CHAPTER 05

INTERNAL SCANNING: ORGANIZATIONAL ANALYSYS

True/False
1.
A resource is an asset, competency, process, skill, or knowledge controlled by the corporation.
Answer: T
2.
There are only two key resources of a firm: value and rareness.
Answer: F
3.
Corporate capabilities are the things that a corporation can do exceedingly well.
Answer: T
4.

Durability is the rate at which a firms underlying resources and capabilities (core competencies)
can be duplicated by others.
Answer: F
5.

Transparency is the speed at which other firms can understand the relationship of resources and
capabilities supporting a successful firms strategy.
Answer: T
6.

Tacit knowledge is knowledge that is easily communicated because it is deeply rooted in

employee experience or in a corporations culture.
Answer: F
7.

The center of gravity is the part of the chain that is most important to the company and the point
where its greatest expertise and capabilities lie.
Answer: T
8.

Linkages are the connections between the way one value activity is performed and the cost of
performance of another activity.
Answer: T
9.

A medium sized firm with several product lines in one industry should use a functional structure.

Answer: F
10.

Cultural integration is the degree to which members of a unit accept the norms, values, or other
culture content associated with the unit.
Answer: F
11.

Cultural integration is the extent to which units throughout an organization share a common
culture.
Answer: T
12.

Economies of scope result when unit costs are reduced by making large numbers of the same
product.
Answer: F
13.

The marketing mix refers to the particular combination of key variables under the corporations
control that can be used to affect demand and to gain competitive advantage.
Answer: T
14.
One of the price marketing mix variables is location.
Answer: F
15.

Financial leverage is the ratio of total debt to total assets.

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Answer: T
16.
R&D intensity is a principal means of decreasing marketing share in global competition.
Answer: F
17.

Product R&D concentrates on marketing and is concerned with product or product-packaging

improvements.
Answer: T
18.

Mass customization is the low-cost production of individually customized goods and services.

Answer: T
19.

Flexible manufacturing permits the low-volume output of custom-tailored products at relatively

low unit costs through economies of scope.
Answer: T
20.

The EFAS Table is one way to organize the internal factors into generally accepted categories of
strengths and weaknesses as well as to analyze how well a particular companys management is
responding to these specific factors in light of the perceived importance of these factors to the
company.
Answer: F
Multiple Choice
21.
Those critical strengths and weaknesses that are likely to determine if a firm will be able to take
advantage of opportunities while avoiding threats are called
a.
b.
c.
d.
e.
22.

Which of the following is NOT one of the four question areas Barney proposes in his VRIO
framework used to evaluate a firm's key resources?
a.
b.
c.
d.
e.

23.

durability
organization
rareness
value
imitability

According to Barneys VRIO framework, the question of the resource being costly for other
competitors to imitate relates to the concept of
a.
b.
c.
d.
e.

24.

SWOT.
competitive forces.
internal strategic factors.
quality accounting.
factor analysis.

value.
rareness.
imitability.
organization.
durability.

When a company determines a resources competitive advantage, Barney refers to this issue as
a.
b.
c.
d.

value.
rareness.
imitability.
organization.

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e.
25.
resource.
a.
b.
c.
d.
e.
26.

b.
c.
d.
e.

resources.
distinctive competencies.
core competencies.
critical success factors.
key performance factors.

resources.
distinctive competencies.
core competencies.
critical success factors.
key performance factors.

The activities that a corporation does exceedingly well are known as

a.
b.
c.
d.
e.

31.

critical success factor.

resource.
key performance factor.
external strategic factor.
internal strategic factor.

When a companys capabilities or competencies are superior to those of competitors, these are
known as
a.
b.
c.
d.
e.

30.

if it is significantly different from its own past, its key competitors, or the industry
average.
if it is the basis for the firm's founding.
if it is a variable to which top management allocates a large proportion of the
organization's resources.
if it is directly affected by the national economic outlook.
if legislation is enacted which requires the organization to concentrate.

Things that a corporation can do exceedingly well are called

a.
b.
c.
d.
e.

29.

value
rareness
imitability
organization
durability

An asset, competency, process, skill, or knowledge controlled by the corporation is called a(n)
a.
b.
c.
d.
e.

28.

According to Barneys VRIO framework, the exploitation of a resource pertains to the _____ of the

An internal variable can be considered a strategic factor and should be considered in strategic
decisions
a.

27.

durability.

corporate capabilities.
distinctive competencies.
core competencies.
critical success factors.
key performance factors.

The rate at which a firm's underlying resources and capabilities depreciate or become obsolete is
called

150

a.
b.
c.
d.
e.
32.

The ability of competitors to use duplicated resources and capabilities to imitate the other firm's
success is called
a.
b.
c.
d.
e.

33.

imitability.
reverse engineering.
transferability.
transparency.
durability.

Knowledge that can be easily articulated and communicated is known as

a.
b.
c.
d.
e.

36.

durability.
replicability.
reverse engineering.
transparency.
transferability.

The speed with which other firms can understand the relationship of resources and capabilities
supporting a successful firms strategy is called
a.
b.
c.
d.
e.

35.

imitability.
durability.
transferability.
transparency.
replicability.

When a company takes apart a competitors product in order to find out how it works, this
process is known as
a.
b.
c.
d.
e.

34.

replicability.
transparency.
imitability.
durability.
transferability.

tacit knowledge.
explicit knowledge.
imitable knowledge.
transferable knowledge.
durable knowledge.

_____ is more valuable because it provides companies with a sustainable competitive advantage
that is harder for competitors to imitate.
a.
b.
c.
d.
e.

Tacit knowledge
Explicit knowledge
Imitable knowledge
Transferable knowledge
Durable knowledge

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37.

Knowledge that is not easily communicated because it is deeply rooted in employee experience or
in a corporations culture is called
a.
b.
c.
d.
e.

38.

An organization's resources and capabilities can be placed on a continuum to the extent they are
durable and can't be imitated by another firm. This continuum is called the
a.
b.
c.
d.
e.

39.

functional crossroads.
center of gravity.
dynamic equilibrium.
R&D intensity.
economy of scope.

The two segments of the value chain of most industries are called
a.
b.
c.
d.
e.

42.

value chain.
continuum of sustainability.
strategic capability.
fully integrated activity set.
a strategic group.

The part of an industry's value chain that is most important to a company and the point where its
greatest expertise and capabilities lie is called the company's
a.
b.
c.
d.
e.

41.

continuum of sustainability.
board of directors continuum.
multidomestic-global continuum.
integration continuum.
gravity continuum.

A linked set of value-creating activities beginning with basic materials provided by suppliers and
ending with distributors getting the final product into the hands of the ultimate consumer is
called a(n)
a.
b.
c.
d.
e.

40.

tacit knowledge.
explicit knowledge.
imitable knowledge.
transferable knowledge.
durable knowledge.

top-down and bottom-up.

upper level and lower level.
upstream and downstream.
research and segmentation.
monopolistic and oligopolistic.

The approach to internal scanning and organizational analysis which examines the nature and
extent of the synergies that do or do not exist between the internal activities of a corporation is
called
a.
b.
c.
d.
e.

PIMS.
S.W.O.T..
functional analysis.
7-S framework.
corporate value chain analysis.

152

43.
When examining the corporate value chain of a particular product or service, which one of the
following is NOT one of the PRIMARY activities that usually occur?
a.
b.
c.
d.
e.
44.

One support activity in the corporate value chain is

a.
b.
c.
d.
e.

45.

identify the legal ramifications and responsibilities of their product or service.

examine the linkages among the product's or services value activities.
confirm that all variables have been included and taken into consideration.
ensure that quality management is adequately addressed.
examine the potential synergies among the corporation's product or business units.

The third step when analyzing the value-added chain is to

a.
b.
c.
d.
e.

48.

procurement process
human resources
technology development
logistics
infrastructure of planning, accounting, and finance

The second step when analyzing the value-added chain is to

a.
b.
c.
d.
e.

47.

inbound logistics.
marketing and sales.
installation.
technology development.
warehousing.

Which of the following is NOT one of the four support activities considered when examining the
value-added chain of a particular product or service?
a.
b.
c.
d.
e.

46.

operations
inbound and outbound logistics
auditing and accounting
marketing and sales
customer service

identify the legal ramifications and responsibilities of their product or service.

examine the linkages among the product's or services value activities.
confirm that all variables have been included and taken into consideration.
ensure that quality management is adequately addressed.
examine the potential synergies among the corporation's product or business units.

When the value chains of two separate products or services share activities, such as the same
marketing channels, in order to reduce costs, this is an example of
a.
b.
c.
d.
e.

economies of scope.
economies of scale.
economies of integration.
economies of learning.
outsourcing.

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49.

The structure of a corporation is often defined in terms of communication, authority, and work
flow. Which of the following describes a typical functional structure?
a.
b.
c.
d.
e.

50.

An organization's structure is
a.
b.
c.
d.
e.

51.

the physical building of the organization.

the patterns of beliefs of the employees.
often represented by an organizational chart.
the raw material assets of an organization.
the acceptable behavior demanded by the organization of its employees.

Which of the following best describes a simple structure?

a.
b.
c.
d.
e.

52.

Work is divided into subunits on the basis of areas like manufacturing, marketing,
and finance.
Most appropriate for large corporations with many product lines in several related
industries, with employees acting as specialists attempting to gain synergy among
divisional activities.
Most appropriate for small, entrepreneur-dominated companies with one or two product
lines that operate in a small niche market, with employees acting as jack-of-all trades.
Employees having two or more superiors, a project manager and a functional manager.
Most appropriate for large corporations with many product lines in several unrelated
industries, with employees acting as specialists but with no attempt at gaining synergy
among the divisions.

Work is divided into subunits on the basis of such functions as manufacturing,

marketing, finance, and human resources.
Most appropriate for large corporations with many product lines in several related
industries, with employees acting as functional specialists attempting to gain synergy
among divisional activities.
Most appropriate for small, entrepreneur-dominated companies with one or two
product lines that operate in a small niche market, with employees acting as
jack-of-all trades.
Employees having two or more superiors, a project manager and a functional manager.
Most appropriate for large corporations with many product lines in several unrelated
industries, with employees acting as functional specialists but with no attempt at gaining
synergy among the divisions.

Which one of the following best describes a divisional structure?

a.
b.
c.
d.
e.

Work is divided into subunits on the basis of such functions as manufacturing,

marketing, finance, and human resources.
Most appropriate for large corporations with many product lines in several related
industries, with employees acting as functional specialists attempting to gain
synergy among divisional activities.
Most appropriate for small, entrepreneur-dominated companies with one or two product
lines that operate in a small niche market, with employees acting as jack-of-all trades.
Employees having two or more superiors, a project manager and a functional manager.
Most appropriate for large corporations with many product lines in several unrelated
industries, with employees acting as functional specialists but with no attempt at gaining
synergy among the divisions.

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53.

Which one of the following best describes a conglomerate structure?

a.
b.
c.
d.
e.

54.

Which of the following is NOT a characteristic of a strategic business unit (SBU)?

a.
b.
c.
d.
e.

55.

b.
c.
d.
e.

A collection of beliefs, expectations, and values learned and shared by corporation's

members and transmitted from one generation of employees to another.
Corporate cultures are only temporary and can be easily changed.
Corporate culture norms are created which define acceptable behavior from top
management to operative employee.
Myths and rituals often emerge over time to explain why a certain aspect of the culture
is important.
Cultures have a powerful influence on the behavior of managers and can strongly affect
a corporation's ability to shift its strategic direction.

Corporate culture has two distinct attributes

a.
b.
c.
d.
e.

57.

distinctive capabilities
control of its business functions
a unique mission
identifiable competitors
an external market focus

According to the text, which one of the following is NOT descriptive of a corporation's culture?
a.

56.

Work is divided into subunits on the basis of such functions as manufacturing,

marketing, finance, and human resources.
Most appropriate for large corporations with many product lines in several related
industries, with employees acting as functional specialists attempting to gain synergy
among divisional activities.
Most appropriate for small, entrepreneur-dominated companies with one or two product
lines that operate in a small niche market, with employees acting as jack-of-all trades.
Employees having two or more superiors, a project manager and a functional manager.
Most appropriate for large corporations with many product lines in several
unrelated industries, with employees acting as functional specialists but with no
attempt at gaining synergy among the divisions.

differentiation and integration.

durability and imitability.
concern for people and concern for task.
intensity and integration.
amount of complexity and tolerance of change.

What is the attribute of corporate culture that is the degree to which members of a unit accept the
norms, values, or other culture content associated with the unit?
a.
b.
c.
d.
e.

integration
strength
intensity
coordination
unity

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58.

What is the attribute of corporate culture that is the extent to which units within an organization
share a common culture?
a.
b.
c.
d.
e.

59.

Which of the following is a function of corporate culture?

a.
b.
c.
d.
e.

60.

market position.
product life cycle.
market segmentation.
marketing mix.
marketing leverage.

Through market research, corporations can target their various products or services so that
management can discover what niches to seek or develop, and how to minimize competitive
pressure. This is descriptive of
a.
b.
c.
d.
e.

63.

cultural integration.
cultural diversification.
cultural intensity.
cultural strategy.
cultural prerogative.

The selection of a specific area for marketing concentration in terms of product and geographical
location is called the
a.
b.
c.
d.
e.

62.

It encourages a laissez faire set of attitudes.

It encourages flexibility and thus constant change.
It conveys a sense of identity for employees.
It generates creative approaches to new situations.
It focuses employee commitment on their own careers.

The depth of an organizations culture is also known as

a.
b.
c.
d.
e.

61.

integration
strength
intensity
coordination
unity

marketing position.
product life cycle.
market segmentation.
marketing mix.
marketing leverage.

The particular combination of product, place, promotion, and price is called

a.
b.
c.
d.
e.

marketing position.
product life cycle.
market segmentation.
marketing mix.
marketing leverage.

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64.

An example of the promotion variable of the marketing mix is

a.
b.
c.
d.
e.

65.

An example of the price variable of the marketing mix is

a.
b.
c.
d.
e.

66.

advertising.
discounts
location.
services.
quality.

sales promotion.
transport.
packaging.
discount.
style.

An example of the product variable of the marketing mix is

a.
b.
c.
d.
e.

publicity.
payment period.
credit term.
transport.
features.

67.

A graph showing time plotted against the dollar sales of a product as it moves from introduction
through growth and maturity to decline is called
a.
marketing position.
b.
product life cycle.
c.
market segmentation.
d.
marketing mix.
e.
marketing leverage.

68.

As compared to a firm with low financial leverage, a firm with a high amount of financial
leverage in an expanding market should have
a.
b.
c.
d.
e.

69.

The analysis and ranking of possible investments in terms of additional outlays and additional
needed receipts is called
a.
b.
c.
d.
e.

70.

lower profits.
higher profits
higher earnings per share.
lower earnings per share.
higher sales revenue.

financial leverage.
investment evaluation.
strategic study.
break-even analysis.
capital budgeting.

When the debt level from the sale of bonds is raised, there is an increase in the
a.
b.
c.
d.
e.

revenues generated.
net profit.
break-even point.
total assets.
stock price.

157

71.

The ratio of total debt to total assets is known as

a.
b.
c.
d.
e.

72.

Which of the following is NOT descriptive of the function of the research and development
department?
a.
b.
c.
d.
e.

73.

economies of scope versus operating leverage.

the R&D mix.
technological competence.
technological discontinuity.
technology transfer.

When laboratories are developed to focus on theoretical problem areas, scientists are conducting
a.
b.
c.
d.
e.

77.

economies of scope versus operating leverage.

the R&D mix.
technological competence.
technological discontinuity.
technology transfer.

The process of taking a new technology from the laboratory to the marketplace is called
a.
b.
c.
d.
e.

76.

11.5%, 1%
12.5%, 1%
1%, 12.5%
1%, 11.5%
14.5%, 1%

The ability of a corporation to effectively and efficiently manage its research and development
effort is referred to as
a.
b.
c.
d.
e.

75.

Conducted by scientists in well-equipped expensive laboratories.

Oriented toward marketing and is concerned with product or product-packaging
improvement.
Takes on an engineering orientation concentrating on quality control and the
development of design specifications and improved production equipment.
Taking the design and operationalizing the plan into mass production.
Suggesting and implementing a corporation's technological strategy in light of its
corporate objectives and policies.

According to the text, the U.S. computer software company spends an average of _____ of its
sales dollars for R&D, whereas the paper and forest products industry spends _____.
a.
b.
c.
d.
e.

74.

budgeting leverage.
capital finance.
capital budgeting.
financial leverage.
financial budgeting.

basic R&D.
product R&D.
engineering R&D.
process R&D.
R&D mix.

When scientists focus on product or product-packaging improvements, this is known as

a.

basic R&D.

158

b.
c.
d.
e.
78.

When scientists concentrate on quality control and the development of design specifications, this
is referred to as
a.
b.
c.
d.
e.

79.

economies of scope versus operating leverage.

technology transfer.
the R&D mix.
technological discontinuity.
a disjunctive learning or experience curve.

When technological discontinuity occurs, Foster recommends that

a.
b.
c.
d.
e.

82.

basic R&D.
product R&D.
engineering R&D.
process R&D.
R&D mix.

The displacement of one technology by another, as shown by two S-shaped curves on a graph, is
referred to as
a.
b.
c.
d.
e.

81.

basic R&D.
product R&D.
engineering R&D.
process R&D.
R&D mix.

The combination of basic, product, and process R&D is research known as

a.
b.
c.
d.
e.

80.

product R&D.
engineering R&D.
process R&D.
R&D mix.

R&D dollars should be allocated to the technology with more

potential.
R&D dollars should be spent on the original technology.
R&D dollars should be spent to advance the original
technology incrementally.
R&D dollars should be spent equally among the technologies.
R&D dollars should be halted until an evaluation can be
made.

The proposition that silicon chips double in complexity every 18 months is referred to as
a.
b.
c.
d.
e.

Ohms Law.
Porters Five Forces Model.
Moores Law.
Mintzbergs Rule.
Keynesians Theory.

159

83.

Moores Law was developed in _____ as an explanation for technological discontinuity.

a.
b.
c.
d.
e.

84.

In Christensens book, The Innovators Dilemma, managers remain with certain technologies
based on
a.
b.
c.
d.
e.

85.

c.
d.
e.

continuous system
debt capacity
chronological processing
operating leverage
intermittent system

Which of the following terms best describes a system in which parts or steps have a specific order
in which to be assembled or processed?
a.
b.
c.
d.
e.

88.

make sure all the products or services are producing maximum revenue.
develop and operate a system that will produce the required number of products or
services, at a given cost, within an allotted time.
make sure the process has a high quality control.
ensure that the process is manufactured or delivered as efficiently as possible.
interface with the other functional departments to coordinate their operations in
avoiding duplication of effort.

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.
b.
c.
d.
e.

87.

return of investment.
net present value.
cost reduction.
total operating expenses.
time spent during technology implementation.

According to the text, the primary task of the manufacturing or service manager is to
a.
b.

86.

1981.
1970.
1994.
1965.
2000.

continuous system
debt capacity
chronological processing
operating leverage
intermittent system

The impact of a specific change in sales volume on net operating income is referred to as the
a.
b.
c.
d.
e.

continuous system.
chronological processing.
operating leverage.
debt capacity.
intermittent system.

160

89.

The concept that refers to a manufacturing facility's ability to reduce unit production costs of a
new product by some fixed percentage as production increases is referred to as
a.
b.
c.
d.
e.

90.

Which one of the following is NOT descriptive of the experience curve?

a.
b.
c.
d.
e.

91.

c.
d.
e.

high-volume output of mass produced products.

the cost advantages of an intermittent system with the customer-oriented advantages of a
continuous system.
the learning curve is longer since technology is automated.
economies of scope over economies of scale.
economies of scale over economies of scope.

The low cost product of individually customized goods and services is called
a.
b.
c.
d.
e.

93.

It is very useful because it is consistent within the industry for all involved
organizations over time.
Used to estimate the production cost of a product produced by newly introduced
techniques or processes.
Used to estimate the production costs of a product never before made with the present
techniques and process.
Simply a line showing the relationship between unit production costs and the number of
consecutive units of production.
Shows that production costs decline by some fixed percentage as production in units
doubles.

Flexible manufacturing emphasizes

a.
b.

92.

the R & D mix.

the experience curve.
technological competence.
break-even analysis.
technology transfer.

mass customization.
technological discontinuity.
operating leverage.
operating revenue.
economies of scope.

Which one of the following is NOT descriptive of human resources managers?

a.
b.
c.
d.
e.

Their job is to improve the match between individuals and the job.
Human resource managers are concerned with wage and salary administration, labor
negotiation, job design, and employee morale.
Human relations are a peripheral factor in the internal strategy of most
corporations.
Human resources managers are concerned with the selection and training of new
employees, performance appraisals, and promotion potential.
Human resources managers are concerned about recruitment and personnel planning for
the future.

161

94.

Strategic managers must be concerned with human resource management because

a.
b.
c.
d.
e.

95.

In order to move through a products development stage, companies like Motorola and Chrysler
are using
a.
b.
c.
d.
e.

96.

they are experiencing a renewed sense of power.

U.S. membership is generally declining.
they have lessening significance for the management of multinational corporations.
they are maintaining an adversarial position to try to hold onto their membership.
corruption and scandal will continue to taint their existence.

Human resource departments have found that to reduce employee dissatisfaction and
unionization efforts, they must
a.
b.
c.
d.
e.

99.

simultaneous strategy.
participatory planning.
jointly-designed objectives.
concurrent engineering.
cooperative design.

According to the text, the current trend regarding unions is that

a.
b.
c.
d.
e.

98.

concurrent engineering.
cross-functional work teams.
advisory committees.
task forces.
continuous engineering.

The term that describes putting once isolated specialists together to work and compare notes in a
collective product design effort is called
a.
b.
c.
d.
e.

97.

dealing with people is their primary job.

quality of work life is more important than strategic management.
they must be aware of the ability and willingness of the workforce to implement
new strategies.
workers are more likely to go on strike if management attempts to cross them.
they must be aware of the possibility and potential of unionism.

significantly increase their wage rates.

shorten the work week to allow for more leisure time.
offer a wider variety of benefits and attractive enticements.
guarantee their workers life time jobs.
consider the quality of work life in the design of jobs.

The term that describes the degree to which members of a work organization are able to satisfy
important personal needs through their experiences in the organization is called
a.
b.
c.
d.
e.

collective bargaining.
codetermination.
quality of work life.
employee involvement.
participatory practices.

162

100.

Which one of the following is NOT one of the four methods to improve the corporation's quality
of work life?
a.
b.
c.
d.
e.

101.

The PRIMARY task of the manager of information systems is to

a.
b.
c.
d.
e.

102.

Improve the work environment.

Introduce participative problem-solving.
More responsive management.
Introduce innovative reward systems.
Restructuring work.

prevent unlawful usage of the information from the system.

make sure the information contained in the system is up-to-date and accurate.
monitor the input of information into the information system.
design and manage the flow of information in a corporation to improve productivity
and decision making.
ensure that only those who have authorized permission have access to the information
system.

The technique recommended by the text to summarize an analysis of internal strategic factors is
called
a.
b.
c.
d.
e.

IFAS.
EFAS.
SFAS.
S.W.O.T..
the issues priority matrix.

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