Answer the following statement(s) true (T) or false (F)

Question

1. The strategic plan must take into account that the organization and everything around it is changing.
2. The threat of substitute products can boost the profitability of an organization’s competitors.
3.An effective strategy derives from maximizing a firm’s strengths and opportunities and minimizing its weaknesses and threats.
4. In an organization, the internal assessment identifies most of the opportunities and threats.
5. An organization’s vision/mission statement forms the foundation for making decisions and taking action.

Answer 1

1. True
The strategic plan must take into account that the organization and everything around it is changing. For example, change in consumers’ likes and dislikes; fluctuation in the costs and availability of raw materials and labor, and variation in the degree of industry and government regulations.
2.False
The threat of substitute products can lower the profitability of industry competitors. The willingness of buyers to switch and the relative cost and performance of substitutes are key factors in this threat.
3.True
The analysis of the internal assessment and external environment is summarized into a Strengths, Weaknesses, Opportunities, Threats (SWOT) matrix. The technique is based on the assumption that an effective strategy derives from maximizing a firm’s strengths and opportunities and minimizing its weaknesses and threats.
4.False
In an organization, the internal assessment identifies most of the strengths and weaknesses, while the analysis of the external environment uncovers most of the opportunities and threats.
5.True
An organization’s vision/mission statement forms a foundation for making decisions and taking action. The most effective vision/mission statements inspire and require employees to stretch to reach its goals. These statements seldom change once they are formulated.