There are two ways. If all users will be using Word 2007 or above, you can use a Drop-Down List Content Control. If users may have earlier versions, then you should use a Drop-Down Form Field, which will require protecting the document for forms, so any
other areas where text needs to be entered will require Text Box Form Fields (or some other kind of form field).
Both types of controls are inserted from the Developer tab, which is not displayed by default. You have to check the box for it in the Customize the Ribbon dialog.
To learn more about content controls, see
http://gregmaxey.mvps.org/word_tip_pages/content_controls.html and
http://gregmaxey.mvps.org/word_tip_pages/content_control_fillin_form.html.
To learn more about form fields, see
http://word.mvps.org/FAQs/Customization/FillinTheBlanks.htm
and especially the forms tutorials by Dian Chapman that this article links to.
