Fred r david – strategic management, 13th edition ch07

Exam Name _ TRUE/FALSE Write 'T' if the statement is true and 'F' if the statement is false 1) 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 1) _ 2) A sustainability report provides information on a firm's social-responsibility practices 2) _ 3) Sustainability is the idea that a business can meet its financial goals without hurting customers 3) _ 4) The first stage of the strategy-formulation framework (the input stage), is followed by the decision stage 4) _ 5) Stage in the strategy-formulation framework involves the Quantitative Strategic Planning Matrix 5) _ 6) Good intuitive judgment is always needed to determine appropriate weights and ratings in the input stage matrices 6) _ 7) 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 7) _ 8) When completing the matching stage of the strategy-formulation framework, the SWOT Matrix needs to be completed before the SPACE Matrix 8) _ 9) The purpose of matching key factors is to generate feasible alternative strategies 9) _ 10) E 87) E 88) E 89) B 90) C 91) E 92) B 93) E 94) E 95) E 96) E 97) E 98) A 99) A 100) E 101) B 102) A 103) A 104) Matching external and internal critical success factors is the key to effectively generating feasible alternative strategies Students could provide examples from Table 7-1 105) If the directional vector points to the lower-left quadrant of the SPACE Matrix, firms should focus on rectifying internal weaknesses and avoiding external threats Defensive strategies include retrenchment, divestiture, liquidation and concentric diversification 106) Question Marks have a low relative market share position, yet they compete in a high-growth industry Stars have a high relative market share and a high industry growth rate, and represent the organization's best long-term opportunities for growth and profitability Cash Cows have a high relative market share position but compete in a low-growth industry Dogs have a low relative market share position and compete in a slow- or no-market-growth industry 107) The BCG Matrix has one major benefit it draws attention to the cash flow, investment characteristics and needs of an organization's various divisions The BCG Matrix has some limitations 1) viewing every business as either a star, cash cow, dog or question mark is an oversimplification; many businesses fall right in the middle and thus are not easily classified; 2) the BCG Matrix does not reflect whether or not various divisions or their industries are growing over time; that is, the matrix has no temporal qualities, but is instead a snapshot of an organization at a given point in time; and 3) other variables besides relative market share position and industry growth rate in sales are important in making strategic decisions about various divisions 108) A firm that is a weak competitor in a slow-growing market would be located in Quadrant III Quadrant III strategies include retrenchment, concentric diversification, horizontal diversification, conglomerate diversification, divestiture and liquidation Student answers will vary when elaborating on what these strategies could mean for a college or university However, students should mention that the college or university might possibly have to be closed, or facilities and staff may have to be drastically reduced, which leads to unhappy students in very large classes 109) Positives 1) sets of strategies can be examined sequentially or simultaneously and there is no limit to the number of strategies that can be evaluated or the number of sets of strategies that can be examined at once using the QSPM; 2) it requires strategists to integrate pertinent external and internal factors into the decisionmaking process; 3) Developing a QSPM makes it less likely that key factors will be overlooked or weighted inappropriately; 4)A QSPM draws attention to important relationships that affect strategy decisions; 5) It requires making a number of decisions along the way, which enhanses the probability that the decisions will be best for the organization.; 6) It can be applied to virtually any type of organization; 7) It can enhance strategic choice in multinational firms because many key factors can be considered at once Limitations 1) it always requires intuitive judgments and educated assumptions; 2) it can be only as good as the prerequisite information and matching analyses upon which it is based 110) Equifinality It is often possible to achieve similar results using different means or paths Strategists should recognize that achieving a successful outcome is more important than imposing the method of achieving it It may be possible to generate new alternatives that give equal results but with far greater potential for gaining commitment Satisfying Achieving satisfactory results with an acceptable strategy is far better than failing to achieve optimal results with an unpopular strategy Generalization Shifting focus from specific issues to more general ones may increase strategists' options for gaining organizational commitment Focus on Higher-Order Issues By raising an issue to a higher level, many short-term interests can be postponed in favor of long-term interests For instance, by focusing on issues of survival, the airline and automotive industries were able to persuade unions to make concessions on wage increases Provide Political Access on Important Issues Strategy and policy decisions with significant negative consequences for middle managers will motivate intervention behavior from them If middle managers not have an opportunity to take a position on such decisions in appropriate political forums, they are capable of successfully resisting the decisions after they are made Providing such political access provides strategists with information that otherwise might not be available and that could be useful in managing intervention behavior 111) The role of NGOs in promoting and enhancing good governance practices has become imperative due to the increasing role of the private sector in the economy, the call for tranparency, openness, and integration in the world economy, along with government encouragement for sound development NGOs are now called upon to participate in the political effort of development, alongside the government and the corporate and business world since the state is no longer considered to be the sole instrument for development In recent years, NGOs have become fully-fledged actors on a par with the state and private sector in the development and regulation of societies 112) Students should list the four categories (control and oversight of Management, adherence to legal prescriptions, considerations of stakeholders' interests, and advancement of stockholder's rights) and an outline the roles and responsibilities can be taken from table 7-7 in the textbook ... the proportion of corporate profits generated by that division 25) 26) Star, question mark, cash cow and dogs are the four quadrants exhibited by the SPACE Matrix 26) 27) Cash cows represent... (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... either a conservative, aggressive, or competitive strategy 16) 17) The ES and CA dimension variables in a SPACE Matrix are assigned a numerical value ranging from -1 (best) to -6 (worst)