Chapter 13 Strategy, Balanced Scorecard, and Strategic Profitability Analysis
Objective 13.1
1) ________ describes how an organization matches its own capabilities with the opportunities in the
marketplace to accomplish its overall objectives.
A) Strategy
B) Planning
C) Learning and growth perspective
D) Customer perspective
Answer: A
Diff: 1
Terms: total quality management (TQM)
Objective: 1
AACSB: Reflective thinking
2) In general, profit potential ________ with greater competition, stronger potential entrants, products
that are similar, and more-demanding customers and suppliers.
A) increases
B) stays constant
C) decreases
D) increases exponentially
Answer: C
Diff: 1
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
3) Which of the following is NOT a force that shapes an organization's profit potential?
A) Competitors
B) Equivalent products
C) Bargaining power of input suppliers
D) All of these answers are correct.
Answer: D
Diff: 2
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
1
Copyright © 2012 Pearson Education, Inc.
,4) Which of the following is a force that shapes an organization's profit potential?
A) Investors
B) Potential entrants into the market
C) Creditors
D) Research and development
Answer: B
Diff: 2
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
5) ________ is an organization's ability to offer products or services that are perceived by its customers
as being superior and unique relative to those of its competitors.
A) Strategy
B) Product differentiation
C) Cost leadership
D) The balanced scorecard
Answer: B
Diff: 1
Terms: product differentiation
Objective: 1
AACSB: Reflective thinking
6) ________ is an organization's ability to achieve low costs relative to competitors through productivity
and efficiency improvements, elimination of waste, and tight cost control.
A) Strategy
B) Product differentiation
C) Cost leadership
D) The balanced scorecard
Answer: C
Diff: 1
Terms: cost leadership
Objective: 1
AACSB: Reflective thinking
7) An organization that is using the product differentiation approach would:
A) focus on tight cost control
B) carefully cultivate their brands
C) provide products that are similar to competitors
D) offer products at a lower cost than competitors
Answer: B
Diff: 2
Terms: product differentiation
Objective: 1
AACSB: Reflective thinking
2
Copyright © 2012 Pearson Education, Inc.
,8) An organization that is using the cost leadership approach would:
A) incur costs for innovative R&D
B) provide products at a higher cost than competitors
C) focus on productivity through efficiency improvements
D) bring products to market rapidly
Answer: C
Diff: 2
Terms: cost leadership
Objective: 1
AACSB: Reflective thinking
Answer the following questions using the information below:
Stewart Corporation plans to grow by offering a sound system, the SS3000, that is superior and unique
from the competition. Stewart believes that putting additional resources into R&D and staying ahead of
the competition with technological innovations is critical to implementing its strategy.
9) Stewart's strategy is:
A) product differentiation
B) downsizing
C) reengineering
D) cost leadership
Answer: A
Diff: 2
Terms: product differentiation
Objective: 1
AACSB: Reflective thinking
Answer the following questions using the information below:
Riter Corporation manufactures water toys. It plans to grow by producing high-quality water toys at a
low cost that are delivered in a timely manner. There are a number of other manufacturers who produce
similar water toys. Riter believes that continuously improving its manufacturing processes and having
satisfied employees are critical to implementing its strategy.
10) Riter's strategy is:
A) product differentiation
B) downsizing
C) reengineering
D) cost leadership
Answer: D
Diff: 2
Terms: cost leadership
Objective: 1
AACSB: Ethical reasoning
3
Copyright © 2012 Pearson Education, Inc.
, Answer the following questions using the information below:
Meale Company makes a household appliance with model number X500. The goal for 2012 is to reduce
direct materials usage per unit. No defective units are currently produced. Manufacturing conversion
costs depend on production capacity defined in terms of X500 units that can be produced. The industry
market size for appliances increased 10% from 2011 to 2012. The following additional data are available
for 2011 and 2012:
2011 2012
Units of X500 produced and sold 10,000 11,000
Selling price $100 $95
Direct materials (square feet) 30,000 29,000
Direct material costs per square foot $10 $11
Manufacturing capacity for X500 (units) 12,500 12,000
Total conversion costs $250,000 $240,000
Conversion costs per unit of capacity $20 $20
11) Which strategy is Meale's Corporation pursuing?
A) Product differentiation, because the units produced and sold increased.
B) Product differentiation, because total conversion costs decreased.
C) Cost leadership, because direct material costs per square foot increased.
D) Cost leadership, because the selling price decreased.
Answer: D
Diff: 2
Terms: cost leadership
Objective: 1
AACSB: Analytical skills
12) Strategy describes how an organization matches its own capabilities with the opportunities in the
marketplace to accomplish its overall objectives.
Answer: TRUE
Diff: 1
Terms: total quality management (TQM)
Objective: 1
AACSB: Reflective thinking
13) One of the five forces of industry analysis is understanding the bargaining power of your input
suppliers.
Answer: TRUE
Diff: 1
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
4
Copyright © 2012 Pearson Education, Inc.
Objective 13.1
1) ________ describes how an organization matches its own capabilities with the opportunities in the
marketplace to accomplish its overall objectives.
A) Strategy
B) Planning
C) Learning and growth perspective
D) Customer perspective
Answer: A
Diff: 1
Terms: total quality management (TQM)
Objective: 1
AACSB: Reflective thinking
2) In general, profit potential ________ with greater competition, stronger potential entrants, products
that are similar, and more-demanding customers and suppliers.
A) increases
B) stays constant
C) decreases
D) increases exponentially
Answer: C
Diff: 1
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
3) Which of the following is NOT a force that shapes an organization's profit potential?
A) Competitors
B) Equivalent products
C) Bargaining power of input suppliers
D) All of these answers are correct.
Answer: D
Diff: 2
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
1
Copyright © 2012 Pearson Education, Inc.
,4) Which of the following is a force that shapes an organization's profit potential?
A) Investors
B) Potential entrants into the market
C) Creditors
D) Research and development
Answer: B
Diff: 2
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
5) ________ is an organization's ability to offer products or services that are perceived by its customers
as being superior and unique relative to those of its competitors.
A) Strategy
B) Product differentiation
C) Cost leadership
D) The balanced scorecard
Answer: B
Diff: 1
Terms: product differentiation
Objective: 1
AACSB: Reflective thinking
6) ________ is an organization's ability to achieve low costs relative to competitors through productivity
and efficiency improvements, elimination of waste, and tight cost control.
A) Strategy
B) Product differentiation
C) Cost leadership
D) The balanced scorecard
Answer: C
Diff: 1
Terms: cost leadership
Objective: 1
AACSB: Reflective thinking
7) An organization that is using the product differentiation approach would:
A) focus on tight cost control
B) carefully cultivate their brands
C) provide products that are similar to competitors
D) offer products at a lower cost than competitors
Answer: B
Diff: 2
Terms: product differentiation
Objective: 1
AACSB: Reflective thinking
2
Copyright © 2012 Pearson Education, Inc.
,8) An organization that is using the cost leadership approach would:
A) incur costs for innovative R&D
B) provide products at a higher cost than competitors
C) focus on productivity through efficiency improvements
D) bring products to market rapidly
Answer: C
Diff: 2
Terms: cost leadership
Objective: 1
AACSB: Reflective thinking
Answer the following questions using the information below:
Stewart Corporation plans to grow by offering a sound system, the SS3000, that is superior and unique
from the competition. Stewart believes that putting additional resources into R&D and staying ahead of
the competition with technological innovations is critical to implementing its strategy.
9) Stewart's strategy is:
A) product differentiation
B) downsizing
C) reengineering
D) cost leadership
Answer: A
Diff: 2
Terms: product differentiation
Objective: 1
AACSB: Reflective thinking
Answer the following questions using the information below:
Riter Corporation manufactures water toys. It plans to grow by producing high-quality water toys at a
low cost that are delivered in a timely manner. There are a number of other manufacturers who produce
similar water toys. Riter believes that continuously improving its manufacturing processes and having
satisfied employees are critical to implementing its strategy.
10) Riter's strategy is:
A) product differentiation
B) downsizing
C) reengineering
D) cost leadership
Answer: D
Diff: 2
Terms: cost leadership
Objective: 1
AACSB: Ethical reasoning
3
Copyright © 2012 Pearson Education, Inc.
, Answer the following questions using the information below:
Meale Company makes a household appliance with model number X500. The goal for 2012 is to reduce
direct materials usage per unit. No defective units are currently produced. Manufacturing conversion
costs depend on production capacity defined in terms of X500 units that can be produced. The industry
market size for appliances increased 10% from 2011 to 2012. The following additional data are available
for 2011 and 2012:
2011 2012
Units of X500 produced and sold 10,000 11,000
Selling price $100 $95
Direct materials (square feet) 30,000 29,000
Direct material costs per square foot $10 $11
Manufacturing capacity for X500 (units) 12,500 12,000
Total conversion costs $250,000 $240,000
Conversion costs per unit of capacity $20 $20
11) Which strategy is Meale's Corporation pursuing?
A) Product differentiation, because the units produced and sold increased.
B) Product differentiation, because total conversion costs decreased.
C) Cost leadership, because direct material costs per square foot increased.
D) Cost leadership, because the selling price decreased.
Answer: D
Diff: 2
Terms: cost leadership
Objective: 1
AACSB: Analytical skills
12) Strategy describes how an organization matches its own capabilities with the opportunities in the
marketplace to accomplish its overall objectives.
Answer: TRUE
Diff: 1
Terms: total quality management (TQM)
Objective: 1
AACSB: Reflective thinking
13) One of the five forces of industry analysis is understanding the bargaining power of your input
suppliers.
Answer: TRUE
Diff: 1
Terms: five force industry analysis
Objective: 1
AACSB: Reflective thinking
4
Copyright © 2012 Pearson Education, Inc.
