Chapter 8 Implementing Strategies:

Marketing, Finance/Accounting, R&D,

and MIS Issues
53) What percent of strategies formulated
are successfully implemented?
A) Less than 10 percent
Answer: A
54) What level of management is directly
affected by strategy implementation?
E) All of the above
Answer: E
55) All of the following are examples of
marketing decisions that may require
policies except:
A) to be a market leader or follower.
Answer: A
56) Which two variables rank as marketing's
most important contributions to strategic
management?
E) Market segmentation and product
positioning.
Answer: E
57) Subdividing a market into distinct
subsets of customers according to their
needs and the way they buy and use a
product or service is known as
D) market segmentation.
Answer: D
58) Why is market segmentation an
important variable in strategy
implementation?
E) All of the above
Answer: E

factories to produce desirable levels without

extra shifts, overtime or subcontracting?
D) Supply and demand
Answer: D
63) Which variable would be considered
part of the "product" element of the
marketing mix?
B) Packaging
Answer: B
64) Which variable would be considered
part of the "place" element of the marketing
mix?
D) Sales territory
Answer: D
65) What entails developing schematic
representations that reflect how your
products or services compare to competitors'
on dimensions most important to success in
the industry?
A) Positioning
Answer: A
66) Which is not a required step in product
positioning?
B) Serve two segments with the same
strategy
Answer: B
67) Looking for a vacant niche helps a
company determine
C) the best place to position a product.
Answer: C
68) Multidimensional scaling is used to
determine
D) product positioning.
Answer: D

59) Which of the following variables are not

directly affected by market segmentation?
C) Process
Answer: C
60) Why is market segmentation an
important variable in the strategyimplementation process?
C) It directly affects marketing mix
variables.
Answer: C
61) Perhaps the most dramatic new market
segmentation strategy is the
A) targeting of regional tastes.
Answer: A
62) Matching of which factors would allow

69) Which of the following is true about two

different market segments?
B) They usually require different marketing
strategies.
Answer: B
70) Which of these is not a rule of thumb
when using product positioning as a
strategy-implementation tool?
C) "Try to serve more than one segment
with the same strategy."
Answer: C
71) Which of the following is not an
example of a decision that may require
finance/accounting policies?
E) To determine the amount of product
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diversification
Answer: E
72) In the low earnings period, too much
________ in the capital structure of an
organization can endanger stockholders'
return and jeopardize company survival.
A) debt
Answer: A
73) Which of the following is not true
regarding stock issuances?
A) They are always better than debt for
raising capital.
Answer: A
74) What is the most widely used technique
for determining the best combination of debt
and stock?
A) Debt-to-stock ratio
Answer: B
75) After completing an EPS/EBIT analysis,
what conclusions would you make if the
debt line is above the stock line throughout
the range of EBIT on the graph?
A) Debt appears to be the best financing
alternative.
Answer: A
76) What becomes a more attractive
financing technique when cost of capital is
high?
A) Stock issuance
Answer: A
77) What is a drawback of using only equity
to raise capital?
C) Dilution of the control of the company
Answer: C
78) A benefit of using projected balance
sheets and income statements is that
A) an organization can compute projected
financial ratios under various scenarios.
Answer: A
79) Projected financial analysis is an
important strategy-implementation
technique because
A) it is an exact measurement of financial
costs in the future.
Answer: C

D) Projected financial statement analysis

Answer: D
81) The first step in performing projected
financial analysis is to
D) prepare the projected income statement.
Answer: D
82) In preparing projected statements, to
project cost of goods sold and the expense
items in the income statement, which of
these methods is recommended?
D) Price-earnings ratio method
Answer: C
83) Which element in the projected income
statement cannot be forecasted using the
percentage-of-sales method?
D) Interest expense
Answer: D
84) Retained earnings is obtained by
subtracting
A) any dividends to be paid for that year
from net income.
Answer: A
85) In projected financial statements, what is
used as a plug figure?
C) The cash account
Answer: C
86) Which of these is the most common type
of budgeting time frame?
C) Annual
Answer: C
87) If a firm incurs a loss during a particular
year, or if the firm had positive net income
but paid out dividends more than the net
income, its retained earnings for that year
will most likely be
D) a negative number.
Answer: D
88) What is the most common type of
financial budget?
A) Cash
Answer: A
89) Who has mandated that every publicly
held company in the United States must
issue an annual cash-flow statement in
addition to the usual financial reports?
D) FASB
Answer: D
90) How should financial budgets be
thought of?
B) As a method for obtaining the most

80) What is a central strategyimplementation technique that allows an

organization to examine the expected results
of various actions and approaches?
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productive and profitable use of an

organization's resources.
Answer: B
91) What is a limitation of using financial
budgets?
E) All of the above
92) Which of the following is not an
accepted for determining a business's worth?
C) What the firm's return on investment has
been.
Answer: C
93) Which item is not included in net worth?
A) Fixed assets
Answer: A
94) Which method of determining a firm's
net worth divides the market price of the
firm's stock by the annual earnings per
share, and multiplies this number by the
firm's average net income for the past five
years?
C) Price-earnings ratio method
Answer: C
95) The valuation of a firm's worth
B) requires both qualitative and quantitative
skills.
Answer: B
96) The Financial Accounting Standard
Board (FASB) Rule 142 deals with
C) goodwill.
Answer: C
97) In the context of a balance sheet,
goodwill represents
A) a premium paid over the book value of
an acquisition.
Answer: A
98) A conservative rule of thumb is to
establish a business's worth as ________ the
firm's current annual profit.
C) five times
Answer: C
99) If an initial stock issuance is at or under
$1 million, what is the average total cost
paid to lawyers, accountants and
underwriters?
C) 25 percent
Answer: C
100) R&D employees and managers
perform all of the following tasks except:
C) researching resource availability.
Answer: C

101) Which of the following is not a major

approach to R&D?
D) To be a liquidator
Answer: D
102) The attitude of U.S. firms toward
research and development is best described
by which of the following?
A) The veil of secrecy is being lifted,
resulting in more collaboration.
Answer: A
103) Information collection, retrieval, and
storage can be used to create competitive
advantages in ways such as
E) All of the above
Answer: E

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