Tb07

CHAPTER 7: PLANNING AND STRATEGY
Test Correlation Table Question Types/Level of Difficulty

LEARNING OBJECTIVES Easy Moderate Difficult

1. Explain the importance of the TF — 1, 2, 3 4, 5
planning function.
MC 1, 2 3 4, 5

ES — 1 —

2. Describe the core components of TF 6, 7, 12 8, 10, 11 9, 13
strategic and tactical planning.
MC 6, 8, 9, 12, 14, 7, 13, 15, 18, 19, 10, 11, 28, 30
16, 17, 24, 25, 20, 21, 22, 23,
27, 29 26, 31

ES — 2 3

3. Discuss the effects of degree of TF 14, 16 — 15
diversification on planning.
MC 35, 37, 38, 40 32, 34, 36, 41, 33, 39, 42, 43
44
ES — 4 —

4. Describe the three basic levels of TF — 17, 18, 19, 20, 21
strategy and planning. 22, 23, 24

MC 45, 47, 50, 52, 49, 51, 59, 60, 46, 48, 53, 55,
54, 58, 62, 63, 64, 69 56, 57, 61, 66, 70
65, 67, 68

ES — — 5

5. State the eight primary tasks of TF 28 25, 26, 29 27
the planning process.

MC 71, 72, 73, 81, 75, 76, 79, 80, 74, 77, 78, 86,
82, 83, 88, 90, 84, 85, 87, 89, 91, 94, 95, 98
92, 99 93, 96, 97, 100

ES — 6 7

6. Explain the generic competitive TF 30, 32, 33 31 —
strategies model.
MC 101, 102, 104, 103, 106 105
107

ES — 8 —

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True/False Questions
Learning Objective 1

1. Johnson & Johnson considers their first responsibility to be making a sound profit for
stockholders.

ANSWER: F, Knowledge, Moderate, p. 178

2. When planning is done properly, it fosters organization-wide learning, including the
discovery of key problems, opportunities, and new strategies.

ANSWER: T, Knowledge, Moderate, p. 179

3. Planning is defined as identifying organizational controls and developing ways to
implement them.

ANSWER: F, Knowledge, Moderate, pp. 178–179

4. The ability to plan by an individual, team, or organization is embedded in four of the six
managerial competencies.

ANSWER: F, Knowledge, Difficult, pp. 178–179

5. Johnson & Johnson’s organization wide planning involves the principle of decentralized
management.

ANSWER: T, Knowledge, Difficult, p. 179


6. Strategic planning is the process of diagnosing the organization’s environments,
deciding on a mission and vision, developing overall goals, creating and selecting
general strategies, and allocating resources.

ANSWER: T, Knowledge, Easy, p. 179

7. Most large organizations use contingency planning for unexpected, major and quick
changes in the environment that will have a significant impact on the organization and
that will require an immediate response.


8. Dell Computer’s mission statement includes: “To add value to our communities through
diversity, environmental, and citizenship initiatives.”

ANSWER: F, Knowledge, Difficult, p. 181

9. Goals must be expressed quantitatively, not qualitatively.


168


10. A firm’s mission expresses its fundamental aspirations and purpose.


11. The strategies of an organization are what it is committed to achieving.


12. When an organization allocates resources, it divides money, people, facilities and
equipment, land, and other resources among various current and new business
opportunities, functions, projects, and tasks.


13. Tactical planning is the process of making detailed decisions about what to do, who will
do it, and how to do it, with a time horizon of four years or more.



14. The variety of goods and/or services produced and the number of different markets
served constitutes an organization’s level of diversification.


15. A firm’s diversification level may be in the form of single business, dominant business,
relative business, or nonrelative business.


16. An unrelated-business firm provides diverse products to many different markets.



17. Corporate-level planning and strategy guides the overall direction of firms having more
than one line of business.


18. Top corporate managers do not determine the role of each separate business within the
organization, lower level managers do that.


169


19. When a company enters the businesses of its customers in order to get closer to their
ultimate (end user) customers, this is known as forward integration.


20. The five common corporate-level growth strategies are: forward integration, backward
integration, horizontal integration, vertical integration, and convergent integration.


21. Concentric diversification is an alternative to traditional forms of backward, forward, and
horizontal integration.


22. Conglomerate diversification is the act of adding unrelated goods or services to a firm’s
line of businesses.


23. The corporate-level strategy refers to the resources allocated and actions taken to
achieve desired goals in serving a specific market with a highly interrelated set of goods
and/or services.


24. The vertical integration strategy refers to the interrelated actions and resource
commitments established for operations, marketing, human resources, finance, legal
services, accounting, and the organization’s other functional areas.



25. In practice, managers and team involved in business-level planning often jump back and
forth between the eight tasks in the planning process. They may even skip phases as
they develop their plans.


26. Task 1 of the planning process involves diagnosing the firm’s opportunities and threats.


27. The situations that tend to make suppliers more powerful are similar to those that make
customers more powerful.

ANSWER: T, Knowledge, Difficult, p. 195

170


28. A company’s core competencies are the strengths that make it distinctive and more
competitive by providing goods or services that have unique value to customers.


29. A market penetration strategy involves seeking new and different markets for current
products.



30. The product differentiation strategy is dominant in much of the automobile industry.


31. A framework that describes strategies that all types of organizations can use is a
Universal Model.


32. Malone Hardware seeks to offer its customers lower prices than any other hardware
store in town. Jones is following the focus strategy.

ANSWER: F, Application, Easy, pp. 200–201

33. The Cotton District Grill has a strategy that involves competing in a specific restaurant
niche by serving the unique needs of certain customers. The Grill is following a product
differentiation strategy.

ANSWER: F, Application, Easy, p. 200

Multiple Choice Questions
Preview
1. The strategic business model of Johnson & Johnson is broadly based in __________.
a. household products
b. human health care
c. boat engines and equipment
d. consumer needs

ANSWER: B, Knowledge, Easy, p. 178

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The Planning Function
2. Which of the following is not something that successful planning should assist the
organization to accomplish?
a. discovering future opportunities
b. anticipating and avoiding future problems
c. developing courses of action
d. Successful planning should assist the organization in accomplishing all of the above.

ANSWER: D, Knowledge, Easy, p. 179

3. The most basic managerial function is __________.
a. organizing
b. planning
c. directing
d. leading

ANSWER: B, Knowledge, Moderate, p. 178

4. Planning should improve the odds of achieving an organization’s goals by _________.
a. creating desirable change
b. improving productivity
c. maintaining organizational stability
d. all of the above

ANSWER: D, Knowledge, Difficult, p. 179

5. William Weldon, CEO of Johnson & Johnson says, “Our decentralized management
system gives us a __________.”
a. method to accurately appraise profitability for each business unit
b. greater opportunity to recognize local talent
c. sense of ownership in local markets
d. completely different approach for each market

ANSWER: C, Knowledge, Difficult, p. 179


Two Types of Planning
6. The process of diagnosing the organization’s environments, deciding on a mission and
vision, developing overall goals, creating and selecting general strategies, and
allocating resources is _________.
a. strategic planning
b. tactical planning
c. strategic control
d. operational planning

ANSWER: A, Knowledge, Easy, p. 179

7. Strategic planning involves developing and analyzing all of the following except
__________.
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a. mission
b. daily operational goals
c. the internal environment
d. the external environment


8. Preparation for unexpected, major, and quick changes in the environment is called
__________ planning.
a. cascade
b. contingency
c. tactical
d. DFD (design for deployment)


9. __________ had a contingency communication plan that worked well after the
September 11 attacks, but they have now additionally routed their telecommunications
channels through multiple access points.
a. Verizon
b. The New York Stock Exchange
c. The Bank of New York
d. American Airlines

ANSWER: C, Knowledge, Easy, p. 180

10. The Bank of New York has established an “active-active” business model which uses
__________.
a. multiple sites for identical functions
b. cross training of less critical functions
c. greater geographic diversity across the country
d. all of the above

ANSWER: A, Knowledge, Difficult, p. 180

11. Generally, no more than _____ potentially critical events should be emphasized in
contingency planning.
a. 2
b. 5
c. 9
d. 12

ANSWER: B, Knowledge, Difficult, p. 179

12. An organization’s purpose or reason for existing is known as a _________.
a. mission
b. rationale
c. scenario
d. strategy


13. Which of the following questions is not often answered in a mission statement?
a. What business are we in?
173


b. Who are we?
c. What are we about?
d. How will we achieve our goals?

ANSWER: D, Knowledge, Moderate, p. 181

14. A mission statement is meaningful only if it acts as a __________ for guiding strategic
decisions and achieving an organization’s long-term goals.
a. strategic plan
b. unifying force
c. tactical plan
d. vision


15. A(n) __________ should encourage the organization’s members to think and act
strategically—not just once a year but every day.
a. operational tactic
b. HRM statement
c. contingency plan
d. mission statement


16. A __________ expresses an organization’s fundamental aspirations and purpose,
usually be appealing to its members’ hearts and minds.
a. strategy
b. mission
c. vision
d. plan


17. A vision statement adds _________ to a mission statement if it lacks one.
a. “strategy”
b. “soul”
c. “mind”
d. “body”


18. Dell Computers’ vision is to __________.
a. lead the Internet economy
b. sell the most computers
c. bring value to communities
d. become a global innovator

ANSWER: C, Knowledge, Moderate, p. 181

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19. An organization’s __________ represent what it is committed to achieving.
a. tactical plans
b. strategic controls
c. feedback systems
d. goals


20. Goals may be expressed __________.
a. qualitatively
b. quantitatively
c. covertly
d. both a and b are correct


21. Which of the following is not a goal of Johnson & Johnson discussed in the text?
a. achieve double-digit revenue growth per year
b. reduce carbon dioxide emissions
c. create injury-free workplaces
d. improve quality of life for customers

ANSWER: A, Knowledge, Moderate, p. 181

22. The major courses of action that an organization takes to achieve its goals are called
__________.
a. contingency plans
b. tactical plans
c. operational plans
d. strategies


23. A key challenge for organizations is to develop ___________ that are(is) at least
partially unique relative to competitors or to pursue strategies similar to those of
competitors but in different ways.
a. goals
b. a vision
c. plans
d. strategies


24. The allocation of __________ is (are) considered a function of resource allocation.
a. money
b. people
c. facilities
d. all of the above


175


25. The earmarking of money, through budgets, for various uses is known as __________.
a. tactical planning
b. resource allocation
c. cost-based accounting
d. deployment


26. John Wayne Productions has decided to increase the number of Western-theme movies
that it produces each year. To accomplish this goal, the company has increased its
payroll budget and hired additional actors. John Wayne Productions has engaged in
__________.
a. resource allocation
b. resource-based costing
c. resource planning
d. resource execution

ANSWER: A, Application, Moderate, p. 183

27. The process of making concrete decisions about what to do, who will do it, and how to
do it—within a time horizon of one year or less—is known as __________.
a. resource allocation
c. contingency planning
d. right-sizing


28. Tactical planning involves all of the following steps except __________.
a. developing budgets for each department
b. developing budgets for each project
c. deciding on courses of action for diversification
d. developing quantitative goals


29. Departmental managers and employee teams develop tactical plans to anticipate or
cope with the actions of __________.
a. competitors
b. other departments
c. customers
d. all of the above


176


30. Dell Computer’s ability to __________, and tailor products and services accordingly, is
the key to having the lowest cost and most effective customer service.
a. control the market
b. segment the market
c. respond to the market
d. sell direct to the public


31. Which of the following is not one of the four interrelated competitive strategies
developed by Dell Computer?
a. speed to market
b. superior customer service
c. early exploitation of the Internet
d. All of the above are among the four interrelated competitive strategies.

ANSWER: D, Knowledge, Moderate, pp. 182–183


Degree of Diversification and Planning
32. __________ refers to the variety of goods and/or services produced by an organization
and the number of different markets it serves.
a. Adaptation
b. Strategy
c. Diversification
d. Functionality


33. Which of the following is not one of the questions managers should consider when
trying to identify the potential risks and opportunities of diversification?
a. What can we do better than other firms if we enter a new market?
b. What strategic resources are needed to succeed in the new market?
c. Will we be simply a player in the new market or will we emerge a winner?
d. What will this diversification move save in costs?

ANSWER: D, Knowledge, Difficult, pp. 184–185

34. Ruben Alvarez is interested in diversification as a means of understanding levels of
strategy and planning. A firm’s diversification level may be all of the following except a
__________-business firm.
a. single
b. dominant
c. related
d. vertical


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35. A firm that provides a limited number of goods or services to one segment of a particular
market is known as a(n) __________-business firm.
a. unrelated
b. related
c. dominant
d. single


36. Southwest Airlines provides one type of transportation service to travelers. This is
known as a(n) __________-business firm.
a. single
b. dominant
c. related
d. integrated

ANSWER: A, Application, Moderate, p. 186

37. A firm that serves various segments of a particular market is known as a(n)
a. single
b. dominant
c. related
d. unrelated


38. A firm that provides a variety of similar goods and/or services is known as a(n)
a. single
b. dominant
c. related
d. unrelated


39. The divisions of Foley Brothers Limited generally operate in the same or similar markets,
use similar technologies, share common distribution channels and benefit from common
strategic assets. Foley Brothers is a(n) __________-business firm.
a. single
b. dominant
c. related
d. concentric

ANSWER: C, Application, Difficult, p. 186

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40. A firm that provides diverse products (goods and/or services) to many different markets
is known as a(n) __________-business firm.
a. single
b. dominant
c. related
d. unrelated


41. __________ is a firm that consists of distinct companies that have little or no relation to
each other in terms of goods, services, or customers served.
a. A megabusiness
b. A limited partnership
c. A conglomerate
d. A holding company


42. Many North American firms have backed away from conglomerate diversification by
selling off __________.
a. unrelated businesses
b. related businesses
c. dominant businesses
d. none of the above

ANSWER: A. Knowledge, Difficult, p. 186

43. GE needs board of directors members to do all of the following except __________.
a. represent diverse industries
b. be critical of the company
c. have greater involvement in the company
d. approve financial strategies


44. GE implemented functional documents to fully comply with Sarbanes-Oxley legislation,
as well as their own vision of __________.
a. environmental protection
b. corporate governance
c. diversity in the workforce
d. homeland security


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Levels of Strategy and Planning
45. __________-level planning and strategy guides the overall direction of firms having
more than one line of business.
a. Functional
b. Business
c. Corporate
d. Diversification


46. Corporate strategies focus on all of the following except __________.
a. the types of businesses the firm wants to engage in
b. ways to acquire or divest businesses
c. allocation of resources among the businesses
d. ways to develop corporate energy


47. A(n) __________ is a division or subsidiary of a firm that provides a distinct product or
service and often has its own mission and goals.
a. functional-business unit (FBU)
b. integrative-business unit (IBU)
c. tactical-business unit (TBU)
d. strategic-business unit (SBU)


48. Which of the following statements is not true concerning SBUs?
a. An SBU may have a well-defined set of customers.
b. An SBU may cover a specific geographic area.
c. An SBU is usually evaluated on the basis of its own income statement.
d. Corporate-level managers develop the plans and strategies for each SBU.


49. __________ is not a common growth strategy.
a. Backward integration
b. Forward integration
c. Matrix diversification
d. Conglomerate diversification

ANSWER: C, Knowledge, Moderate, pp. 189–190

180


50. __________ occurs when a company enters the business of its suppliers, usually to
control component quality, on-time delivery, or stable prices.
a. Forward integration
b. Backward integration
c. Horizontal integration
d. Concentric diversification


51. Community Gas and Electric provides utilities for three counties. The company recently
started drilling its own gas wells in order to gain control over price and availability of
product for its pipelines. C. G. & E. is following a strategy of __________.
a. forward integration
b. backward integration
c. horizontal integration
d. conglomerate diversification

ANSWER: B, Application, Moderate, p. 189

52. When a company enters the businesses of its customers, it is involved in __________.
d. concentric diversification


53. Harris Ranch, a cattle ranch and commercial feedlot operation located along Interstate
Highway 5 in California, opened a restaurant to serve its high quality beef to travelers.
This decision characterizes __________ integration.
a. forward
b. backward
c. horizontal
d. conglomerate

ANSWER: A, Application, Difficult, p. 189

54. __________ integration occurs when a company acquires a competitor to consolidate
and extend its market share.
a. Forward
b. Backward
c. Horizontal
d. Conglomerate


181


55. Intercontinental Printing, Inc. is growing by purchasing established printing companies.
Intercontinental is following a strategy of __________.
d. conglomerate diversification


56. The _________ strategy is an alternative to traditional forms of backward, forward, and
horizontal integration.
a. related
b. benchmarking
c. unrelated
d. alliance


57. The Harbert Corporation owns a valuable piece of commercial real estate. JWA, Inc.
has extensive experience in developing and operating shopping centers. They form a
joint venture, called Mall Associates, to develop Harbert’s site. Mall Associates is an
example of a(n) __________ strategy.
a. backward integration
b. horizontal integration
c. forward integration
d. alliance

ANSWER: D, Application, Difficult, p. 189

58. When a firm acquires or starts a business related to the firm’s existing business in terms
of technology, markets, or products, it has engaged in __________ diversification.
a. horizontal
b. concentric
c. backward
d. forward


59. All of the following are examples of concentric diversification, or related diversification,
except __________.
a. a general set of customers
b. incompatible managerial skills
c. overlapping distribution channels
d. similar technology


182


60. The merger between America Online (AOL) and Time Warner was viewed by top
management as a form of ______________ diversification.
a. forward
b. backward
c. horizontal
d. concentric

ANSWER: D, Application, Moderate, p. 190

61. Lakewood, Inc. is a real estate company. It recently acquired companies operating in
the floral, tire, and athletic equipment industries. Lakewood is using a
__________ strategy.
a. conglomerate
b. related diversification
c. concentric diversification
d. dominant business firm

ANSWER: A, Application, Difficult, p. 190

62. __________ diversification occurs when a firm adds unrelated goods or services to its
line of business.
a. Concentric
b. Conglomerate
c. Horizontal
d. Backward


63. __________ strategy refers to the resources allocated and actions taken to achieve
desired goals in serving a specific market with a highly interrelated set of goods and/or
services.
a. Forward integration
b. Single-business
c. Horizontal integration
d. Business-level


64. Which of the following questions is not one that management must address when
planning and formulating strategies that focus on customers?
a. Who will be served?
b. What customer needs will be satisfied?
c. How will customers’ needs be satisfied?
d. How will our technology needs change?


183


65. Warren Buffett’s strategy with Berkshire Hathaway can be characterized as
__________.
a. concentric
b. conglomerate
c. backward
d. forward

ANSWER: B, Knowledge, Easy, pp. 190–191

66. Warren Buffett’s unique success with Berkshire Hathaway is characterized by all of the
following comments on the way he manages his operations except:
a. ”To be a winner, work with a winner.”
b. ”Our actions are based on long-term interests rather than short-term, expedient
solutions.”
c. ”My job is to stay out of their way and allocate whatever excess capital their
businesses generate.”
d. ”I regularly hand bats to many of the heaviest hitters in American business.”

ANSWER: B, Knowledge, Difficult, pp. 190–191

67. __________ strategies specify how the firm will develop and utilize its production
capabilities to support the firm’s business-level strategies.
a. Operations
b. Business-level
c. Marketing
d. Functional-level


68. A __________ strategy refers to the actions and resource commitments established for
operations, marketing, human resources, finance, legal services, accounting, and the
organization’s other functional areas.
a. corporate-level
b. business-level
c. functional-level
d. comprehensive-level


69. Functional-level plans and strategies should be designed to __________ business-level
strategies and plans.
a. overshadow
b. support
c. compensate for
d. compete with


184


70. The Dodge Trucks Division of DaimlerChrysler has a business-level strategy based on
quality. This requires that Ron Fielder, a Dodge Division manager, develop strong
relationships with suppliers who can consistently provide high quality inputs. Ron is
responsible for one of DaimlerChrysler’s __________ strategies.
a. operations
b. functional-level
c. business-level
d. integration

ANSWER: B, Application, Difficult, p. 192


Tasks of Planning
71. There are _____ primary tasks in the business-level planning process.
a. 3
b. 5
c. 8
d. 12


72. The first task in the strategic planning process is to begin to develop an organization’s
__________.
a. tactical plans
b. strategic plans
c. new weaknesses
d. mission and goals

ANSWER: D, Knowledge, Easy, pp. 193–194

73. Karen Cox is involved in the strategic planning process for her Web development
company. She is presently pondering such questions as: What business are we in? and
What results do we want to achieve?” Which task in the business-level planning
process is Karen completing?
a. Task 1
b. Task 2
c. Task 3
d. Task 4

ANSWER: A, Application, Easy, pp. 193–194

74. Which of the following environmental force(s) can represent significant threats or
opportunities for an organization?
a. competitors
b. financial resources
c. technological capabilities
d. all of the above


185


75. Michael Porter designed a framework to diagnose competitive forces confronting a firm
at any particular time. These forces include all of the following except __________.
a. transformational bargaining power
b. customer bargaining power
c. supplier bargaining power
d. threat of substitute products

ANSWER: A, Knowledge, Moderate, pp. 194–195

76. __________ is often a response to high profits earned by established firms and/or rapid
growth in an industry.
a. The entry of new competitors
b. The increased rivalry among competitors
c. The increased bargaining power of suppliers
d. The increased bargaining power of customers


77. Many automakers and dealers have introduced special financing and rebate programs
and have extended the length of coverage of their warranties. This demonstrates
__________.
a. the threat of new competitors
b. customer bargaining power
c. supplier bargaining power
d. the threat of substitute goods or services

ANSWER: B, Application, Difficult, p. 195

78. The Newton Controls Manufacturing Corporation has eliminated certain features of their
products without losing customers. This action best represents __________.
a. a threat of new competitors
b. decreased supplier bargaining power
c. increased supplier bargaining power
d. an increase in rivalry among existing firms


79. One of Southwest Airlines’ goals is to get consumers to fly on trips of about 100 to 700
miles instead of driving. Southwest is focusing on __________.
a. identifying the threat of new competitors
b. establishing customer bargaining power
c. establishing supplier bargaining power
d. establishing a substitute good or service


186


80. __________ limit(s) the price that firms in a particular industry can charge for their
products without risking a loss in sales.
a. Substitutes
b. Rivalry among firms
c. New entrants
d. Competitors


81. Russell Athletic sells apparel to a __________ customer base: old, young, Asian,
Hispanic, and African American.
a. profitable
b. low income
c. diverse
d. eccentric


82. Core organizational competencies represent __________.
a. strengths
b. weakness
c. opportunities
d. threats


83. The strengths that make an organization distinctive and more competitive by providing
goods or services that have unique value its customers are known as __________
competencies.
a. tactical
b. financial
c. core
d. market-based


84. Nathan Cochran is a consultant with Steinbach Consulting. He is designing a basic
framework for diagnosing the strengths and weaknesses of organizations. __________
is (are) not considered one of these components.
a. Human resource skills
b. Ability to adapt
c. Customers
d. Managerial depth

ANSWER: C, Application, Moderate, p. 195

187


85. From a business level perspective, ___________ fall(s) into three broad categories:
superior technological know-how, reliable processes, and close relationships with
external stakeholders.
a. core competencies
c. strategic planning
d. bargaining power of suppliers


86. Most organizations find that assessing their __________ is easier than assessing their
__________.
a. weaknesses; strengths
b. strengths; weaknesses
c. opportunities; threats
d. threats; opportunities


87. Which of the following is not a basic growth strategy common to business-level planning
and strategy?
a. market penetration
b. market development
c. alliance development
d. product development

ANSWER: C, Knowledge, Moderate, pp. 196–197

88. The __________ strategy involves seeking growth in current markets with current
products.
c. market alliance
d. market venture


89. AT&T reduced its residential long distance rates to attract new customers. AT&T is
using the __________ strategy.
a. market venture
b. market import
c. market alliance
d. market penetration

ANSWER: D, Application, Moderate, pp. 196–197

188


90. The __________ strategy involves seeking new markets for current products.
c. market alliance
d. market venture


91. Which of the following is not one of the principal ways to implement a market
development strategy?
a. enter new geographic markets
b. develop new uses for current facilities
c. develop new uses for current products
d. All of the above are principal ways to implement a market development strategy.


92. The __________ strategy involves developing new or improved goods or services for
current markets.
a. product penetration
b. product reengineering
c. market alliance


93. Samsung has introduced a steady new line of cellular phones. Samsung is following a
__________ strategy.
a. product amalgamation
b. product reengineering
c. market alliance


94. A strategic plan contains all of the following except __________.
a. organizational mission and goals
b. strategies for obtaining and utilizing the necessary technological, marketing,
financial, and human resources to achieve the stated goals
c. strategies for benchmarking
d. strategies for developing and utilizing organizational and employee competencies


95. The personal banker job at First American was changed to start handling walk-in traffic
and trying to sell additional banking products. This was a result of __________.
a. human resource management
b. diversification
c. strategic planning
d. tactical planning


189


96. The purpose of __________ is to help implement __________.
a. tactical plans; strategic plans
b. strategic plans; tactical plans
c. business strategies; corporate strategies
d. corporate strategies; business strategies


97. Middle and first-line managers and employee teams normally base tactical plans on the
organization’s __________ plan.
a. cultural
b. staff
c. diversification
d. strategic


98. Cameraworld.com sells quality camera and related products online and via telephone.
The firm recently implemented a __________ plan to improve its order fulfillment and
shipping system. Specifically, their warehouse was reorganized so that frequently
ordered items were moved closest to the packing and shipping stations, and rarely
ordered items were moved to the back of the warehouse.
a. business-level
b. strategic
c. tactical
d. diversification


99. Strategic and tactical planning must be accompanied by __________ to ensure the
plans are implemented as intended and to evaluate the results of those results.
a. controls
b. the accounting function
c. time constraints
d. the information systems function

ANSWER: A, Knowledge, Easy, pp. 198–199

100. Tony Mahoney realizes that the forces affecting organizations are constantly changing.
Hence he sees __________ as a continuing and ongoing process.
a. business-level strategy
b. planning
c. corporate-level strategy
d. employee training

ANSWER: B, Application, Moderate, p. 199

190



Generic Competitive Strategies Model
101. The generic strategies model consists of _____ basic business-level strategies that can
be applied to a variety of organizations in diverse industries.
a. 2
b. 3
c. 4
d. none, because it is a corporate-level model


102. The __________ strategy emphasizes competing with all other firms in the industry by
offering a product that customers perceive to be unique.
a. differentiation
b. cost leadership
c. industry leadership
d. concentric


103. Which of the following is not an example of a differentiation strategy?
a. Mercedes-Benz—unique brand image
b. BMW—innovative product design
c. Lexus—customer service
d. Wal-Mart—cost competitiveness


104. The __________ strategy emphasizes competing in the industry by providing a product
at a price as low as or lower than competitors.
a. differentiation
b. cost leadership
c. multidomestic
d. diversification

ANSWER: B, Knowledge, Easy, pp. 200–201

105. __________ is (are) associated with a cost leadership strategy.
a. Utilizing facilities or equipment that yield high economies of scale
b. Constantly striving to reduce per unit overhead, manufacturing, marketing, and
follow-up service costs
c. Minimizing labor-intensive personal services and sales forces
d. All of the above


191


106. Delta Fried Catfish Restaurant opened in Freeport, Maine to serve the needs of a small
segment of the population that prefers fried catfish to steamed lobster. Delta Fried
Catfish is following a _________ strategy.
a. broad
b. narrow
c. focused cost leadership
d. specialized

ANSWER: C, Application, Moderate, p. 201

107. The __________ strategy involves competing in a specific industry niche by serving the
unique needs of certain customers or a specific geographic market.
a. focused cost leadership
b. narrow
c. broad
d. specialized


Essay Questions

1. How should planning should assist leaders and managers?

a. Discovering new opportunities.
b. Anticipating and avoiding future problems.
c. Developing effective courses of action (strategies and tactics).
d. Comprehending the uncertainties and risks with various options.

Moderate, p. 179


2. Describe the strategic planning process.

a. Strategic planning is the process of diagnosing the organization’s external and
internal environments.
b. Strategic planning is the process of deciding on a vision and mission.
c. Strategic planning is the process of developing overall goals.
d. Strategic planning is the process of creating and selecting general strategies.
e. Strategic planning is the process of allocating resources to achieve the
organization’s goals.

Moderate, p. 179

192


3. Describe the tactical planning process.

Tactical planning is the process of making detailed decisions about what do to, who will
do it, and how to do it. Tactical planning normally involves a time horizon of one year or
less. Middle and first-line managers and teams often are heavily involved in tactical
planning. The tactical planning process generally includes:
a. choosing specific goals and the means of implementing the organization’s strategic
plan.
b. deciding on courses of action for improving current operations.
c. developing budgets for each department, division and project.

Difficult, p. 183


4. List and define the various degrees of diversification.

a. A single-business firm provides a limited number of goods or services to one
segment of a particular market.
b. A dominant-business firm serves various segments of a particular market.
c. A related-businesses firm provides a variety of similar goods and/or services.
d. An unrelated-business firm provides diverse products (goods and/or services) to
many different markets.

Moderate, pp. 185–187


5. Describe three of the five common corporate-level growth strategies.

a. Forward integration occurs when a company enters the businesses of its customers,
moving it closer to the ultimate consumer.
b. Backward integration occurs when a company enters the businesses of its suppliers,
usually to control component quality, on-time delivery, or stable prices. This
approach is sometimes called an upstream strategy.
c. Horizontal integration occurs when a company acquires a competitor to consolidate
and extend its market share.
d. Concentric diversification, sometimes called related diversification, occurs when a
firm acquires or starts a business related to the firm’s existing business in terms of
technology, markets, or products.
e. Conglomerate diversification occurs when a firm adds unrelated goods or services to
its line of businesses.

Difficult, pp. 189–190

193



6. Describe the relationship of strategy to tactics, and the ways in which First American
Corporation (FAC) implemented tactical plans related to their new “customer intimate”
strategy.

Tactical plans are intended to help implement strategic plans. In order to become
strategically more “customer intimate”, FAC decided to focus on three market segments
– consumer, small, and midsize businesses. Tactically they first expanded the job of
customer service representatives to handle routine tasks such as change of address
that had previously been the responsibility of personal bankers. Personal bankers were
then given the role of greeting and sales to walk-in customers. The bank’s most
valuable customers were shifted to the responsibility of customer relationship managers
who have strong relationship skills. Finally, the investment specialists were given an
expanded set of investment products in a move toward becoming a full financial
services company.

Moderate, p. 198

7. What are four of the eight tasks of the strategic planning process?

a. Develop the vision, mission, and goals
b. Diagnose threats and opportunities
c. Diagnose strengths and weaknesses
d. Develop strategies
e. Prepare strategic plan
f. Prepare tactical plans
g. Control and diagnose results
h. Continue planning

Difficult, pp. 193–199


8. Explain the generic competitive strategies model.

The generic competitive strategies model provides a framework of four basic business-
level strategies for a variety of organizations in diverse industries. These four strategies
include the following:

a. The differentiation strategy involves competing by offering goods or services that
customers perceive to be unique in ways that are important to them.
b. The focused differentiation strategy involves competing in a specific niche by serving
the unique needs of certain customers or a specific geographic market.
c. The cost leadership strategy means competing by providing goods or services at a
price as low as or lower than competitors’ prices.
d. The focused cost leadership strategy refers to competing in a specific customer or
geographic niche by providing goods or services at a price as low or lower than
competitors’ prices.

Moderate, pp. 199–201

194

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