Test on Understanding Business Vision and Mission Statements

Question 1: The vision statement should be established before a comprehensive mission statement is developed to provide its foundation.

A. Yes

B. No

Explanation: A clear vision statement provides the foundation for developing a comprehensive mission statement and should be established first and foremost.

Question 2: An effective mission statement frequently includes specific monetary objectives.

A. Yes

B. No

Explanation: Effective mission statements are broad in scope and should not include monetary amounts, numbers, percentages, ratios, or objectives.

Question 3: According to the study materials, which of the following are common ways firms communicate their vision and mission statements?

A. Often found in the front of annual reports

B. Displayed throughout a firm’s premises

C. Distributed with company information sent to constituencies

D. Exclusively shared through internal memos to top management

Explanation: The study materials state that vision and mission statements often can be found in the front of annual reports, are displayed throughout a firm’s premises, and are distributed with company information sent to constituencies. They are also part of numerous internal reports. The statements are not exclusively shared through internal memos to top management, as they are communicated to a wider audience including employees and external constituencies.

Question 4: According to the study materials, who is often referred to as 'the father of modern management' and influenced current thought on mission statements?

A. Michael Porter

B. Peter Drucker

C. Fred R. David

D. King and Cleland

Explanation: The study materials explicitly state: 'Current thought on mission statements is based largely on guidelines set forth in the mid-1970s by Peter Drucker, who is often called “the father of modern management”.'

Question 5: A good mission statement should ideally include specific monetary amounts for its survival, growth, and profitability component.

A. Yes

B. No

Explanation: The study materials state that a mission statement should not include monetary amounts, numbers, percentages, ratios, goals, or objectives. While 'survival, growth, and profitability' is a component, it should not be expressed with specific monetary figures.