TEST BANK for Strategic Healthcare Management Planning and Execution, 2nd Edition Stephen Walston

TEST BANK Strategic Healthcare Management: Planning and Execution 2nd Edition Stephen L. Walston.

TABLE OF CONTENTS Chapter 1. Strategy and Strategic Management Chapter 2. Understanding Market Structure and Strategy Chapter 3. Business Models and Common Strategies Chapter 4. Growth and Integration Strategies Chapter 5. Strategic Alliances Chapter 6. Stakeholders, Values, Mission, and Vision Chapter 7. The External Environment and Strategy Chapter 8. The Internal Environment and Strategy Chapter 9. Strategic Financial Analysis Chapter 10. Development and Execution of a Strategic Plan Chapter 11. Business Plans and Strategic Management Chapter 12. Organizational Structure and Strategy Chapter 13. Strategic Change Management Chapter 14. Strategic Leadership Chapter 15. Implementing, Monitoring, and Evaluating Strategy

Chapter 1 1. Generally, strategy originated as a need in military events. *a. True b. False

2. The growth of the importance of strategy in healthcare has been primarily driven by the growth of HMOs in the United States. a. True *b. False

3. Private healthcare organizations rarely employ cooperative strategies. a. True *b. False

4. Strategy can be considered a tool and means for making better decisions. *a. True b. False

5. Prospective strategy is always the most useful in developing and making strategic decisions. a. True *b. False

6. Emergent strategies enable an organization to learn what actions its competitors might take. *a. True b. False

7. Corporate strategy must originate with functional strategy. a. True *b. False

8. Business-level strategies focus on specific product lines. *a. True b. False

9. An organization explicitly expresses its business unit strategy in its functional strategy. a. True *b. False

10. Organizations must use either mostly deliberate, prospective strategies or emergent strategies, not a mix of the two. a. True *b. False

11. In terms of the dimensions of competition versus collaboration and public versus private benefit, a medical equipment company would probably have a. high competition and high public benefit *b. high competition and high private benefit c. high collaboration and high private benefit d. high collaboration and high public benefit

13. An organization may use emergent strategies when a. consumer preferences change over a decade b. the organization has a clearly defined mission *c. product and market uncertainty exists d. an industry has a long period of success

14. Functional strategies should *a. align with corporate strategies b. be derived by line workers c. determine which products will be produced d. decide which markets to penetrate

15. Strategies are used to a. guide a company in creating its mission and vision b. implement personnel policies *c. guide behaviors to achieve an organization's mission and goals d. determine which organizational values are most important

Chapter 2 1. Influences from the societal environment do not affect healthcare greatly. a. True *b. False

2. Chronic disease is and will be a critical factor in designing healthcare strategies. *a. True b. False

3. Women have much higher utilization of obstetrics than men do. *a. True b. False

4. Patient origin studies enable organizations to better understand where their patients live. *a. True b. False

5. The healthcare industry is one of the most heavily regulated sectors in the United States. *a. True b. False

6. Major advances in healthcare information technology are predicted to be made in the twenty-first century. *a. True b. False

7. It is reasonably easy to determine the boundaries of different industries. a. True *b. False

8. People working for a company is an example of a market. *a. True b. False

9. Industries cannot exist without appropriate markets. *a. True b. False

10. Monopolistic competition involves just one large organization. a. True *b. False

11. Many markets exhibit actual perfect competition. a. True *b. False

12. Most healthcare systems in the United States exist in oligopolistic market structures. *a. True b. False

13. History has shown that monopolists frequently make good decisions that directly benefit their customers. a. True *b. False

14. The four-firm concentration ratio is more accurate and more often used than other measures of market concentration. a. True *b. False

15. Which is not part of the societal environment? a. General economic conditions b. Population growth c. Government laws *d. Product development

16. Why are population demographics so important in healthcare strategy? *a. Age directly affects the amount and type of healthcare used. b. Men tend to make healthcare decisions for their family.

c. Demographers often make regulations. d. Gender is the most important indicator of healthcare use.

17. Patient or customer origin studies identify a. the birthplace of critical customer segments b. the percentage of minority populations using a facility *c. the proportion of customers or patients coming from different zip codes d. the combination of minorities and gender differences among all patients

18. Which would not be considered medical technology? a. New medical procedures *b. Newly hired personnel c. New medications d. Different ways to complete a surgery

19. A healthcare industry includes a. an exchange locale b. groups of buyers in a specific location *c. groups of sellers of products that are close substitutes d. a series of exchanges that transfer a product to a new owner

20. What do markets generally not exchange? a. Information b. Products c. Money *d. Effort

22. In which market structure would there be the most market power? *a. Monopoly b. Oligopoly c. Monopolistic competition d. Perfect competition

23. Perfect competition is distinct from the other market structures in that its products *a. are undifferentiated b. are distinguished on the basis of quality c. are of low quality d. change more rapidly

24. In which market structure is price of greatest strategic consideration? a. Monopoly b. Oligopoly c. Monopolistic competition *d. Perfect competition

25. Physician practices in the United States could best be considered to exist in which market structure? a. Monopoly b. Oligopoly *c. Monopolistic competition d. Perfect competition

26. Oligopolies do not exhibit a. domination by a few firms b. high entry and exit barriers *c. easy ability to raise prices d. frequent governmental controls

27. Monopolists' primary strategic focus is on a. price b. differentiating their products and services c. increasing their market share *d. keeping potential competitors out of the market

28. In which market structure can consumers most easily find substitutes? a. Monopoly *b. Perfect competition c. Monopolistic competition d. Oligopoly

29. Market concentration can be determined by using which two formulas? *a. Herfindahl-Hirschman Index and four-firm concentration ratio b. Heckman Index and four-firm concentration ratio c. FTC ratio and four-firm concentration ratio d. FTC ratio and six-firm market ratio

30. Which of the following is not a phase of the product life cycle?

a. Maturity b. Decline c. Growth *d. Deficit

31. In which phase of the product life cycle might it be best to enter a market? a. Emerging *b. Growth c. Maturity d. Decline

32. What is not correct regarding the product life cycle? *a. It may not apply to fad products. b. Products can skip stages. c. The duration of each stage can vary dramatically. d. Changing technologies and consumer demand affect it.

Chapter 3 1. A common definition of "business model" has been established. a. True *b. False

2. Isomorphic organizations have similar forms, products, and practices. *a. True b. False

3. Insurance companies perform a "middle-man" function as part of the current healthcare business model. *a. True b. False

4. The US healthcare business model is shifting to focus on prevention and disease reduction. *a. True b. False

5. Most innovation in healthcare has destroyed existing competencies. a. True *b. False

6. Broad differentiated strategies are most effective in large markets with diverse buyer preferences and rapid product innovation. *a. True b. False

7. The ease with which a product can be fixed if broken could be considered a means of differentiating. *a. True b. False

8. Successful differentiation in healthcare would allow an organization to charge higher prices. *a. True b. False

9. Focused factories do not exist in healthcare. a. True *b. False

10. Middle strategies are almost always difficult to sustain. a. True *b. False

11. First movers in a market can use the learning curve to become more efficient than their later competitors. *a. True b. False

12. First movers almost always become the market leader in a growing industry. a. True *b. False

13. What is not one of the components of the business model discussed in the text? a. Inputs b. Revenue generation *c. Outputs d. Processes

14. Why is it difficult to change just one component of a business model? *a. All the components interrelate and are affected by the other components. b. Customers will not accept a change of just one component. c. Often the change will cause the organization to move into another industry. d. The outputs are too difficult to change.

15. The US healthcare business model a. makes morbidity and mortality lower than they are in most other industrialized nations b. spends most of its resources on primary care treatments c. coordinates care through a federal government agency

*d. is often seen as fragmented and inefficient

16. Which of the following statements does not describe disruptive innovation? *a. It increases scientific discovery by motivating venture capital. b. It is enabled by technological and business model innovation. c. It enables new organizations to better compete in a marketplace. d. It is created by the discovery of competency-destroying innovation.

17. Which combination of generic strategies would be the most difficult market position in healthcare? *a. Broad segment and low cost b. Broad segment and differentiated c. Focused segment and differentiated d. Focused segment and low cost

18. A broad-segment, low-cost strategy requires all of the following to be successful except a. high asset turnover b. a narrow product line of standardized, no-frill goods *c. highly centralized decision making d. low-cost distribution system

19. Which is not mentioned in the text as a means of differentiating a product or service? a. Symbols b. Distribution coverage *c. Integration of processes and inputs d. Courtesy

20. Concierge medicine enables *a. greater differentiation of healthcare services b. higher costs for healthcare c. better overall healthcare coverage d. improved vaccination rates for a population

21. Which of the following shifts in strategy has not been known to occur?

a. Low cost and high differentiation to high cost and high differentiation *b. Low cost and high differentiation to high cost and low differentiation c. Low cost and low differentiation to high cost and low differentiation d. High cost and high differentiation to high cost and low differentiation

22. First movers in healthcare can create entry barriers and sustainable advantage through a. low-cost, efficient distribution centers *b. technological advantage and reputation among customers c. constant innovation and acquisitions d. market pricing and marketing

23. The success of a first mover may depend on which two external factors? a. Average production cost and marketing expertise b. Steepness of the learning curve and the isomorphic nature of the market c. Market demographics and regulations *d. Speed of innovation and rate of market demand

24. A first-mover advantage may be only short term if which two factors are present? *a. Rapid technological change and rapid change in market demand b. Slow technological change and rapid change in market demand c. Rapid technological change and slow change in market demand d. Slow technological change and slow change in market demand

Chapter 4 1. Organizations use growth for reasons other than to gain market share and more profits. *a. True b. False

2. The major advantages of internal expansion are greater control by managers and preservation of an organization's culture. *a. True b. False

3. Internal expansion is almost always the best choice in any condition. a. True *b. False

4. Acquisition or merger may combine incompatible cultures and produce extreme conflict as a result. *a. True b. False

5. Networks enable the acquisition of knowledge that supports long-term sustainability. a. True *b. False

6. "Vertical expansion" and "vertical integration" are essentially the same terms. a. True *b. False

7. There are few differences between the flow of vertical integration in healthcare and that in other industries. a. True *b. False

8. Research has shown that healthcare organizations often obtain efficiencies from vertical integration.

a. True *b. False

9. Transfer pricing often creates internal conflict in vertically integrated companies. *a. True b. False

10. Many believe that accountable care organizations will necessitate a lot of integration efforts. *a. True b. False

11. Horizontal expansion and integration are now occurring among physician practices. *a. True b. False

12. Related diversification tends to involve greater business risk than unrelated diversification does. a. True *b. False

13. Unrelated diversification often involves venture capitalists. *a. True b. False

14. Which of the following is not a generally accepted method by which organizations accomplish growth? a. Internal expansion *b. Increasing inventory c. Acquisition and/or merger d. Networking

15. Entering a market by acquisition enables an organization to a. obtain the most talented individuals in a market b. ensure the continuity of an established, profitable product *c. enter a market most rapidly d. increase company profits most rapidly

16. Which of the following is an example of horizontal expansion? a. A hospital acquiring an HMO b. An insurance company acquiring a physician group practice c. A pharmaceutical company acquiring a medical supply company *d. An academic medical center acquiring a specialized hospital

17. Which of the following is not a component of transaction cost economics? a. Number of suppliers or buyers *b. Interlocking boards c. Cost of writing and enforcing contracts d. Frequency of exchange

18. Transfer pricing is used to *a. charge for goods and services within a company b. charge frequent customers for non-price services c. align goals across vertically integrated companies d. provide feedback on company profitability

19. A "most favored nation" clause does which of the following? a. It allows a company to set up a preferred provider list. b. It gives the holder valuable business knowledge. *c. It guarantees the lowest price. d. It contributes to higher levels of competition among organizations.

20. Hospitals' markets and large insurance companies' markets a. almost always overlap and are similar *b. frequently are quite different c. include many of the same competitors d. rarely overlap

21. Which is not one of the types of integration discussed in the text? *a. Component integration b. Operational integration c. Emotional integration d. Social integration

22. Which entity has been identified as having the role of virtual integrator in healthcare?

a. The nurse case manager b. The primary care physician *c. The insurance company d. A new governmental regulator

23. Research has suggested that which of the following is the greatest benefit hospitals have gained through horizontal integration? *a. Greater market power b. Greater efficiencies c. Lower administrative costs d. Increased consumer access

24. Related diversification involves adding new products for an existing customer base or a. expanding internationally b. adding new services for a geographic niche *c. entering a new business with similar technologies d. expanding an existing warehouse or factory

25. Potential problems of unrelated diversification include all but which of the following? a. It may increase administrative costs. b. It may decrease top executives' ability to understand their business. *c. It may decrease organizations' ability to gain economies of scale. d. Problems increase as the number of different companies controlled increases.

Chapter 5 1. Most strategic alliances achieve the purpose of their creation. a. True *b. False

2. Strategic alliances are sometimes organized to gain economies of scale. *a. True b. False

3. Most strategic alliances produce some type of immediate benefit. a. True *b. False

4. A strategic alliance gives an organization much more flexibility than a merger does. *a. True b. False

5. Strategic alliances are often better options if they involve human resources and knowledge rather than equipment and fixed assets. *a. True b. False

6. Pooled interdependence involves non-modular coordination. a. True *b. False

7. Coordination and trust are needed more heavily in a situation of sequential interdependence. a. True *b. False

8. PHO is an abbreviation for "physician-hospital organization." *a. True b. False

9. Strategic alliances can have thousands of participants. *a. True b. False

10. A hospital and independent practicing physicians who own a medical service organization represent a joint venture alliance. *a. True b. False

11. Lack of a mission for a strategic alliance does not seem to affect its success. a. True *b. False

12. Strategic alliances often have ambiguous governance structures. *a. True b. False

13. Turnover of top personnel often occurs and can negatively affect alliances if it is not planned for. *a. True b. False

14. Which is not a component of the definition of a strategic alliance? *a. An integrated, multidimensional contract b. A mutually beneficial, formal relationship c. Two or more parties d. Entities that remain independent organizations

15. The number of strategic alliances in healthcare *a. slightly decreased from 1990 to 2000 b. has remained about the same since 2000 c. has abruptly dropped to zero d. has constantly increased since 1990

16. What percentage of strategic alliances fail according to academic studies? a. 20 to 40 percent b. 35 to 50 percent

c. 40 to 60 percent *d. 55 to 80 percent

17. A strategic alliance may be better than a merger between two organizations when a. their cultures and missions are aligned *b. their cultures are misaligned and their missions are aligned c. their cultures and missions are misaligned d. their cultures are aligned and their missions are misaligned

18. An insurance company's strategic alliance with a hospital would be considered a. a manufacturer-to-provider alliance b. a manufacturer-to-purchaser alliance *c. a purchaser-to-provider alliance d. a provider-to-provider alliance

19. A group of physicians who work together and jointly take care of patients might have what type of interdependence? a. Pooled interdependence b. Sequential interdependence *c. Reciprocal interdependence d. Clockwork interdependence

20. The degree of interdependence is lowest in *a. pooled interdependence b. sequential interdependence c. reciprocal interdependence d. clockwork interdependence

21. The degree of control and equity is highest within which of the following alliances? a. Licensing *b. Franchise c. Purchasing d. Learning

22. Which type of alliance is not discussed in the text? a. Joint venture alliance b. Network outsource alliance *c. Manufacturing development alliance d. Pooled service alliance

23. Why is trust so important to the success of an alliance? a. Alliance members rarely know each other prior to the alliance. b. CEOs do not understand the goals of the alliance. *c. Documents setting forth the purpose of the alliance are always incomplete. d. Subordinates always run alliances.

24. Which of the following factors is critical to improving the odds of an alliance's success? *a. A means of conflict resolution b. Constant involvement of top executives c. Common education among participants d. A superordinate goal

Chapter 6 1. Stakeholders are almost always shareholders of an organization. a. True *b. False

2. Stakeholders and organizations share benefits and support. *a. True b. False

3. Having a written mission is probably the most important aspect of creating a positive strategic intent. a. True *b. False

4. Strategic actions should be driven by an organization's mission and vision. *a. True b. False

5. An organization should be considered successful if it achieves its mission, even if its actions conflict with its values. a. True *b. False

6. An organization's values should reflect the expectations and common values of key stakeholders. *a. True b. False

7. Most organizations have written mission statements. *a. True b. False

8. Long mission statements are often useful because they more fully describe the mission of an organization. a. True *b. False

9. It is preferable for an organization's mission to distinguish the organization from competitors. *a. True b. False

10. The mission and vision should always be separate statements. a. True *b. False

11. Strategic intent includes all of the following but a. mission *b. organizational motto c. vision d. organizational values

12. Which component of strategic intent probably should be developed first? a. Mission b. Organizational motto c. Vision *d. Organizational values

13. Which of the following is a major factor affecting the content of a healthcare organization's mission? a. The type of personnel the organization employs b. The geographic location of the organization *c. The organization's status as for-profit or not-for-profit d. The organization's link to private funds

14. Which of the following healthcare organizations are predominantly for-profit? a. Acute care hospitals b. Home health agencies c. Hospices *d. Pharmaceutical companies

15. An organization's mission statement should contain *a. the scope of the organization's products and markets b. The future market position of the organization c. The organization's key stakeholders

d. The locus of decision making in the organization

16. Which of the following generally is not a problem with mission statements? a. Missions statements are too similar across organizations in the same industry. b. Mission statements are not used to set organizational strategies. *c. Mission and vision statements are often confused for one another, and they confound employees. d. Missions may not include actionable, measurable statements.

17. "Isomorphism" refers to a. the isolation of mission and values *b. mimicking one's competitors c. stakeholders' creation of novel structures d. employees attending similar training

18. Visions should do all of the following but a. guide strategic actions b. meet stakeholders' future needs *c. be revised at least every two years d. paint a future that is attainable but challenging to achieve

Chapter 7 1. The extent of rivalry in a market varies according to the strength of buyers and sellers and the potential for substitute products. *a. True b. False

2. Switching costs are costs associated with changing a product, brand, or supplier. *a. True b. False

3. Patents can be an effective barrier to market entry. *a. True b. False

4. A high possibility of having a substitute for a product or service increases the competitive nature of a market. *a. True b. False

5. Most oligopolies are characterized by generally the same level of rivalry. a. True *b. False

6. The height of an organization's exit barrier may be affected by the amount of specialized assets it has. *a. True b. False

7. Strategic groups help determine which firms belong in which industry. a. True *b. False

8. Few dimensions can be legitimately used to determine strategic groups. a. True

*b. False

9. Strong mobility barriers enable some organizations in an industry to earn much higher profits than others in their industry earn. *a. True b. False

10. Force field analysis is almost equivalent to scenario planning. a. True *b. False

11. Scenario planning does not deal with driving forces. a. True *b. False

12. Which of the following is not one of the forces used in Porter's Five Forces model? a. Potential for new entrants b. Power of buyers *c. Power of key stakeholders d. Threat of substitutes

13. All of the following create barriers to entry except *a. the size of a market b. economies of scale c. product differentiation d. access to distribution channels

14. Governments in healthcare have increased barriers to entry by creating a. membership requirements b. Medicare *c. certificate-of-need laws d. Medicaid

15. In healthcare, GPO stands for a. group physician organization *b. group-purchasing organization c. group policy ordinance d. group performance options

16. If a large percentage of an organization's product is purchased by one firm, what situation exists? a. High seller market power b. A monopoly c. High rivalry *d. High buyer power

17. Which of the following is not identified in the text as a factor that may increase rivalry? *a. Similar leadership b. Degree of product differentiation c. Rate of demand growth d. Height of exit barriers

18. A patient's reluctance to change his physician might be considered a. product differentiation *b. a switching cost c. monopolistic competition d. consumer preference

19. Mobility barriers a. increase the rivalry in a market b. block organizations from moving into a new industry c. are generally illegal in the United States *d. impede organizations from moving into a different strategic group

20. Which of the following is not one of the driving forces discussed in the text? a. Political changes *b. Chronic disease c. Technological changes d. Workforce availability

21. A PEST analysis is a method of a. determining strategic goals *b. selecting driving forces c. analyzing market demand d. determining patient origin

22. Scenario analysis may be important a. to an organization's success because it enables the organization to accurately predict the future b. to organizations that exist in relatively stable environments c. for accurately allocating resources across corporate units *d. for preparing contingencies for potential major changes in the future

Chapter 8 1. Core competencies could be many different kinds of both tangible and intangible assets. *a. True b. False

2. Overall, it is probably easier to turn a tangible asset into a core competency than it is to turn an intangible asset into a core competency. a. True *b. False

3. Organizations that use benchmarking compare internal trend data. a. True *b. False

4. Most organizations have too little internal data to be able to adequately reflect important stakeholder needs. a. True *b. False

5. Ensuring consistent definitions is one of the first steps involved in collecting data. *a. True b. False

6. An organization should determine the best level and type of key stakeholder involvement. *a. True b. False

7. A SWOT analysis should examine both the internal and external environments. *a. True b. False

8. SWOT analyses are often performed because they are easy to do and take little preparation.

*a. True b. False

9. A group must perform a SWOT analysis before doing a TOWS analysis. *a. True b. False

10. A TOWS analysis could guide an organization to minimize its weaknesses by taking advantage of specific opportunities. *a. True b. False

11. A value chain consists of three broad categories of activities: primary, support, and network activities. a. True *b. False

12. Value chains are primarily used to analyze the activities and processes of a single organization. a. True *b. False

13. A portfolio analysis enables an internal comparison of an organization's distinct units. *a. True b. False

14. Later versions of portfolio analysis methods extended the original set of analysis criteria to include industry attractiveness and competitive advantage. *a. True b. False

15. To be sustainably valuable to a company, a resource should be a. tangible and visible b. fungible and vibrant *c. rare and hard to imitate d. historically successful and critical to the company's mission

16. Which might be the most durable asset and most difficult to imitate? *a. Culture b. Equipment c. Employee attitudes d. Technology

17. Which is a major problem with benchmarking? a. Internal trend data do not indicate how well a company is performing compared to its competitors. b. There are far too many data available to benchmark. *c. Companies may define and collect data differently, even though the data are named the same. d. External data are very expensive to collect.

19. Which of the following is not a level of involvement considered for key stakeholders? a. Participate b. Direct *c. Organize d. Inform

20. Which of the following is not a potential problem in using a SWOT analysis for strategic planning? *a. Too many people may participate in the process. b. The analysis may not include background information and trend data. c. Personal bias may be interjected into the process. d. Strong personalities may have undue influence.

21. Two dimensions that can be used to rank items listed in a SWOT analyses are a. stakeholder need and market change *b. level of uncertainty and significance c. technological innovation and employee attitudes d. Delphi and nominal methods

22. Which of the following statements is not true with regard to value chains? a. They are graphical representations of key internal activities. b. They provide a framework for analyzing an organization's strengths and weaknesses.

c. They demonstrate the ultimate aim of profitability or mission achievement. *d. They often are seen as a substitute for SWOT analysis.

23. A common portfolio analysis method is known as a. the Anderson Consulting six-stage portfolio matrix *b. the GE/McKinsey nine-block matrix c. the Booz/Allen product portfolio matrix d. the Maryland magnet portfolio matrix

24. Which of the following is not one of the quadrants of BCG's growthshare matrix? *a. Crab b. Cash cow c. Star d. Dog

25. Which of the following statements is not a criticism of portfolio analysis? a. It may ignore important factors. b. Some dimensions are difficult to define quantitatively. c. Market share may not have a strong correlation with profitability. *d. Most organizations fail to use it for capital allocation purposes.

Chapter 9 1. Healthcare leaders without strong financial skills are at a severe disadvantage. *a. True b. False

2. An organization's strategic analysis of its strengths and weaknesses must include its finances. *a. True b. False

3. Financial activity ratios are used to determine the reasonableness of an organization's financial return. a. True *b. False

4. A business is successful if it has a large amount of accounts receivable. a. True *b. False

5. Activity ratios are also known as efficiency ratios. *a. True b. False

6. Optimal levels for financial ratios remain stable over time. a. True *b. False

7. A high times interest earned might suggest that an organization might lack monies to pay basic expenses. a. True *b. False

8. Net present value can be helpful in deciding what capital equipment to purchase. *a. True b. False

9. Internal rate of return is found when the net present value equals zero. *a. True b. False

10. Payback includes the time value of money by reducing cash flows by the discount rate. a. True *b. False

11. In determining capital allocation, a leader should use just one of the three financial analysis methods discussed in the text. a. True *b. False

12. A variable cost increases when volumes increase. *a. True b. False

13. Operating statements include all of the following except a. revenues *b. asset values c. personnel expenses d. depreciation

14. Appropriate liquidity enables an organization to *a. meet its short-term financial obligations and carry out planned financial transactions b. quickly sell almost all of its assets if threatened with bankruptcy c. minimize the amount of interest it can earn on its invested monies d. understand the amount of debt needed to fund long-term projects

15. Which of the following is a measure of liquidity? a. Asset turnover b. Debt-to-asset ratio *c. Acid or quick ratio

d. Operating margin

16. Why would an organization want to have a short average payment period? *a. It frees up cash for other purposes. b. It encourages vendors to provide higher discounts. c. It lowers discount rates. d. It indicates positive cash flow.

17. An organization that is highly financially leveraged has a. a low operating margin b. a high current ratio *c. a high debt-to-assets ratio d. a positive net margin

18. Return on assets is a *a. profitability ratio b. liquidity ratio c. activity ratio d. debt ratio

19. A major difference between operating margin and net margin is that net margin accounts for a. depreciation b. cash flows c. arbitrage *d. all revenue sources

20. A key aspect of net present value is a. unequal cash flows *b. time value of money c. accounting for depreciation d. salvage values

21. All of the following are major problems with net present value except a. accurately determining future cash flows b. accounting for nonfinancial, mission-based reasons *c. the finite amount of available capital d. determining an accurate discount rate

22. Break-even analysis includes *a. fixed and variable costs b. liquid and non-liquid assets c. payback analysis d. an appropriately determined discount rate

Chapter 10 1. Different levels in an organization generally have the same perceptions regarding progress on strategic goals and the organization's mission. a. True *b. False

2. Effective communication is a critical skill leaders need to implement strategic planning. *a. True b. False

3. In a gap analysis, executives identify the distance between their mission and vision and where their organization currently exists. *a. True b. False

3. In a gap analysis, executives identify the distance between their mission and vision and where their organization currently exists. *a. True b. False

5. In most situations, an organization's board should use a strategic planning committee to complete its strategic plan. a. True *b. False

6. Strategic priorities are similar to driving forces. a. True *b. False

7. To be effective, strategic plans should contain metric-oriented goals and objectives. *a. True b. False

8. There are many different appropriate formats for a strategic plan. *a. True

b. False

9. Psychographic segmentation combines psychological and demographic data. *a. True b. False

10. An organization's mission and vision statements should be included in its marketing plan. *a. True b. False

11. Misalignment of key stakeholders' and executives' perceptions on the need for change can lead to a. efforts to achieve the status quo b. a likely consensual effort *c. resistance to change d. a high possibility for major change

12. A problem with published, public data is that *a. they are almost always two to three years old b. their source is often unknown c. they are difficult to understand d. they are created for public consumption

14. Governing boards can better prepare for strategic planning by a. hiring the best consulting firm *b. developing a communication plan c. assigning full responsibility for planning to a vice president d. creating a large strategy advisory board

15. The main advantage of using a project charter is that it a. enables greater employee participation *b. further clarifies scope and outcomes c. can be used in lieu of objectives d. provides a better method for allocating capital equipment

16. Which of the following statements is not true about marketing plans? a. They should be developed after a strategic plan is adopted.

b. They focus on attracting and retaining preferred customers. *c. They are often created as part of a project charter. d. They involve segmentation and targeting.

17. Which of the following is not a major market segment? *a. Political b. Geographic c. Demographic d. Behavioral

18. Which of the following is not a key attribute used to determine which market segment to target? a. Substantiality of the market *b. Persistence of the consumers c. Accessibility of the segment d. Differentiability of the segment

19. What are two of the four Ps traditionally used for product positioning? a. Proposition and polemics *b. Promotion and price c. Population and personality d. Patient need and placement

Chapter 11 2. Business plans should be used only to develop new external projects and programs. a. True *b. False

3. A marketing section is often included in business plans. *a. True b. False

4. Often it is not critical to describe the background of key managers in a business plan. a. True *b. False

5. Business plans often include a section that discusses sales strategies, which would not usually be part of a strategic plan. *a. True b. False

6. Business plans are often used to raise money from independent entities. *a. True b. False

7. The position in a product's life cycle is not important to discuss in a business plan. a. True *b. False

9. Which is not one of the ways a business plan differs from a strategic plan? a. Focus b. Plan components *c. Goals d. Time frame involved

10. The executive summary of a business plan should include

*a. the organization's mission and vision b. detailed project plans c. pro forma financial statements d. a complete marketing analysis

11. Financial projections in a business plan should be made for what term of time? a. One to two years b. Two to four years *c. Three to five years d. Eight to ten years

12. Funding requests should specify all but which of the following? *a. Who will have authority over expenditures b. Amount of funds requested c. Time period for which money is needed d. How funds will be used

13. Determining an organization's management structure is important in business plan development because *a. it may influence whether investors will contribute b. it provides direction on how capital will be invested c. it defines the process of implementation for the new organization d. it places a skilled administrator at the helm of the new organization

14. Which of the following is not one of the items often placed in a business plan's appendix? a. Personal and business credit history b. Letters of reference c. Details of permits and patents *d. Financial projections

Chapter 12 1. There is almost always an optimal structure for an organization. a. True *b. False

2. One primary reason companies use a corporate legal structure is to limit personal liability. *a. True b. False

3. Corporations can only be for-profit and have stockholders. a. True *b. False

4. In a corporation, the primary degree of competition lies at the corporate level of the organization. a. True *b. False

5. The extent and degree of division of labor usually have little impact on strategy. a. True *b. False

6. Tension almost always exists between the need to integrate and need to differentiate functional activities in an organization. *a. True b. False

7. Organizations that employ wider spans of control always have a decentralized decision-making function. a. True *b. False

8. Type of industry influences the span of control in organizations in the industry. *a. True b. False

9. Multidivisional organizations can duplicate functions and increase costs. *a. True b. False

10. Matrix structures are more common in organizations that are focused on innovation and projects than they are in other organizations. *a. True b. False

11. Chain of command a. defines the span of control in an organization b. provides a clear understanding of the locus of decision making *c. defines the formal line of authority and reporting relationships d. provides direction on the type of structure optimal for an organization

12. Which of the following is not a primary function of corporate strategy? *a. Developing new products and services b. Deciding which businesses to compete in c. Deciding how businesses should be integrated d. Allocating capital among business units

13. Which of the following is the primary strategic issue handled by the functional level of an organization? a. Purchasing new companies b. Divesting companies that are not profitable c. Monitoring and promoting favorable legislation *d. Promoting the organization's products and services through marketing

14. An appropriate span of control may depend on all of the following except *a. the gender of the leader b. the degree of centralization of decision making c. the skills and abilities of subordinates d. the culture of the organization

15. Hospitals traditionally have had which type of organizational structure? a. Matrix b. Multidivisional *c. Functional d. Corporate

16. A functional organization's primary advantage is its a. ability to integrate activities easily *b. high level of skills and expertise and ability to capture economies of scale c. ability to decrease its need for information technology for communication d. ability to lower the unit price of goods and services

17. Silos are a problem that often exist in which type of organizational structure? a. Matrix b. Multidivisional *c. Functional d. Corporate

19. Accountable care organizations may require organizational structures that *a. integrate decision making among physicians and hospital personnel b. include insurance products and managers c. include functional structures d. minimize the influence of allied health professionals

Chapter 13 1. Change can be difficult and challenging for most organizations. *a. True b. False

2. An organization must embed (refreeze) change into its culture to make change permanent. *a. True b. False

3. Engendering a sense of urgency facilitates strategic change. *a. True b. False

4. Leaders should seek to form coalitions of existing formal leaders to best effect change. a. True *b. False

5. Surveys can be effectively used to determine an organization's readiness for change. *a. True b. False

6. If an organization has determined that leaders or participants are not prepared for a planned change, the change should be delayed untilthese groups are prepared. *a. True b. False

7. Most well-crafted strategies are successfully implemented. a. True *b. False

8. In any major change, significant resistance should be anticipated. *a. True b. False

9. An employee or a manager is demonstrating disloyalty if he/she expresses resistance to a strategic change. a. True *b. False

10. Short-term wins can build important leadership support needed to proceed with long-term efforts. *a. True b. False

11. Audits enable leaders to determine whether change has been sufficiently implemented. *a. True b. False

12. Pre-change preparation requires all of the following except a. recognition of the need for change b. a connection between the results of the change and the organization's mission and vision *c. a leadership style characterized by significant participation d. an understanding of the rationale for change among key stakeholders

13. An "elevator speech" about change should *a. communicate the organization's strategic direction in less than five minutes b. describe the organization's structure and goals c. be written and delivered by the organization's CEO d. not include specific information about goals and objectives

14. All of the following groups should be diagnosed for readiness for change except a. participants *b. stakeholders c. the organization d. leaders

15. Two means of facilitating implementation of change are a. newsletters and strategic champions b. marketing plans and organizational missions

*c. addressing resistance and identifying short-term wins d. stakeholder engagement and development of elevator speeches

16. Which of the following is not an important aspect of a short-term win? a. It must be visible. b. It must be meaningful. c. It must be achievable. *d. Top leadership must be involved in it.

17. Which of the following is not a method of embedding organizational change? *a. Conducting surveys of employee satisfaction b. Having leaders tell success stories c. Using checklists d. Forming problem-solving groups

Chapter 14 1. Strategic plans often fail because organizations lack strategic leaders. *a. True b. False

2. Strategic leaders must balance short-term financial success and long-term growth and viability. *a. True b. False

3. There is little overlap between strategic management and strategic thinking. a. True *b. False

4. Past success can make leaders more susceptible to fail to acknowledge environmental shifts. *a. True b. False

5. Hubris is a quality that highly skilled strategic leaders should seek to gain. a. True *b. False

6. Gathering honest feedback from subordinates has been a problem across the ages in most organizations. *a. True b. False

6. Gathering honest feedback from subordinates has been a problem across the ages in most organizations. *a. True b. False

8. Establishing core competencies encourages strategic management. *a. True

b. False

9. The quality of care provided by healthcare organizations that do not have the active, consistent support of senior executives tends to be poorer than the quality of care provided by other organizations. *a. True b. False

10. Effective leaders delegate the strategic planning process to others. a. True *b. False

11. Unproductive meetings are a top reason for frustration and lack of motivation among employees. *a. True b. False

12. Strategic leaders should be directly involved in change efforts. *a. True b. False

13. Which of the following is an example of a behavior exhibited by an effective strategic leader? a. Stating "we will do it this way because I am the boss" *b. Reevaluating key assumptions periodically c. Growing red-faced and expressing anger d. Showing hubris when in the presence of subordinates

14. All the following are ways to encourage strategic thinking except a. having ground rules for meetings to encourage open conversations *b. developing detailed budgets and establishing high-level control systems c. creating personal and needed competency development opportunities for key employees d. making decisions on the basis of organizational values and ethics

15. Strategic management differs from strategic thinking in that it

*a. focuses on daily control and allocation of resources b. encourages innovation and participation of employees c. constantly challenges the mission and vision of the organization d. seeks to gain strategic competitive advantage

16. All of the following are ways for leaders to speed decision making except *a. holding formal meetings on a frequent basis b. visiting work settings c. holding meetings in subordinates' offices, if possible d. actively managing time

17. Which of the following is not a guideline for holding effective meetings? a. The correct people should attend. b. Meetings should have specific purposes and explicit desired outcomes. c. Agendas and ground rules should exist. *d. A top executive should direct each key meeting and committee.

Chapter 15 1. Placing a highly respected consulting firm in change of strategic implementation almost guarantees that it will happen. a. True *b. False

2. Strategic plans should be used to actively change and challenge an organization. *a. True b. False

3. A CEO is best situated to direct the day-to-day strategic planning process. a. True *b. False

4. An organization's governing board has principal responsibility for the strategic planning process. *a. True b. False

5. All large companies must have a strategic planning committee. a. True *b. False

6. Medical staffs are key stakeholders who need to be involved in hospitals' strategic planning process. *a. True b. False

7. Many organizations fail to establish metrics and specific outcome measures when beginning a strategic change process. *a. True b. False

8. Gantt charts can be used to graphically display the time frames for the activities involved in a strategic planning process. *a. True

b. False

9. Profits could be a measure included on a balanced scorecard to demonstrate expected performance. *a. True b. False

10. An organization's mission and vision should direct which metrics are included on a balanced scorecard. *a. True b. False

11. Balanced scorecards and dashboards are fundamentally very different. a. True *b. False

12. Balanced scorecards can be decoupled from the organization's strategic planning efforts. a. True *b. False

13. A clear tie between organizational budgets and strategic plans should exist. *a. True b. False

14. A review of budget variances can help identify the root cause of the variances. *a. True b. False

15. A static budget provides much more information than a flexible budget does. a. True *b. False

16. The strategic action cycle discussed in the text includes all of the following except

a. budgeting b. implementation c. controlling/monitoring *d. design of strategic initiatives

17. The person in charge of an organization's day-to-day strategic planning process should a. be the CEO b. have an advanced degree *c. report directly to the CEO d. have many other more important responsibilities

19. Governing boards' role in regard to strategic planning generally includes *a. final approval and periodic monitoring of strategic plans b. data analysis and environmental analysis c. drafting a mission, a vision, and values d. implementation of financial controls

20. Which of the following statements is not true about strategic planning committees? a. Both governing board and non-governing board members can be part of the committees. b. They organize and facilitate the strategic planning process. *c. Committee members serve for specific terms and then rotate off. d. They monitor trends and periodically review the internal and external environment.

21. Consultants can be effectively used if a. they are given full control of the strategic planning process *b. deliverables are clearly established and monitored c. they are allowed to choose participants from their firm d. the organization deals directly with them and does not seek external advice to review the consultants' work

22. KPI stands for *a. key performance indicator b. key process indicator c. key practice index d. key practical indexes

23. A balanced scorecard generally includes measures in each of the following categories except a. customer/stakeholder b. internal business processes *c. organizational design d. learning and growth

24. Which of the following awards requires candidates to have a balanced scorecard? a. International Quality Metric Award *b. Malcolm Baldrige National Quality Award c. Institute of Medicine Quality Award d. Centrix Best Hospital Award

25. Balanced scorecards often include a. annual employee evaluations b. personal development plans *c. colors and grades d. CEO compensation

27. Which of the following is not a type of budget variance generally used by organizations? a. Volume variance *b. Inventory variance c. Efficiency variance d. Price variance

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