Midterm Quiz # 7

• Not all organizations have strengths and weaknesses in the functional areas of business.

  FALSE
• A declining return on investment or profit margin ratio could be the result of ineffective marketing, poor management policies, research and development errors, or a weak management information system.

  TRUE
• The process of performing an internal audit closely parallels the process of performing an financial audit.

  FALSE
• Compared to the external audit, the process of performing an internal audit provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization.

  TRUE
• The basic premise of the RBV is that the mix, type, amount, and nature of a firm's external resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage.

  FALSE
• Heroes and Heroines is a standardized set of behaviors used to manage anxieties.

  FALSE
• Even if a firm employs resources that are rare, a sustainable competitive advantage may be achieved only if other firms cannot easily obtain these resources.

  TRUE
• When a major competitor or new market entrant offers products or services at very low prices, this may be because that firm has substantially lower value chain costs or perhaps the rival firm is just waging a desperate attempt to gain sales or market share.

  TRUE
• A core competence is a value chain activity that a firm performs poorly.

  FALSE
• Most firms have no choice but to continually develop new and improved products because of changing consumer needs and tastes, new technologies, shortened product lifecycles, and increased domestic and foreign competition.

  TRUE
• Performing an internal audit requires gathering, assimilating, and evaluating information about the firm's operations.

  TRUE
• The hardest part of benchmarking can be gaining access to other firms' value chain activities with associated costs.

  TRUE
• A failure to recognize and understand relationships among the functional areas of business can be detrimental to strategic management.

  TRUE
• Understanding both external and internal factors, and more importantly, understanding the relationships among them, will be the key to effective strategy formulation.

  TRUE
• An effective information system thus collects, codes, stores, synthesizes, and presents information in such a manner that it answers important operating and strategic questions.

  TRUE
• Internal strengths and weaknesses associated with a firm's culture sometimes are overlooked because of the interfunctional nature of this phenomenon.

  TRUE
• All enterprise is equally strong or weak in all areas.

  FALSE
• Firms whose information-system skills are weak are at a competitive disadvantage.

  TRUE
• Computing financial ratios is like taking a picture because the results reflect a situation atjust one point in time.

  TRUE
• Building competitive advantages involves taking advantage of distinctive competencies.

  TRUE
• Production/operations function of a business consists of all those activities that transform inputs into goods and services.

  TRUE
• Managers and employees perform worst when they understand how their work affects other areas and activities of the firm.

  FALSE
• A management information system receives raw material from both the external and internal evaluation of an organization.

  TRUE
• Strategic management is a highly interactive process that requires effective coordination among management, marketing, finance/accounting,production/oper ations, R&D, and management information systems managers.

  TRUE
• The heart of an information system is a database containing the kinds of records and data important to managers.

  TRUE
• The focus of R&D efforts can vary greatly depending on a firm's competitive strategy.

  TRUE
• Representative managers and employees from throughout the firm need to be involved in determining a firm's strengths and weaknesses.

  TRUE
• Practical judgment may be required in performing a VCA because different items along the value chain may impact other items positively or negatively.

  FALSE
• Marketing Management deals with inputs, transformations, and outputs that vary across industries and markets.

  FALSE
• Effective management of the R&D function requires a strategic and operational partnership between R&D and the other vital business functions.

  TRUE