CHAPTER 3 CHAPTER 4

1. The strategic approach to management requires integrative 1. Well-implemented just-in-time production and purchasing
thinking, i.e., the ability to identify and solve problems techniques
a. from a cross-functional view. a. result in large stockpiles of inventory to keep production
b. without using accounting data. running.
c. quickly and decisively b. strengthen a company' ability to compete in the
d. under considerable stress. marketplace.
c. increase a reliance on long-term consumer forecasts.
2. Firms have responded to the recent changes in business in d. reduce a company's competitive edge.
all but which one of the following ways?
a. down-sizing the workforce 2. Computer-integrated manufacturing (CIM) plants allow
b. developing smaller structures management to do all EXCEPT
c. outsourcing service functions a. create brand recognition.
d promoting more effective policies b. diagnose the reason for a defect.
c. access timely and accurate information reading production
3. The competitive strategy in which the firm succeeds by costs.
producing at the lowest cost in the industry is termed: d. respond faster to changes in customer preferences.
a differentiation
b. cost advantage 3. ___________ is/are when a firm compares itself with the
c. price strategy best practice of competitors or other comparable
d. cost leadership organizations.
a. Value chain
4. The competitive strategy in which the firm succeeds by b. Supply chain
developing and maintaining a unique value for the product, as c. Key success factors
d. Benchmarking
perceived by the customers is termed
a differentiation
4. R&D, production and customer service are business
b. cost advantage functions that are all included as part of
c. price strategy a. the value chain.
d. cost leadership b. benchmarking.
c. marketing.
5. Skills or competencies that the firm employs especially well d. the supply chain.
are called:
a. critical skills. 5. The value chain is the sequence of business functions in
b core competencies which
c essential strategies a. value is deducted from the products or services of an
d. competitive factors. organization.
b. value is proportionately added to the products or services
of an organization.
6. Which one of the following describes the type of
c. products and services are evaluated with respect to their
information that cost management must provide that is not
value to the supply chain.
provided by traditional cost accounting systems? d. usefulness is added to the products or services of an
a. information of a record keeping nature organization.
b. reported financial information
c. reported nonfinancial information 6. __________ is the generation of, and experimentation
d. information that address the strategic objectives of the firm with, ideas related to new products, services, or processes.
a. Research and development
7. Activities that firms in the industry must perform in the b. Design of products, services, or processes
process of taking raw material and converting it into final c. Production
product are known as: d. Marketing
a. value activities
7. ____________ is the acquisition, coordination, and
b. conversion activities
assembly of resources to produce a product or deliver a
c. production activities
service.
d. production activities a. Research and development
b. Customer services
c. Production
d. Marketing
8. ____________ is an operational factor that directly affects
the economic viability of the organization.
a. Customer focus
b. A key success factor
c. Continuous improvement
d. Supply chain
9. Customers are demanding improved performance related
to
a. reduced costs.
b. both reduced costs and increased quality.
c. lower costs, improved quality, and improved customer
service.
d. lower costs, improved quality, improved customer service,
and innovative products and services.
10. The sequence of activities that creates a good or service is:
a. an organization.
b. a value chain.
c. a customer chain.
d. an information system
11. There are four broad classes of activities in the value chain.
Research and development would be in which class?
a. activities relating to getting ready to make the product
b. activities related to making the product
c. activities related to dealing with the customer
d. other activities that support the first three activities
12. There are four broad classes of activities in the value chain.
Storing work in process would be in which class?
a. activities relating to getting ready to make the product
b. activities related to making the product
c. activities related to dealing with the customer
d. other activities that support the first three activities
13. There are four broad classes of activities in the value chain.
Billing activities would be in which class?
a. activities relating to getting ready to make the product
b. activities related to making the product
c. activities related to dealing with the customer
d. other activities that support the first three activities
14. There are four broad classes of activities in the value chain.
Accounting activities would be in which class?
a. activities relating to getting ready to make the product
b. activities related to making the product
c. activities related to dealing with the customer
d. other activities that support the first three activities
15. Which of the following activities is value-added?
a. Processing
b. moving
c. storing
d. inspecting
16. Which of the following four general steps to improve the
effectiveness and efficiency of an organization's activities
would be performed first?
a. identify what is now being done
b. measure current performance
c. Analysis
d. Improve
17. Employees improve effectiveness and efficiency by
performing four general steps regarding the organization's
activities. The following describes which step?
The employee measures the performance of each activity in
the process (value chain) from the perspective of customer
requirements while assuring that the overall performance of
activities meets the requirements of the organization's other
stakeholders.
a. Identify what is now being done.
b. Measure current performance.
c. Analyze.
d. Improve.
18. Which of the following would NOT happen when quality is
bad?
a. Rework
b. Scrap
c. zero-defects
d. an increase in the cost of good units increases
19. Which of the following statements is true?
a. The customer will choose the product with the lower price.
b. If two products provide the same services and quality, the
customer will choose the product with the lower price.
c. If two products provide the same services and quality, the
customer will choose the product with the higher price.
d. The customer will choose the product with the higher price.
20. A key advantage of cross-functional teams in today's
manufacturing and service environment is
a. information is shared much more quickly by people in
different functions and this helps speed products to market.
b. the physical size of the organization gets smaller
c. there are fewer computing system requirements
21. Rewarding team performance based on team output can
cause problems for team members because
a. some team members work different shifts than others.
b. not all team members pull their weight.
c. the team leader has to get a much higher share of the
reward and team members resent it.
d. day shift workers are entitled to a higher share of the
reward than evening shift workers.
22. Continuous education has the following advantages, 29. A process by which a firm identifies its critical success
EXCEPT factors, studies the best practices of other firms for these
a. Employees learn about organizational changes and critical success factors, and then implements improvements in
improvements. the firm's processes to match or beat the performance of
b. employees skills are kept up-to-date. these competitors is termed:
c. employees learn too much too quickly and get frustrated. a. continuous improvement
d. employees become more committed to their jobs as they b. reengineering
believe the organization is investing in them. c. strategic management
d. benchmarking
23. Goal congruence means
a. an employee has set high goals for him/herself. 30. A technique in which management develops policies and
b. an employee has set low goals for him/herself. practices to ensure that the firm's products and services
c. an employee's goals are aligned with those of the exceed the customer's expectations is:
organization. a. continuous improvement
d. an employee will never attain his or her goals. b. benchmarking
c. critical success factoring
24. A management approach that emphasizes the importance d. total quality management
of managing constraints
a. Decentralization 31. A process for creating competitive advantage in which a
b. Theory of Constraints firm reorganizes its operating and management functions,
c. Control often with the result that jobs are modified, combined, or
d. Business Process eliminated is termed:
a. benchmarking
25. A production system in which units are produced and b. life cycle costing
materials are purchased only as needed to meet actual c. target costing
customer demand is called d. reengineering
a. Total quality management
b. Just-in-time 32. A strategic technique to help firms effectively improve the
c. Process reengineering most common and important critical success factor-cycle time,
d. Benchmarking is:
a. activity-based costing
26. In Process Reengineering, two objectives are to simplify b. benchmarking
and to eliminate c. the theory of constraints
a. Constraint d. continuous improvement
b. Non-valued-added activities
c. Nonconstraint
d. Losses 33. The competitive strategy of "cost leadership" allows a firm
to out-perform competitors by producing products or services.
27. A detailed report to management comparing budgeted a. with lowered quality standards.
data with actual data for a specific time period is called a b. in smaller operational units
a. Performance report c. at lower costs achieved by increased productivity
b. Feedback d. with attractive added features
c. Financial accounting report
d. Budget 34. The competitive strategy of "differentiation" requires that
a product or service must be:
28. The critical success factors for a business today are all: a. always readily available.
a. planning-oriented b. price competitive.
b. production-oriented c. produced at the lowest possible cost.
c. sales-oriented d. unique in some important way, usually of being of higher
d. customer-oriented quality.

35. Many firms find that a consideration of critical success

factors yields a renewed focus on the three key factors of:
a. product design, manufacture and distribution b. b. cost,
price and volume
c. innovation, regulation and utilization
d. cost, quality and speed of product development and
delivery
 42. In value chain analysis, the third step choice made by a
36. After critical success factors (CSFs) have been identified, firm to emphasize its strong research and development
the next step in developing a competitive strategy is to reputation is an example of:
develop relevant and reliable measure for these CFSS. If these a. low cost manufacturing
measures are not developed, a firm cannot hope to: b. price leadership.
a. make profit for any extended period. c. cost leadership.
b. increase sales above previous year(s).
d. innovative design.
c. develop policies to enhance profitability.
d. monitor its progress toward achieving its strategic goals.
43. In regard to critical success factors, which one of the
37. In order to achieve a firm's objectives, the strategic cost following would not be considered a financial measure of
accounting system must collect, record and report: success?
a. the right king of information. a. cash flow
b. information on a very regular basis. b. brand growth
c. only incremental information. c. sales growth
d. detailed information. d. earnings growth

38. The "balanced scorecard" accounting report can be made 44. In regard to critical success factors, which one of the
more effective by developing it at a detail level so that following would not be considered a non-financial customer
employees: measure of success?
a. can see how it is put together.
a. education
b. on-time delivery
b. appreciate all the effort that goes into its preparation.
c. respect management for including them in its formulation. c. customer satisfaction
d. can see how their actions contribute to the success of the d. customer service
firm.
45. In regard to critical success factors, which one of the
39. Both leading and lagging indicators should be used in the following would not be considered a non-financial internal
development of the "balanced scorecard" accounting report business process measure of success?
because: a. cycle time
a. leading indicators are future oriented and lagging indicators b. Yield
are primarily historical output measures. c. high product quality
b. one type of indicator will always correct the other type. d. market share
c. leading indicators are expressed non-quantitatively while
lagging indicators are expressed only in quantitative terms.
46. Which of the following financial critical success factors is
d. both answer a and answer b are correct.
measured by earnings from operations?
40. The objective of the value chain analysis is to identify a. profitability
stages of the value chain where the firm can: b. sales
a. justify increases in the price of the product or service. c. liquidity
b. increase value to the customer or reduce cost. d. flexibility
c. sublet production to other producers.
d. Answer b is most correct, but answer a and c are possibly 47. Many firms are finding it is difficult to compete
true. successfully on cost leadership or differentiation alone, and
they must, in fact, compete on both:
41. The second step in value chain analysis is to identify the a cost and design
cost driver(s) at each value activity. The objective of the b. price and functionality
second step is to identify activities where the firm has a c. cost and price
current or future: d. design and functionality
a. revenue potential.
b. legal responsibility.
c. cost advantage.
d. cost overrun.