Oxford University Press | Online Resource Centre | Chapter 11

Haberberg and Rieple: Strategic Management

Chapter 11

Question 1

When trying to judge whether a firm's strategies 'feel' right, the assessment is likely to be:

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Correct answer:

a) Qualitative

Feedback:

The assessment of a firm's performance can also be quantitative, looking at measurable indicators.

Page reference: 454

Question 2

In assessing an organization's success or failure, there are three stages; working out what to observe and
measure, establishing the standards against which to measure and:

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Correct answer:

c) Drawing conclusions

Feedback:

These three stages are applicable to real life situations and to case studies. There are a number of
variables that can be measured and compared against standards.

Page reference: 455-6

Question 3

Which of the following is the least useful measurement of performance?

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Correct answer:

b) Top managements targets

Feedback:

An organization's performance should be measured against internal and external indicators of success.
An organization could surpass internal targets but may still be lagging behind competitors or best
practice.

Page reference: 456
Question 4

From a strategist's point of view, the most appropriate measure of profit is:

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Correct answer:

a) Before interest and tax

Feedback:

Usually the measure of profits is before interest and tax because the management of tax and interest is
not directly related to customer value.

Page reference: 456-7

Question 5

A raw number such as profit is not all that useful on its own. It is more useful to use:

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Correct answer:

a) A ratio
Feedback:

It is important to use the same ratios when comparing organizations with each other. Ratios provide a
better indicator of success than just profit data on its own.

Page reference: 457

Question 6

The number of months that a business has sufficient cash in the bank to cover outgoings is called:

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Correct answer:

b) Cash burn

Feedback:

The cash burn measurement is an important indicator of the sustainability of a young firm that may have
a lot of outgoings to cover in a short period of time.

Page reference: 460

Question 7

The financial terms 'gearing' or 'leverage' are also known as which ratio?
You did not answer the question.

Correct answer:

c) Debtequity ratio

Feedback:

The debt/equity ratio is the most important indicator of a firm's financial strength.

Page reference: 460

Question 8

For clues as to why a firm is performing badly, what type of measure would be useful?

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Correct answer:

a) Operational performance measures

Feedback:

Financial measures on their own do not indicate why a firm is performing badly. They show
only whether a firm is performing well or not.
Page reference: 463

Question 9

If a firm's debtors are rising it could be an indication of:

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Correct answer:

b) Weak financial management

Feedback:

If debtors are rising it could indicate a number of things such as inadequate I.T systems to follow up
debtors, poor quality products, poor selection of customers or weak financial management.

Page reference: 464

Question 10

If we measure the number of new products that Sony has launched in the last three years, this is an:

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Correct answer:
b) Output measure of innovation

Feedback:

Sometimes it is necessary to use tailored measures of performance that match what the firm declares as
its strategic objectives. In the case of Sony, firm performance can be measured on the basis of
innovation of which there are input and output measures.

Page reference: 465

Oxford University Press | Online Resource Centre | Chapter 12

Haberberg and Rieple: Strategic Management

Chapter 12

Results

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Question 1

When formulating strategic options, it is a valid option to 'do nothing'. However, this can lead to:

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Correct answer:

b) A competency trap

Feedback:

Sticking to the same strategy for too long may cause the organization to miss opportunities because it
doesn't want to risk changing what it can currently do very well.

Page reference: 504

Question 2

The future can be broadly divided into four categories; infinite option future, limited-option future,
known future and:

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Correct answer:
a) Multi-option future

Feedback:

In emerging or growing markets or industries, there might be a multi-option future. This means that
while it is possible to draw some conclusions based on experience elsewhere, there is not enough
evidence to limit the possible outcomes to just a few.

Page reference: 504-7

Question 3

A hospital manager needs to consider how to organize resources to cope with elderly patients. The
manager is dealing with:

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Correct answer:

d) A known future

Feedback:

Some issues like demographic changes are easy to predict. We can extrapolate population data into the
future and be reasonably certain about future numbers. However, we have to be certain that statistics
are reliable in the first place.

Page reference: 504-7
Question 4

The government has to plan for the re-sourcing of the health service to deal with the obesity problem.
The government is dealing with:

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Correct answer:

c) A limited option future

Feedback:

The trend for obesity is increasing. However, the government cannot know for certain whether this
trend will continue increasing at the same rate. Public opinion could change such that people strive to
lose weight or a wonder-drug could appear on the market to deal with the problem. We can be
reasonably certain that people will get older but we cannot be certain that the obesity trend will
continue in the same pattern.

Page reference: 505-6

Question 5

Which of the following strategies could be considered a 'breakthrough' strategy?

You did not answer the question.

Correct answer:

a) Ryanairs no-frills service

Feedback:

Breakthrough strategies are also known as 'outpacing' strategies. These usually involve a revolutionary
new way of doing things. Virgin Atlantic's 'upper class' service was a product innovation but not
particularly radical as it didn't change the whole nature of the airline industry.

Page reference: 508

Question 6

A 'feint' strategy is where:

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Correct answer:

a) A firm misleads competitors about its future intentions

Feedback:

A similar type of strategy is a 'spoiling action' where difficult markets are entered just to make it more
difficult for existing competitors.

Page reference: 510-11
Question 7

The slowest way to grow a business is likely to be through:

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Correct answer:

c) Internal development

Feedback:

Although internal development allows a high degree of control and all benefits can be kept within the
firm, it is a slow method of growth.

Page reference: 513

Question 8

In the context of strategic methods, 'learning risk' can be defined as:

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Correct answer:

c) Failing to bring in new ideas from outside the firm

Feedback:

Learning risk is the risk that an organization will become locked into its own routines and worldview
unless it periodically refreshes itself through contact with other organizations. This can be done through
participation in alliances and networks.

Page reference: 515

Question 9

The merger between AOL and Time Warner was intended to take advantage of:

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Correct answer:

a) Industry convergence

Feedback:

AOL and Time Warner merged because they thought Time Warner's films, publishing and TV products
could benefit from expertise in internet distribution.

Page reference: 516

Question 10

A firm that has become too large has decided to set up part of the organization as an independent
company. This is known as:
You did not answer the question.

Correct answer:

c) Float-off

Feedback:

A 'float-off' is also known as a de-merger or a spin-off. A business unit is formed into a separate public
company with its own equity issue.

Page reference: 519

Oxford University Press | Online Resource Centre | Chapter 13

Haberberg and Rieple: Strategic Management

Chapter 13

Results

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Question 1
Which of the following would NOT normally be an advisable strategy in the introductory stage of the
industry life cycle?

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Correct answer:

d) Aiming to maximize efficiency and lower costs

Feedback:

At the introductory stage, it makes sense to take actions to legitimize the industry. Firms are increasingly
able to sell internationally at an early stage in the life cycle, even if it is sometimes a better use of
resources to focus on home markets. Differentiation strategies are the norm at this stage - it makes little
sense to seek cost advantage until technologies have stabilized later in the life cycle.

Page reference: 555-6

Question 2

Which of the following would NOT normally be an advisable strategy in a progressive mature industry?

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Correct answer:

a) Differentiating on superior product technology

Feedback:

In a progressive mature industry, product differentiation is difficult to achieve, though some firms are
able to do so. It is more usual, however, to focus on cost reduction, gain economies of scale - perhaps by
internationalizing - and get rid of any activities that are not core.

Page reference: 564-5

Question 3

Which of the following industries would be classified as a 'creative' industry?

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Correct answer:

b) Pharmaceuticals

Feedback:

'Creative' industries are those where investment costs are very high, demand for the product/service is
uncertain and/or technological change is uncertain. All of these conditions exist for pharmaceuticals.

Page reference: 565

Question 4

'Dominant design' can be defined as:

You did not answer the question.

Correct answer:

a) The design that is accepted and expected by customers and producers

Feedback:

In the introductory stage of the industry, there will be no clear dominant design. The dominant design
might not necessarily be the best design.

Page reference: 554

Question 5

At the introductory stage of an industry, products and services are likely to be differentiated on:

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Correct answer:

d) Functionality

Feedback:
Attributes such as quality, reliability/dependability are more likely to be differentiators in the mature
phase of an industry once the novelty of the new industry has worn off.

Page reference: 555

Question 6

An industry which can be described as 'progressive' is characterized by:

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Correct answer:

a) Incremental product development and efficiency improvement

Feedback:

Most industries follow the progressive pattern. Product-based competitive advantage is hard to achieve
and so firms look to lower costs to achieve advantage.

Page reference: 561-2

Question 7

An industry in which large investments are made in products where return on investment is very difficult
to predict is known as which model?

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Correct answer:

a) The creative model

Feedback:

The creative model is less common. The uncertainty may be due to the difficulty in gauging customer
reaction (such as films or music) or technological uncertainties.

Page reference: 562

Question 8

In a mature industry experiencing intermediating change it means:

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Correct answer:

c) The industrys interaction with customers and suppliers changes

Feedback:

For example, the arrival of the internet affected how firms interact with customers and suppliers.

Page reference: 562

Question 9
Firms confronting turbulence must chose from three strategic postures; shaping the future, adapting to
the future and:

You did not answer the question.

Correct answer:

c) Phased adoption of the new approach

Feedback:

Sometimes a firm can ride out the storm by 'reserving the right to play'. The firm can survive a turbulent
environment by adopting a new approach along with existing business and enhance the already existing
reputation.

Page reference: 569

Question 10

Which of the following is a typical characteristic of a hypercompetitive industry?

You did not answer the question.

Correct answer:

b) The need to compete fiercely is embedded in the belief system of every firm in the industry
Feedback:

Competitors in hypercompetitive industries have been found to have belief systems that foster
competitive behaviour. However, price is only one competitive weapon that is sometimes used: the
nature of competition changes frequently. Investment is not cut back - on the contrary, it is a key
weapon in the battle to attain and retain leadership. The industry leader may make massive profits, but
followers can sometimes find profitable niches, like Nintendo in video games.

Page reference: 573-5

Oxford University Press | Online Resource Centre | Chapter 15

Haberberg and Rieple: Strategic Management

Chapter 15

Results

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Question 1

Which of the following is NOT a feature of a typical entrepreneur?

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Correct answer:

b) A natural talent for salesmanship

Feedback:

Many entrepreneurs are innovators rather than salespeople.

Page reference: 642

Question 2

Which of the following is likely to be the least problematic issue for a small firm?

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Correct answer:

a) The principalagent problem

Feedback:

There is less likelihood of the principal agent problem in a small firm because the owner and manager is
often the same person.

Page reference: 641

Question 3
The five stages of company growth are existence, survival, success, take-off and:

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Correct answer:

c) Maturity

Feedback:

Companies will tend to have different characteristics and problems at different stages of development.

Page reference: 642

Question 4

There are a number of general options that small firms could follow. These are targeting a niche market,
achieving distinctiveness of resources, internationalizing and:

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Correct answer:

a) Building relational capital

Feedback:
Relational capital includes relationships with local organizations or being part of a community of practice
and clusters of local firms.

Page reference: 645

Question 5

The public sector includes different types of organization but they all have one unifying factor. They are
all:

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Correct answer:

c) Dependent on the state for their funds

Feedback:

The public sector is using funds generated by tax payers and therefore a strategic priority is how the
funds are allocated and deployed.

Page reference: 646

Question 6

The public sector confronts challenges relating to 'managing upwards'. This would include:

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Correct answer:

c) Dealing with elected politicians that set policy frameworks

Feedback:

Poister and Streib (1999) have categorized the strategic priorities of the public sector into 'managing
upwards/downwards/outwards.

Page reference: 647

Question 7

Which of the following is NOT a feature of the public sector?

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Correct answer:

d) Performance related rewards are common

Feedback:

The public sector is characterized by a fixed pay structure with little opportunity for an employee to
increase their income.

Page reference: 649
Question 8

The philosophy of 'new public management' is characterized by:

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Correct answer:

b) Market mechanisms and partnerships with the private sector

Feedback:

This includes things like contracting out of cleaning services in hospitals, privatization and introducing
competition between schools through publication of league tables.

Page reference: 649

Question 9

Which of the following is NOT a strategic issue for a typical not-for-profit organization?

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Correct answer:

a) Developing a broad portfolio of products and services

Feedback:

Many NFPs are specialized in a single service for a single user group - a broad portfolio is not required.
But typically, they need strong values around which to unite a wide variety of powerful stakeholders,
and to attract the donors who are their lifeblood.

Page reference: 663

Question 10

An organization that is set up to generate profits specifically in order to further a social objective is
called:

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Correct answer:

b) A social enterprise

Feedback:

All social enterprises are socially responsible, but the reverse is not true. Many socially responsible
organizations have profit generation as their main aim, while many not-for-profit organizations are also
socially responsible.

Page reference: 664-5

Oxford University Press | Online Resource Centre | Chapter 16

Haberberg and Rieple: Strategic Management

Chapter 16

Results

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Question 1

There are different magnitudes of strategic change. 'Modular transformation' can be defined as:

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Correct answer:

c) Radical change at the level of the business unit

Feedback:

The magnitude of change influences the degree of disruption to the organization. Radical change is less
common and involves a high degree of disruption.

Page reference: 691
Question 2

Which of the following triggers for change is likely to be most easily accepted?

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Correct answer:

b) A decline in performance

Feedback:

A decline in performance is an objective measure that will tend to spur people into action. The other
triggers are all subjective and may not be noticed or accepted by everyone.

Page reference: 695

Question 3

Greenpeace instigated the reversal of Royal Dutch Shell's decision to dispose of a redundant oil facility in
the North Sea. This was an example of:

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Correct answer:
b) Moral legitimacy

Feedback:

Although Greenpeace had no direct power over Royal Dutch Shell, they were able to persuade
customers to Boycott Shell petrol stations.

Page reference: 699

Question 4

On Eden and Ackermann's (1998) Saliency/Interest grid, if a stakeholder is classified as low saliency and
high interest, how should the organization respond?

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Correct answer:

b) The organization needs to be aware of them because, although the stakeholder has only limited
directly influence on the outcome of the strategic proposal, their high interest may make them lobby
more salient stakeholders to intervene

Feedback:

An organization needs to prioritize their stakeholders so that they do not ignore a potentially
troublesome stakeholder or spend too many resources on dealing with a stakeholder that has little
power.

Page reference: 701
Question 5

Greenpeace joined together with consumers to fight against the dumping of the Royal Dutch Shell oil
platform. They formed a:

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Correct answer:

c) Coalition

Feedback:

Stakeholders can increase their power by joining together and forming coalitions. Organizations need to
attempt to pre-empt these and discourage them from forming.

Page reference: 701

Question 6

When an individual exhibits 'discarding' behaviour in reaction to organizational change they:

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Correct answer:

b) Acknowledge that some of the old ways had flaws and accept that the new way needs to be adopted
Feedback:

People tend to go through five stages of the 'coping cycle'. 'Discarding' behaviour is the third stage
where the individual is starting to adapt to the new way of doing things.

Page reference: 704

Question 7

The TROPICS test is used to assess whether a change should be implemented using a hard or soft
approach. The 'S' stands for:

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Correct answer:

a) Source of Issue

Feedback:

Hard change programmes are simpler and can be planned within precise time horizons. Soft change is
slower and more difficult and involves more appreciation of culture and values.

Page reference: 711

Question 8
Two types of activity that might be expected to occur close to the beginning of most successful change
programmes are:

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Correct answer:

d) Building a sense of need, urgency, and commitment and Developing and communicating a shared
vision of change

Feedback:

Building a sense of urgency and a shared vision can be expected to occur towards the beginning of a
change programme. The other activities would be expected to come later, with the exception of
mergers and acquisitions - these are sometimes a trigger for organizational change, but are not an
expected part of it.

Page reference: 715

Question 9

A change agent can be defined as:

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Correct answer:

d) A person or group of people who take on the role of promoting change within an organization
Feedback:

Change agents can be internal and/or external to the organization. They are responsible for seeing the
change through and take on a variety of roles.

Page reference: 722

Question 10

Buchanan and Boddy suggest fifteen roles for a change agent which they have classified into five
'clusters'. These are goals, roles, communication, negotiation and:

You did not answer the question.

Correct answer:

a) Managing up

Feedback:

Managing up includes understanding and dealing with stakeholder priorities.

Page reference: 724
Oxford University Press | Online Resource Centre | Chapter 17

Haberberg and Rieple: Strategic Management

Chapter 17

Results

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Question 1

Collins (2001) defines five levels of leader. 'Level 5' leadership can be described as:

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Correct answer:

d) Executive

Feedback:
Leadership behaviour can occur at many levels in an organization.

Page reference: 744

Question 2

Theorists have identified two main styles of leadership. These are transformational leadership and:

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Correct answer:

b) Transactional leadership

Feedback:

A transactional leader prefers a formalized approach to leadership building on existing practices.

Page reference: 744

Question 3

Which of the following contexts would most suit a transformational leader?

You did not answer the question.

Correct answer:

a) An organization that is in trouble

Feedback:

Transformational leaders are not appropriate in all contexts. They are more suited to organizations in
turbulent environments that need a strong person at the helm to boost morale, much like a country at
war.

Page reference: 744

Question 4

Which of the following is NOT regarded as good practice during a merger or acquisition?

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Correct answer:

a) Pitching the offer at a high level to frighten away potential counter-bidders

Feedback:

One big danger in an acquisition is that the bidder overpays, having been optimistic about post-merger
synergies. The price should be a realistic reflection of the business benefits, even if this allows other
bidders to start an auction.

Page reference: 771, 773-6

Question 5

If a leader spends a lot of their time ensuring that staff acquire necessary knowledge and skills, their
approach can be defined as:

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Correct answer:

d) The expertise approach

Feedback:

This is the least common approach found by the researchers.

Page reference: 745

Question 6

Value-based management is:

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Correct answer:

a) A structured system of targets to motivate people to enhance the organizations value
Feedback:

The philosophy can be applied in public, NFP, or private sector, to any concept of value, not just
shareholder value. It is supposed to be a superior technique to management by objectives.

Page reference: 755-6

Question 7

The balanced scorecard approach is a framework for measuring performance based on four factors.
These are 'learning and growth', 'the customer perspective', 'the internal perspective' and:

You did not answer the question.

Correct answer:

c) The key stakeholder perspective

Feedback:

The balanced scorecard approach is the most well known performance measurement technique. The
measures need to be compared against 'value drivers' otherwise known as critical success factors.

Page reference: 757

Question 8

The process of 'due diligence' involves:

You did not answer the question.

Correct answer:

c) Bidders for a firm investigating a firms operations and financial situation prior to potential acquisition.

Feedback:

The process may involve not just examination of the accounts and order book prior to acquisition, but
also visits to factories and other key premises and increasingly also an assessment of cultural
compatibility.

Page reference: 771; 774-5

Question 9

The stages in a turnaround process are:

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Correct answer:

a) Realignment, retrenchment, recovery

Feedback:
Turnaround strategies are designed to save a firm on the brink of failure. This is a specialized activity
around which a separate academic field and consultancy association have appeared.

Page reference: 767

Question 10

When two firms merge, a situation of 'relative deprivation' can occur. This is where:

You did not answer the question.

Correct answer:

c) One side of the merger feels they have lost out to the other side

Feedback:

It is often very difficult to get two merging firms to achieve a good cultural fit. One side might feel that
they are they have not benefited from the merger as much as the other side. Resentment and bitterness
can build up.

Page reference: 772