Chapter 2 Objectives
1) The ________ is the overall purpose of the organization.
A) brand position
B) mission
C) competitive advantage
D) market cap
Answer: B
Rationale:
The mission of an organization defines its fundamental reason for existence and outlines its
overarching goals and objectives. It serves as a guiding principle that shapes the
organization's strategies and actions.
2) The ________ of an organization is its set of distinctive capabilities that give it an edge
over its market rivals in terms of cost or differentiation.
A) operational objective
B) competitive advantage
C) core competency
D) strategic fit
Answer: B
Rationale:
Competitive advantage represents the unique strengths and capabilities possessed by an
organization, which enable it to outperform competitors and achieve superior performance in
the market.
3) Which of the following is one of the primary activities proposed by Michael Porter as part
of the chain of activities that are used to create products and services and deliver them to
market?
A) procurement
B) operations
C) human resource management
D) technological development
Answer: B
Rationale:
Operations involve the processes and activities within an organization that are directly
involved in producing goods or delivering services to customers. This includes
manufacturing, assembly, and service delivery.
4) Which of the following is one of the support activities proposed by Michael Porter as part
of the chain of activities that are used to create products and services and deliver them to
market?
A) inbound logistics
B) infrastructure
C) outbound logistics
D) service
Answer: B
Rationale:
Infrastructure refers to the support systems and functions within an organization that enable
its primary activities to take place effectively. This includes functions such as technology,
organizational structure, and financial systems.
5) Which of the following value chain activities is concerned with access to unique
production materials?
A) procurement
B) inbound logistics
C) infrastructure
D) marketing and sales
Answer: A
Rationale:
Procurement involves the process of sourcing and acquiring raw materials, components, and
other resources needed for production. It includes activities such as supplier selection,
negotiation, and contracting to ensure access to necessary materials.
6) Which of the following value chain activities is concerned with managing the organization,
including planning, finance, and legal affairs?
A) human resource management
B) infrastructure
C) procurement
D) operations
Answer: B
Rationale:
Infrastructure encompasses various support functions within an organization, including
management activities related to planning, finance, legal affairs, and other administrative
functions necessary for organizational operations.
7) Google leverages its considerable company assets, such as its strong cash position, to grow
the company. Which of the following value chain activities is this most consistent with?
A) outbound logistics
B) infrastructure
C) technological development
D) procurement
Answer: B
Rationale:
Leveraging company assets to support growth aligns with infrastructure activities, which
involve managing organizational resources and capabilities to facilitate business operations
and expansion.
8) For an organization, the value chain activity of "service" involves ________.
A) managing the organization, including planning, finance, and legal affairs
B) providing its customers help related to its product before, during, and after a sale
C) shipping products out of the organization
D) leveraging technical expertise to develop innovative products
Answer: B
Rationale:
The service value chain activity pertains to providing assistance and support to customers
throughout their interaction with the organization's products or services, ensuring customer
satisfaction and loyalty.
9) Which of the following value chain activities involves recruiting and training managerial
talent?
A) infrastructure
B) human resource management
C) technological development
D) inbound logistics
Answer: B
Rationale:
Human resource management encompasses activities related to the recruitment, training,
development, and management of personnel within an organization, including managerial
talent.
10) When organizations leverage technical expertise to develop innovative products, they
perform the value chain activity of ________.
A) procurement
B) technological development
C) infrastructure
D) operations
Answer: B
Rationale:
Technological development involves activities related to research, innovation, and the
development of new technologies or products, leveraging technical expertise to create value
within the organization.
11) Procurement is the value chain activity that involves ________.
A) marketing and selling products
B) purchasing materials
C) shipping products out of the organization
D) providing service before, during, and after the sale
Answer: B
Rationale:
Procurement refers to the process of acquiring goods, services, or materials required for the
organization's operations. It involves sourcing, purchasing, and managing relationships with
suppliers to ensure the availability of necessary resources.
12) ________ are items that focus organizational effort toward improving the organization's
competitive strength and its long-term market position.
A) Operations
B) Objectives
C) Missions
D) Competitive advantages
Answer: B
Rationale:
Objectives are specific targets or goals set by an organization to enhance its competitive
position, improve performance, or achieve strategic aims. They guide the organization's
efforts and align activities toward achieving desired outcomes.
13) Which of the following is the most likely objective of a large organization with a mission
emphasizing growth in new markets?
A) increasing its market share within its current market, with the intent on dominating a
particular niche
B) increasing its market share by expanding geographically
C) increasing its brand reputation, or improving its customer service for high-end customers
D) improving its responsiveness to dynamic market conditions by shortening its product
development cycle time
Answer: B
Rationale:
A large organization emphasizing growth in new markets would likely prioritize expanding
its geographic presence to capture market share in those new regions, aligning with the
mission of market expansion.
14) Which of the following is the most likely objective of a small organization with a mission
to be an expert in its narrow category?
A) increasing its market share within its current market, with the intent on dominating a
particular niche
B) increasing its market share by expanding geographically
C) increasing its brand reputation, or improving its customer service for high-end customers
D) improving its responsiveness to dynamic market conditions by shortening its product
development cycle time
Answer: A
Rationale:
A small organization aiming to be an expert in a narrow category would likely focus on
increasing its market share within its current market by dominating a specific niche,
leveraging its specialized expertise to gain a competitive advantage.
15) Which of the following is the most likely objective of an organization with a mission
focused on luxury services?
A) increasing its market share within its current market, with the intent on dominating a
particular niche
B) increasing its market share by expanding geographically
C) increasing its brand reputation, or improving its customer service for high-end customers
D) improving its responsiveness to dynamic market conditions by shortening its product
development cycle time
Answer: C
Rationale:
An organization with a mission focused on luxury services would likely prioritize enhancing
its brand reputation and delivering exceptional customer service to high-end clients, as this
aligns with the premium positioning and customer expectations associated with luxury
offerings.
16) Which of the following is the most likely objective of an organization driven by
innovation with a competitive advantage in technology?
A) increasing its market share within its current market, with the intent on dominating a
particular niche
B) increasing its market share by expanding geographically
C) increasing its brand reputation, or improving its customer service for high-end customers
D) improving its responsiveness to dynamic market conditions by shortening its product
development cycle time
Answer: D
Rationale:
An organization driven by innovation with a competitive advantage in technology would
likely prioritize improving its responsiveness to dynamic market conditions by shortening its
product development cycle time. This objective aligns with leveraging its technological
expertise to innovate rapidly and bring new products or updates to the market quickly,
maintaining its competitive edge.
17) An organization's product/service objectives ________.
A) focus on the organization's size of the market
B) concentrate on the organization's offering to the market
C) devote effort to the brand of the organization or its offerings
D) engage in customer-related issues
Answer: B
Rationale:
Product/service objectives are focused on the organization's offerings to the market, including
aspects such as product features, quality, pricing, and distribution channels.
18) Which of the following factors is addressed by an organization's financial objectives?
A) market share
B) monetary results
C) product offering
D) customer-related issues
Answer: B
Rationale:
Financial objectives focus on monetary results such as revenue, profit, cash flow, and return
on investment, aiming to ensure the financial health and sustainability of the organization.
19) Which of the following is an example of an organization's financial objective?
A) developing market share in new market Y from 0% to 10% within one year
B) increasing organization-wide sales by 15% by end of calendar year
C) improving recommendations rate from 30% to 70% of customers surveyed, by end of year
D) adding a new luxury brand to target high-end customer
Answer: B
Rationale:
Increasing organization-wide sales by a specific percentage represents a financial objective
aimed at improving revenue generation and overall financial performance.
20) Which of the following is an example of an organization's market share-related objective?
A) improving sales of new services from 10% of total sales to 15% of total sales within one
year
B) increasing the portion of the market controlled in new market Y from 0% to 12% within
one year
C) decreasing development cycle time (inception to launch) from 18 months to 12 months
D) increasing brand awareness in market X by 30% within one year, as measured by survey Y
Answer: B
Rationale:
Increasing the portion of the market controlled in a specific market represents a market sharerelated objective, focusing on expanding the organization's market presence and share within
a defined market segment.
21) Which of the following is an example of an organization's product/service-related
objective?
A) increasing brand awareness in market X by 30% within one year, as measured by survey Y
B) decreasing development cycle time (inception to launch) from 18 months to 12 months
C) improving sales of new services from 10% of total sales to 15% of total sales within one
year
D) increasing the portion of the market controlled in new market Y from 0% to 12% within
one year
Answer: B
Rationale:
Decreasing the development cycle time from 18 months to 12 months focuses on improving
the efficiency and effectiveness of the organization's product or service development process,
making it a product/service-related objective.
22) Which of the following is an example of an organization's brand-related objective?
A) increasing the portion of the market controlled in new market Y from 0% to 12% within
one year
B) adding a new luxury product line to target high-end customer
C) developing market share in new market Y from 0% to 10% within one year
D) improving perceived quality, as evidenced by third party analyst rating increasing from
ranking #5 to ranking #2 in analyst report X
Answer: B
Rationale:
Adding a new luxury product line to target high-end customers directly relates to enhancing
the organization's brand image and reputation among a specific market segment, making it a
brand-related objective.
23) Which of the following is an example of an organization's customer-related objective?
A) increasing the portion of the market controlled in new market Y from 0% to 12% within
one year
B) improving recommendations rate from 40% to 75% of customers surveyed, by end of year
C) increasing preference of our brand over brand Z, for target market X, from 22% to 33% by
end of calendar year
D) maintaining positive cash flow to survive double-dip recession
Answer: B
Rationale:
Improving the recommendations rate from 40% to 75% of customers surveyed focuses on
enhancing customer satisfaction and loyalty, directly addressing customer-related issues.
24) Caltec Rensing is a leading marketer of high-end cell phones in the U.S. Recently, the
company's market research revealed that buyers were increasingly preferring cell phones built
on the Android platform over the earlier Java-based cell phones. Accordingly, Caltec Rensing
developed a new cell phone built on the Android platform. Based on the enthusiastic response
to the new product, Caltec Rensing resolved to promote the new phone so that its sales would
grow the current 10% of total sales to 25% of the company's total sales within the next six
months. Which of the following categories of organizational objectives does Caltec Rensing's
aim of increasing sales of a certain product come under?
A) market-share related objective
B) product/service-related objective
C) brand-related objective
D) financial objective
Answer: B
Rationale:
Caltec Rensing's aim of increasing sales of a certain product (the new cell phone built on the
Android platform) aligns with a product/service-related objective, as it focuses on improving
the performance and sales of a specific product within the company's offerings.
25) According to the S.M.A.R.T objective framework, a specific objective is one which is
________.
A) possible and leverages existing capabilities and skills
B) precise about what it intends to achieve
C) rational and allocates an adequate amount of resources to support its completion
D) measurable for its effectiveness
Answer: B
Rationale:
In the S.M.A.R.T objective framework, a specific objective is characterized by being precise
about what it intends to achieve, ensuring clarity and focus on the desired outcome.
26) According to the S.M.A.R.T objective framework, what is the characteristic of realistic
objectives?
A) objectives that are clear about when they are expected to be completed
B) objectives that are rational and allocate an adequate amount of resources to support their
completion
C) objectives that are possible and leverage existing capabilities and skills to ensure their
accomplishment
D) objectives that are precise about what they intend to achieve and can be quantified to
gauge their effectiveness
Answer: B
Rationale:
Realistic objectives in the S.M.A.R.T framework are those that are rational and feasible,
considering the organization's resources and capabilities. They should allocate sufficient
resources to support their achievement.
27) Baker's Hut is a coffee house based in Atlanta, Georgia. The proprietor of Baker's Hut has
set out a list of objectives for the establishment to achieve. Which of the following qualifies
as a specific objective under the S.M.A.R.T objective framework?
A) "Provide training and opportunities for the staff to improve their skills."
B) "Increase the number of Baker's Hut coffee houses in underserved areas in Atlanta."
C) "Expand the range of our menu offerings by the end of the calendar year."
D) "Become the preeminent coffee house in the city through a robust commitment to quality."
Answer: B
Rationale:
"Increase the number of Baker's Hut coffee houses in underserved areas in Atlanta" is a
specific objective as it clearly outlines the desired outcome.
28) Baker's Hut is a coffee house based in Atlanta, Georgia. The proprietor of Baker's Hut has
set out a list of objectives for the establishment to achieve. Which of the following qualifies
as a measurable objective under the S.M.A.R.T objective framework?
A) "Provide training and opportunities for the staff to improve their skills."
B) "Establish a minimum of four Baker's Hut coffee houses in Atlanta through a franchise
model."
C) "Expand the range of our menu offerings by the end of the calendar year."
D) "Become the preeminent coffee house in the city through a robust commitment to quality."
Answer: B
Rationale:
"Establish a minimum of four Baker's Hut coffee houses in Atlanta through a franchise
model" is measurable as it provides a clear target to achieve.
29) Baker's Hut is a coffee house based in Atlanta, Georgia. The proprietor of Baker's Hut has
set out a list of objectives for the establishment to achieve. Which of the following qualifies
as a time-based objective under the S.M.A.R.T objective framework?
A) "Provide training and opportunities for the staff to improve their skills."
B) "Establish a minimum of four Baker's Hut coffee houses in Atlanta through a franchise
model."
C) "Expand the range of our menu offerings by the end of the calendar year."
D) "Become the preeminent coffee house in the city through a robust commitment to quality."
Answer: C
Rationale:
"Expand the range of our menu offerings by the end of the calendar year" includes a specific
time frame, making it a time-based objective.
30) Wild Side is an adventure firm based in Wyoming. The firm organizes outdoor
excursions, bungee jumping, cliff-diving, and other adventure packages for both individuals
and corporates. The firm has been in robust financial health and plans to expand further to
cater to the rising demand for newer adventure services, such as skydiving, rock-climbing,
etc. At the end of the latest financial year, the company endorsed the following objective:
"Increase sales of new adventure packages, such as rafting and skydiving (where new
services are defined as those introduced within the past 2 years), from 20% of total revenue to
25%." Why would this objective fail to meet the S.M.A.R.T objective framework?
A) It is not specific enough and does not clearly mentions what it intends to achieve.
B) It does not indicate a specific time of completion of the objective.
C) It is not achievable and does not leverage existing skill sets of its employees.
D) It does not specify a practical measure of the degree to which the objective is achieved.
Answer: B
Rationale:
This objective fails to meet the S.M.A.R.T criteria because it lacks a specific time frame for
achieving the increase in sales from 20% to 25% of total revenue.
31) Wild Side is an adventure firm based in Wyoming. The firm organizes outdoor treks,
bungee jumping, cliff-diving, and other adventure packages for both individuals and
corporates. The firm has been in robust financial health and plans to expand further to cater to
the rising demand for newer adventure services, such as skydiving, rock-climbing, etc. At the
end of the latest financial year, the company endorsed the following objective: "Increase sales
of new adventure packages, such as rafting and skydiving (where new services are defined as
those introduced within the past 2 years), to be completed by the end of the next financial
year." Why would this objective fail to meet the S.M.A.R.T objective framework?
A) It is not specific enough and does not clearly mention what it intends to achieve.
B) It does not indicate a specific time of initiation and completion of the objective.
C) It is not achievable as it does not leverage existing skill sets of its employees.
D) It does not specify a measure of the degree to which the objective is achieved.
Answer: D
Rationale:
This objective lacks a specific measure to determine the extent to which the increase in sales
of new adventure packages is achieved, making it vague and not aligned with the measurable
criterion of the S.M.A.R.T framework.
32) Wild Side is an adventure firm based in Wyoming. The firm organizes outdoor treks,
bungee jumping, cliff-diving, and other adventure packages for both individuals and
corporates. The firm has seen a decline in sales and plans to expand further by offering newer
adventure services, such as skydiving, rock-climbing, etc. At the end of the latest financial
year, the company endorsed the following objective: "Introduce new adventure packages,
such as rafting and skydiving, with the sales of such services constituting at least 25% of total
sales by the end of the next financial year." Why would this objective fail to meet the
S.M.A.R.T objective framework?
A) It is not specific enough and does not clearly mention what it intends to achieve.
B) It does not indicate a specific time of initiation and completion of the objective.
C) It is not achievable enough and does not leverage existing skill sets of its employees.
D) It does not specify a measure of the degree to which the objective is achieved.
Answer: C
Rationale:
This objective may not be achievable as it sets a high target without considering the existing
capabilities of the firm's employees, which violates the attainable criterion of the S.M.A.R.T
framework.
36) The value chain activity of "infrastructure" involves designing unique manufacturing
processes.
Answer: False
Rationale:
The value chain activity of "infrastructure" typically involves support functions such as
company-wide planning, finance, quality management, information technology, and other
essential organizational activities. It does not directly involve designing manufacturing
processes, which falls more under the domain of operations or production activities.
37) An organization's objectives should be developed based on its mission and competitive
advantage.
Answer: True
Rationale:
Objectives should align with the organization's mission and leverage its competitive
advantage to ensure strategic coherence and effectiveness in achieving its goals.
38) A large organization with a mission emphasizing growth in new markets will often focus
on increasing its market share within its current market, with the intent on dominating a
particular niche.
Answer: False
Rationale:
A large organization with a mission emphasizing growth in new markets is more likely to
focus on expanding geographically or diversifying its product offerings to capture new
market segments rather than solely concentrating on increasing market share within its
current market.
39) When a company aims to achieve a certain percentage rate of return by the end of a
specific period, it is setting itself a market share-related objective.
Answer: False
Rationale:
A company aiming for a certain percentage rate of return is setting a financial objective, not a
market share-related objective. Market share-related objectives typically focus on capturing a
specific portion of the market, either by increasing it or maintaining it.
40) Objectives should be broad and expansive in scope and should not be defined in very
specific or narrow terms.
Answer: False
Rationale:
Objectives should be specific, measurable, achievable, relevant, and time-bound
(S.M.A.R.T). Being too broad or vague can lead to ambiguity and make it difficult to assess
progress and success.
41) Measurable objectives are rational and allocate an adequate amount of resources to
support their completion.
Answer: False
Rationale:
While measurable objectives should indeed be quantifiable and specific enough to gauge
progress, their rationality and resource allocation are not inherently tied to their
measurability. Rationality and resource allocation are separate considerations in objective
setting.
42) Explain the significance of "mission" for an organization.
Answer: The mission is the overall purpose of the organization. It describes the general scope
of activities for the firm, and often includes fundamental principles of the manner in which
the organization intends to do business. Many companies use mission statements to define
their overall purpose. For example, Hilton's Hampton Inn franchise declares its mission
statement as follows: "To create rewarding customer experiences that build long term loyalty
to Hilton Worldwide, drive business to our hotels, and spread the warmth of Hilton
hospitality worldwide."
43) Why is competitive advantage important to organizations?
Answer: The competitive advantage of an organization is its set of distinctive capabilities that
give it a cost advantage or a differentiation advantage over the competition. Companies
leverage their competitive advantage to succeed against other competitors in the market. For
example, Hilton claims that its proprietary check-in computer system gives it a competitive
advantage. The system improves guest recognition during check-in and provides more
enhanced levels of service through real-time computer access to guest preferences.
44) What are organizational "objectives"? How do they influence the working of the
organization?
Answer: Objectives are items that focus organizational effort toward improving the
organization's competitive strength and its long-term market position. Objectives have to be
developed based on the organization's mission and competitive advantage. Limiting the
number of objectives to only one will definitely improve the plan's focus. Trying to
implement more than three objectives at once can be counterproductive, because the
organization's efforts gets scattered in too many directions.
45) What are the characteristics of clear objectives?
Answer: Objectives should be clear to ensure their success. Murky objectives invite
confusion. To ensure clarity, marketing plans should include specific objectives with which to
manage the plan's proposed project (sometimes called management by objectives, or MBO).
Objectives should follow the S.M.A.R.T. objective framework: specific, measurable,
achievable, realistic, and time-based.
46) How does Michael Porter's value chain model help categorize competitive advantages?
Answer: Companies leverage their competitive advantage to succeed against other
competitors in the market. Several different types of competitive advantages are available.
Michael Porter's value chain model helps categorize competitive advantages by showing how
each value chain element can be transformed into a competitive advantage. The value chain
model asserts that companies can deliver customer value throughout the chain of activities
that are used to create products and services and deliver them to market.
47) Describe each of the value chain activities that can be converted into a competitive
advantage, as proposed by Michael Porter.
Answer: In his book, Competitive Advantage, Michael Porter identified five primary
activities (inbound logistics, operations, outbound logistics, marketing and sales, and service)
and four support activities (infrastructure, human resource management, technological
development, and procurement).
•Inbound logistics-Access to unique production materials
•Operations-Unique manufacturing process; Unique service delivery process
•Outbound logistics-Shipping products out of organization
•Marketing and sales-Marketing and selling products
•Service-Providing service before, during and after the sale
•Infrastructure of firm-Managing organization, including planning, finance, and legal affairs
•Human resource management-Recruiting and training managerial talent
•Technological development-Leveraging technical expertise to develop innovative products
•Procurement-Purchasing materials
48) How do organizational missions and competitive advantages influence organizational
objectives?
Answer: Objectives are items that focus organizational effort toward improving the
organization's competitive strength and its long-term market position. Objectives have to be
developed based on the organization's mission and competitive advantage.
Different types of missions and competitive advantages will dictate different types of
objectives:
• A large organization with a mission emphasizing growth in new markets will often focus on
increasing its market share by expanding geographically.
• A small organization with a mission to be an expert in its narrow category will often focus
on increasing its market share within its current market, with the intent on dominating a
particular niche.
• An organization with a mission focused on luxury services will often target an objective
based on increasing its brand reputation, or improving its customer service for high-end
customers.
• A company driven by innovation with a competitive advantage in technology will often try
to leverage its advantage through new innovative products, or improving its responsiveness to
dynamic market conditions by shortening its product development cycle time.
49) What are the different types of organizational objectives? Provide an example for each.
Answer: Organizations generally have five types of objectives:
• Financially Related Objectives, which address monetary results. Example: "Increase
organization-wide sales by 12% by end of calendar year."
• Market share-related objectives, which focus on the organization's size of the market.
Example: "Develop market share in new market Y from 0% to 5% within one year."
• Product or service-related objectives, which concentrate on the organization's offering to the
market. Example: "Improve perceived quality, as evidenced by third party analyst rating
increasing from ranking #5 to ranking #2 in analyst report X."
• Brand-related objectives, which devote effort to the brand of the organization or its
offerings. Example: "Increase brand awareness in market X by 25% within one year, as
measured by survey Y."
• Customer-related objectives, which engage in customer-related issues. Example: "Improve
customer service, as measured by 15% reduction in customer complaints about service, by
end of year."
50) How can unclear objectives be made clearer? Illustrate with an example.
Answer: Objectives should be clear to ensure their success. Murky objectives invite
confusion. For example, one of the Hilton objectives states that the hotel business should
target emerging markets for growth, but how is growth defined? Number of rooms? Number
of hotel properties? And when is the growth to be completed? How do we know we have
completed the objective without knowing the specifics?
To ensure clarity, marketing plans should include specific objectives with which to manage
the plan's proposed project (sometimes called management by objectives, or MBO).
Objectives should follow the S.M.A.R.T. objective framework: specific, measurable,
achievable, realistic, and time-based. Let us see how Hilton's growth objective might change
using the S.M.A.R.T. method:
• Specific: Specific objectives are precise about what they intend to achieve (answering who,
what, when, where, and why). For example, Hilton's growth objective could be made more
specific by stating: "Increase the number of hotels in emerging markets..."
• Measurable: Measurable objectives are quantified. For example, Hilton could state: "...by
200 hotels with a sum of 10,000 rooms..."
• Achievable: Achievable objectives are possible and leverage existing abilities and skills (or
abilities and skills that could be easily learned). For example, Hilton could mention that the
objective leverages its current skill base.
• Realistic: Realistic objectives are rational and allocate an adequate amount of resources to
support their completion. For example, the Hilton objective could add the following phrase:
"...leveraging a dedicated team and sufficient capital..."
• Time-based: Time-based objectives state when the objective will be completed. Hilton could
make the objective time-based by adding: "...to be completed by the end of the calendar
year."
Test Bank for Marketing Planning
Stephan Sorger
9780132544702
