SIKKIM MANIPAL UNIVERSITY -DDE

Subject: “Strategic Management and Business Policy”

Subject code: MB0052
Book ID: B1699
Model Question Paper

Time: 2 hours
Max.Marks:140

PART A
(50 X 1 mark= 50 MARKS)

1. The concept of ‘Strategic window’ was introduced by ____________.

A. Michael Porter
B. Peter Drucker
C. Hamel
D. Abell

2. In what type of organisation there is a greater focus on growth and

development and also diversification in terms of both products and
markets?

A. Multinational companies
B. Public sectors
C. Small businesses
D. Non-profit organisations
3. In what type of organisations, the focus is more on ideology, social
responsibilities and underlying values rather than revenue generation?

A. Multinational companies
B. Public sectors
C. Small businesses
D. Non-profit organisations

4. Functional strategies are sometimes called as ________________.

A. Process strategies
B. Corporate strategies
C. Business-unit level strategies
D. Operational strategies

5. _______________ is concerned with overall purpose or objective of

the organisation; for example, making decision such as mergers,
acquisition or going for joint ventures.

A. Business-unit level strategies

B. International strategies
C. Corporate strategies
D. Operational strategies

6. The formal-structured approach of SMP is also sometimes called as

_______________ mode.

A. execution
B. planning
 C. adaptive
D. opportunistic

7. A basic advantage of ___________ approach is that it generates

enough information and employs scientific tools of analysis which
enable planners and decision makers to find solutions even in complex
situations

A. formal-structured
B. adaptive
C. entrepreneurial-opportunistic
D. combination

8. The system by which business corporations are directed and controlled

is called ________________

A. Corporate Governance
B. Corporate Social Responsibility
C. Strategic Management
D. Organisational Planning

9. Corporate governance is primarily guided by _____________.

A. Customers
B. Shareholders
C. Employees
D. Board of Directors
10. The affairs of the company are directed and controlled through the
__________________ who represent the shareholders of the
company

A. Board of Directors
B. Senior managers
C. Middle management
D. Managing Director and the Chief Executive Officer

11. The _____________ system should clearly address the three major
issues of an organisation – the corporate objective, whom the
organisation should be serving and finally how best to serve their
interests.

A. Corporate Governance
B. Policy making
C. Strategic
D. Planning

12. The interrelationship or interdependence between governance and

strategy can be seen through ______________________ in the
organisation.

A. tasks and practices

B. a chain in the reporting system
C. structure
D. processes adopted
13. _________________ is a new tool for systematic review of strategy
by board members without directly involving themselves with
management of companies.

A. Strategic review
B. Management review
C. Strategic planning
D. Strategic audit

14. In governed corporation, the focus is not on power (i.e., not on

monitoring or controlling the managers) but on ________________.

A. improving decision making

B. talent retention
C. social responsibility
D. sustainability

15. Management thinkers like Peter Drucker feel that business definition
should strongly focus on the _______________.

A. Shareholders
B. Suppliers
C. Customers
D. Employees

16. The ____________ of a company is variously called a statement of

philosophy, a statement of beliefs and a statement of purpose.

A. mission statement
 B. vision statement
C. quality principles
D. policy

17. _________________ involves setting goals or targets which demand

stretching of the present resource base and capabilities for their
fulfilment.

A. Strategic intent
B. Strategic objectives
C. Social audit
D. Strategic plan

18. ________________ can be defined as the alignment of business

operations with social values.

A. Corporate Governance
B. Corporate Social Responsibility
C. Business policy
D. Sustainability

19. ________________ evaluates or measures a company’s performance

against planned or laid down social objectives or goals.

A. Social audit
B. Strategic intent
C. Strategic audit
D. Strategic review
20. _________________ of a company is one of its special or unique
competence which gives that company a clear competitive advantage
over its competitors.

A. Distinctive competence
B. Core competence
C. Strategic competence
D. Threshold competence

21. Xerox’s competence in photo copying and Canon’s competence in

optics, imaging and laser control are examples of ______
competence.

A. Strategic
B. Threshold
C. Distinctive
D. Core

22. _______________ is the unique capability that helps an organisation

in capitalizing upon a particular opportunity.

A. Core competence
B. Distinctive competence
C. Strategic competence
D. Threshold competence

23. Various competencies and resources of an organisation can be

integrated into a chain of activities which an organisation performs to
meet customer demand. This is called as ____________.
 A. value chain
B. product life cycle
C. innovation
D. business process

24. In order to secure or sustain competitive advantage, __________

may have to be continuously developed and adjusted to competence
levels.

A. skills
B. talent
C. resources
D. equipments

25. In order to improve the competitive position, companies are adopting

_____________, that is, moving one or more of the functions in the
value chain outside.

A. strategic outsourcing
B. Business process re-engineering
C. Corporate restructuring
D. subcontracting

26. The national income, the manufacturing and service sector, capital or
financial sector, investment, savings, etc., constitute the __________
environment.

A. Economic
 B. Sociological
C. Micro
D. political

27. Prevailing tendencies, course of action or events taking place over

time like movements in national income, inflationary tendencies,
growth in industrial production, etc., are known as ___________.

A. Patterns
B. macro activities
C. Trends
D. fluctuations

28. A ________________ is a detailed and probable view of how the

business environment of an organisation may develop in the future
based on the analysis of key environmental influences and factors of
change about which there is a high degree of uncertainty.

A. Scenario
B. Vision
C. Mission
D. Policy

29. In addition to environmental analysis, organisations need to assess

their internal strengths and weaknesses. This is done through
______________.

A. SWOT analysis
B. Scenario building
 C. PEST analysis
D. Benchmarking

30. The focus of _____________ is on developing and maintaining

competitive advantage consistent with present resources and market
requirements.

A. dynamic strategy
B. stability strategy
C. competitive strategy
D. generic strategy

31. In the BCG model, ‘BCG’ stands for ______________.

A. Boston Consulting Group

B. Business Communication Group
C. Business Consulting Group
D. Benchmark Consulting Group

32. The BCG model is also known as ______________.

A. Johari Window
B. evaluation matrix
C. Generic strategy model
D. portfolio matrix
33. In Michael Porter’s theory, the four generic strategic options available
to companies are cost leadership, focused cost leadership,
differentiation and _____________.

A. diversification
B. focused differentiation
C. uniqueness
D. mass customization

34. Porter’s theory is based on the concepts of ___________ and mass

marketing and product proposition to be offered by different
companies.

A. niche marketing
B. differentiated marketing
C. customised marketing
D. innovation

35. The manner in which the corporate headquarters manages and

nurtures individual businesses or SBUs is called ______________.

A. Corporate parenting
B. Management nurturing
C. Corporate cultivation
D. Corporate education

36. ________________ businesses fit well with parenting characteristics

but do not provide enough opportunities to the parent for
improvement.
 A. Value trap
B. Ballast
C. Heartland businesses
D. Alien territory

37. To ascertain the acceptability and commercial viability of a new

product, it is necessary to conduct ____________ before launching
the product.

A. User Acceptability test

B. test marketing
C. pilot study
D. survey

38. Market development for existing products can take place in two ways:
first is through geographic expansion in the existing market segments
and second is through ___________________.

A. coming up with new features for existing products

B. new marketing techniques
C. developing new market segments
D. more advertisements

39. The kind of diversification in which new business has commonalities

with the core business or core competence of the company is called
___________________.

A. Related diversification
 B. unrelated diversification
C. concentric diversification
D. conglomerate diversification

40. __________________ is less related to the present business and

skills and resources (except financial) and may mean venturing into
an entirely new area.

A. Related diversification
B. Unrelated diversification
C. concentric diversification
D. conglomerate diversification

41. _____________________ is defined as cooperation between two or

more organisations with a common objective, shared control and
contributions (in terms of resources, skills and capabilities) by the
partners for mutual benefits.

A. Strategic alliance
B. Joint venture
C. Merger
D. Acquisitions

42. A ______________ may be defined as a business venture in which

two or more independent companies join together, contribute to
equity capital in equal or agreed proportion and establish a new
company.

A. Strategic alliance
 B. Joint venture
C. Merger
D. Acquisitions

43. The basic objective behind all strategic alliances is to

_____________.

A. secure competitive advantage in the market

B. increase sales
C. increase market share
D. improve operational processes

44. ___________________ is a type of merger which takes place when

there is combination of two or more companies in the same business
or product group or product.

A. Vertical merger
B. Horizontal merger
C. Synergic merger
D. Concentric merger

45. _______________ is a type of merger which takes place when there

is a combination of two or more companies which are NOT in the
same business but in related businesses or products.

A. Horizontal merger
B. Vertical merger
C. Synergic merger
D. Concentric merger
46. ___________________ takes place when a company enters into a
downstream activity with respect to the same product line/ flow – for
example, a garment manufacturer starts its own retail chain.

A. Backward integration
B. Horizontal integration
C. Acquisition
D. Forward integration

47. ___________________ takes place when a company acquires a

competing business or when two or more companies in competing
businesses merge.

A. Forward integration
B. Joint venture
C. Horizontal integration
D. Vertical integration

48. A __________________ is characterized by the existence of a large

number of small and medium units and no single company has any
significant market share.

A. Emerging industry
B. Mature industry
C. Declining industry
D. Fragmented industry
49. A ______________ is one which has passed through transition from
period of fast growth to more modest or stable growth.

A. Fragmented industry
B. Emerging industry
C. Mature industry
D. Declining industry

50. The competitive threat model or the five forces model was developed
by ______________

A. Michael E Porter
B. Hamel
C. C K Prahlad
D. Peter Drucker

PART B
(25 x 2 marks = 50 marks)

51. In many respects, business strategy is similar to military strategy.

Business strategy is formulated, implemented and evaluated with an
assumption of ____________, but military strategy is based on the
assumption of __________.

A. competition, conflict
B. plans, rivalry
C. business environment, prediction of war
 D. scarcity of resources, opponent’s plan

52. Strategies exist at different levels in an organisation. The three

different levels of organisation strategy are corporate level,
_______________ and _____________ strategies.

A. Operational level, division level

B. business-unit level, functional level
C. process level, divisional level
D. scarcity of resources, opponent’s plan

53. What is the concept of ‘Strategic window’?

A. It denotes the direction and control of affairs of the company

B. process of defining organisation’s direction, and making decisions
on allocating its resources to pursue this strategy
C. There are only limited periods during which there is a fit between
market requirements and firm competencies. Companies should
make use of such ‘optimum opportunities’
D. It is an aspirational description of what an organization would like
to achieve or accomplish in the long-term future

54. State True (T) or False (F):

(1) Strategic windows arise as a result of business or market
evolution
(2) For single-business companies, corporate-level strategies and
business-unit level strategies are generally same.

A. 1F, 2F
 B. 1T, 2T
C. 1T, 2F
D. 1F, 2T

55. The strategic management process consists of four distinct steps or

stages. They are (a) defining organisational mission, (b) formulation
of strategy, (c) ______________ and (d) ___________

A. (c) implementation of strategies, (d) strategy evaluation & control

B. (c) preparation, (d) execution
C. (c) monitoring, (d) strategy evaluation
D. (c) execution, (d) strategy monitoring

56. In __________________ approach, the strategy is to move forward

with unusual leaps or ‘discontinuous growth’ for achieving success or
profit and this kind of approach is suitable for organisations in which
the key strategists are ____________.

A. combination, planners
B. entrepreneurial-opportunistic, visionaries
C. formal-structured, imitators
D. adaptive, great leaders

57. The ____________ approach of strategic management process is

essentially a balancing strategy and is more of remedial,
reconciliatory and reactive approach. It suits ____________ where
the focus is more on accountability.

A. formal-structured, non-profit organisations

 B. adaptive, large public sectors
C. entrepreneurial, small companies
D. combination, multinational companies

58. Output (outcomes) and activities like organizing and accomplishing

the plan are classified as mix of both ___________ and
___________ factors.

A. policy making, governance

B. strategic, governance
C. strategic, tactic
D. operational, tactic

59. Mission is concerned more with the _____________ whereas the

vision is concerned more with the ________________

A. present, future
B. future, present
C. direction, purpose
D. strategic path, principles

60. Four types of ‘mergers’ are (i) horizontal merger, (ii) vertical merger,
(iii) ____________ and (iv) _____________.

A. concentric merger, conglomerate merger

B. synergic merger, concentric merger
C. synergic merger, conglomerate merger
D. consolidation merger, amalgamation merger
61. Companies which wish to compete globally generally adopt one of the
following four strategies (i) Global strategy, (ii) multi-domestic
strategy, (iii) _____________ and (iv) _____________.

A. transformational strategy, local strategy

B. domestic strategy, international strategy
C. universal strategy, transnational strategy
D. international strategy, transnational strategy

62. Fill up the blanks

(1) ________________ is a process of identifying, understanding and
adopting outstanding practices either from same organisation or
from other organisations to help improve performance.
(2) _______________ is the decision which selects from among the
alternative grand strategies which will best meet the enterprise’s
objectives.

A. (1) Best practices, (2) Strategic intent

B. (1) Strategic window, (2) Strategic planning
C. (1) Benchmarking, (2) Strategic choice
D. (1) Benchmarking, (2) Strategic review

63. State True (T) or False (F)

(1) Strategic Position and Action Evaluation (SPACE) matrix or
framework can be considered an improvement over the portfolio
analysis and more comprehensive as a technique for evaluating
strategies.
(2) SPACE matrix is also called as BCG matrix.
 A. 1T, 2T
B. 1F, 2F
C. 1T, 2F
D. 1F, 2T

64. State True (T) or False (F)

(1) Strategic budget is different from conventional accounting budget
(2) Strategic capability is concerned with how the resources are
deployed, managed and controlled in a harmonious way to
produce a synergetic effect.

A. 1T, 2T
B. 1F, 2F
C. 1T, 2F
D. 1F, 2T

65. State True (T) or False (F)

(1) Structure of an organisation defines the levels and roles of
management in a hierarchical way.
(2) An organisational structure is presented through the
organisational chart

A. 1T, 2T
B. 1F, 2F
C. 1T, 2F
D. 1F, 2T

66. Fill up the blanks:

 (1) The ________________ structure represents an organisation
which is owned and managed by a single individual.
(2) A _______________ structure is based on differentiation and
allocation of primary functions such as production, marketing,
finance and HR along with certain delegation of powers.

A. (1) Divisional, (2) SBU

B. (1) Entrepreneurial, (2) functional
C. (1) Entrepreneurial, (2) matrix
D. (1) Project-based, (2) divisional

67. State True (T) or False (F)

(1) The fundamental factor in the SBU structure is to identify
independent product/ market segment which requires distinct
strategies.
(2) A matrix structure is a need-based structure which does not
follow the conventional lines of hierarchy or control.

A. 1F, 2F
B. 1T, 2T
C. 1T, 2F
D. 1F, 2T

68. Fill up the blanks:

(1) A __________ organisation is an organisation without a formal
structure and is like an extended network.
(2) The objective of _______________ is to nurture individual
managers and build human capital.
 A. (1) matrix, (2) Motivation system
B. (1) virtual, (2) Management Development System (MDS)
C. (1) functional, (2) Evaluation system
D. (1) virtual, (2) Management Control System (MCS)

69. State True (T) or False (F)

(1) In “ethical damage control” approach of business ethics, the
objective is to protect the company from adverse publicity.
(2) In “ethical culture” approach, the top management believes that
high ethical principles embedded in the corporate culture should
guide the managers and staff.

A. 1F, 2F
B. 1T, 2T
C. 1T, 2F
D. 1F, 2T

70. State True (T) or False (F)

(1) Managers in organisations use different types of power to
influence operations, choice of strategy and its implementation.
(2) Political view of strategy development relates to the proposition
that strategies develop as the outcome of process of bargaining
and negotiation among powerful internal or external interest
groups.

A. 1T, 2F
B. 1F, 2T
C. 1F, 2F
D. 1T, 2T
71. Choose the right option:
For pre-implementation assessment of strategies, which of the
following interrelated evaluation criteria are generally used:
(1) Suitability
(2) Manageability
(3) Feasibility
(4) Acceptability
(5) Accountability

A. Only 1, 3 and 4
B. Only 1, 2 and 3
C. All the criteria (i.e., 1,2,3,4 & 5)
D. Only 3 and 4

72. State True (T) and False (F):

(1) Critical Success Factors (CSF) are those aspects of strategy in
which a company must excel to outperform competitors.
(2) CSF analysis highlights the important relationship between
resources, competences and choice of strategy.

A. 1T, 2T
B. 1F, 2F
C. 1T, 2F
D. 1F, 2T

73. State True (T) and False (F):

 (1) The balanced scorecard approach combines both quantitative and
qualitative criteria/ measures of evaluation.
(2) The balanced scorecard approach is also called as benchmarking.

A. 1T, 2T
B. 1F, 2F
C. 1T, 2F
D. 1F, 2T

74. Fill up the blanks:

(1) ______________ is conventionally known for minimizing errors or
defects in manufacturing or quality improvement.
(2) In DMAIC method of Six-sigma, DMAIC stands for Define,
Measure, Analyse, Improve and __________.

A. (1) Kaizen, (2) Communication

B. (1) TQM, (2) Communication
C. (1) Six-sigma, (2) Control
D. (1) Balanced scorecard, (2) Compute

75. State True (T) and False (F):

(1) Liquidation means closing down a company and selling its assets.
(2) Corporate turnaround may be defined as organisational recovery
from business decline or crises.

A. 1T, 2T
B. 1F, 2F
C. 1T, 2F
D. 1F, 2T
 PART C
(4 X 10 marks = 40 marks)

76. Describe Porter’s Competitive threat model with relevant examples.

(Refer Unit 11)

77. Write short notes on the following:

(a) Core Competence
(b) SWOT Analysis

(Refer Unit 6, 7)

Case Study: (Read the case study given below and answer the
questions ‘78’ and ‘79’)

Strategy of Hindustan Unilever (HUL)

Hindustan Unilever (HUL) is a partly owned (majority holding)
subsidiary of Unilever Ltd. For quite some years, Unilever was on the
lookout for expansion opportunities for its group companies/ businesses
in India. When the opportunity came its way with India’s economic
liberalization in the 1990s, Unilever acted fast, achieved a big expansion
in each of its major businesses in the country, regrouped and integrated
its companies. Unilever worked out its corporate strategy for India in
line with its objectives. To achieve its objectives, HUL formulated a
strategy which had three distinct components:
1. A strategy for expansion of businesses
2. A strategy for regrouping and integrating the group companies
3. A strategy for consolidation of ownership and control by the parent
company in the Indian operations by acquiring majority equity in them.

For expansion of its business, HUL exploited a whole range of strategic

possibilities. It used takeovers/ acquisitions, mergers, strategic alliances
and joint ventures. In some cases, it employed the start-up route as
well. It, however, relied heavily on the takeover route for its
expansions. There were valid reasons for this. By relying on the
takeover route for its expansion, Unilever was in a position to avoid the
time lags.
Along with the expansion of its various businesses, Unilever carried out
the regrouping/integration of its existing businesses/companies in the
country. Its idea was to integrate all its companies in India into a single
mega firm. It used mergers for accomplishing the objective and carried
it out in stages. It took two companies at a time—two companies of the
group which enjoyed the closest synergy were merged at a time into a
single entity, and the merged entity in turn was subsequently merged
with another company of the group to form a much larger entity. The
process continued till it reached the stage where Unilever had just a
single company in India.

Unilever merged four companies—two of its existing companies, Doom

Dooma India and Tea Estates India, two taken-over companies, Kissan
and Kothari General Food (KGF), into Brooke Bond. The merging of
Doom Dooma and Tea Estates served two purposes. It furthered the
objective of integrating the group companies. It also helped Unilever to
acquire majority equity in Brooke Bond with an incremental new
investment. Unilever then merged Brooke Bond and Lipton into a single
entity—Brooke Bond Lipton India Ltd (BBLIL). Then TOMCO, which had
been taken over earlier, was merged with HLL. Subsequently, the
combined entity, Brooke Bond Lipton India Ltd (BBLIL) was merged with
Hindustan Lever. Consolidation of ownership and control by the parent
company was the third part of Unilever’s strategic process with respect
to its Indian operations. Unilever acquired majority stake and
consolidated its position in all its companies in India. The company
 acquired 51 per cent or more equity in each of its companies in India,
and it managed this at attractive prices and with minimal new
investment. This was accomplished through a chain of moves involving
mergers of companies and incremental new investments.

78. Describe Strategic Management Process in terms of the strategic

management model. Why did HUL formulated the three distinct
strategies?

79. How did HUL implement the strategies formulated? Did the company
follow the strategic management process rigidly as per the strategic
management model? Justify your answer.