organizational goals B) specific goals for accomplishing a specific objective C) the mission of an organization D) how overall goals are to be achieved Answer: D Diff: 2 Page Ref: 125 Objective: 4.3

128. A politician whose ultimate goal is to get elected is planning campaign ads for TV. In planning the ads, the politician is functioning at a ________ level. A) tactical B) strategic C) directional D) longlong-term Answer: A Diff: 3 Page Ref: 125 Objective: 4.3

129. Which of the following defines the time frame of a longlong -term plan? A) under three years B) over three years C) over one year D) over seven years Answer: B Diff: 1 Page Ref: 125 Objective: 4.3

130. Directional plans ________. A) leave no room for interpretation B) are flexible general guidelines C) must be shortshort-term plans D) are difficult to modify Answer: B Diff: 2 Page Ref: 125 Objective: 4.3

131. Standing plans typically can be used ________. A) only once B) twice at most C) repeatedly D) only in conjunction with specific, longlong-term plans Answer: C Diff: 2 Page Ref: 126 Objective: 4.3

132. Top managers, for the most part, focus on this type of planning. A) tactical B) strategic C) operational D) short term Answer: B Diff: 2 Page Ref: 126 Objective: 4.3

133. The more uncertain a situation is, the more ________ plans must be. A) short term B) flexible C) long term D) unspecific Answer: B Diff: 2 Page Ref: 126 Objective: 4.3

134. The commitment concept states that plans should ________. A) stake out a time period that is neither too long nor too short B) always stake out a shorter time period than is estimated C) always stake out a longer time period than is estimated D) not include time periods because they are too confining Answer: A Diff: 3 Page Ref: 126 Objective: 4.3

135. Most managers feel that formal, toptop -down plans created by corporate planning departments are ________. A) very useful B) indispensible C) usually unsatisfactory D) excellent Answer: C Diff: 2 Page Ref: 128 Objective: 4.3

136. In the twentytwenty -first century, managers increasingly need to consider their plans as ________. A) rigid road maps with a single destination B) a vague philosophy that should not interfere with actions C) highly explicit recipes that must be scrupulously followed D) flexible road maps with destinations that may change Answer: D Diff: 3 Page Ref: 129 Objective: 4.4

137. A cell phone company might ask managers to do some environmental scanning of blogs that deal with electronics as a way to ________. A) identify emerging trends

B) obtain new advertisers C) obtain new customers D) identify potential rivals Answer: A Diff: 2 Page Ref: 130 Objective: 4.4

138. Which of the following is NOT something that a company would be likely to do as a part of a competitive intelligence program? A) have employees evaluate competing products B) buy stock in a competitor's company C) buy competitors' products D) attend trade shows Answer: B Diff: 2 Page Ref: 130 Objective: 4.4

Taco Rocket (Scenario) Imagine that you are the president of Taco Rocket, a new and successful chain of 8 Mexican fast -food restaurants. The success you have experienced in the last 5 years has you thinking of what to do with the business next. Should you expand the business at the current rate? Open new and different restaurants? What? 139. Up to now your success has been based on selling highhigh -quality tacos and burritos at a price that others can't match. Your business is pursuing which of Porter's strategies? A) differentiation strategy B) cost leadership strategy C) focus strategy D) competitive advantage strategy Answer: B Diff: 2 Page Ref: 118 Objective: 4.2

140. You are thinking of buying a tortilla factory in a nearby state. This action would be an example of ________. A) forward diversification B) forward vertical integration C) backward vertical integration D) horizontal integration Answer: C Diff: 2 Page Ref: 116 Objective: 4.2

141. Recently, Taco Rocket has considered buying a local competitor and the two would combine under the Taco Taco Rocket name. This is an example of which of the following? A) vertical integration B) diversification C) horizontal integration D) stability Answer: C Diff: 3

Page Ref: 116

Objective: 4.2

142. For a limited time, Taco Rocket is thinking of coming out with a new Fifth Degree Burrito that is so hot it "burns a hole in the plate." Catering to the small segment of the market that likes supersuper-hot food is an example of a ________. A) longlong-term strategy B) cost leader strategy C) differentiation strategy D) focus strategy Answer: D Diff: 3 Page Ref: 116 Objective: 4.2

143. In a short essay, define planning and compare formal and informal planning as they are used in various organizations. Answer: Planning involves defining the organization's goals, establishing an overall strategy for achieving those goals, and developing a system to implement that strategy. Planning is concerned with both ends and means. All managers engage in some form of planning whether it is formal or informal. In informal planning, little or nothing is written down and there is little or no sharing of goals with others within the organization. This type of planning is often done in small businesses where the ownerowner -manager has a vision of where he or she wants the business to go and how to get there. In formal planning, goals and plans covering a specific period of time are developed. These goals and plans are written and shared with organizational members. Specific programs exist in formal planning to achieve planning goals; that is, managers clearly define the path they want to take and the actions they will carry out to reach their goals. Diff: 3 Page Ref: 110 110--111 Objective: 4.1

144. In a short essay, list and discuss two reasons for planning. Answer: Planning establishes coordinated effort. It gives direction to managers and nonmanagers alike. When employees know where the organization is going and what they must contribute to reach goals, they can focus their individual and collective efforts to accomplish those goals. Without planning, departments and individuals might end up working at crosscross -purposes, preventing the organization from moving efficiently toward its goals. Planning reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses to change. Even though planning can't eliminate change, managers plan in order to anticipate changes and develop the most effective response to them. Diff: 2 Page Ref: 110 110--111 Objective: 4.1

145. In a short essay, list and discuss two additional reasons that justify the need for planning. Answer: Planning reduces overlapping and wasteful activities. When work activities are coordinated around established plans, waste and redundancy can be minimized. Furthermore, when means and ends are made clear through planning, inefficiencies often become obvious and can be easily corrected or eliminated.

Planning managers are unsure of what they are trying to accomplish, they will be unable to determine whether establishes goals or or not they have been successful. In planning, goals and standards are clearly developed and stated. standards that are Then actual performance can be compared against the goals and corrective action is taken, if used in necessary. Without the goals identified in a planning process, there is no way for an organization to controlling. If assess its own progress. Diff: 2 Page Ref: 110 110--111 Objective: 4.1

146. In a short essay, identify criticisms of formal planning. Answer: One of the main arguments directed at formal planning is that it is rigid and can lock an organization into specific goals and timetables that must be achieved, no matter how circumstances may change. Another criticism of plans is that they cannot replace intuition and creativity, and in many cases are said to stifle these qualities. Many people advise planners to try to take intuition and creativity into account when they formulate their plans, so their plans will enhance rather than undermine these qualities. A third criticism of planning is that it often fixates on the current business climate, not on how the climate might change in the future. This can result in plans that are short -sighted and limited. Rather than look for new opportunities, managers keep trying to perfect what they did in the past. Finally, plans often focus too much on successes of the past, forcing a company to stick to triedtried-andand-true methods of operating rather than forging into new areas and blazing new trails. Diff: 3 Page Ref: 111 Objective: 4.1

147. In a short essay, compare strategic plans and tactical plans. Answer: Strategic plans are plans that apply to the entire organization, establish the organization's overall goals, and seek to position the organization in terms of the overall business environment. Plans that specify the details of how the overall goals are to be achieved are called tactical or operational plans. Tactical plans tend to cover a shorter time frame and a more narrow view of an organization than strategic plans. Where strategic plans focus on identifying goals, tactical plans focus on how to reach those goals. Diff: 3 Page Ref: 125 Objective: 4.3

148. In a short essay, compare specific plans and directional plans. Answer: Specific plans are plans that are clearly defined and that leave no room for interpretation. There is little room for ambiguity or misunderstanding with a specific plan. The drawbacks of specific plans are that they can be rigid and often require a measure of predictability that in many cases does not exist. When uncertainty is high and managers must be able to respond to unexpected changes, directional plans are preferable. Directional plans are flexible plans that set out general guidelines but don't lock managers into overly specific goals or courses of action. However, the flexibility inherent in directional plans must be weighed against the loss of clarity provided by specific plans. Diff: 3 Page Ref: 125 Objective: 4.3

149. In a short essay, define and discuss management by objectives (MBO).

Answer: Management by objectives (MBO) is a system in which specific performance goals are jointly determined by employees and their managers. MBO requires that progress toward accomplishing these goals be periodically reviewed, and rewards allocated on the basis of this progress. Rather than using goals exclusively exclusively as controls, MBO uses them to motivate employees employees as well. Management by objectives consists of four elements: goal specificity, participative decision making, requiring an explicit time period, and performance feedback. MBO's appeal lies in its focus on employees working to accomplish goals they have had a hand in determining. Diff: 3 Page Ref: 123 123--124 Objective: 4.3

150. In a short essay, describe the first two steps in the strategic management process. Answer: The first step in the strategic management process is to identify the organization's current mission, goals, and strategies. Defining the organization's mission forces managers to identify what it is in  business to do. Knowing the company's current goals gives managers a basis for assessing whether those goals need to be changed. The second step involves an external analysis. Managers need to know, for instance, what the competition is doing and how the current business environment is likely to affect the company. After analyzing the environment, managers need to assess what they have learned in terms of opportunities that the organization can exploit, and threats that it must counteract or buffer against. Diff: 3 Page Ref: 114 114--115 Objective: 4.2

151. In a short essay, describe the final four steps in the strategic management process. Answer: The third step in the strategic management process involves an internal analysis, which provides important information about an organization's specific resources and capabilities. After completing an internal analysis, managers can then complete a SWOT analysis. The SWOT analysis combines information from this step and the previous step in the process to formally identify an organization's strengths, weaknesses, opportunities, and threats. The fourth step in the strategic management process is to put all of the information gathered together and use it to formulate strategies for putting the organization on the right track for the future. As managers formulate strategies, they have to consider the realities of the external environment and their available resources and capabilities and design strategies that will help the organization reach its goals. After strategies are formulated, they must be implemented. A strategy is only as good as its implementation. The final step in the strategic management process is evaluating results. How effective have the strategies been? Have they helped the organization reach its goals? What adjustments, if any, are necessary? Diff: 3 Page Ref: 114 114--115 Objective: 4.2

152. In a short essay, discuss environmental scanning and competitive intelligence. Answer: Managers in both small and large organizations use environmental scanning, which is the screening of large amounts of information, to anticipate and interpret trends and changes in the business environment. Extensive environmental scanning is likely to reveal issues, trends, and concerns that could affect an organization's current and planned activities. One of the fastest growing areas of environmental scanning is competitive intelligence. Competitive

intelligence is a get answers to questions such as: Who are they? What are they doing? How will what they're doing process by which affect us? Competitive intelligence doesn't have to involve spying. Advertisements, promotional organizations materials, press releases, reports filed with government agencies, annual reports, want ads, newspaper gather information reports, and industry studies are all examples of readily accessible sources of information for about their competitive intelligence. Many firms also regularly purchase and analyze competitors' products to competitors and learn about new technical innovations. Diff: 3 Page Ref: 130 Objective: 4.4

153. In a short essay, discuss the cost leadership strategy according to Michael Porter. Answer: When an organization sets out to be the lowestlowest -cost player in its industry, it is following a cost leadership strategy. A lowlow-cost leader aggressively searches out efficiencies in production, marketing, and other areas of operation. Overhead is kept to a minimum, and the firm does everything it can to cut costs. Although lowlow-cost leaders don't place a lot of emphasis on "frills," the product or service  being sold must be perceived perceiv ed as comparable in quality to that offered of fered by rivals or at least be acceptable to buyers. Examples of companies that have used the lowlow -cost leader strategy include WalWal-Mart and Southwest Airlines. Diff: 3 Page Ref: 118 Objective: 4.2

154. In a short essay, discuss Porter's differentiation strategy. Answer: When a company seeks to offer unique products that are seen as truly special by customers, it is following a differentiation strategy. Ways in which companies differentiate themselves might include exceptionally high quality, extraordinary service, innovative design, technological capability, or an unusually positive brand image. The key to this competitive strategy is that whatever product or service attribute is chosen for differentiation must set the firm apart from its competitors and be significant enough to justify a price premium that exceeds the cost of differentiation. Many highly successful businesses can be identified as examples of the differentiation strategy: L.L. Bean (customer service), Intel (higher(higher -quality chip technology), Maytag (reliability), and Mary Kay Cosmetics (distribution). Diff: 3 Page Ref: 118 Objective: 4.2

155. In a short essay, discuss Porter's focus strategy. Answer: A company pursues a focus strategy when it concentrates on a narrow product or segment of the market. The goal of a focus strategy is to fill a niche in the market. A niche can be based on product, type of buyer, distribution channel, or geographical location of buyers. Research suggests that the focus strategy may be the most effective choice for small businesses because they typically do not have the economies of scale or internal resources to successfully pursue one of the other two strategies. strategies. Stouffer used a focus strategy with its Lean Cuisine line to reach affluent, sophisticated, caloriecalorie -conscious customers who wanted convenient but high quality products. Diff: 3 Page Ref: 118 Objective: 4.2