MA5128 – Integrated Review in Financial Reporting,

Planning, Performance, and Control

Second Term, Academic Year 2021-2022

HANDOUT 9: STRATEGIC PLANNING

STRATEGY AND SWOT

1. Which of the following correctly describes strategy?

A. Strategy is the short-term planning and work of the organization. Strategy work
is not the day-to-day operations work of the organization, but strategy does guide
that daily work in the organization. Strategy provides a framework and feedback
mechanism to evaluate the short-term effects of daily work on the future of the
organization.
B. Strategy is the long-term planning and work of the organization. Strategy work is
the day-to-day operations work of the organization, guiding that daily work in the
organization. Strategy provides a framework and feedback mechanism to
evaluate the long-term effects of daily work on the future of the organization.
C. Strategy is the short-term planning and work of the organization. Strategy work
is the day-to-day operations work of the organization, guiding that daily work in
the organization. Strategy provides a framework and feedback mechanism to
evaluate the short-term effects of daily work on the future of the organization.
D. Strategy is the long-term planning and work of the organization. Strategy work is
not the day-to-day operations work of the organization, but strategy does guide
that daily work in the organization. Strategy provides a framework and feedback
mechanism to evaluate the long-term effects of daily work on the future of the
organization.

2. Which of the following correctly describes vision statement and mission statement,
respectively?
A. The mission statement describes what the organization intends to be or become
and answers the question, “Who are we?” The mission statement guides
subsequently the development of the vision statement. The vision statement
describes what the organization is committed to do or how it will act and answers
the question, “What do we do?”
B. The vision statement describes what the organization intends to be or become
and answers the question, “Who are we?” The vision statement guides
subsequently the development of the mission statement. The mission statement
describes what the organization is committed to do or how it will act and answers
the question, “What do we do?”
C. The vision statement describes what the organization intends to be or become
and answers the question, “What do we do?” The vision statement guides
subsequently the development of the mission statement. The mission statement
describes what the organization is committed to do or how it will act and answers
the question, “Who are we?”
D. The mission statement describes what the organization is committed to do or
how it will act and answers the question, “Who are we?” The mission statement
guides subsequently the development of the vision statement. The vision
statement describes what the organization intends to be or become and answers
the question, “What do we do?”
3. Which of the following correctly orders the steps in the Strategic Planning Process?
A. Vision and Mission, Environmental Scanning, Strategy Implementation, Strategy
Design, Evaluation and Control
B. Environmental Scanning, Vision and Mission, Strategy Design, Strategy
Implementation, Evaluation and Control
C. Vision and Mission, Environmental Scanning, Strategy Design, Evaluation and
Control, Strategy Implementation
D. Vision and Mission, Environmental Scanning, Strategy Design, Strategy
Implementation, Evaluation and Control

4. Which of the following is the appropriate time frame for a strategic plan?
A. Always short-term
B. Commonly short-term but it depends on the industry
C. Commonly long-term but it depends on the industry
D. Always long-term

5. The CEO of Chroma, Inc., a large multinational company, believes that the company
should prepare strategic plans at least once a year. However, the company's president
believes that strategic plans should not be changed frequently and should be
prepared only every three years. Which of the following types of organization
structures for Chroma would support the CEO's position on the time frame of
strategic plans for Chroma?
A. Chroma is in the business of publishing a trade magazine for the woodworking
machinery industry in Colorado.
B. Chroma is a leading provider of cutting-edge communication technology and
functions in a fast-moving and highly competitive market.
C. Chroma is the only seller of antique Asian musical instruments on the West Coast.
D. Chroma's business comes primarily from the long-term contracts it has with the
U.S. government to carry out construction projects.

6. Which of the following is not one of the aspects or features of an organization's

environment?
A. Companies in the same geographical region that will never be customers or
competitors
B. Suppliers and other stakeholders who may partner with the organization,
including local governments and community groups
C. The world in which the organization operates, which involves economic trends,
government and legal mandates, and demographic factors
D. The organization's internal structure, comprising employees, physical assets,
financial resources, intellectual property, etc.

7. Which of the following is not an example of an internal factor in SWOT analysis?

A. Physical assets
B. Human skills
C. Customer demographics
D. Reputation and Brand

8. The top management of Juno, Inc., a manufacturer of cell phones and laptops, is in the
process of conducting a SWOT (strengths, weaknesses, opportunities, and threats)
analysis of its business. Andrew Hudson, a vice president of the company, lists the
company's cutting-edge research and development division as a strength as it helps
the company design premium products of high quality. However, Melanie Harris, the
marketing manager, believes that its research and development division is now a
 weakness rather than a strength. Which of the following, if true, best supports
Melanie's argument?
A. Juno operates in a legal environment where strict regulations are in place to
protect intellectual property rights.
B. Juno's cell phones and laptops continue to generate high profit margins.
C. Due to an economic slump, Juno's target consumers are becoming increasingly
price sensitive.
D. The bulk of Juno's business comes from consumers who are identified as early
adopters of technology.

9. Which of the following is not an example of an external factor in SWOT analysis?

A. The economy
B. Future technology trends
C. Financial resources
D. Competitive forces

10. When using SWOT in designing strategy, which of the following describes an S-T
strategy?
A. Identify how to use our strengths to reduce exposure to threats.
B. Pursue opportunities that are a good fit to our strengths.
C. Overcome our weaknesses to pursue available opportunities.
D. Establish a plan to prevent threats from exploiting our weaknesses.

STRATEGIC OBJECTIVES AND GENERIC STRATEGY

1. An organization's long-term business objectives (such as business diversification, the

addition or deletion of product lines, or the penetration of new markets) are derived
from what?
A. The objectives and plans of company executives
B. The objectives and plans of company managers
C. The mission and vision of the organization
D. The mission and vision of competitors

2. Short-term objectives, tactics for achieving these objectives, and operational planning
(master budget) must be congruent with what? Choose the best answer.
A. The organization's external environmental factors
B. The organization's internal environmental factors
C. The organization's performance evaluation and incentive compensation factors
D. The organization's strategic plan and long-term strategic goals

3. Which of the following is not a characteristic of a successful strategic plan?

A. The strategic plan compels managers to align their own planning and decision
making with the longer-term goals and strategy of the organization.
B. The strategic plan improves communication and aids coordination among
managers by helping them align their goals with the overall strategy.
C. Performance evaluation and incentive compensation can be tied clearly to the
strategic plan.
D. The process of building the strategic plan should be exclusive to the
organization’s executive leadership.

4. Which of the following is not a characteristic of a successful strategic plan?

A. The strategic plan is based on realities in the environment (both external and
internal).
B. The strategic plan should be created in such a way that it does not need to be
reviewed and updated periodically.
 C. The strategic plan is based on a clear statement of the organization's vision and
mission.
D. The strategic plan serves as a reference point for decision-making in the
organization.

5. A cost leadership strategy, in addition to focusing on the company's ability to sell a

large volume of low-cost products, is often aided by all of the following
characteristics except:
A. Advanced production technology.
B. More highly desirable product features.
C. Access to low-cost capital.
D. Access to low-cost production inputs (raw materials, labor, etc.).

6. From its facility in North Carolina, TMC Corporation manufactures and sells a small
electric car under the brand name of Quinoa. Quinoa is the first and only electric car
of its kind in the market and is a bestseller owing to its low price. Which of the
following is a threat that is most likely to reduce the competitive advantage Quinoa
has due to its low price?
A. The price of gasoline increases sharply.
B. The government places import restrictions on electric cars and other vehicles.
C. New environmental regulations are imposed on fossil fuel–based vehicles.
D. The government withdraws the subsidies it had extended to the electric car
segment.

7. Which of the following correctly describes a cost leadership strategy in the

framework of Porter's generic strategies?
A. The strategy focuses on the organization's ability to sell a high volume of lower-
cost products or services. In order to be able to implement this strategy, the
organization should have high levels of productivity and efficiency, as well as
access to extensive distribution resources. Additional factors affecting the
successful implementation of this strategy include proprietary production
technology, control of low-cost production inputs (raw materials, labor, etc.), and
access to low-cost financial capital.
B. The strategy focuses on the organization's ability to sell a high volume of lower-
cost products or services. In order to be able to implement this strategy, the
organization should have high levels of productivity and efficiency, as well as
access to extensive distribution resources. In order to support this strategy, the
organization must foster continued product innovation and improvement
through investment in research and development, and must effectively market
the innovation of the product to maintain the brand.
C. The strategy focuses on products or services with unique features or benefits to
the customer. In general, these products inspire higher levels of brand loyalty in
customers, making them less sensitive to price differences among products.
Additional factors affecting the successful implementation of this strategy include
proprietary production technology, control of low-cost production inputs (raw
materials, labor, etc.), and access to low-cost financial capital.
D. The strategy focuses on products or services with unique features or benefits to
the customer. In general, these products inspire higher levels of brand loyalty in
customers, making them less sensitive to price differences among products. In
order to support this strategy, the organization must foster continued product
innovation and improvement through investment in research and development,
and must effectively market the product to maintain the brand.

8. Which of the following strategies focuses on a differentiation competitive advantage

in a narrow (segmented) competitive scope?
 A. Cost leadership strategy
B. Focus strategy (differentiation)
C. Differentiation strategy
D. Focus strategy (lower cost)

9. In which of the following settings is the threat of decreased profits most likely to be
the highest owing to rivalry among existing competitors?
A. Rivalry between the top fast-food restaurant chains in a market
B. Rivalry between a company known for its innovative, cutting-edge technology
and a company that sells cheap, basic technology
C. Rivalry between the established market leader in discount superstores and small
convenience stores
D. Rivalry between leading satellite television companies where customers who
sign up get hardware that is compatible only with that service provider

SPECIFIC STRATEGY TOOLS

1. Bespoke Designs is a small store that sells custom-tailored formal clothes for men in
a town in upstate New York. The company has been doing good business since its
inception five years ago and is the first choice of discerning clients in the area. The
owners of the company have approached an investor to help fund Bespoke's growth.
The investor is impressed with the company's products but is worried that since
Bespoke's market is attractive, new entrants will soon flood the market and reduce
the profitability of the business. Using Porter's Five Forces, which of the following
facts can Bespoke's management use to convince the investor that the threat of new
competitors is low?
A. The company's offerings are premium products that earn high margins.
B. Many potential competitors in the area employ tailors who were once employed
at Bespoke.
C. The company's products are on par with those offered by premium clothing
brands stocked in malls in the town.
D. The company is owned and operated by designers who are famous for their deep
understanding of customer preferences and their distinctive style.

2. Infinity Enterprises, a large organization with seven business units, recently prepared
a BCG Growth-Share Matrix to evaluate whether it has a balanced portfolio of
businesses. Upon analysis, its three large business units were identified as stars, two
medium-size business units were identified as question marks, and one small
business unit each was identified as a cash cow and as a dog. Which of the following
is a conclusion you can draw upon evaluating the data?
A. The company needs to set up more business units that operate in high-growth
markets.
B. The company is probably facing a shortage of funds to fuel its growth.
C. The company should hold onto the business unit identified as a dog in order to
maintain a balanced portfolio of businesses.
D. The company is probably generating excess cash that can be used to start new
business units.

3. Which of the following describes a Star business line in the BCG Growth-Share Matrix?
A. By holding a small share of a fast-growing market, these products or services have
a lot of potential to do well, but have yet to actually deliver strong results.
Organizations usually design explore strategies for this kind of business.
B. Products, services, or business units that have a large share of an established
(slower growing) market. These business lines require little investment and can
 generate a lot of cash that can be used in other business units. Organizations
usually design harvest strategies for these kinds of business.
C. The business line holds a high share of a fast-growing market. The organization
typically needs to spend significant resources in order to maintain its share of this
market. Organizations usually design invest strategies for this kind of business.
D. An undesirable business holding a small share of a market that isn't growing. This
business may not require much cash to maintain, but there is often significant
capital resources and valuable management attention tied up in these businesses.
Unless there is an important purpose to remain in this market, organizations
usually design divest strategies for this kind of business.

4. Which of the following correctly lists all the factors of PESTLE analysis?
A. Politics, Economy, Social, Technology, Legal, External
B. Politics, Economy, Social, Technology, Legal, Environmental
C. Politics, Economy, Social, Threats, Legal, Environmental
D. Politics, Economy, Skill, Technology, Legal, Environmental

5. Which of the following is not one of Porter's Five Forces?

A. Intensity of Competition
B. Threat of New Entrants
C. Threat of Substitute Products
D. Threat of Regulation

6. What type of analysis is the following definition describing?

Developing alternative strategies in order to be prepared for unexpected
conditions or outcomes, which can minimize the negative effect of surprising
events, as well as optimize opportunities that may unexpectedly present
themselves.

A. Scenario analysis
B. Competitive analysis
C. Contingency planning
D. SWOT analysis

7. Elliott Enterprises is engaged in the construction of roads. The company falls under
OSHA (Occupational Safety and Health Administration) regulations that require it to
design accident prevention policies and processes for its employees. According to
PESTLE analysis, how does this regulatory requirement affect the organization's
strategy?
A. It will force the organization to be environmentally accountable.
B. It will restrict the marketing campaigns of the organization.
C. It will affect the technological innovations planned by the organization.
D. It will affect the human resource practices followed by the organization.

8. Romero Roman, Inc., a leading manufacturer of cars, has two product lines: small
family cars and luxury cars. According to the BCG Growth-Share Matrix, in which
quadrant would small family cars likely be classified for Romero Roman?
A. Cash Cows
B. Dogs
C. Stars
D. Question Marks