Test Bank For Foundations of Strategy 2nd Edition By Robert M. Grant, Judith Jordan

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Chapter 1

The Concept of Strategy

 

1. Strategy today is essentially a detailed plan which every member of the organization must follow to ensure success.

@Pages and References: Page 2

1. T

*b. F

 

2. Strategy is in essence a long-term plan for an organisation to achieve its long-term objectives.

@Pages and References: Page 2

*a. T

1. F

 

3. For most firms, although good luck may play a part, success is more likely to be a result of a soundly grounded and well executed strategy.

@Pages and References: Pages 10-12

*a. T

1. F

 

4. Sound strategy and implementation largely determine the probability and extent of the success of a firm.

@Pages and References: Pages 10-12

*a. T

1. F

 

5. A sound strategy relies on four factors: simple and consistent goals; sound understanding of the competitive environment; objective appraisal of resources; and effective implementation of strategic decisions.

@Pages and References: Pages 10-12

1. T

*b. F

 

6. Usually, business success has been proved to rely in the end on superior resources.

@Pages and References: Pages 10-12

1. T

*b. F

 

7. From the military arena, tactics are about actions and techniques for winning battles, whereas strategy is about winning the war.

@Pages and References: Pages 12-16

*a. T

1. F

 

8. Strategic decisions are likely to significantly affect the organisation as a whole and involve major resource commitment.

@Pages and References: Pages 12-16

*a. T

1. F

 

9. Business strategy has largely evolved from the theories put forward by academics.

@Pages and References: Pages 13-16

1. T

*b. F

 

10. Strategy in the 1950’s and 1960’s was dominated by top-down corporate planning and so-called scientific management.

@Pages and References: Pages 13-16

*a. T

1. F

 

11. In the 1970’s and 1980’s, strategy evolved to be viewed more in terms of competition, competitive advantage, market share and profit.

@Pages and References: Pages 13-16

*a. T

1. F

 

12. Strategy today has been forced to evolve to cope with an increasingly fast-paced and volatile environment, making inflexible long-term plans redundant.

@Pages and References: Pages 13-16

*a. T

1. F

 

13. In summary, strategy has evolved from “strategy as a detailed plan” to become “strategy as direction” in the early 21st century.

@Pages and References: Page 17

*a. T

1. F

 

14. Corporate strategy is also called business strategy, or competitive strategy.

@Pages and References: Page 17

1. T

*b. F

 

15. To determine a large firm’s strategy, it’s sufficient to read the annual corporate report.

@Pages and References: Pages 17-19

1. T

*b. F

 

16. Much can be learned about a firm’s actual strategy by looking at where it invests most money, and what products, services and technologies it is working on.

@Pages and References: Pages 17-19

*a. T

1. F

 

17. Some observers have noticed that there’s only a weak link between a firm’s intended or stated strategy, and its actual or realised strategy.

@Pages and References: Pages 22-24

*a. T

1. F

 

18. The essential purpose of a commercial firm can be seen as creating value for customers – and then to appropriate a portion of this value for the firm.

@Pages and References: Pages 26-28

*a. T

1. F

 

19. Company law throughout the developed, industrialised world obliges firms to primarily focus on profit for shareholders.

@Pages and References: Pages 26-28

1. T

*b. F

 

20. Paradoxically, the most consistently profitable companies are those whose primary goals are not stated in terms of profits.

@Pages and References: Pages 31-33

*a. T

1. F

 

21. Strategy is fundamentally about:

@Pages and References: Page 2

1. Being better than rivals

*b. Success in achieving long-term goals

1. Satisfying all stakeholders
2. Being an excellent “corporate citizen”

 

22. Success is fundamentally linked to:

@Pages and References: Pages 10-12

1. A soundly formulated strategy and luck
2. An effectively formulated strategy and a strong awareness of the rivals’ strengths
3. A clear understanding of the environment and strong political skills

*d. A soundly formulated and effectively implemented strategy

 

23. From the three stories describing key attributes of strategy at the beginning of the chapter, four factors stand out:

@Pages and References: Pages 10-12

1. Goals, environment, appraisal of resources, and social and cultural implications
2. Goals, internal and external analysis of the environment, effective implementation, and awareness of rivals’ strengths

*c. Consistent goals, understanding the environment, objective appraisal of resources, and effective implementation

1. Goals, environment, irreversibility of decision, and effective implementation

 

24. Strategic goals should be:

@Pages and References: Pages 10-12

1. Simple
2. Consistent
3. Long term

*d. All of the above

 

25. Appraising a firm’s resources consists of:

@Pages and References: Pages 10-12

1. Protecting the firm from its weaknesses and trying to reduce or eliminate them
2. Leveraging the firm’s strengths to increase market share and profit

*c. Being very realistic yet creative about what can be achieved with what you’ve got

1. Completing 360-degree analytical evaluations of top managers’ strengths and weaknesses

 

26. The success of an organization in general, depends on the following:

@Pages and References: Pages 10-12

1. Being consistently focused on an achievable goal
2. Having a strong and in-depth knowledge of the competitive environment
3. Realistic appraisal of its own strengths and weaknesses

*d. All of the above plus the ability to implement strategy with commitment, consistency and determination

 

27. The textbook limits attention to:

@Pages and References: Pages 34-35

1. The global business environment

*b. Profit-making companies in market economies

1. Both public and private sector firms in English-speaking countries
2. Profit making companies above a certain size

 

28. The approach taken in the textbook primarily assumes that:

@Pages and References: Pages 34-35

1. CSR is taking over from generating profits as the primary corporate goal
2. Top managers determine the success of a firm by concentrating on short-term profits
3. The “Anglo-Saxon” model of shareholder capitalism is the right one

*d. Profit making firms are seeking to maximise profits for the owners over the long term

 

29. The fundamental role of strategy is to:

@Pages and References: Pages 35-36

1. Determine how the firm will make a profit in its industry environment:
2. Determine how the firm will deploy its resources to satisfy its short-term financial goals

*c. Determine how the firm will deploy its resources to satisfy its long-term goals, given the conditions in the competitive environment

1. Determine how the firm can organize its own activities and achieve dominance

 

30. If a firm’s strategy ensures it is consistent with both its internal and external environment, it achieves:

@Pages and References: Pages 35-36

*a. Strategic fit

1. Strategic adjustment
2. Environment consistency
3. Political and social fit

 

31. The notion of “strategic fit”:

@Pages and References: Pages 35-36

1. Does not mean much, and is a common statement made in strategic literature
2. Implies coherence between resources, capabilities, structure and systems
3. Expresses how well a firm’s strategy fits its internal and external environment

*d. Answers b and c

 

32. Modern strategy applied to the business world shares with military strategy:

@Pages and References: Pages 13-16

1. Only linguistic roots
2. Some authors such as Sun Tzu and his “Art of War”
3. The existence of resources, conflict, and battle between players

*d. Decisions of significance to overall success, and major resource commitment

 

33. Strategy and tactics:

@Pages and References: Pages 13-16

1. Are interchangeable terms

*b. Relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively

1. Can be seen as what top managers do and what lower level employees do, respectively
2. None of the above

 

34. Modern business strategy has evolved across time due to:

@Pages and References: Pages 13-16

1. Are interchangeable terms
2. Relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively

*c. Can be seen as what top managers do and what lower level employees do, respectively

1. None of the above

 

35. Modern business strategy has evolved across time due to:

@Pages and References: Pages 13-16

*a. Business school academics developing new theories, which are taught to new graduates

1. Earlier methods have simply been seen as old-fashioned
2. Earlier thinking was repeatedly demonstrated to be inadequate in coping with the evolving more turbulent environment
3. Computerisation and the internet age meaning that we know more about what’s really going on nowadays

 

36. By the 1980s, thinking on strategy had shifted to:

@Pages and References: Pages 13-16

1. An emphasis on competition, market share and industry profitability
2. The development of the “PIMS” at the Strategic Planning Institute

*c. Research on the resource and capability approach

1. The management of political, economic and technological influences

 

37. The shift from Corporate Planning to Strategy-Making implies:

@Pages and References: Pages 13-16

1. From the sources of profit outside the firm to the sources of profit within the firm
2. To the Resource-based view of the firm

*c. Both a and b

1. From the structure-based approach to the value-added perspective

 

38. In the military field, we generally make the following distinction between strategy and tactics:

@Pages and References: Pages 13-16

1. Tactics are the overall plan whereas strategy focuses on specific actions

*b. Tactics are a scheme of specific everyday actions, practices and techniques whereas strategy relates to the top-level plan

1. Tactics encompass specific political actions within the firm whereas strategy is the overall plan for deploying resources to establish a favorable position
2. Tactics are the overall plan whereas strategy is concerned with the maneuvers to win battles

 

39. A contemporary phenomenon is known as “winner-take-all markets”. This concept is exemplified by:

@Pages and References: Pages 13-16

1. Enron and WorldCom
2. E-Trade and WebVan

*c. Microsoft (PC software) and Intel (PC core processors)

1. Peapod in grocery retailing

 

40. The simplest useful definition of business strategy would be:

@Pages and References: Pages 17

1. A sort of plan
2. A conceptual construct relating to the juxtaposition of corporate richness versus the snakes and ladders of a kaleidoscopic environment
3. How to win the corporate wars; price wars, technology races, develop killer applications

*d. The means by which organisations achieve their long-term objectives

 

41. Corporate and Business strategy differ mainly in that:

@Pages and References: Pages 17

1. Corporate Strategy has a broader scope, including decisions about which industries to operate in
2. Business strategy is subordinate to corporate strategy

*c. Both a and b

1. There is no real difference; they are the same thing

 

42. Business strategy can be summarized as:

@Pages and References: Pages 17

*a. The means by which organisations achieve their long-term objectives

1. The means by which individuals achieve their objectives
2. The formal detailed plans used by organizations to guide their actions
3. The will of top managers to change their organization

 

43. A good starting-point to identify a large firm’s strategy is:

@Pages and References: Pages 17

*a. To read the annual corporate report

1. To call the CEO and ask him/her what the strategy is
2. To look on the company’s website
3. To search the internet to find out if someone else has already done the work

 

44. In addition to just reading published information, to identify a firm’s strategy you could

@Pages and References: Pages 17

1. Identify where the company is making most of its investments
2. Identify where the company is doing most of its business
3. Find out what new products and services the company is putting most effort into

*d. All of the above

 

45. The 1950’s/60’s style of Corporate Planning assumed that:

@Pages and References: Pages 17

1. There would be almost no difference between the intended strategy and the realised strategy
2. The business world is essentially a predictable environment
3. There was unlikely to be anything unexpected to occur of sufficient importance to disrupt the strategic plan

*d. All of the above

 

46. The shift in strategy from a plan to a direction leads [email protected]

@Pages and References: Pages 17

1. A downgrade its role in management

*b. An overt reliance on flexibility and responsiveness

1. A need for top managers’ training
2. Less work for top managers

 

47. As the environment becomes more turbulent, or unpredictable:

@Pages and References: Pages 17

1. Strategy appears to not be very useful

*b. Strategy remains just as vital a tool to navigate the firm through “stormy seas”

1. Strategy is put into the hands of external consultants
2. Strategy becomes an “impossible exercise”

 

48. The difference between intended and realised strategy is:

@Pages and References: Pages 17

*a. So great that arguably only 30% of  intended strategy becomes realised

1. Greater in unsuccessful companies
2. Unimportant, because no-one ever expects the intended strategy to seriously be implemented
3. Only a very small difference, in general

 

49. Two basic questions concern corporate and business strategy:

@Pages and References: Pages 17

*a. Where and how to compete?

1. How and when to compete?
2. What are the best arenas and structures to compete?
3. When and where to compete?

 

50. If a firm has no formal, intended strategy:

@Pages and References: Pages 17

1. The firm will soon go out of business

*b. A strategy of sorts will exist; an emergent strategy

1. It cannot be a large company, or there would be a corporate report detailing the intended strategy
2. There are no such companies

 

51. The role of strategy today is claimed to be:

@Pages and References: Pages 17

1. A unifying role underpinning all consequent decisions
2. A means by which top management can communicate and gain commitment to a sense of direction
3. A means by which top management can inspire and motivate the workforce

*d. All of the above

 

52. Business strategy defines:

@Pages and References: Pages 17

1. The way a firm competes in a particular industry or market]
2. How a firm gains a competitive advantage over its rivals within a specific industry or market

*c. Both a and b

1. Neither a nor b

 

53. Profit-making firms are about creating value:

@Pages and References: Pages 17

1. This value is simply the profit generated at the end of the year
2. They must create value for several stakeholder groups if this is to result in sustainable long-term profit generation
3. Value to some stakeholders eg customers, may be difficult to quantify in money terms

*d. Both c and b

 

54. Maximising shareholder value:

@Pages and References: Pages 17

1. Is the sole objective of all profit-making companies in every country
2. Is the primary legal obligation only in the English-speaking countries
3. Is not the only legal obligation in central & southern Europe, and in Asia. Firms here are legally obliged to take account of a broad range of stakeholder interests

*d. Both b and c

 

55. A strategy can be described as:

@Pages and References: Pages 17

*a. Intended, emergent, or realized

1. Intended, emergent, or sustained
2. Emergent, critical, or sustained
3. Realized, emergent, failed

 

56. In practice, strategy making is:

@Pages and References: Pages 17

*a. A combination of centrally-driven rational design and decentralized adaptation

1. A combination of luck, organizational politics, and centrally-driven planning
2. The expression of political games among top managers
3. None of the above

 

57. In regard to strategy making, most firms are likely to exhibit:

@Pages and References: Pages 17

1. A combination of design and emergence
2. A process labeled as “planned emergence”
3. An interaction between strategic design, through formal top-level processes, and strategic enactment through decisions made by all management levels of the organization

*d. All of the above

 

58. The balance between designed strategy and emergent strategy depends mostly on:

@Pages and References: Pages 17

1. The type of organizational structure

*b. The stability and predictability of a firm’s environment

1. Top managers’ personalities
2. Middle managers’ autonomy

 

59. Corporate Social Responsibility:

@Pages and References: Pages 17

1. Fits more readily with the central/southern Europe and Asian legal framework of broader stakeholder obligations
2. Is not seen as an imperative requirement by all influential thinkers
3. Is becoming more important for all firms to take account of due to the threat of adverse publicity

*d. All of the above

 

60. The underlying purpose of studying strategy is:

@Pages and References: Pages 36-37

1. To reach quick-fix decisions
2. To better understand the issues facing top managers
3. To work out how to best create value in the future

*d. Both b and c

 

Chapter 5

Business Strategies in Different Industry and Cultural Contexts

 

1. Change in industries is driven chiefly by the forces of technology, market demand and economics.

@Pages and References: Page 210

*a. T

1. F

 

2. Massive and unpredictable changes occur in some industries, but less so in others.

@Pages and References: Page 210

*a. T

1. F

 

3. Firms are continually trying to erode the competitive advantage of rivals, and to build and maintain their own competitive advantage.

@Pages and References: Page 210

*a. T

1. F

 

4. The industry life cycle comprises 4 stages: introduction, growth, maturity, decline – so is indistinguishable from the product life cycle.

@Pages and References: Pages 214-221

1. T

*b. F

 

5. Two main factors drive industry evolution: demand growth and the production and diffusion of knowledge.

@Pages and References: Pages 214-221

*a. T

1. F

 

6. The introduction to maturity phases of the industry life cycle curve are characteristically S-shaped.

@Pages and References: Page 215

*a. T

1. F

 

7. The industry life cycle consists of four stages: 1) Introductory, 2) Growth, 3) Plateau, and 4) Rejuvenation.

@Pages and References: Pages 214-221

1. T

*b. F

 

8. Knowledge influences the characteristics of an industry in different ways depending on the stage of the industry life cycle.

@Pages and References: Pages 215-216

*a. T

1. F

 

9. The duration of the industry life cycle varies greatly from one industry to another.

@Pages and References: Pages 214-220

*a. T

1. F

 

10. Over time, industry life cycles become longer and longer.

@Pages and References: Pages 214-220

1. T

*b. F

 

11. A shift from radical to incremental innovation takes place when an industry coalesces around a leading technology and design.

@Pages and References: Pages 215-216

*a. T

1. F

 

12. A dominant design is one which is the most noticeable, or receives the most publicity.

@Pages and References: Pages 216-220

1. T

*b. F

 

13. Technical standards have the most dramatic effect in markets exhibiting network effects – that is users not adopting the standard risk isolation.

@Pages and References: Pages 216-220

*a. T

1. F

 

14. Emphasis often shifts from product innovation to process innovation, once a dominant design emerges.

@Pages and References: Pages 216-220

*a. T

1. F

 

15. It’s a good idea to reduce product innovation as soon as possible so as to precipitate a shift to the growth phase.

@Pages and References: Pages 221-228

1. T

*b. F

 

16. The terms “public sector” and “not-for-profit” sector are different terms for the same thing.

@Pages and References: Pages 228-236

1. T

*b. F

 

17. A not-for-profit organisation is legally obliged not to make any profit.

@Pages and References: Pages 228-236

1. T

*b. F

 

18. Some public sector organisations provide services which the private sector could not possibly provide.

@Pages and References: Pages 228-236

*a. T

1. F

 

19. Public sector organisations are not driven by the need to return a profit for shareholders, and are therefore less accountable than private sector firms.

@Pages and References: Pages 228-236

1. T

*b. F

 

20. In scenario planning, the scenarios constructed are often somewhat unrealistic.

@Pages and References: Pages 238-241

1. T

*b. F

 

21. Change in the industry environment faced by a firm is:

@Pages and References: Page 210

1. Massive and unpredictable
2. Gradual and predictable

*c. Could be either answer a or b, depending on the industry and the prevailing conditions

1. Easier for large firms to cope with

 

22. Change in an industry is the result of:

@Pages and References: Page 210

1. The forces of technology, consumer preferences, and economic growth

*b. Both external forces and the incumbents’ competitive strategies

1. The effect of the “5 forces” model of competition
2. Economic and psychological factors

 

23. Regarding change, a firm really needs to:

@Pages and References: Page 210

1. Understand and predict change
2. Understand, predict, and manage change

*c. Understand, predict, manage change, and adapt its strategy to it

1. Predict and manage change

 

24. The industry life cycle:

@Pages and References: Pages 214-220

1. Is an extension of the concept of the product life cycle
2. Uses the same stages as the product life cycle
3. Nearly always lasts much longer than a typical product life cycle in that industry

*d. All of the above

 

25. The text claims that two factors are fundamental to the industry life cycle. One of these is:

@Pages and References: Pages 214-220

*a. The production and diffusion of knowledge

1. Industrial production and the diffusion of knowledge
2. Demand during the growth phase
3. Demand for growth in the diffusion of knowledge

 

26. The decline phase of the industry life cycle is caused by:

@Pages and References: Pages 214-220

*a. The emergence of a radically better substitute product, representing a new industry

1. Tired old firms running out of new ideas
2. Existing firms leaving the industry to move to a more profitable one
3. Excessive market saturation

 

27. A new industry life cycle begins when:

@Pages and References: Pages 214-220

1. A very large gap in the market emerges
2. Another industry dies

*c. New knowledge manifests itself in the guise of a sufficiently radical product innovation

1. There are sufficient entrepreneurs

 

28. A dominant design is:

@Pages and References: Pages 214-220

1. One which has won the most industrial design awards

*b. An emergent de facto industry standard broad product format

1. The one advertised most strongly by the market leader
2. The latest new product which gains the most media attention

 

29. A technical standard:

@Pages and References: Pages 214-220

1. Only occurs in computing when there is a network effect
2. Emerges when there are interconnectivity and interface compatibility issues
3. Can emerge for safety and other reasons from standards bodies eg ISO

*d. Answers b and c

 

30. The different stages of the industry life cycles are characterised by:

@Pages and References: Pages 214-220

*a. The evolution of the industry growth rate over time

1. The evolution of the competition in the industry
2. The evolution of a firm’s market share
3. None of the above

 

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