Strategic Management in Action 6th Edition By Mary A. Coulter – Test Bank

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Strategic Management in Action, 6e (Coulter)

Chapter 5 Functional and Competitive Strategies

1) The SWOT analysis points to the strategic issues organizational decision makers need to

address in their pursuit of sustainable competitive advantage and high performance levels.

Answer: TRUE

Diff: 1 Page Ref: 121

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Reflective Thinking

Objective: Identify and describe common types of functional strategies

2) An organization’s functional strategies are the goal-directed plans and actions of the

organization’s functional areas.

Answer: FALSE

Diff: 1 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Reflective Thinking

Objective: Identify and describe common types of functional strategies

3) The process of creating goods and services in which organizational resources are transformed

into outputs is called production-operations.

Answer: TRUE

Diff: 1 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

4) The product functional strategies include design, production-operations, and human resources.

Answer: FALSE

Diff: 2 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

5) The three functional strategies relate to the product, the processes, and the people.

Answer: FALSE

Diff: 1 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies6) Once products are produced, the next step is to efficiently and effectively get those products to

the customers when, where, and how they want them.

Answer: TRUE

Diff: 2 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

7) The process of creating and providing goods and services is production-operations.

Answer: TRUE

Diff: 1 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

8) Effectively managing customers and competitors is customer satisfaction.

Answer: FALSE

Diff: 2 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

9) High-performance work practices are production policies and practices that can lead to both

high individual and high organizational performance.

Answer: FALSE

Diff: 2 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

10) An organization’s two main support processes are information systems and auditing systems.

Answer: FALSE

Diff: 2 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Use of Information Technology

Objective: Identify and describe common types of functional strategies11) Competitive advantage is what sets an organization apart from other firms in its industry.

Answer: TRUE

Diff: 2 Page Ref: 126

Topic: Explain What Competitive Advantage Is and What It Implies

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

12) An organization’s competitive advantage cannot be eroded easily by competitors’ actions.

Answer: FALSE

Diff: 2 Page Ref: 126

Topic: Explain What Competitive Advantage Is and What It Implies

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

13) Competitive strategy is a choice of how an organization or business unit is going to compete

in its particular industry or market.

Answer: TRUE

Diff: 2 Page Ref: 129

Topic: Explain What Competitive Advantage Is and What It Implies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

14) Mintzberg’s generic strategies are more popular than Porter’s generic strategies.

Answer: FALSE

Diff: 2 Page Ref: 139

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

15) The reactor competitive strategy involves thorough analysis of new business ideas and

imitation.

Answer: FALSE

Diff: 2 Page Ref: 131

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

16) The reactor strategy is characterized by continually innovating and exploiting new products

and markets.

Answer: FALSE

Diff: 2 Page Ref: 131

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

17) The differentiator will market products aimed at the “average” customer.

Answer: FALSE

Diff: 2 Page Ref: 134

Topic: Describe the Different Competitive StrategiesAACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

18) One disadvantage of the cost leader strategy is the ability to remain unique to the customer.

Answer: FALSE

Diff: 2 Page Ref: 135

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

19) The corporate strategies play a dual role in the implementation of competitive strategy.

Answer: FALSE

Diff: 2 Page Ref: 140

Topic: Discuss How Competitive Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

20) The prospector will market products aimed at the “average” customer.

Answer: FALSE

Diff: 2 Page Ref: 134

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

21) The role of top-level decision makers in the strategic management process is to

A) develop the overall goal that the organization hopes to achieve.

B) establish the overall operational goals.

C) establish functional strategies.

D) supervise line managers.

E) None of the answer choices is correct.

Answer: A

Diff: 2 Page Ref: 120

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies22) The ________ point(s) to the strategic issues organizational decision makers need to address

in their pursuit of sustainable competitive advantage and high levels of performance.

A) portfolio analysis

B) distinctive capabilities

C) strengths

D) SWOT analysis

E) core competencies

Answer: D

Diff: 2 Page Ref: 121

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

23) Which of the following is included under the product functional strategies?

A) Marketing

B) Management

C) Supervision

D) Leadership

E) Control

Answer: A

Diff: 1 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

24) ________ strategies are the short-term goal-directed decisions and actions of the

organization’s various functional areas.

A) Competitive

B) Coordinating

C) Corporate

D) Business

E) Functional

Answer: E

Diff: 2 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies25) ________ refer(s) to the process of creating and providing goods and services.

A) Production-operations

B) Marketing

C) High-performance work practices

D) Information system

E) None of the answer choices is correct.

Answer: A

Diff: 2 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

26) Product design strategies typically involve an organization’s ________ functional area.

A) finance

B) R&D

C) accounting

D) HR

E) corporate governance

Answer: B

Diff: 2 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

27) Which of the following is a possible production-operations management strategy?

A) Selective specialization

B) Inventory management systems

C) User positioning

D) Market logistics

E) Database marketing

Answer: B

Diff: 2 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies28) Which are the two biggest factors in marketing?

A) Competitors and pricing

B) Product and competitors

C) Customers and competitors

D) Pricing and customers

E) Layout and distribution

Answer: C

Diff: 3 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

29) The marketing mix is commonly known as the

A) 4Ps

B) 5Ps

C) 7Ss

D) 4Ss

E) 5Ss

Answer: A

Diff: 3 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

30) Which of the following should be included in an organization’s marketing mix strategies?

A) Product strategies

B) Pricing strategies

C) Promoting strategies

D) Distribution strategies

E) All of the answer choices are correct.

Answer: E

Diff: 2 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies31) The four Ps in marketing are

A) product, price, promotion, and place.

B) production, placement, personnel, and place.

C) promotion, price, positioning, and perception.

D) perception, perspective, promotion, and price.

E) None of the answer choices is correct.

Answer: A

Diff: 1 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

32) One factor that would lead to high-performance work practices is

A) using contingent pay.

B) forming problem-solving groups.

C) conducting attitude surveys.

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: D

Diff: 2 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Reflective Thinking

Objective: Identify and describe common types of functional strategies

33) An organization’s ________ strategies reflect its commitment to and treatment of its

employees.

A) procurement

B) corporate

C) HR

D) competitive.

E) cooperative.

Answer: C

Diff: 1 Page Ref: 123

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Reflective Thinking

Objective: Identify and describe common types of functional strategies34) Which of the following is an example of high-performance work practices?

A) Fixed job assignments

B) Centralized decision making

C) Self-managed work teams

D) Limited employee involvement

E) None of the answer choices is correct.

Answer: C

Diff: 2 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

35) The strategic decisions associated with the organization are the choice of a system and the

choice of type of system needed for which system type?

A) Marketing

B) Human resources

C) Information

D) Financial-accounting

E) None of the answer choices is correct.

Answer: C

Diff: 2 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Use of Information Technology

Objective: Identify and describe common types of functional strategies

36) Designing which of the following systems involves making sure we have the information we

need, when the information is needed, and in the form needed?

A) Marketing

B) Human resources

C) Information

D) Financial-accounting

E) None of the answer choices is correct.

Answer: D

Diff: 2 Page Ref: 126

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies37) The two main support processes in an organization are

A) production systems and marketing systems.

B) procurement systems and HR systems.

C) financial accounting systems and HR systems.

D) information systems and HR systems.

E) information systems and financial accounting systems.

Answer: E

Diff: 1 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

38) Determining the optimum mix of equity or debt is a decision made by which organizational

support process?

A) Financial-accounting systems

B) Corporate governance systems

C) Procurement systems

D) Product development systems

E) None of the answer choices is correct.

Answer: A

Diff: 3 Page Ref: 126

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

39) One of the two strategic decisions most associated with the organization’s information

system is

A) optimum equity mix.

B) creating an approved vendor list.

C) selecting the correct marketing mix.

D) corporate budgeting.

E) the choice of system technology.

Answer: E

Diff: 3 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategiesMaria diMatteo, a young entrepreneur, has recently opened her second homemade Italian

restaurant within the same large metropolitan area named Francesca’s. You have been asked to

advise Ms. diMatteo in how best to implement functional strategies.

40) Ms. diMatteo discovered in opening her second restaurant, she needed to pay attention to

which of the following concerns?

A) The product

B) The people

C) The support processes

D) All the above answer choices are correct.

E) None of the answer choices are correct.

Answer: D

Diff: 2 Page Ref: 122

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

41) If Ms. diMatteo wanted to introduce high-performance work practices in her organization,

which of the following practices would she adopt?

A) Centralized decision making

B) Fixed job assignments

C) Limited communication

D) Self-managed work teams

E) Seniority-based compensation

Answer: D

Diff: 2 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

42) Francesca’s has had a higher than desirable level of server turnover. Ms. diMatteo decided

she needed to pay better attention to which strategies?

A) Marketing

B) Human resources

C) Information

D) Financial-accounting

E) None of the answer choices is correct.

Answer: B

Diff: 2 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies43) Ms. diMatteo has decided to use a computerized order taking and fulfillment system in the

new location demonstrating her ability to give attention to which of the following strategies?

A) Marketing

B) Human resources

C) Information

D) Financial-accounting

E) None of the answer choices is correct.

Answer: C

Diff: 2 Page Ref: 124

Topic: Describe the Functional Strategies an Organization Needs, and Explain How Those

Strategies are Implemented and Evaluated

AACSB: Analytical Skills

Objective: Identify and describe common types of functional strategies

44) ________ is when organizations battle or vie for some desired object or outcome.

A) Competition

B) Strategy

C) Goal

D) Objective

Answer: A

Diff: 2 Page Ref: 127

Topic: Explain What Competitive Advantage Is and What It Implies

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

45) Which of the following is NOT a possible dimension for identifying strategic groups?

A) Units sold

B) Price

C) Quality

D) Geographic scope

Answer: A

Diff: 2 Page Ref: 128

Topic: Explain What Competitive Advantage Is and What It Implies

AACSB: Reflective Thinking

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages46) Which of the following is NOT one of Miles and Snow’s adaptive strategies?

A) Cost leader

B) Prospector

C) Defender

D) Analyzer

Answer: A

Diff: 2 Page Ref: 130

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

47) According to the Miles and Snow typology, a defender

A) searches for market stability.

B) seeks innovation.

C) simply reacts to environmental changes.

D) makes strategic adjustments only when forced to do so.

Answer: A

Diff: 2 Page Ref: 131

Topic: Describe the Different Competitive Strategies

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies

48) The ________ strategy is one in which an organization continually innovates by finding and

exploiting new product and market opportunities.

A) prospector

B) defender

C) analyzer

D) reactor

Answer: A

Diff: 2 Page Ref: 131

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

49) When a company builds a profitable business by “stealing” ideas from other successful peers,

it is following a(n) ________ strategy.

A) analyzer

B) defender

C) prospector

D) reactor

Answer: A

Diff: 2 Page Ref: 132

Topic: Describe the Different Competitive Strategies

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies50) Which of the following is not a recommended competitive strategy for developing a

competitive advantage?

A) Reactor

B) Defender

C) Analyzer

D) Prospector

Answer: A

Diff: 2 Page Ref: 133

Topic: Describe the Different Competitive Strategies

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies

51) In Porter’s cost leadership strategy, the main goal of the cost leader is to have the lowest

________ in the industry.

A) costs

B) prices

C) profits

D) products

Answer: A

Diff: 2 Page Ref: 133

Topic: Describe the Different Competitive Strategies

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies

52) When an organization competes by providing unique products with features that customers

value, perceive as different, and are willing to pay a premium price for, it is using a strategy of

A) differentiation.

B) focus.

C) cost leadership.

D) niche.

Answer: A

Diff: 2 Page Ref: 134

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

53) The ________ works hard to establish brand loyalty.

A) differentiator

B) cost leader

C) defender

D) reactor

Answer: A

Diff: 2 Page Ref: 135

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

54) Which of the following is NOT a way to segment specialized market niches?

A) Price consciousnessB) Geographical

C) Type of customer

D) Product line segment

Answer: A

Diff: 2 Page Ref: 136

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

55) When an organization hasn’t developed a low cost or a differentiation competitive advantage,

it is said to be

A) stuck-in-the-middle.

B) using an integrated strategy.

C) using a strategy of best cost.

D) pursuing a niche-based competitive advantage.

Answer: A

Diff: 2 Page Ref: 137

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

56) In Mintzberg’s typology, ________ is a way to differentiate.

A) price

B) adaptability

C) focus

D) niche

Answer: A

Diff: 2 Page Ref: 138

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies

57) Describe some product strategies.

Answer:

∙ Product design and development strategies (actual sequence of activities from idea generation

to product design)

∙ Production-operations strategies (process of creating and providing goods and services)

∙ Marketing strategies (directed at effectively and efficiently managing customers and

competitors)

Diff: 2 Page Ref: 138-139

Topic: Describe the Functional Strategies an Organization Needs

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies58) Explain the disadvantages of being a first mover organization.

Answer:

∙ Uncertainty over exact direction technology and market will go

∙ Risk of competitor imitating innovations (free-rider effect)

∙ Financial and strategic risks; high development costs

Diff: 2 Page Ref: 139

Topic: Describe the Functional Strategies an Organization Needs

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies

59) List some examples of high-performance work practices.

Answer:

∙ Self-directed work teams and job rotation

∙ Problem-solving groups

∙ Total quality management programs

∙ Implemented employee suggestions

∙ Contingent pay

∙ Information sharing

∙ Attitude surveys

Diff: 2 Page Ref: 141

Topic: Describe the Functional Strategies an Organization Needs

AACSB: Reflective Thinking

Objective: Compare and contrast different business-level strategies

60) Describe briefly Porter’s notion of being “stuck-in-the-middle.” Is it always true?

Answer: When an organization hasn’t developed a low cost or a differentiation competitive

advantage, it is said to be “stuck-in-the-middle.” An organization becomes stuck-in-the-middle

when its costs are too high to compete with the low-cost leader, or when its products and services

aren’t differentiated enough to compete with the differentiator. However, this is not always true

because research has pointed out that a firm can pursue an integrated low cost-differentiation

strategy.

Diff: 2 Page Ref: 137

Topic: Describe the Different Competitive Strategies

AACSB: Analytical Skills

Objective: Compare and contrast different business-level strategies