MGT603 Solved MCQs from Book by David (chap 4)

 CHAPTER 4

The Internal Assessment  

 The Nature of an Internal Audit
1.Opportunities are a firm’s distinctive competencies that cannot be easily matched or imitated by competitors.
Ans: F Page: 123
 
2.The process of performing an internal audit, compared to the external audit, provides more opportunity for participants to understand how their jobs, departments and divisions fit into the whole organization.
Ans: T Page: 123
 
3.An internal audit task force of managers could be charged with determining a specific number (usually 10 to 20) of the most important strengths and weaknesses.
Ans: T Page: 124
The Resource-Based View
 
4.Proponents of the resource-based view argue that external factors are more important than internal factors for a firm in achieving and sustaining competitive advantage 
Ans: F Page: 125
 
5.The basic premise of the research-based view is that the mix, type, amount and nature of a firm’s internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage
Ans: T Page: 125
 
Integrating Strategy and Culture
 
6.The subtle, elusive and largely unconscious forces that shape the workplace are captured by the organizational culture.
 Ans: T Page: 126
 
7.Cultural products include values, beliefs, stories, and language.
Ans: T Page: 126
 
8.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
 
9.A ritual is a standardized, detailed set of techniques and behaviors that manage anxieties but seldom produce intended, technical consequences of practical importance.
Ans: T Page 127
 
10.In China, business behaviors revolve around guanxi, or personal relations.
Ans: T Page: 128
 
11.Linkages between a firm’s culture and strategies often determine success.
Ans: T Page: 128
 
12.The U.S. understanding of Far Eastern cultures is a strength its firms have in competing with Pacific Rim firms.
Ans: F Page: 129
 
13.In China, to show that you enjoyed your meal, you should completely finish your food.
Ans: F Page 129
 
14.The smile is one form of communication that works the same worldwide.
Ans: T Page 129
 
15.In the U.S., personal achievement and accomplishments are more important than time spent with the family and the quality of relationships espoused by some cultures.
Ans: T Page: 130
 
16.Punctuality, in general, is revered in all cultures of the world.
Ans: F Page: 130
 
17.In the United States, an amicable relationship is often mandatory before conducting business.
Ans: F Page: 131

Management
 
18.Allocating resources is one of the five basic activities (functions) performed by managers.
Ans: F Page: 131
 
19.The only certain thing about the future of any organization is change.
Ans: T Page: 131
 
20.Organizing is the cornerstone of effective strategy formulation.
Ans: F Page: 132
 
21.Planning should be performed mostly by middle management and then presented to top management for analysis and approval.
Ans: F Page: 132
 
22.Controlling is the management function that is most important for the evaluation stage of the strategic management process.
Ans: T Page 132
 
23.The purpose of organizing is to achieve coordinated effort by defining task and authority relations.
Ans: T Page: 133
 
24.Motivation is one explanation why some people work hard and others do not.
Ans: T Page: 134
 
25.The management function of organizing is included in human resource management.
Ans: F Page: 135
 
26.The controlling function of management is synonymous to strategy formulation.
Ans: F Page: 127
 

Marketing
 
27.There are seven basic functions of marketing: customer analysis, selling, product and service planning, pricing, distribution, marketing research and opportunity analysis.
Ans: T Page: 136
 
28.A form of customer analysis is administering customer surveys.
Ans: T Page: 136
 
29.Successful strategy formulation generally rests upon the ability of an organization to sell some product or service.
Ans: F Page: 137
 
30.A new trend is to base advertising rates solely on sales rates with regard to advertising products or services on the Internet.
Ans: T Page: 137
 
31.The Internet was the fastest-growing segment of U.S. advertising spending in 2004 compared to 2003.
Ans: T Page 137
 
32.Pfizer, which has the world’s largest drug sales force, was planning on increasing their sales force by 15% in 2005.
Ans: F Page 137
 
33.Test marketing is used more frequently by industrial companies than consumer goods companies.
Ans: F Page: 137
 
34.Five major stakeholders that affect pricing decisions are consumers, governments, suppliers, distributors and competitors.
Ans: T Page: 138
 
35.Distribution involves warehousing, marketing research, distribution channels, wholesaling and retailing.
Ans: F Page: 138
 
36.Distribution becomes especially important when a firm is striving to implement a product development or backward integration strategy.
Ans: F Page: 138
 
37.Marketing research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.
Ans: T Page: 139
 
38.An opportunity analysis is an appraisal of the costs, benefits and risks associated with marketing decisions.
Ans: T Page: 139

Finance/Accounting
 
39.Three areas, according to James Van Horne, comprise the functions or basic decision areas of finance: the investment decision, the financing decision and the earnings decision.
Ans: F Page: 141
 
40.Financial ratios are not applicable to nonprofit organizations.
Ans: F Page: 141
 
41.Dividend decisions concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time and the repurchase or issuance of stock.
Ans: T Page: 141
 
42.The idea that paying dividends results in a higher stock price is a myth. 
Ans: T Page: 141
 
43.Activity ratios measure how effectively a firm is using its resources.
Ans: T Page: 143
 
44.Leverage ratios measure a firm’s ability to meet maturing short-term obligations.
Ans: F Page: 143
 
45.Total assets turnover ratio is calculated by dividing sales by fixed assets.
Ans: F Page 144
 
46.Financial ratio analysis rarely has to go beyond the actual calculation and interpretation of ratios.
Ans: F Page 145
 
47.A limitation of financial ratios is the fact that they are based on accounting data.
Ans: T Page: 145

Production/Operations
 
 48.Capacity decisions concern the design of the physical production system.
Ans: F Page: 147
 
49.In most industries, only minor costs of producing a product or service are incurred within operations, so production/operations does not have great value as a competitive weapon in a company’s overall strategy.
Ans: F Page: 148
 
50.Increased efficiency, quality, productivity and job satisfaction can come from cross-training workers.
Ans: T Page: 149

Research and Development 
 
51.Four common approaches to determine R&D budget allocations used successfully are:
(1) finance as many project proposals as possible;
(2) use a percentage-of-sales method;
(3) budget for R&D about what competitors spend; or
(4) decide how many successful new products are needed and work backwards to estimate the required R&D investment.
Ans: T Page: 151
 
52.Internal R&D and contract R&D are the two basic forms of R&D in organizations.
Ans: T Page: 151
 
53.Spending on research and development is steadily decreasing in the United States.
Ans: F Page: 152

Management Information Systems
 
54.The functions of information systems are growing in importance because organizations are becoming more complex, decentralized and globally dispersed.
Ans: T Page: 153
 
Value Chain Analysis (VCA)
55.Value Chain Analysis can enable a firm to better identify its own strengths and weaknesses especially as compared to competitors’ Value Chain Analyses.
Ans: T Page: 154
 
56.Although a useful step in the strategic management process, value chain analysis can rarely help a firm monitor whether its prices and costs are competitive.
Ans: F Page 155
 
57.Benchmarking is an analytical tool used to determine whether a firm’s value chain activities are competitive compared to rivals.
Ans: T Page 157 

The 
IFE Matrix
 
58.Internal Factor Evaluation Matrix is a summary step when conducting an internal strategic-management audit.
Ans: T Page: 157

59.The Internal Factor Evaluation Matrix should include from 10 to 20 key factors
Ans: T Page: 15
 
 
Multiple Choice

The Nature of an Internal Audit
 
60.A firm’s strengths that cannot be easily matched or imitated by competitors are called
a.  internal audits.
b.distinctive competencies.
c.  external audits.
d.special properties.
e.  internal properties.
Ans: b Page: 115
 
61.Who should perform an internal audit?
a.  A private auditing firm
b.The organization’s accounting department
c.  Managers from different units of the organization
d.A team of top-level managers and lower-level employees
e.The chief executive officer
Ans: c Page: 116
 
62._______ exemplifies the complexity of relationships among the functional areas of business.
a.  Government audit
b.External audit
c.  Financial ratio analysis
d.Environmental scanning
e.  Distribution strategy
Ans: c Page: 116
 
The Resource Based Web
63.The internal resource categories used in the resource-based approach are physical resources, human resources and
a.  financial resources.
b.shareholder resources.
c.  organizational resources.
d.natural resources.
e.  technological resources.
Ans: c Page: 117
 
64.Organizational resources include all of the following except:
a.  employee training.
b.firm structure.
c.  planning processes.
d.information systems.
e.  copyrights.
Ans: a Page: 117
 
65.Empirical indicators are resources that are either rare, hard to imitate, or
a.  expensive.
b.inexpensive.
c.  easily substitutable.
d.not easily substitutable.
e.  inefficient.
Ans: d Page: 117

Integrating Strategy and Culture
 
66.A pattern of behavior developed by an organization as it learns to cope with its problems of external adaptation and internal integration that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think and feel is called
a.  dysfunctional behavior.
b.groupthink.
c.  behavior modification.
d.organizational culture.
e.  internal audit effect.
Ans: d Page: 118
 
67.Which of the following is not a cultural product?
a.  Rites
b.Emotions
c.  Rituals
d.Sagas
e.  Symbols
Ans: b Page: 118
 
68.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
Ans: d Page: 119
 
69.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
Ans: b Page: 119
 
70.Life-directing attitudes that serve as behavioral guidelines are called
a.  values.
b.rites.
c.  beliefs
d.metaphors
e.  legend
Ans: a Page: 119
 
71.In Europe, it is generally true that the farther __________ on the continent, the more participatory the management style.
a.  south
b.east
c.  west
d.north
e.  southeast
Ans: d Page: 120
 
72.Americans place an exceptionally high priority on __________ whereas many foreigners place more worth on __________.
a.  time; relationships
b.relationships; time
c.  silence; time
d.silence; relationships
e.  close personal distance; ample personal distance
Ans: a Page: 122

Management
 
73.What is the essential bridge between the present and the future that increases the likelihood of achieving desired results?
a.  Motivating
c.  Controlling
d.Staffing
e.  Organizing
 
74.All of the following are basic duties of a manager except:
a.  staffing.
b.planning.
d.organizing.
e.  motivating.
 
75.What is an up-front investment in success?
b.Organizing
c.  Motivating
d.Staffing
e.  Controlling
 
76.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
Ans: b Page: 124
 
77.Who does a planning horizon of two to five years applies to?
a.  top management
b.general management
c.  middle management
d.lower management
e.  all levels of management
Ans: a Page: 124
 
78.Synergy is
a.  synthetic energy.
c.  when individuals work separately to achieve desired results.
d.when financial expectations of the firm are decided upon.
e.  employee energy.
 
 
79.Which management function includes breaking tasks into jobs, combining jobs to form departments and delegating authority?
a.  motivating
b.staffing
d.controlling
e.  planning

 
80.Which function of management is concerned with span of control and chain of command?
a.  planning
c.  controlling
d.directing
e.  evaluating
 
81.Which of the following is the process of influencing people to accomplish specific objectives?
a.  Staffing
b.Motivating
c.  Planning
d.Controlling
e.  Organizing
Ans: b Page: 126
 
82._______ is a major component in motivation.
a.  Forecasting
b.Organizational structure
c.  Recruiting
d.Management development
 
83.Staffing involves all of these activities except:
a.  recruiting.
b.transferring.
c.  customer analysis.
d.managing union relations.
e.  training and developing.
Ans: c Page: 127