Download MGMT 478 Chapter 3 Exam Questions and Answers: Strategic Management External Audit and more Exams Advanced Education in PDF only on Docsity!
MGMT 478 CH. 3 EXAM QUESTIONS WITH
COMPLETE ANSWERS
What is the most important part of an external audit? - ANSWER To develop a finite list of opportunities that could benefit a firm as well as threats that should be avoided or mitigated When identifying and prioritizing key external factors in strategic planning, four criteria should be met to the extent possible. What are these four criteria? - ANSWER actionable, quantitative, comparative, and divisional For industries and firms that depend heavily on government contracts or subsidies, which forecasts can be the most important part of an external audit? - ANSWER Political As common positions in firms today, chief information officers (CIOs) reflect the growing importance of the impact of which external force? - ANSWER Technological Which of the following is NOT one of Porters five forces? - ANSWER Barriers to entry Under which condition can consumers gain increasing bargaining power? - ANSWER If they can inexpensively switch to a substitute Which of the following is considered an unpublished source of external information - ANSWER customer surveys which of the following is considered a published source for external information? - ANSWER Directories which of the following is NOT true concerning forecasts? - ANSWER sometimes, wild guesses are acceptable as forecasts in forecasting, strategists identify future occurrences that could have a major effect on the firm, and, based on that make - ANSWER reasonable assumptions the EFE Matriz provides an empirical assessment of how well a firm is handling - ANSWER external factors overall Which of the following EFE scores indicates that a firm is weak at responding to external factors - ANSWER 1. One difference between a Competitive Profile Matrix and an EFE is that critical success factors - ANSWER in a CPM include both internal and external issues in generating the list of critical success factors in a CPM, a firm should strive to include factors that - ANSWER differentiate firms within the industry
How many factors should be included in an External Factor Evaluation Matrix - ANSWER 20 The video emphasizes that strategic planning is all about what concept - ANSWER Prioritization Factors are organized in an EFE Matrix into what two categories? - ANSWER Opportunities and threats Which two matrices require strategists to assign weights and ratings - ANSWER EFE Matrix and Competitive Profile Matrix Who says, "In God we trust; all others bring the data" - ANSWER Edward Deming What do the letters CPM stands for - ANSWER Competitive Profile Matrix An EFEM matrix should always include what element? - ANSWER A 1, 2, 3, 4 rating scale. 1 being bad 4 being good Opportunities are best described in what way - ANSWER External in nature In using the strategic planning Excel template, how many critical success factors should be included in a CPM - ANSWER 12 When using a CPM, rival companies should be assigned ratings in what manner - ANSWER Different ratings which of the following economic forces might be monitored by an international firm entering a new market in Germany? - ANSWER European Economic Community EEC policies A firm making a decision concerning the location of a manufacturing facility would monitor which of the following political, governmental, and legal variables? - ANSWER unionization trends Which of the following is similar about the chief information officer (CIO) and chief technology officer (CTO) position? - ANSWER both are involved with information technology an effective competitive intelligence program - ANSWER identifies potential moves that a competitor might make that would endanger a firms market position which of porters five-forces model is usually the most powerful? - ANSWER rivalry among competing firms Which of the following conditions causes high rivalry among competing firms? - ANSWER when the competing firms are of a similar size If a firm engages in backward integration, it is likely to be ______. - ANSWER decreasing the bargaining power of suppliers
- technological forces
- competitive forces
The AQCD Test - ANSWER • When identifying and prioritizing key ex ternal factors in strategic planning, the following 4 factors are important:
- Actionable
- Quantitative
- Comparative
- Divisional - The AQCD is a measure of the quality of an external factor.
Economic Forces - ANSWER Shift to service economy
**- Availability of credit
- Level of disposable income
- Propensity of people to spend
- Interest rates
- Inflation rates
- GDP trends
- Consumption patterns
- Unemployment trends
- Value of the dollar
- Import/Export factors
- Demand shifts for different goods and services
- Income differences by region and consumer group
- Price fluctuations
- Foreign countries' economic conditions
- Monetary and Fiscal policy**
**- Stock market trends
- Tax rate variation by country and state
- European Economic Community (EEC) policies
- Organization of Petroleum Exporting Countries (OPEC) policies**
Social, Cultural, Demographic, and Environmental (SCDE) Forces - ANSWER • SCDE forces impact strategic decisions on virtually all products, services, markets, and customers.
- These forces are shaping the way people live, work, produce, and consume.
Key SCDE Variables - ANSWER • Population changes by race, age, and geographic area
**- Regional changes in tastes and preferences
- Number of marriages
- Number of divorces
- Number of births
- Number of deaths
- Immigration and emigration rates
- Social Security programs
- Life expectancy rates
- Per capita income
- Social media pervasiveness
- Attitudes toward retirement
- Energy conservation
- Attitudes toward product quality
- Attitudes toward customer service
- Pollution control
- Attitudes toward foreign peoples
- Energy conservation**
**- mobile devices
- biotech
- analytics
- autotech
- robotics and
- artificial intelligence are fueling innovation in many industries, and impacting** strategic-planning decisions. - Many firms now hav e a Chief Information Officer (CIO) and a Chief Technology Officer (CTO) who work together to ensure that information needed to formulate, implement, and evaluate strategies is available where and when it is needed
Competitive Forces - ANSWER • An important part of an external audit is identifying rival firms and determining their strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies
Obtaining Competitive Intelligence - ANSWER Legal and ethical ways to obtain competitive intelligence:
- Reverse-engineer rival firms' products.
- Use surveys and interviews of customers, suppliers, and distributors of rival firms.
- Analyze rival firm's Form 10-K.
- Conduct fly-over and drive-by visits to rival firm operations.
- Search online databases.
- Contact government agencies for public information about rival firms.
- Monitor relevant trade publications, magazines, and newspapers.
- Purchase social-media data about customers of all firms in the industry.
- Hire top executives from rival firms.
Key Questions About Competitors - ANSWER 1. What are the strengths and weaknesses of our major competitors?
- What products and services do we offer that are unique in the industry?
- What are the objectives and strategies of our major competitors?
- How will our major competitors most likely respond to current economic, SCDE, political, governmental, legal, technological, and competitive trends affecting our industry?
- How vulnerable are the major competitors to our new strategies, products, and services?
- How vulnerable is our firm to successful counterattack by our major competitors?
- How does our firm compare to rivals in mastering the social-media conversation in this industry?
- To what extent are new firms entering and old firms leaving this industry?
- What key factors have resulted in our present competitive position in this industry?
- How are supplier and distributor relationships changing in this industry?
Competitive Intelligence Programs - ANSWER • a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals
The Five-Forces Model of Competition - ANSWER 1. Identify key aspects or elements of each competitive force that impact the firm.
- Evaluate how strong and important each element is for the firm.
- Decide whether the collective strength of the elements is worth the firm entering or staying in the industry.
The Five-Forces Model - ANSWER Rivalry among competing firms
- Most powerful of the five forces
- Focus on competitive advantage of strategies over other firms
- When the number of competing firms is high
- When competing firms are of similar size
Potential development of substitute products
- Pressure increases when: Prices of substitutes decrease Consumers' switching costs decrease
Bargaining Power of Suppliers is increased when (there are):
- Few suppliers
- Few substitutes
- Costs of switching raw materials is high - Backward integration is gaining control or ownership of suppliers
Bargaining power of consumers
- Customers being concentrated or buying in volume affects intensity of competition
- Consumer power is higher where products are standard or undifferentiated
Conditions Where Consumers Gain Bargaining Power - ANSWER 1. If buyers can inexpensively switch
- If buyers are particularly important
- If sellers are struggling in the face of falling consumer demand
- If buyers are informed about sellers' products, prices, and costs
- If buyers have discretion in whether and when they purchase the product
Sources of External Information - ANSWER Unpublished sources include customer surveys, market research, speeches at professional and shareholders' meetings, television programs, interviews, and conversations with stakeholders.
Published sources of strategic information include periodicals, journals, reports, government documents, abstracts, books, directories, newspapers, and manuals.
**- IBISWorld
- Lexis** -Nexis Academic - Lexis -Nexis Company Dossier **- Mergent Online
- PrivCo
- Regional Business News
- S&P NetAdvantage
- Value Line Investment Survey
- U.S. Securities and Exchanges Commission
- Company Annual Reports On** -Line (CAROL)
Forecasts - ANSWER - educated assumptions about future trends and events
Assumptions - ANSWER - Best present estimates of the impact of major external factors, over which the manager has little if any control, but which may exert a significant impact on performance or the ability to achieve desired results
Industry Analysis: The External Factor Evaluation (EFE) Matrix - ANSWER Summarize and evaluate these factors:
**- Social
- Cultural
- Demographic
- Economic
- Environmental
- Political -** Governmental
