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Strategic Management and the Entrepreneur

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Chapter 3

Strategic Management and The Entrepreneur

Multiple Choice Questions:

1.

Which of the following is NOT one of the three components of intellectual capital? a. b. c. d. human structural competitor customer

c., Medium, Page 68

2.

__________ involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives to keep it on its desired course. a. Competitive advantage b. Mission c. Strategic management d. Market segmentation

c., Easy, Page 69

3.

The aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market superior to its competition is its: a. mission statement. b. competitive advantage.

c. competitive profile. d. strategic plan.

b., Easy, Page 69

4.

A strategic plan: a. serves as a blueprint for helping business owners to match their companies' strengths and weaknesses to the environment's opportunities and threats. b. is a company's game plan, helping it to accomplish its mission, goals, and objectives. c. is crucial to creating a company's competitive advantage that sets it apart from its competition and gives it a unique position in the market. d. All of the above.

d., Medium, Page 69

5.

Which of the following was NOT identified as a way for the typical small business to establish a competitive advantage? a. Lowering prices b. Providing higher quality goods or services c. Improving customer service d. Doing whatever the company does for its customers better than its competitors

a., Medium, Page 69

6.

____________ are a unique set of capabilities that a company develops in key operational areas (e.g., quality, service, innovation, and others) that allow it to vault past its competitors. a. Core competencies b. Opportunities c. Key success factors d. Mission statements

a., Medium, Page 69

7.

The relationship between core competencies and competitive advantage is best described by which statement? a. Strengthening a company's competitive advantage strengthens its core competencies. b. A company's core competencies become the nucleus of its competitive advantage. c. As a company's core competencies become stronger, its competitive advantage becomes weaker. d. There is no relationship between core competencies and competitive advantage.

b., Difficult, Page 69

8.

Which of the following is NOT a characteristic of the strategic management procedure for a small company? a. It should use a relatively short planning horizontwo years or less, typically. b. It should begin with an extensive objective-setting session. c. It should encourage the participation of employees and even outsiders to improve the reliability and creativity of the resulting plan. d. It should allow for flexibility and not be overly structured.

b., Medium, Page 71

9.

A clearly defined vision helps a company in which of the following ways? a. b. c. d. Provides direction Determines decisions Motivates people All of the above.

d., Easy, Page 71

10.

A small company's mission statement: a. establishes its purpose in writing. b. gives the business and everyone in it a sense of direction. c. defines what the company is, why it exists, and its reason for being. d. All of the above.

d., Easy, Page 72

11.

When developing a company's mission statement, an entrepreneur should remember to: a. write the statement alone without anyone else's interference. b. omit statements about her values because they may turn some stakeholders off. c. keep it short and simple. d. All of the above.

c., Difficult, Page 74

12.

__________ are positive internal factors that contribute toward accomplishing the company's mission, goals, and objectives, while __________ are negative internal factors that inhibit the accomplishment of a firms mission, goals, and objectives. a. Strengths; Weaknesses b. Weaknesses; Strengths c. Opportunities; Threats d. Threats; Opportunities

a., Easy, Page 75

13.

Kevin Abt noticed that people were cooking meals in their homes less often but wanted to avoid the hassle of going out to eat. They wanted to "eat in" without cooking. Abt launched a company, Takeout Taxi, that delivers restaurant-prepared food to his customers' homes and businesses. Takeout Taxi is the result of a(n): a. strength. b. weakness. c. opportunity. d. threat.

c., Medium, Page 75

14.

Maria Sanchez is the owner of the Main Street Cafe. A new restaurant opens a few blocks away. To Maria, this new restaurant constitutes a(n): a. strength. b. weakness. c. threat. d. opportunity.

c., Medium, Page 76

15.

_______ are positive external factors a firm could exploit to accomplish its objectives, while ______ are negative external forces that inhibit a firms ability to achieve its mission, goals, and objectives. a. Strengths; Weaknesses b. Weaknesses; Strengths c. Opportunities; Threats d. Threats; Opportunities

c., Medium, Page 76

16.

Every business is characterized by a set of controllable variables that determines the relative success (or lack of it) of market participants called: a. distinctive competencies. b. key success factors. c. opportunities and threats. d. competitive edge.

b., Easy, Page 77

17.

Your ________ competitors offer the same products and services, and customers often compare prices, features, and deals from these competitors as they shop. a. b. c. d. significant direct indirect All of the above.

b., Easy, Page 79

18.

Which of the following is an effective method of collecting information about competitors? a. Ask customers and suppliers what competitors are doing. b. Talk to employees, especially sales representatives and purchasing agents, about competitors. c. Attend trade shows and collect competitors' sales literature. d. All of the above

d., Easy, Page 80

19.

Which of the following is NOT a recommended method of collecting competitive intelligence? a. Attend trade shows and collect competitors' sales literature. b. Buy competitors' products or services and assess their quality and features, benchmarking their products and services against yours. c. Pay competitors' employees to become informants about their companies' strategies, markets, and trade secrets. d. Watch for employment ads from competitors to determine the types of workers they are hiring.

c., Medium, Page 80

20.

Which of the following is true about the information-gathering process in competitive analysis? a. It is an expensive process which only large companies can afford. b. It can be relatively inexpensive and easy for the small business owner to conduct. c. It is a process closely regulated by various federal laws which prohibit doing things like purchasing competitive products and analyzing them. d. It is a process that requires expert help and is relatively expensive.

b., Difficult, Page 80

21.

Purchasing rival companies' products, taking them apart, and analyzing them is: a. called industrial espionage. b. considered illegal due to federal regulation. c. benchmarking. d. cataloging.

c., Easy, Page 80

For Questions 22-26, consider the following competitive profile matrix:

Key Success Factors Quality Service Convenience On-Time Delivery Location TOTAL

Your Business Weighted Weight Rating Score .35 4 1.40 .20 4 .80 .15 2 .30 .20 2 .40 .10 1.00 3 .30 3.20

Competitor 1 Weighted Rating Score 2 .70 2 .40 4 .60 4 .80 1 .10 2.60

Competitor 2 Weighted Rating Score 1 .35 2 .40 1 .15 2 .40 2 .20 1.50

22.

Which of the following statements is TRUE? a. Overall, Competitor 2 is the strongest of these three companies. b. Your company's most serious weakness is its poor quality. c. Your company's most vulnerable point against these two competitors is in the area of on-time delivery. d. The most important of the key success factors is location.

c., Medium, Page 81

23.

Which company has the strongest competitive position? a. Your company b. Competitor 1 c. Competitor 2 d. Impossible to tell from the information given

a., Medium, Page 81

24.

Which company has the worst location? a. Your company b. Competitor 1 c. Competitor 2 d. Impossible to tell from the information given

b., Medium, Page 81

25.

In terms of quality, which company has the weakest competitive position? a. Your company b. Competitor 1 c. Competitor 2 d. Impossible to tell from the information given

c., Medium, Page 81

26.

Which key success factor does the entrepreneur who built this table believe is most important? a. Quality b. Service and on-time delivery c. Convenience d. Location

a., Medium, Page 81

27.

A competitive profile matrix: a. identifies a firm's core competencies. b. permits the small business owner to divide a mass market into smaller, more manageable segments. c. allows the small business owner to evaluate her firm against competitors on the key success factors for the industry. d. creates a road map of action for the entrepreneur in order to fulfill her company's mission, goals, and objectives.

c., Difficult, Page 81

28.

___________ are the broad, long range attributes the small business seeks to accomplish; __________ are the more specific targets for performance. a. Goals; objectives b. Goals; strategies c. Objectives; goals d. Strategies; goals

a., Easy, Page 83

29.

Which of the following is NOT a characteristic of a well-written objective? a. Realistic, yet challenging b. Measurable

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