Sample Comprehensive Exam
Chapters 1 – 5

1. A vision statement answers the question, “What is our business?,” whereas a mission statement answers, “What do we want to become?”
Ans: F Page: 10-11

2. The changes that occurred at Disney after Robert Iger took over as CEO exemplifies the fact that more and more organizations are centralizing the strategic-management process.
Ans: F Page: 16

3. In multidivisional organizations, each division should develop a mission statement independent of the parent company.
Ans: F Page: 63

4. According to Vern McGinnis, to be effective, all a mission statement need to do is define what the organization is and what the organization aspired to be.
Ans: F Page: 63

5. It is predicted that, by 2025, over 18% of the population in the United States will be over 65 years old.
Ans: T Page 88

6. The first step for using Porter’s Five-Forces Model is to evaluate the relative strength of each competitive force.
Ans: F Page 101

7. Metaphors are handed-down narratives of some wonderful event that is based on history but has been embellished with fictional detail.
Ans: F Page 127

8. Benchmarking is an analytical tool used to determine whether a firm’s value chain activities are competitive compared to rivals.
Ans: T Page 157

9. Since a combination strategy is not risky, many organizations pursue a combination of two or more strategies simultaneously.
Ans: F Page: 171

10. Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.
Ans: T Page 180

Multiple Choice
11. What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives?
a. Strategy formulation
b. Strategy evaluation
c. Strategy implementation
d. Strategic management
e. Strategic leading

12. During what stage of strategic management are a firm’s specific internal strengths and weaknesses determined?
a. Formulation
b. Implementation
c. Evaluation
d. Feedback
e. Goal-setting

13. Anything that a firm does especially well compared to rival firms is referred to as _____.
a. competitive advantage
b. comparative advantage
c. opportunity cost
d. sustainable advantage
e. an external opportunity

14. The trends in newspaper circulation in the United States provide support for which statement?
a. Sustainable competitive advantage is easy to maintain.
b. Several firms can have similar competitive advantages.
c. Some products are relatively immune to changes in the external environment
d. Most competitive advantages are hard to sustain
e. Competition is generally good for companies and consumers

15. In which phase of strategic management are annual objectives especially important?
a. Formulation
b. Control
c. Evaluation
d. Implementation
e. Management

16. Principles of conduct that guide decision-making are known as _____.
a. human rights
b. the Constitution
c. business ethics
d. nonprofit organization policies
e. social responsibility requirements

17. Which of these basic questions should a vision statement answer?
a. What is our business?
b. Who are our employees?
c. Why do we exist?
d. What do we want to become?
e. Who are our competitors?

18. What is the first step in the comprehensive strategic-management model?
a. Developing vision and mission statements
b. Performing external audits
c. Performing internal audits
d. Measuring and evaluating performance
e. Establishing long-term objectives

19. According to the comprehensive strategic-management model, which step needs to be completed immediately following the establishment of long-term objectives?
a. Developing vision and mission statements
b. Performing external audits
c. Performing internal audits
d. Generating, evaluating, and selecting strategies
e. Measuring and evaluating performance

20. What is the best time to develop a mission statement?
a. Before a business is opened
b. When the firm is successful
c. When the firm is in financial trouble
d. When the firm is in legal trouble
e. When the firm encounters competition

21. A proactive environmental policy is likely to lead to _____.
a. higher cleanup costs
b. conservation of energy
c. reduced customer loyalty
d. numerous liability suits
e. higher medical costs

22. Which of these examples of a mission statement’s focus area is not effective?
a. AT&T focuses on communication rather than telephones.
b. Exxon/Mobil focuses on oil and gas rather than energy.
c. Union Pacific focuses on transportation rather than railroads.
d. Universal Studios focuses on entertainment rather than movies.
e. Starbucks focuses on the café experience rather than coffee.

23. Which type of trend is exemplified by the increasing numbers of two-income households in America?
a. Social
b. Economic
c. Cultural
d. Technological
e. Historical

24. In general, what happens to American goods in overseas markets when there is a strong dollar?
a. Less expensive
b. More attractive
c. Cheaper
d. More expensive
e. Desirable

25. It is predicted that the United States will have how many racial or ethnic majorities by the year 2075?
a. None
b. One
c. Two
d. Three
e. Five

26. Who is the largest exporter to the United States?
a. Mexico
b. China
c. Canada
d. United Kingdom
e. Japan

27. The term that refers to the EU’s effort to end competitive tax breaks among member countries is _____.
a. double taxation
b. taxation bias
c. equity taxation
d. tax reconciliation
e. tax harmonization

28. According to Porter, what is usually the most powerful of the five competitive forces?
a. Potential development of substitute products
b. Bargaining power of suppliers
c. Bargaining power of consumers
d. Rivalry among competing firms
e. Potential entry of new competitors

29. A standardized, detailed set of techniques and behaviors that manage anxieties, but seldom produce intended, technical consequences of practical results are called _____.
a. folktales
b. rites
c. metaphors
d. rituals
e. values

30. What are historical narratives describing the unique accomplishments of a group and its leaders, usually in heroic terms?
a. Rites
b. Sagas
c. Stories
d. Myths
e. Folktales

31. Which function of management includes areas such as job design, job specification, job analysis and unity of command?
a. Planning
b. Organizing
c. Motivating
d. Staffing
e. Controlling

32. Which of the following is the process of influencing people to accomplish specific objectives?
a. Staffing
b. Motivating
c. Planning
d. Controlling
e. Organizing

33. Which decision concerns determining the best capital structure for the firm and includes examining various methods by which the firm can raise capital?
a. Investment
b. Dividends
c. Financing
d. Capital budgeting
e. Implementation

34. What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry?
a. Profitability
b. Liquidity
c. Leverage
d. Activity
e. Growth

35. Budget Rent-a-Car opening car rental shops in Wal-Mart stores is an example of which type of strategy?

a. Forward integration
b. Backward integration
c. Horizontal integration
d. Related diversification
e. Unrelated diversification

36. Advanced Medical Optics using acquisitions to obtain all medical aspects of eye care, from laser surgery to contacts to implants for all ages is an example of which type of strategy?
a. Forward integration
b. Backward integration
c. Horizontal integration
d. Market development
e. Product development

37. In which situation would horizontal integration be an especially effective strategy?
a. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.
b. When an organization competes in a slowing industry.
c. When decreased economies of scale provide major competitive advantages.
d. When an organization has neither the capital nor human talent needed to successfully manage an expanded organization.
e. When competitors are succeeding due to managerial expertise or having particular resources an organization possesses.

38. Win-Dixie closing one-third of its stores and eliminating 22,000 jobs in an attempt to emerge from bankruptcy would be an example of _____.
a. divestiture
b. backward integration
c. liquidation
d. retrenchment
e. forward integration

39. According to Porter, which strategy offers products or services to a small range of customers at the lowest price available on the market?

a. Low-cost
b. Best-value
c. Low-cost focus
d. Best-value focus
e. Differentiation

40. Which strategy would be most appropriate when the distinctive competencies of two or more firms complement each other especially well?
a. Conglomerate diversification
b. Divestiture
c. Joint venture
d. Retrenchment
e. Integration

See Also