Business Policy
Textbook Exam Questions
Course Introduction
Business Policy is a capstone course designed to integrate knowledge from various business disciplines such as management, marketing, finance, and operations into a comprehensive understanding of how organizations develop and implement strategies in dynamic environments. The course examines the formulation, evaluation, and execution of business policies and strategies, with a focus on decision-making processes, environmental analysis, competitive advantage, and the alignment of strategic initiatives with organizational objectives. Through case studies, simulations, and real-world examples, students learn to analyze complex business situations, consider ethical implications, and propose effective solutions that drive organizational success.
Recommended Textbook
Concepts in Strategic Management and Business Policy 15th Edition by Thomas
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L. Wheelen
Chapter 1: Basic Concepts in Strategic Management
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Sample Questions
Q1) Which of the following is not a part of strategy implementation?
A) performance evaluation
B) budgets
C) programs and tactics
D) procedures
E) operational planning
Answer: A
Q2) The ability of a corporation to shift from one dominant strategy to another is called
A) strategy implementation.
B) chaos formulation.
C) contingency management.
D) logical incrementalism.
E) strategic flexibility.
Answer: E
Q3) General Electric led the transition from strategic planning to strategic management during the 1980s.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Corporate Governance
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Sample Questions
Q1) According to the research,in turbulent environments,the best type of planning is
A) top-down strategic planning.
B) bottom-up strategic planning.
C) horizontal strategic planning.
D) concurrent strategic planning.
E) composite strategic planning.
Answer: A
Q2) Codetermination has been used in Germany since the 1950s,but has not been used in the United States.
A)True
B)False
Answer: False
Q3) A study by Korn/Ferry found that ________ of U.S.boards of directors had at least one ethnic minority member in 2007.
A) 6%
B) 26%
C) 47%
D) 78%
E) 96%
Answer: D
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Chapter 3: Social Responsibility and Ethics in Strategic Management
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Sample Questions
Q1) Managers who want to improve ethical behavior should take actions such as
A) communicate the code of ethics in training programs.
B) emphasize the code of ethics in performance appraisal systems.
C) follow a code of ethical behavior themselves.
D) communicate the code of ethics in policies and procedures.
E) all of the above
Answer: E
Q2) The broader concept of sustainability is closely aligned with Carroll's view of social responsibility.
A)True
B)False
Answer: True
Q3) The Dow Jones Sustainability Index includes
A) environmental, economic, and quality sustainability.
B) industry, environmental, and economic factors.
C) environmental, economic, and social sustainability.
D) ethical, economic, and social sustainability.
E) environmental, ethical, and quality sustainability.
Answer: C
Page 5
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Chapter 4: Environmental Scanning and Industry Analysis
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Sample Questions
Q1) A study of nearly 500 of the world's largest corporations indicated which of the following to be the most widely practiced form of forecasting?
A) statistical modeling
B) scenario-writing
C) Delphi technique
D) brainstorming
E) trend extrapolation
Q2) The societal environment includes the economic,technological,political-legal,and sociocultural forces.
A)True
B)False
Q3) According to Miles and Snow,a company that operates in at least two different product-market areas in which one product is stable and the other one is variable,reflects which strategic orientation?
A) initiators
B) reactors
C) analyzers
D) prospectors
E) defenders
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Page 6
Chapter 5: Organizational Analysis and Competitive Advantage
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Sample Questions
Q1) Which of the following statements is not true concerning a corporate reputation?
A) It is a widely held perception of a company by the general public.
B) A good corporate reputation can be a strategic resource.
C) There is a positive relationship between corporate reputation and financial performance.
D) Reputation tends to be long lasting and hard for others to duplicate.
E) Research shows no positive relationship between corporate reputation and financial performance.
Q2) Which of the following terms best describes a system in which items are normally processed sequentially,but the work and sequence of the process vary?
A) continuous system
B) debt capacity
C) chronological processing
D) operating leverage
E) intermittent system
Q3) A functional structure is appropriate for a medium-sized firm with several product lines in one industry.
A)True
B)False
Page 7
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Chapter 6: Strategy Formulation: Business Strategy
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Sample Questions
Q1) Business strategy focuses on
A) ensuring that the company maintains the existing market share that it has historically enjoyed.
B) improving the competitive position of a corporation's products or services within the industry or market segment served.
C) providing adequate shareholders' return on investment.
D) preventing the competition from gaining a competitive edge by undermining their marketing plan.
E) recovering the competitive lead by using all available resources that the company can provide.
Q2) If a mission does not provide a common thread for a corporation's businesses,managers might be unclear about where the company is heading.
A)True
B)False
Q3) Tight cost control is an organizational requirement for a cost leadership strategy.
A)True
B)False
Q4) What is the impact of hypercompetition on competitive advantage?
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Page 8
Chapter 7: Strategy Formulation: Corporate Strategy
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Sample Questions
Q1) Define corporate parenting.
Q2) A limitation of the BCG Growth-Share Matrix is the questionable link between market share and profitability.
A)True
B)False
Q3) What are the three key issues that corporate strategy addresses?
Q4) The stability strategy is appropriate for all of the following circumstances EXCEPT
A) useful in the short-run but can be dangerous if followed too long.
B) most appropriate for reasonably successful corporations in a reasonably predictable environment.
C) when a firm is continuing its current activities without a significant change in direction.
D) appropriate when the industry is in decline.
E) popular with small business owners who have found a niche and are happy with their success.
Q5) A long-term contract is considered vertical integration.
A)True B)False
Q6) Define a retrenchment strategy.Discuss the more popular options.
Page 9
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Chapter 8: Strategy Formulation: Functional Strategy and Strategic Choice
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Sample Questions
Q1) The continuous improvement system was developed by Deming.
A)True
B)False
Q2) The type of marketing strategy in which a company captures a larger share of an existing market for current products through market saturation or market penetration or develops new markets for current products is called
A) market development.
B) push strategy.
C) product development.
D) pull strategy.
E) skimming the cream.
Q3) What is a functional strategy?
Q4) The top factors in a successful ________ seemed to be a spirit of partnership,a well-designed agreement,joint governance,and consistent communication.
A) IT relationship
B) customer relationship management
C) outsourcing relationship
D) logistics relationship
E) accounting relationship
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Chapter 9: Strategy Implementation: Global Strategy
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Sample Questions
Q1) Among the most important barriers to international trade are the different standards for products and services.
A)True
B)False
Q2) Which of the following is not true of the stages of international development?
A) Corporations operating internationally tend to evolve through five common stages.
B) Stage 1 of international development is the domestic company.
C) In Stage 4 of international development, the company adds an international division with responsibility for most of the business functions conducted in other countries.
D) In Stage 2 of international development, the firm is a domestic company with an export division.
E) In Stage 5 of international development, all managers are responsible for dealing with international as well as domestic issues.
Q3) Production sharing is often called outsourcing.
A)True
B)False
Q4) Discuss the five stages of international development.
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11
Chapter 10: Strategy Implementation: Organizing and Structure
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Q1) During Stage V of the organizational life cycle,the popular strategy is
A) concentration in a niche.
B) horizontal and vertical growth.
C) liquidation or bankruptcy.
D) concentric and conglomerate diversification.
E) profit strategy followed by retrenchment.
Q2) The movement of workers through several jobs to increase variety is referred to as
A) job combination.
B) job rotation.
C) job enrichment.
D) job enlargement.
E) job motivation.
Q3) The concept that structure follows strategy was developed by Alfred Chandler.
A)True
B)False
Q4) What is strategy implementation? What questions must strategy makers consider to begin the implementation process?
Q5) What is reengineering? What are the principles for reengineering proposed by Michael Hammer?
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Chapter 11: Strategy Implementation: Staffing and Directing
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Sample Questions
Q1) Downsizing refers to the planned elimination of positions or jobs; it is often used to implement retrenchment strategies.
A)True
B)False
Q2) When managing corporate culture,the first question management must ask is
A) what the change in strategy means to the corporate culture.
B) whether a change in culture is needed.
C) whether an attempt to change the culture is worth the likely costs.
D) whether it is possible to manage around the culture.
E) whether stakeholders will be impacted.
Q3) When AT&T acquired NCR Corporation,the NCR managers were replaced with an AT&T management team.Which management strategy was employed in terms of culture?
A) integration
B) separation
C) deculturation
D) assimilation
E) segmentation
Q4) List the guidelines proposed for successful downsizing.
Q5) What is TQM and what are its essential ingredients?
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Chapter 12: Evaluation and Control
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Sample Questions
Q1) A survey of 600 business units found that compensation programs emphasizing bonuses and other incentives were most used in those units emphasizing
A) stability strategies.
B) retrenchment strategies.
C) cooperative strategies.
D) international strategies.
E) growth strategies.
Q2) What responsibility center is judged for effectiveness rather than efficiency?
A) investment center
B) revenue center
C) standard cost center
D) profit center
E) expense center
Q3) What is the most commonly used measure of corporate performance (in terms of profits)? Discuss the limitations of using this measure.
Q4) Unlike ROI,managers cannot manipulate the numbers of EVA.
A)True
B)False
Q5) Discuss the benchmarking process.
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Chapter 13: Suggestions for Case Analysis
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Sample Questions
Q1) Which financial ratio indicates the percentage of profit that is paid out as dividends?
A) return on equity
B) dividend payout ratio
C) dividend yield on common stock
D) price/earnings ratio
E) debt to asset ratio
Q2) Return on equity
A) is an activity ratio.
B) shows how much after-tax profits are generated by each dollar of sales.
C) is referred to by the acronym ROI.
D) measures the rate of return on the book value of shareholders' total investment in the company.
E) is a leverage ratio.
Q3) The debt-to-asset ratio measures the funds provided by creditors versus the funds provided by owners.
A)True
B)False
Q4) What is the Z-value?
Q5) What are common-size statements?
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