Vipul Final Mcqs

Section-1
1.Strategy is developed by the visionary chief executive in

___________ mode of strategic management51.
Functional level strategy directly supports
A. corporate strategy
B. business strategy
C. differentiation strategy
D. focus strategy
Answer & Solution Discuss in Board Save for Later
Answer & Solution
Answer: Option B
Solution:
Functional level strategy directly supports business strategy. A business strategy is a set of competitive
moves and actions that a business uses to attract customers, compete successfully, strengthening
performance, and achieve organisational goals. It outlines how business should be carried out to reach
the desired ends.
52.
What is the most appropriate method of categorizing
stakeholders?
A. Relative power only
B. Relative level of interest only
C. Relative power and interest
D. Relative power, interest, and amount of stock held
Answer & Solution

Answer: Option C
Solution:
Relative power and interest is the most appropriate method of categorizing stakeholders.
53.
International business transactions include
A. all commercial transactions between two or more countries
B. private, but not governmental, commercial transactions between two or more countries
C. governmental, but not private, commercial transactions between two or more countries
D. only commercial transactions between two or more countries that are entered for the
purpose of making a profit
Answer & Solution
Answer: Option A
Solution:
International business transactions include all commercial transactions between two or more
countries. International Business Transactions is a survey course designed to introduce students to
cross-border business transactions between private business firms. It considers a wide range of
different transactions taking place across borders.
54.
What is monopoly power?
A. When an organization has absolute power in its chosen marketplace
B. When an organization has power over its immediate rivals in its chosen marketplace
C. When an organization has limited power in its chosen marketplace
D. When an organization buys out another organization and assumes power of its share of
the marketplace
Answer & Solution

Answer: Option A
Solution:
When an organization has absolute power in its chosen marketplace is monopoly power. Monopoly
power (also called market power) refers to a firm's ability to charge a price higher than its marginal
cost. Monopoly power typically exists where the there is low elasticity of demand and significant
barriers to entry.
55.
Which of the following statements best describes scenario
planning?
A. Exploring future possibilities by looking at potential outcomes from particular causes

and seeking to explain why things might occur
B. Considering three likely scenarios for future developments, and devising a strategy
according to the likeliest outcome
C. Helping managers come to terms with the threats and opportunities within the company
by devising a possible scenario to eliminate the threats and capitalize on the opportunities
D. Planning the best way to secure the scenario outcome that would benefit the company
most
Answer & Solution
Answer: Option A
Solution:
Exploring future possibilities by looking at potential outcomes from particular causes and seeking to
explain why things might occur best describes scenario planning. Scenario planning is making
assumptions on what the future is going to be and how your business environment will change
overtime inlight of that future. More precisely, Scenario planning is identifying a specific set of
uncertainties, different “realities” of what might happen in the future of your business.
A. planning mode
B. adaptive mode
C. strategic mode
D. entrepreneurial mode
Answer & Solution
Answer: Option D
2.Stability strategy is a ____________ strategy
A. corporate level
B. business level
C. functional level
D. strategic levelAnswer & Solution Discuss in Board Save for Later
Answer & Solution
Answer: Option A
3.What are the means by which long term objectives will be

achieved?
A. StrategiesB. PoliciesC. StrengthD. OpportunitieAnswer & Solution Discuss

in Board Save for LaterAnswer & Solution Answer: Option A
4.Marketing strategy is a ___________ type of strategy
A. business level
B. Growth strategy
C. corporate strategy
D. functional strategy
Answer & Solution
Answer: Option D
5.When an industry relies heavily on government contracts,
which forecasts can be the most important part of an
external audit
A. Economic
B. Competitive
C. Political
D. Multinational
Answer & Solution
Answer: Option C
6.A possible and desirable future state of an organization is

called:
A. Mission
B. Vision C. Strategy implementation D. Strategy formulation
Answer & Solution

Answer: Option B
7.What does Question mark symbolize in BCG matrix?
A. Remain Diversified
B. Invest
C. Stable
D. Liquidate
Answer & Solution
Answer: Option A
8.Selling all of a companys assets in parts for their tangible
worth is called:
A. Divestiture
B. Concentric Diversification
C. Liquidation
D. Unrelated integration
Answer & Solution
Answer: Option C
9.
What do Cash Cows symbolize in BCG matrix?
A. Remain Diversified
B. Invest
C. Stable
D. Liquidate
Answer & Solution
Answer: Option C
10.
The BCG matrix is based on
A. Industry attractiveness and Business strength
B. Industry Growth rate and Business strength
C. Industry Attractiveness and Relative Market share
D. Industry growth rate and relative market share

Answer & Solution
Answer: Option D
11.
What are the guides to decision making?
A. Rules
B. Procedures
C. Goals
D. Policies
Answer & Solution
Answer: Option D
12.
In strategic thinking, how long is the long term,
approximately?
A. 1 month to 1 year
B. 2 to 3 years
C. 3 to 5 years
D. More than 5 years
Answer & Solution
Answer: Option D
13.
Buying another company by one company means:
A. Joint venture
B. Acquisition
C. Amalgamation
D. Merger
Answer & Solution
Answer: Option B
14.
Low cost, Differentiation and Focus are examples of
A. Corporate strategies
B. Operational strategies
C. Business strategies
D. Functional strategies
Answer & Solution
Answer: Option C
15.
Which environment can create new market and new
business segments?
A. Political environment
B. Economic environment
C. Socio cultural environment
D. Technological environment
Answer & Solution

Answer: Option D
16.
The word tactics is most likely to be associated with
A. Business strategy
B. Corporate strategy
C. Operational strategy
D. All of the abvoe
Answer & Solution
Answer: Option C
17.
Buyers market exist when:
A. few suppliers in the market
B. buyers purchases in small volume
C. buyers purchases in large volume
D. product of suppliers are unique and differentiated
Answer & Solution
Answer: Option C
18.
How many cells are in a SWOT matrix?
A. 9
B. 6
C. 3
D. 2
Answer & Solution
Answer: Option A
19.
The Reasons for diversification is:
A. to reduce competition
B. to increase organizational capabilities
C. to get tax advantage
D. to get quick entry into a business
Answer & Solution
Answer: Option B
20.
Strategic Management handles:
A. external issues
B. management issues
C. internal issues
D. administrational issues
Answer & Solution
Answer: Option A
21.
What is the starting point of strategic intent?
A. Objectives
B. Goals
C. Mission
D. Vision
Answer & Solution
Answer: Option D
22.
Corporate level strategy deals with:
A. objectives of specific functions
B. objective of Single strategic Business Unit
C. objectives of the corporate
D. objectives of specific operations
Answer & Solution
Answer: Option C
23.
From the following activity which does not comes under the
primary activities of value Chain analysis:
A. Operations
B. Technology development
C. Marketing and sales
D. Services
Answer & Solution

Answer: Option B
24.
Which of the following can be identified as a best statement
that represents a firms big picture statements, describing a
desired end state, general in scope and not restrictive?
A. Corporate philosophy statement
B. Company creed
C. Vision statement
D. Mission statement
Answer & Solution
Answer: Option C
25.
One of the top level manager of a large manufacturing plant
uses to spend her day trying to ensure that the material
waste is not more than 10% , she spends her day
performing the management process of:
A. Planning
B. Organizing
C. Leading
D. Controlling
Answer & Solution
Answer: Option D
26.
All of the following are key opportunities and threats in
external environment because of political, government and
legal forces except:
A. Tax rate
B. Social security program
C. Cross boarder relationship
D. Patent law
Answer & Solution
Answer: Option B
27.
Internal audit is done:
A. Before external audit
B. After external audit
C. Parallel to external audit
D. Vertical to external audit
Answer & Solution
Answer: Option C
28.
Bargaining power of customers is high if:
A. Differentiation of competitors product is low
B. Switching costs are low for substitute products
C. The buyer has little information about the market
D. The buyer requires a high quality product for own production

Answer & Solution
Answer: Option A
Solution:
29.
The magnitude and changes that may affect an organization
is survival owing to all of the following except:
A. Merger-mania
B. Demographics
C. E-commerce
D. Dubious firms
Answer & Solution
Answer: Option D
30.
Which of the following requires a firm to establish annual
objectives, devise, policies, motivates employees and
allocate resources for the execution of strategies?
A. Strategy formulation
B. Strategy evaluation
C. Strategy implementation
D. Strategy estimation
Answer & Solution
Answer: Option C
31.
Which type of trend can be exemplified by the increasing
numbers of two income households in a society?
A. Solid
B. Economic
C. Cultural
D. Technological
Answer & Solution
Answer: Option B
32.
The primary benefit brought from restructuring is:
A. employee involvement
B. cost reduction
C. increased morale
D. increased number and organizational hierarchy
Answer & Solution
Answer: Option B
33.
Technological advancements can create which of the
following advantage besides many other existing powerful
advantages for the businesses?
A. Economic
B. Social
C. Environmental
D. Competitive
Answer & Solution
Answer: Option D
34.
Which strategies aim at improving internal weakness by
taking advantage of external opportunities?
A. SO
B. WO
C. SW
D. ST
Answer & Solution
Answer: Option B
35.
the sketch of the BCG matrix, what is the label of the
horizontal axis?
A. Industry growth rate
B. Market share
C. Market growth rate
D. Business strength
Answer & Solution
Answer: Option B
36.
the sketch of the BCG matrix, what is the label of the
vertical axis?
A. Market growth rate
B. Business strength
C. Market share
D. Industry growth rate
Answer & Solution
Answer: Option D
37.
What is the purpose of an activity map?
A. A system to facilitate better time-planning
B. It is used in business process reengineering to show how the different activities of an

organisation are linked together
C. It is used to identify and understand strategic capability by mapping how the different
activities of an organisation are linked together
D. A list of activities undertaken by an organisation
Answer & Solution
Answer: Option C
38.
Industry/sector benchmarking compares:
A. Organisational performance between firms/public sector organisations in different

industries or sectors
B. Organisational performance between firms/public sector organisations in the same

industry or sector
C. Organisational performance between firms/public sector organisations in different

countries
D. Organisational performance between different divisions of the firm
Answer & Solution
Answer: Option B
39.
Which of the following statements is not true reg corporate
strategies?
A. They are concerned with the broad and more long-term issues of the organization
B. They are concerned with how the organization is going to compete in a specific business
or industry
C. are concerned with the direction the organization is headed
D. They are concerned with the business(es) that the organization is in and the businesses
they want to be in
Answer & Solution
Answer: Option B
40.
Abdullah group of industries is involved in the sale of its
marginal business. It is most likely to say that Abdullah
group is implementing which one of the following
strategies?
A. Retrenchment
B. Liquidation
C. Acquisition
D. Join venture
Answer & Solution

Answer: Option A
41.
Which would be classified as a stakeholder?
A. Communities
B. Banks
C. Suppliers
D. Communities Banks Suppliers
Answer & Solution
Answer: Option D
42.
an organisation increases its sales through greater
marketing efforts, and expands its workforce and
production capacity to cope with the increase in demand for
its product, it is following a growth strategy in which growth
is achieved through:
A. Unrelated diversification
B. Acquisition
C. Merger
D. Direct expansion
Answer & Solution
Answer: Option D
43.
According to the BCG matrixSBU comprising products in an
attractive industry but representing little market share
would be referred to as:
A. A cash cow
B. A star
C. A dog
D. A question mark
Answer & Solution
Answer: Option D
44.
A company offers unique products that are widely valued by
customers, it is likely to follow a:
A. Differentiation strategy
B. Combination strategy
C. Focus strategy
D. Cost-leadership strategy
Answer & Solution
Answer: Option A
45.
the following are considered grand strategies, except for:
A. A retrenchment strategy
B. Strategic business units
C. A growth strategy
D. Related diversification
Answer & Solution

Answer: Option B
46.
Analysing the ext environment and the organisations
resources are part of the:
A. Functional level planning process
B. Determining the mission of the business
C. Financial planning process
D. Strategic planning process
Answer & Solution
Answer: Option D
47.
Which of the following is not one of Porters five competitive
forces?
A. Bargaining power of suppliers
B. Threats of new entrants and barriers to entry
C. Threats of technological advances
D. Threats of substitutes
Answer & Solution
Answer: Option C
48.
Strategic business units
A. Are found in one-business organisations
B. Carry out strategies assigned by the CEO

C. Develop their own unique way of competing
D. Implement the marketing function's strategic planning and management decisions
Answer & Solution
Answer: Option C
49.
Marketing current products with possible modifications and
range increases is also known as what?
A. Retrenchment
B. Market penetration
C. Product development
D. Market development
Answer & Solution
Answer: Option D
50.
Retrenchment is:
A. When a company experiences declining profits and makes cutbacks to improve

efficiency
B. When a company adopts a new strategic position for a product or service
C. The sale of the complete business, either as a single going concern or piecemeal to
different buyers or sometimes by auctioning the assets
D. ely to take place when an organization lacks a key success factor for a particular market
Answer & Solution

Answer: Option A
51.
When does horizontal integration occur?
A. When a firm acquires or merges with a major competitor
B. When a firm acquires or merges with a an unrelated business
C. When a firm acquires or merges with a distributor
D. When a firm acquires or merges with a supplier firm
Answer & Solution
Answer: Option A
52.
Divestment is what kind of strategy?
A. An asset-reduction strategy
B. A weakness-reduction strategy
C. A product-reduction strategy
D. A cost-reduction strategy
Answer & Solution
Answer: Option A
53.
Sustained survival implies
A. that a turnaround is achieved but there is little further growth
B. that a turnaround is achieved and there is potential for further growth
C. that a turnaround is achieved and there is a clear opportunity to employ a new growth
strategy
D. that a turnaround is achieved and it is appropriate to diversify soon
Answer & Solution
Answer: Option A
54.
In which of the following scenarios is a joint venture likely
to be more attractive than acquisition?
A. Horizontal integration
B. Vertical integration
C. New market entry
D. Larger resource pool
Answer & Solution
Answer: Option A
55.
McDonalds is deciding whether to expand into
manufacturing kitchen equipment in China. At what level is
this decision likely to be made?
A. Business
B. Corporate
C. Functional
D. International
Answer & Solution
Answer: Option B
56.
Corporate governance is concerned with:
A. Executive remuneration, disclosure of information, auditing and accounting procedures,

and organizations' management structures
B. Elections to the board of directors
C. Relationships with national governments
D. Corporate-level strategy
Answer & Solution
Answer: Option A
57.
The slowest way to grow a business is likely to be through:
A. A merger
B. outsourcing
C. Internal development
D. A strategic alliance
Answer & Solution
Answer: Option C
58.
The value chain is subdivided into two main headings.
These are primary activities and:
A. Peripheral activities
B. Support activities
C. Secondary activities
D. Outsourced activities
Answer & Solution
Answer: Option B
59.
A joint venture can be defined as:
A. Two firms collaborate together on a specific project
B. One firm licenses its intellectual property to another firm
C. Two firms merge together
D. Two firms come together to form a third, legally separate firm
Answer & Solution
Answer: Option D
60.
___________ are short-term milestones or benchmarks that
organizations must achieve in order for longer term
objectives are to be reached
A. Vision
B. Mission
C. Plans
D. Goals
Answer & Solution
Answer: Option D
61.
Which of the following is not a recognized element of
corporate strategy?
A. Competitive advantage
B. Closure
C. Acquisition
D. Divestment
Answer & Solution
Answer: Option A
62.
__________ refers to the purposes an organization strives
to achieve
A. Strategic Intent
B. Strategic Formulation
C. Strategic Implementation
D. Strategic Control
Answer & Solution
Answer: Option A
63._____ strategy may require a firm to redefine its business
and may involve divestment of a major product line or an
SBU, abandon some markets or reduce its functions
A. Expansion Strategy
B. Retrenchment Strategy
C. Combination Strategy
D. Stability Strategy
Answer & Solution
Answer: Option B
.
64.
Which of the following statements is false? Formal strategic
planning
A. implies determined actions for achieving objectives
B. is a time consuming process
C. should develop clear and rigid plans for the organization to implement
D. is most applicable in stable environments
Answer & Solution
Answer: Option C
65.__________ strategy is often considered as
entrepreneurial strategy where firm develops and introduce
new products and markets or penetrate markets to build
share
A. Expansion Strategy
B. Retrenchment Strategy
C. Combination Strategy
D. Stability Strategy
Answer & Solution
Answer: Option A
66.
Which of the following statements best describes the
concept of strategic awareness?
A. Managers understanding of the organizations history, competencies, and current strategy
B. Managers understanding of current strategy and its effectiveness
C. Managers understanding of the strategic options available to the organization
D. Managers understanding the organizations strategy, its effectiveness
Answer & Solution
Answer: Option D
67.Which of the following is associated with successful
strategies?
A. Creating superior value to customers
B. Exploitation of key success factors
C. Creating and maintaining strategic fit
D. All of the above
Answer & Solution
Answer: Option D
68.
What is the recommended length of an effective mission
statement?
A. One page
B. Less than 200 words
C. One sentence of 10 to 20 words

D. There is no recommendation It can be as long as the management wants
Answer & Solution
Answer: Option D
69.
Which type of strategies are of particular importance to
global companies?
A. Corporate
B. Functional
C. Competitive
D. Corporate and competitive
Answer & Solution
Answer: Option D
.
70.Two reasons for mergers and acquisitions are
A. to increase managerial staff and to minimize economies of scale
B. to reduce tax obligations and increase managerial staff
C. to create seasonal trends in sales and to make better use of a new sales force
D. to provide improved capacity utilization and to gain new technology
Answer & Solution
Answer: Option D
******************** Section-2 *****************

*************************************************
1. .
The pie slices within the circles of a ________ reveal the
percent of corporate profits contributed by each division
A. QSPM
B. BCG matrix
C. SPACE matrix
D. Grand strategy matrix
Answer & Solution
Answer: Option B
2.
Which one of the following is of concern for not-for-profit
organizations?
A. The markets to service
B. Identifying suppliers to deal with
C. Developing capabilities
D. Building monopolies
Answer & Solution
Answer: Option A
Solution:
3.
Select the statement that best applies to emergent
strategies. Emergent strategy...
A. implies an ability to react to events

B. implies strategizing
C. implies no deviation from plans
D. implies constant evaluation of the bigger picture
Answer & Solution
Answer: Option A
4.
The impact of strategies on the general direction and basic
character of a company is
A. short range
B. medium range
C. long range
D. minimal
Answer & Solution
Answer: Option C
.
5.
Select the most accurate statement. Value
A. means value for money
B. is best described as the benefits the business chooses to give to customers through its
product/service
C. is the benefits of a product/service as perceived by the customer
D. does not offer competitive advantage

Answer & Solution
Answer: Option C
6.
The acronym SWOT stands for
A. Special Weapons for Operations Timeliness
B. Services, Worldwide Optimization and Transport
C. Strengths, Weakness, Opportunities and Threats
D. None of the above
Answer & Solution
Answer: Option C
7.
Which of the following statements best describes strategic
management?
A. A process consisting of determining objectives and strategic actions to achieve those

objectives
B. A process consisting of determining objectives, strategic actions to achieve those

objectives, the implementation of desired strategy, and the monitoring of that strategy
C. A process consisting of the determination of direction, strategic actions to achieve

objectives, the implementation of desired strategy, and monitoring of that strategy
D. A process for determining direction, strategic actions to achieve objectives, and the
implementation of desired strategy
Answer & Solution
Answer: Option C
8.
Which of the following is a key external factors that should
be taken into account by a corporate strategy?
A. economic conditions
B. political conditions
C. legal environments
D. competition
Answer & Solution
Answer: Option D
9.
Which one of the following would not be considered a
functional strategy?
A. Financial
B. Marketing
C. Product-market
D. Operations
Answer & Solution
Answer: Option C
10.
The two internal elements of SWOT analysis are
A. weaknesses and threats
B. opportunities and threats
C. strength and weaknesses

D. strengths and threats
Answer & Solution
Answer: Option C
11.
Porter's generic strategies are
A. Low price, differentiation, focus
B. Cost leadership, differentiation, cost focus, focus differentiation
C. Price leadership, differentiation, focus
D. Low cost, differentiation, focus differentiation
Answer & Solution
Answer: Option B
12.
Which of these is not a key stakeholder that an organization
must seek to satisfy?
A. Managers
B. Shareholders
C. Employees
D. Customers
Answer & Solution
Answer: Option A
.
13.
Who can be considered as the main stakeholders for
London Zoo?
A. Research groups
B. Visitors
C. The government
D. Private investors
Answer & Solution
Answer: Option B
14.
In Porter's generic strategies model, a focus strategy
involves
A. selling a limited range of products
B. selling to a narrow customer segment
C. selling to one region only
D. selling simple products that are cheap to produce
Answer & Solution
Answer: Option B
15.
What common, related problem do for non-profit
organizations such as the British Museum and the National
History Museum often face?
A. Costs associated with repairs and maintenance
B. The need to be educational and adhere to their scientific/research orientation whilst

addressing commercial issues (e g , admission charges to cover costs)
C. The need to be educational and adhere to their scientific/research orientation whilst
satisfying main stakeholders
D. The conflict between pursuing organizational objectives and resource availability

constraints
Answer & Solution
Answer: Option A
16.
A question for business level strategy would be
A. Which industries do we want to be in?
B. How should the businesses be related?
C. How should the business compete in its market?
D. How should resources be shared amongst the businesses?
Answer & Solution
Answer: Option C
17.
Which of the following is not a way in which organizations
can behave more ethically and socially responsibly?
A. By avoiding discrimination and improving working conditions
B. By lowering prices to their targeted market, to stimulate demand and increasing profit by
increases in productivity to meet customer demands
C. By ensuring product safety
D. By avoiding pollution and safely disposing of waste
Answer & Solution

Answer: Option B
18.
The term corporate strategy concerns strategy and strategic
decisions
A. In certain types of organization
B. At all levels in an organization
C. Developed by the senior management in an organization
D. In the private sector only
Answer & Solution
Answer: Option B
19.
Ansoff's growth vector matrix is used for
A. analyzing the different strategic directions an organization can pursue
B. analyzing the balance of the portfolio
C. assessing whether the corporate parent is adding value
D. assessing the market share of a business
Answer & Solution
Answer: Option A
20.
Which one of these would not be a problem for an
organization attempting to establish a unified vision or
direction?
A. The constraints applied by key stakeholders upon the organizations management

B. The personal objectives of those within the organization
C. The varying expectations of external stakeholders
D. Conflicts between the product and its desired target market
Answer & Solution
Answer: Option D
1.
In Ansoff's matrix, product development involves going in
the direction of
A. present products to present markets
B. present products to new markets
C. new products to present markets
D. new products to new markets
Answer & Solution
Answer: Option C
.
22.
Which of these questions is not addressed by an effective
business model?
A. What do customers value today?
B. Who are our customers?
C. What does the organization produce?
D. None of the above All are essential questions for effective business models
Answer & Solution
Answer: Option D
23.
Which of the following would you not expect to see in a
vision statement?
A. Descriptions of desirable future situations
B. Motivational terminology
C. Focus on the values to which the organization is committed
D. What the organization seeks to do to reach desirable future states
Answer & Solution
Answer: Option D
24.
What are the decisions and actions that determine long-run
performance of an organization?
A. strategies
B. missions
C. goals
D. opportunities
Answer & Solution
Answer: Option A
.
25.
Which of the following does Campbell (1989) suggest to be
a dimension of valuable mission statements?
A. Differentiates the business from competitors
B. States the objectives of the organization
C. Meaningful and relevant to stakeholders
D. States the values of the organization
Answer & Solution
Answer: Option D
26.
______ is the collection of managerial decisions and actions
that determine the long-run performance of an organization
A. planning
B. goal-oriented management
C. strategic management
D. leadership
Answer & Solution
Answer: Option C
27.
Which one of the following is not a form of non-price
competition?
A. Branding
B. Innovation
C. Advertising
D. None All of the above increase non-price competition
Answer & Solution
Answer: Option D
28.
Why is strategic management important?
A. It has little impact on organizational performance
B. It is involved in many of the decisions that managers make
C. Most organizations do not change
D. Organizations are composed of similar divisions and functions
Answer & Solution
Answer: Option B
.
29.
Which one of the following is not an aspect of the MOST
analysis
A. Mission
B. Strategies
C. Tactics
D. Organization
Answer & Solution
Answer: Option D
30.
______ and ______ are outcomes from a study of the
external environment
A. Threats and Weaknesses
B. Strengths and Weaknesses
C. Weights and Measures
D. Opportunities and Threats
Answer & Solution
Answer: Option D
31.
Which one of the following does not influence
organizational learning?
A. Awareness of wider environmental developments
B. Knowledge of competitor activity
C. Reflecting on past actions
D. Applying activity maps
Answer & Solution
Answer: Option D
32.
_______ are the organizations major value creating skills,
capabilities and resources that determine the organizations
competitive weapons
A. Strengths
B. Opportunities
C. Core competencies
D. Weaknesses
Answer & Solution
Answer: Option C
.
33.
Which one of the following is not a future pattern identified
by Courtney et al. (1997)
A. A limited and definable number of discrete alternatives which can be evaluated and
judged by strategic managers
B. A limited and definable number of alternatives which cannot be evaluated nor judged
with any great certainty
C. A limited but undefinable number of discrete alternatives which can be evaluated and
judged
D. A limited but undefinable number of discrete alternatives that cannot be evaluated nor
judged at all
Answer & Solution
Answer: Option A
An example of a core competency of a firm is
A. the corporate reputation
B. communicating with customers in their own languages worldwide
C. developing least squared exemptions within its accounting system
D. evaluating tangible and intangible assets

Answer & Solution
Answer: Option B
35.
The merging of analysis of internal and external factors
influencing the organizations strategy is known as
A. complete studies
B. organizational behavior and theory
C. definitional analysis
D. SWOT analysis
Answer & Solution
Answer: Option D
36.
Which of the following is not a purpose of strategic
thinking?
A. To realize what needs to change
B. To establish the agenda for managing strategic change
C. To clarify future direction
D. To allocate scarce resources
Answer & Solution
Answer: Option A
37.
Middle level managers typically are responsible for
___________ strategies
A. business
B. organizational
C. operational
D. corporate
Answer & Solution
Answer: Option A
38.
Which of the following is not an element of strategic
thinking?
A. Judge what strategic changes to make
B. Realize what needs to change
C. Understanding current strategic positions
D. Manage organizational resources and competencies
Answer & Solution
Answer: Option D
39.
_________ strategy determines what businesses an
organization should be in
A. Business
B. Organizational
C. Operational
D. Corporate

Answer & Solution
Answer: Option D
40.
Which of the following is not a recognized area of
opportunity for developing synergy?
A. Functional
B. Processual
C. Strategic
D. Managerial
Answer & Solution
Answer: Option B
41.
Which of the following is one of the four key elements which
must be adhered to if synergy is to be achieved?
A. Efficiency
B. Competitive strategies
C. Customer satisfaction
D. Effective leadership
Answer & Solution
Answer: Option D
46.
A _______ strategy addresses organizational weaknesses,
helps stabilize operations and revitalizes organizational
resources and capabilities
A. unrelated diversification
B. horizontal integration
C. vertical integration
D. retrenchment
Answer & Solution
Answer: Option D
47.
Which one of the following are considered to be synergistic
benefits for LVMH?
A. Joint ventures
B. Similarity of portfolio
C. Commercial exploitation
D. Name association
Answer & Solution
Answer: Option D
48.
An organization is said to have _______ when it has several
different businesses that are independent and that
formulate their own strategies
A. operational units
B. strategic business units
C. competitive advantages
D. legal subunits
Answer & Solution
Answer: Option B
.
49.
Which of the following is a force in the Porter's five forces
model of industry attractiveness?
A. opportunity for new entrants
B. opportunity for substitutes
C. bargaining power of suppliers
D. sustainable competitive advantage for customers
Answer & Solution
Answer: Option C
50.
Which one of the following is not one of the elements of
strategic thinking described by Campbell and Alexander
(1997)?
A. Organizational culture
B. Outlining of competencies
C. Future-gazing
D. Organizational behavior
Answer & Solution
Answer: Option B
42.
An organization that is diversifying its product line is
exhibiting what type of growth strategy?
A. stability
B. retrenchment
C. growth
D. maintenance
Answer & Solution
Answer: Option C
43.
A stability strategy is particularly appropriate when
A. the firm is facing rapid growth opportunities
B. the industry is in a state of rapid upheaval
C. an organization is not meeting its goals
D. an organizations performance is declining
Answer & Solution
Answer: Option B
44.
What is synergy?
A. When the organization is providing a product to the customer that perfectly suits their
requirements
B. When the parts of an organization are combined and managed in such a way that the
drawbacks exceed those which would result if the parts were operating separately
C. When the parts of an organization are combined and managed in such a way that the
benefits exceed those which would result if the parts were operating separately
D. When the parts of an organization are combined and managed in such a way to reduce
costs
Answer & Solution
Answer: Option C
45.
What is Kelloggs main challenge for the future:
A. To create new products for a market that is both growing and declining according to
geography whilst generating enough cash to advertise and launch new products
B. To create new products for a market that is both growing and declining according to
geography
C. To create new products for a market that has the same tastes, whilst generating enough
cash to advertise and launch new products
D. To not become adversely affected by increased competition again and adapt to changing
customer tastes
Answer & Solution
Answer: Option A
51.
D. focus strategy
Answer & Solution
Answer & Solution
Answer: Option B
52.
stakeholders?
D. Relative power, interest, and amount of stock held
Answer & Solution
Answer: Option C
53.
Answer & Solution
Answer: Option A
54.
the marketplace
Answer & Solution
Answer: Option A
55.
Which of the following statements best describes scenario
planning?

most
Answer & Solution
Answer: Option A
51.
D. focus strategy
Answer & Solution
Answer: Option B
Solution:
Functional level strategy directly supports business strategy. A business strategy is a set of competitive
moves and actions that a business uses to attract customers, compete successfully, strengthening
performance, and achieve organisational goals. It outlines how business should be carried out to reach
the desired ends.
52.
stakeholders?
D. Relative power, interest, and amount of stock held61.

International business has recently grown at such a rapid
pace because of
A. stricter government policies on cross-border movements
B. development of institutions to support and facilitate trade
C. decreasing global competition
D. companies increased concerns with terrorism

Answer & Solution
Answer: Option B
Solution:
International business has recently grown at such a rapid pace because of development of institutions
to support and facilitate trade. International business refers to the trade of goods, services,
technology, capital and/or knowledge across national borders and at a global or transnational level. It
involves cross-border transactions of goods and services between two or more countries.
62.
Which of the following factors does not increase the
bargaining power of a supplier?
A. Substitutability
B. Concentration of suppliers
C. A buyer is important to the supplier
D. High switching costs
Answer & Solution
Answer: Option C
Solution:
A buyer is important to the supplier does not increase the bargaining power of a supplier. The idea is
that the bargaining power of the supplier in an industry affects the competitive environment for the
buyer and influences the buyer's ability to achieve profitability. Strong suppliers can pressure buyers
by raising prices, lowering product quality, and reducing product availability.
63.
Which of the following best describes the mode of
international business used by most companies?
A. mixed ventures
B. foreign direct investment
C. joint ventures
D. exporting and importing
Answer & Solution
Answer: Option D
Solution:
Exporting and importing best describes the mode of international business used by most companies.
Exporting is the sale of products and services in foreign countries that are sourced or made in the
home country. Importing refers to buying goods and services from foreign sources and bringing them
back into the home country.
64.
What is the danger of excessive monopoly power?
A. The organization will charge high prices
B. The organization will not attempt to cut costs
C. The organization will change strategy to seek to fully exploit its power
D. The organization will stifle innovation
Answer & Solution
Answer: Option C
Solution:
The organization will change strategy to seek to fully exploit its power is the danger of excessive
monopoly power. A pure monopoly is a single supplier in a market with no competitors, whereas
monopoly power exists when a single firm dominates a particular market.
65.
Exports and imports apply mostly to which of the following?
A. services
B. merchandise
C. intellectual property
D. licensing
Answer & Solution
Answer: Option B
Solution:
Exports and imports apply mostly to merchandise. Exporting is the sale of products and services in
foreign countries that are sourced or made in the home country. Importing refers to buying goods and
services from foreign sources and bringing them back into the home country.
Answer & Solution
Answer: Option C
Solution:
Relative power and interest is the most appropriate method of categorizing stakeholders.
53.
Answer & Solution
Answer: Option A
54.

the marketplace
Answer & Solution
Answer: Option A
Solution:
55.Which of the following statements best describes

scenario planning?

most
Answer & Solution
Answer: Option A
66.
Why should governments seek to regulate?
A. To control competition and stop monopoly power
B. To minimize resource wastage and monopoly power

C. To control competition and minimize resource wastage
D. To control competition, minimize resource wastage, and inhibit the exploitation of weak
buyers and suppliers
Answer & Solution
Answer: Option D
Solution:
Governments seek to regulate to control competition, minimize resource wastage, and inhibit the
exploitation of weak buyers and suppliers.
67.
An investment that gives the investor a controlling interest
in a foreign company is known as which of the following?
A. foreign portfolio investment
B. foreign direct investment
C. mixed venture
D. pure venture
Answer & Solution
Answer: Option B
Solution:
An investment that gives the investor a controlling interest in a foreign company is known as foreign
direct investment. A foreign direct investment (FDI) is an investment made by a firm or individual in
one country into business interests located in another country. Generally, FDI takes place when an
investor establishes foreign business operations or acquires foreign business assets in a foreign
company.
68.
Which of the following is not suggested by Markides (1999)
as a factor for competitive and strategic success?
A. Synergy
B. Careful evaluation of strategic options
C. Ensure consistency between desired strategic position and the chosen strategy
D. Active opportunity searching
Answer & Solution
Answer: Option C
Solution:
Ensure consistency between desired strategic position and the chosen strategy is not suggested by
Markides (1999) as a factor for competitive and strategic success. Markides (1999introduced "
breakthrough strategies " that primarily focus on revitalizing business and markets in a competitive
environment, also taking other strategic alliances into consideration. The combination of creative
marketing strategies and effective implementation seems a logical approach for organizations to gain
a competitive advantage.
69.
In order to have controlling interest in a foreign company
A. an investor must have at least 100 % interest in the foreign company
B. an investor must have at least 50% interest in the foreign company
C. an investor may hold a minority stake if the remaining ownership is widely dispersed
D. an investor must make all decisions at headquarters about the foreign company
Answer & Solution
Answer: Option C
Solution:
In order to have controlling interest in a foreign company an investor may hold a minority stake if the
remaining ownership is widely dispersed. Working control is a situation wherein a minority
shareholder or shareholders have enough voting power to influence or determine corporate policy.
70.
To succeed, Ansoff (1987) demands that organizations
become
A. more aggressive in terms of competitive strategies and entrepreneurialism or change
orientation
B. more aggressive in terms of competitive strategies
C. more aggressive in terms of competitive strategies and in their pursuit of opportunities
D. more aggressive in terms of competitive strategies and innovation
Answer & Solution
Answer: Option A
***********************************CHAPTER 3***********************************
1.
The strategic management process is
A. a set of activities that is guaranteed to prevent organizational failure
B. a process concerned with a firms resources, capabilities, and competencies, but not the
conditions in its external environment
C. a set of activities that to date have not been used successfully in the not-for-profit sector
D. a dynamic process involving the full set of commitments, decisions, and actions related
to the firm
Answer & Solution
Answer: Option D
2.
Organizations require good people with appropriate skills
and abilities to work together effectively to be successful.
Which of the following characteristics is not seen as critical
for this?
A. Competent
B. Committed
C. Cost-effective
D. Capable
Answer & Solution
Answer: Option D
3.
Hard human resource management assumes which of the
following?
A. Employees are more productive when they are better informed
B. Employees are more productive if they are committed to the organization
C. Employees are resources to be used effectively in the search for competitive advantage
D. Employees have to be trusted to make correct decisions
Answer & Solution
Answer: Option C
4.
Strategic mission
A. is a statement of a firms unique purpose and scope of operations
B. is an internally-focused affirmation of the organization's societal and ethical goals

C. does not limit the firm by specifying the industry in which the firm intends to compete
D. is developed by a firm before the firm develops its strategic intent
Answer & Solution
Answer: Option A
5.
Which of these is a characteristic of soft human resource
management?
A. Managers are responsible for employees
B. Teams provide increased productivity
C. Managers are responsible for deploying employees
D. Scientific management principles and systems should be used to deal with employees
Answer & Solution
Answer: Option B
Solution:
Teams provide increased productivity is a characteristic of soft human resource management. Soft
human resource management (HRM) is an approach to human resource management that involves
treating employees as one of a company's most important assets. When management uses soft HRM,
it views its employees as critical resources who are key to their long-term business strategies.
A. Employees are more productive when they are better informed
B. Employees are more productive if they are committed to the organization
C. Employees are resources to be used effectively in the search for competitive advantage
D. Employees have to be trusted to make correct decisions

Answer & Solution
Answer: Option C
Solution:
Hard human resource management assumes Employees are resources to be used effectively in the
search for competitive advantage. Hard human resources management, or hard HRM is a staff
management system in which workers are seen as a resource that needs to be controlled to achieve
the highest profit and a competitive advantage. The focus of hard HRM is on the task that needs to be
done, cost control, and achieving organizational goals.
4.
Strategic mission
A. is a statement of a firms unique purpose and scope of operations
B. is an internally-focused affirmation of the organization's societal and ethical goals
C. does not limit the firm by specifying the industry in which the firm intends to compete
D. is developed by a firm before the firm develops its strategic intent
Answer & Solution
Answer: Option A
Solution:
Strategic mission is a statement of a firms unique purpose and scope of operations. Strategic mission
is a type of marketing approach which is based on the core philosophy of organization. It is a long term
plan on which the company operates to achieve its mission and vision objectives and goals.
5.
Which of these is a characteristic of soft human resource
management?
A. Managers are responsible for employees
B. Teams provide increased productivity
C. Managers are responsible for deploying employees

D. Scientific management principles and systems should be used to deal with employees
Answer & Solution
Answer: Option B
Solution:
Teams provide increased productivity is a characteristic of soft human resource management. Soft
human resource management (HRM) is an approach to human resource management that involves
treating employees as one of a company's most important assets. When management uses soft HRM,
it views its employees as critical resources who are key to their long-term business strategies.
6.
The _______________ has its own business strategy,
objectives and competitors and these are often differ from
parent company
A. Strategic Business Unit structure
B. Matrix structure
C. Divisional structure
D. None of given option
Answer & Solution
Answer: Option A
Solution:
The Strategic Business Unit structure has its own business strategy, objectives and competitors and
these are often differ from parent company. A strategic business unit, popularly known as SBU, is a
fully-functional unit of a business that has its own vision and direction. Typically, a strategic business
unit operates as a separate unit, but it is also an important part of the company. It reports to the
headquarters about its operational status.
7.
Which of the following is not an example of a managerial
mindset?
A. Analytic
B. Reflective
C. Competent
D. Co-operative
Answer & Solution
Answer: Option C
Solution:
Competent is not an example of a managerial mindset. A worldly mindset helps you operate in diverse
regions, with the cultural and social insights needed to serve varied customers. Managing
relationships (collaborative mindset).
8.
The vision and mission statement can often be found
A. in the SEC report
B. in annual reports
C. on customer receipts
D. on supplier invoices
Answer & Solution
Answer: Option B
Solution:
The vision and mission statement can often be found in annual reports. A Mission Statement defines
the company's business, its objectives and its approach to reach those objectives. A Vision Statement
describes the desired future position of the company. Elements of Mission and Vision Statements are
often combined to provide a statement of the company's purposes, goals and values.
9.
Which statement should be created first and foremost?
A. Strategic
B. Vision
C. Objectives
D. Mission
10.
What does the acronym SMART refer to?
A. Superiority, Measurement, Appropriability, Replicability, Transparency
B. Specific, Measurable, Achievable, Realistic, Timescale
C. Substitutability, Measurement, Appropriability, Replicability, Transparency
D. Specific, Measurable, Achievable, Realistic, Timely
Answer & Solution
Answer: Option B
Solution:
S.M.A.R.T. is an acronym that stands for specific, measurable, achievable, realistic and timescale.
11.
The purpose of a mission statement is to declare all of these
except
A. a reason for being
B. an annual financial plan
C. a statement of purpose
D. a statement of beliefs

Answer & Solution
Answer: Option B
Solution:
The purpose of a mission statement is to declare all of these except an annual financial plan. The sole
purpose of a mission statement is to serve as a company's goal/agenda, it outlines clearly what the
goal is.
12.
Which of the following is not a characteristic of the Internet?
A. Provides information
B. Facilitates communication
C. Provides competitive advantage
D. Enables electronic trading
Answer & Solution
Answer: Option A
Solution:
Providing information is not a characteristic of the Internet. The Internet is essentially a decentralized,
self-maintained telecom-munications network. It is made up of inter-linking small networks from all
parts of the world. It is ubiquitous, borderless, global and ambient in its nature. Hence the term
“cyberspace.”
13.
As indicated in the strategic-management model, a clear
_______ is needed before alternate strategies can be
formulated and implemented.
A. long-term objective
B. short-term objective
C. policy
D. mission statement
Answer & Solution
Answer: Option D
Solution:
As indicated in the strategic-management model, a clear mission statement is needed before alternate
strategies can be formulated and implemented. The strategic management model provides managers
and strategists a greater comprehension of the iterative approach in conducting real strategic
management in the organizational setting. The strategic management model begins with the
development of the organizational mission and vision.
14.
Which one of the following criteria does not provide a
means to assess strategic resources?
A. Sustainability
B. Scarcity
C. Inimtability
D. Synergy
Answer & Solution
Answer: Option D
Solution:
Synergy criteria does not provide a means to assess strategic resources. Synergy is the concept that
the combined value and performance of two companies will be greater than the sum of the separate
individual parts. Synergy is a term that is most commonly used in the context of mergers and
acquisitions (M&A).
15.
Innovation and quality can be seen as which form of
management?
A. Marketing management
B. Financial management
C. Operations management
D. Human resource management
Answer & Solution
Answer: Option C
Solution:
Innovation and quality can be seen as Operations

management. Operations management is the
administration of business practices to create the highest
level of efficiency possible within an organization. It is
concerned with converting materials and labor into goods
and services as efficiently as possible to maximize the
profit of an organization16.
The mission statement answers which question?
A. What is our business?
B. How can we improve ourselves?
C. What do we want to become?
D. Who are our stakeholders?
Answer & Solution
Answer: Option A
Solution:
The mission statement answers- What is our business?. A mission statement is a brief description of a
company's fundamental purpose.
17.
Which of the following is not one of the four key strategic
elements linked to corporate objectives?
A. Competitive environment
B. Stakeholder expectations
C. Research and development
D. Organization structure
Answer & Solution
Answer: Option C
Solution:
Research and development is not one of the four key strategic elements linked to corporate
objectives. Research and development (R&D) refers to the activities companies undertake to innovate
and introduce new products and services. It is often the first stage in the development process. The
goal is typically to take new products and services to market and add to the company's bottom line.
18.
The vision statement answers which question?
A. What is our business?
B. How can we improve ourselves?
C. What do we want to become?
D. Who are our stakeholders?
Answer & Solution
Answer: Option C
Solution:
The vision statement answers- What do we want to become?
19.
In the process of developing a mission statement, it is
important to involve
A. as few managers as possible

B. as many managers as possible
C. upper-level management only
D. lower-level management only
Answer & Solution
Answer: Option B
Solution:
In the process of developing a mission statement, it is important to involve as many managers as

possible. The mission statement allows everyone in an organization to clearly understand why they
are doing their work. An organization's mission also guides its operational plans and describes the
organization to potential funders, clients and beneficiaries.
20.
Information is defined by Lucas (1976) as
A. some tangible or intangible entity that creates certainty about a state or event
B. some tangible or intangible entity that reduces uncertainty about a state or event
C. some tangible or intangible entity that leads to understanding
D. some tangible or intangible entity that leads to knowledge
Answer & Solution
Answer: Option B
Solution:
Information is defined by Lucas (1976) as some tangible or intangible entity that reduces uncertainty
about a state or event.
21.
The process of developing a mission statement includes
which of these as the first activity?
A. A request to modify the current document

B. Ask managers to read selected articles about mission statements
C. Ask managers to prepare a mission statement for the organization
D. A merging of several mission statements into one document
Answer & Solution
Answer: Option B
Solution:
The process of developing a mission statement includes ask managers to read selected articles about
mission statements. A mission statement defines what an organization is, why it exists, its reason for
being. At a minimum, your mission statement should define who your primary customers are, identify
the products and services you produce, and describe the geographical location in which you operate.
22.
Which of the following is a skill required by organizations to
deal with competitive chaos?
A. The ability to share information among all managers
B. The ability to operate efficiently and effectively
C. The ability to discern patters in the dynamic environment and competitive chaos, and
spot opportunities ahead of rivals
D. The ability to benchmark competitors
Answer & Solution
Answer: Option C
Solution:
The ability to discern patters in the dynamic environment and competitive chaos, and spot
opportunities ahead of rivals is a skill required by organizations to deal with competitive chaos.
23.
What can be used to promote unbiased views and to
manage the development of the mission and vision
statement more effectively?
A. an internal group
B. a committee of managers
C. command-and-control
D. a facilitator
Answer & Solution
Answer: Option D
Solution:
A facilitator can be used to promote unbiased views and to manage the development of the mission
and vision statement more effectively. Facilitation is defined as an activity designed ‘to make easier, to
promote or help forward’. In business, it is about helping people to solve their problems using their
own solutions.
24.
Which of the following is a characteristic of a customer-
driving organization?
A. Innovative
B. Conservative
C. Responsive
D. Unresponsive
Answer & Solution
Answer: Option C
Solution:
Responsive is a characteristic of a customer-driving organization. Customer responsiveness measures

the speed and quality at which your company provides customer service and communication.
25.
An effective mission statement is all of the following except
A. It reflects judgments about future growth directions that are based upon forward-looking
external and internal analyses
B. It provides useful criteria for selecting among alternative strategies
C. It provides a basis for generating and screening strategic options
D. It is static in orientation
Answer & Solution
Answer: Option D
Solution:
An effective mission statement is all of the following except it is static in orientation. To be effective,
mission statements need to clarify the intentions of the business while being inspirational and
meaningful to customers and employees. Successful mission statements may take time to create, but
when they are developed correctly, they provide a company with clear direction and purpose.
26.
What are focus strategies?
A. Where a company focuses on achieving lower costs than its rivals so as to compete
across a broad range of market segments
B. Where a company chooses to concentrate on only one market segment or a limited range
of segments
C. When a company conducts market research through focus groups to determine how their
strategy should be shaped
D. When a company focuses on supplying differentiated products which appeal to different

market segments
Answer & Solution
Answer: Option B
Solution:
Focus strategies is that where a company chooses to concentrate on only one market segment or a
limited range of segments. A marketing strategy in which a company concentrates its resources on
entering or expanding in a narrow market or industry segment. A focus strategy is usually employed
where the comopany knows its segment and has products to competitively satisfy its needs. Focus
strategy is one of three generic marketing strategies.
27.
Which of the following is not a factor in the positioning of an
organization in an industry?
A. Competitive advantage
B. Rate of growth
C. Market share
D. Size
Answer & Solution
Answer: Option B
Solution:
Rate of growth is not a factor in the positioning of an organization in an industry. A process through
which the structure of a multigent system organization increases the number of its roles and links.
Organizational growth is essentially a quantitative process.
28.
Good mission statements identify the ______ of a firms
products to its customers
A. utility
B. price
C. profit margin
D. demand
Answer & Solution

Answer: Option A
Solution:
Good mission statements identify the utility of a firms products to its customers. A mission statement
is a formal summary that explains what you do, how you do it and why you do it.
29.
Heller (1998) suggested organizations must address seven
key issues effectively to sustain competitive advantage.
Which of the following is not one of those issues?
A. Effectiveness
B. Innovation
C. Costs
D. Speed
Answer & Solution
Answer: Option D
Solution:
Heller (1998) suggested organizations must address seven key issues effectively to sustain competitive
advantage. Speed is not one of those issues.
30.
Effective mission statements can vary in
A. length
B. content
C. format
D. all of the above
Answer & Solution
Answer: Option D
Solution:
Effective mission statements can vary in length, content and format. To be effective, mission
statements need to clarify the intentions of the business while being inspirational and meaningful to
customers and employees. Successful mission statements may take time to create, but when they are
developed correctly, they provide a company with clear direction and purpose.
31.
Which component of a mission statement addresses the
firms distinctive competence or major competitive
advantage?
A. Technology
B. Philosophy
C. Concern for public image
D. Self-concept
Answer & Solution
Answer: Option D
Solution:
Self-concept component of a mission statement addresses the firms distinctive competence or major
competitive advantage. A mission statement is a short statement of why an organization exists, what
its overall goal is, identifying the goal of its operations: what kind of product or service it provides, its
primary customers or market, and its geographical region of operation.
32.
Which of these characteristics best describes a customer-
driven organization?
A. Unresponsiveness
B. Cost reduction
C. Responsiveness
D. Innovation

Answer & Solution
Answer: Option C
Solution:
Responsiveness characteristics best describes a customer-driven organization. Responsiveness, in

communication, refers to the degree that what YOU say, responds clearly and directly, to what the
other person just said. If you are being responsive, the other person knows you are paying attention,
and care enough about what he or she is talking about to "stay on that topic".
33.
Which of the following is a source of differentiation?
A. Relationships with customers
B. Distribution
C. Low costs
D. Unreliability
Answer & Solution
Answer: Option A
Solution:
Relationships with customers is a source of differentiation. Product differentiation is a marketing

strategy that strives to distinguish a company's products or services from the competition. Successful
product differentiation involves identifying and communicating the unique qualities of a company's
offerings while highlighting the distinct differences between those offerings and others on the market.
34.
Which component of a mission statement addresses the
basic beliefs, values, aspirations, and ethical priorities of
the firm?
A. Technology
B. Philosophy
C. Concern for public image

D. Customers
Answer & Solution
Answer: Option B
Solution:
Philosophy component of a mission statement addresses the basic beliefs, values, aspirations, and
ethical priorities of the firm. What are the basic beliefs, values, aspirations, and philosophical.
35.
Effective mission statements
A. are usually changed every few months
B. are usually changed every few years
C. never require revision
D. stand the test of time and require little revision
Answer & Solution
Answer: Option D
Solution:
Effective mission statements stand the test of time and require little revision. To be effective, mission
statements need to clarify the intentions of the business while being inspirational and meaningful to
customers and employees. Successful mission statements may take time to create, but when they are
developed correctly, they provide a company with clear direction and purpose.
36.
Which of the following best relates to market share? Market
share is:
A. the best indicator of performance
B. not important
C. indicative of competitive advantage

D. subjective
Answer & Solution
Answer: Option D
Solution:
Market share is subjective. Subjective marketing is founded on the marketer's own experience
regarding product successes and failures, knowledge of new products, understanding of the customer
and prospect base, and existing and past customer relationships. These all are essential to setting up a
marketing plan.
37.
The goal of the cost leader is to:
A. start a price war
B. minimize wages
C. charge the lowest price
D. make high margins
Answer & Solution
Answer: Option D
Solution:
The goal of the cost leader is to make high margins. Leader pricing is a common pricing strategy used
by retailers to attract customers. It involves setting lower price points and reducing typical profit
margins to introduce brands or stimulate interest in the business as a whole or a particular product
line. Products sold in this strategy are often sold at a loss.
38.
Which of the following is not a means to develop a customer
commitment focus in the organization?
A. Introducing quality control
B. Activity mapping
C. Enhancing customer service
D. Image building
Answer & Solution
Answer: Option C
Solution:
Enhancing customer service is not a means to develop a customer commitment focus in the
organization. Great customer service can help you build trust, improve brand awareness, gain
customer loyalty, drive sales, and attract new customers through valuable recommendations.
39.
The means by which long term objectives will be achieved
are
A. mission statements
B. strategies
C. vision statements
D. long term goals
Answer & Solution
Answer: Option B
Solution:
The means by which long term objectives will be achieved are strategies. Strategy determines the
direction and scope of an organization over the long term, and they say that it should determine how
resources should be configured to meet the needs of markets and stakeholders.
40.
By what means should an organization measure its
performance?
A. Efficiency
B. Effectiveness
C. Economy, efficiency, and effectiveness
D. Efficiency and effectiveness
Answer & Solution
Answer: Option C
Solution:
By economy, efficiency, and effectiveness means should an organization measure its performance.
analyzing a company's performance against its objectives and goals. In other words, organizational
performance comprises real results or outputs compared with intended outputs.
41.
Which of these statements best describes all the benefits a
company can derive from analyzing its financial
performance?
A. It can make comparisons with competitors, reveal lost profit and growth potential,
emphasize possible dangers and enable a study of trends and progress
B. It can make comparisons with competitors, reveal lost profit and growth potential and
isolate neglected market sectors
C. It can reveal lost profit and growth potential, emphasize possible dangers and isolate
neglected market segments
D. It can make comparisons with competitors, reveal lost profit and growth potential and
reveal possible trends in the development of the company's share price
Answer & Solution
Answer: Option A
Solution:
The statement that best describes all the benefits a company can derive from analyzing its financial
performance is that it can make comparisons with competitors, reveal lost profit and growth
potential, emphasize possible dangers and enable a study of trends and progress.
42.
According to Schein (1985), what are the levels that make
up a company's culture?
A. Artifacts, values, underlying assumptions, and behaviors
B. Artifacts, values, and underlying assumptions
C. Artifacts, communications, underlying assumptions, and behaviors
D. Values, communications, and underlying assumptions
Answer & Solution
Answer: Option A
Solution:
According to Schein (1985), Artifacts, values, underlying assumptions, and behaviors are the levels
that make up a company's culture. The first level is the characteristics of the organization which can be
easily viewed, heard and felt by individuals collectively known as artifacts. The dress code of the
employees, office furniture, facilities, behavior of the employees, mission and vision of the
organization all come under artifacts and go a long way in deciding the culture of the workplace. The
next level according to Schein which constitute the organization culture is the values of the
employees. The values of the individuals working in the organization play an important role in deciding
the organization culture. The thought process and attitude of employees have deep impact on the
culture of any particular organization. What people actually think matters a lot for the organization?
The mindset of the individual associated with any particular organization influences the culture of the
workplace. The third level is the assumed values of the employees which can’t be measured but do
make a difference to the culture of the organization. There are certain beliefs and facts which stay
hidden but do affect the culture of the organization. The inner aspects of human nature come under
the third level of organization culture. Organizations where female workers dominate their male
counterparts do not believe in late sittings as females are not very comfortable with such kind of
culture. Male employees on the other hand would be more aggressive and would not have any
problems with late sittings. The organizations follow certain practices which are not discussed often
but understood on their own. Such rules form the third level of the organization culture.
43.
____________ refers to the strategies and counter strategies
of a firm that compete in a shared market place
A. Retrenchment strategy
B. Competitive gaming
C. Business strategy
D. Corporate strategy
Answer & Solution
Answer: Option B
Solution:
Competitive gaming refers to the strategies and counter strategies of a firm that compete in a shared
market place. Competitive games are those in which players play against one another and where one
player winning means another player loses. Two player games are often competitive, with a distinct
win-or-lose outcome.
44.
____________ is also referred to as external strategic
management audit
A. Organizational analysis
B. Environmental analysis
C. Industry analysis
Answer & Solution
41.
Which of these statements best describes all the benefits a
company can derive from analyzing its financial
performance?
A. It can make comparisons with competitors, reveal lost profit and growth potential,
emphasize possible dangers and enable a study of trends and progress
B. It can make comparisons with competitors, reveal lost profit and growth potential and
isolate neglected market sectors
C. It can reveal lost profit and growth potential, emphasize possible dangers and isolate
neglected market segments
D. It can make comparisons with competitors, reveal lost profit and growth potential and
reveal possible trends in the development of the company's share price
Answer & Solution
Answer: Option A
42.
According to Schein (1985), what are the levels that make
up a company's culture?
A. Artifacts, values, underlying assumptions, and behaviors
B. Artifacts, values, and underlying assumptions
C. Artifacts, communications, underlying assumptions, and behaviors
D. Values, communications, and underlying assumptions
Answer & Solution
Answer: Option A
43.
____________ refers to the strategies and counter strategies
of a firm that compete in a shared market place
A. Retrenchment strategy
B. Competitive gaming
C. Business strategy
D. Corporate strategy
Answer & Solution
Answer: Option B
Solution:
Competitive gaming refers to the strategies and counter strategies of a firm that compete in a shared
market place. Competitive games are those in which players play against one another and where one
player winning means another player loses. Two player games are often competitive, with a distinct
win-or-lose outcome.
44.
____________ is also referred to as external strategic
management audit
Answer & Solution : Answer: Option C
45.
In order for a culture to generate success, what does it need
to be?
A. Stable and secure
B. Flexible and adaptive
C. Innovative and resourceful
D. Flexible and resourceful
Answer & Solution
Answer: Option B
6.
Which of the following would a market-driven business
most likely be?
A. Competitive
B. Efficient
C. Flexible
D. Resourceful
Answer & Solution
Answer: Option D
Solution:
A market-driven business most likely be resourceful. Market-driven is defined as: “Firm's policy or
strategy guided by market trends and customer needs instead of the firm's productive capacity or
current products.”
47.
________ are external forces affecting organizations
A. Technological forces
B. Political forces
C. Economic forces
D. All of the above
Answer & Solution
Answer: Option D
Solution:
Technological forces, Political forces and Economic forces are external forces affecting organizations.
48.
According to Sir Allen Shepherd what is the task of
corporate leadership?
A. To apply energy and judgement to the corporate culture to ensure its relevance
B. To apply energy and judgement to the corporate culture to ensure its stability
C. To apply energy and judgement to the corporate culture to ensure its continuity
D. To apply energy and judgement to the corporate culture to ensure its productivity
Answer & Solution
Answer: Option A
Solution:
According to Sir Allen Shepherd to apply energy and judgement to the corporate culture to ensure its
relevance is the task of corporate leadership. Shepherd leadership is a matter of selfless service to
subordinates. This service to others will require a commitment to serve without the potential of
immediate recognition or reward. Shepherd leadership will require, at times, gently leading those in
their charge, mentoring and sometimes teaching them along the way.
49.
__________ is identifying opportunities and threats
affecting their business
D. Competitive analysis
Answer & Solution
Answer: Option B
Solution:
Environmental analysis is identifying opportunities and threats affecting their business. Environmental
analysis is a strategic tool. It is a process to identify all the external and internal elements, which can
affect the organization's performance. The analysis entails assessing the level of threat or opportunity
the factors might present.
50.
According to Press (1990), what are the four discrete
philosophies upon which an organization's culture can be
based?
A. The resource focus, the product focus, the shareholder focus and the people focus
B. The product focus, the shareholder focus, the people focus and the market focus
C. The resource focus, the shareholder focus, the people focus and the market focus
D. The shareholder focus, the people focus, the product focus and the market focus
Answer & Solution
Answer: Option C
Solution:
According to Press (1990), The resource focus, the shareholder focus, the people focus and the market
focus are the four discrete philosophies upon which an organization's culture can be based.
51.
What or who are Reactors?
A. Innovative and entrepreneurial organizations
B. Organizations which follow industry trends
C. Conservative and low risk organizations
D. Organizations with limited change and measured steps
Answer & Solution
Answer: Option B
Solution:
Organizations which follow industry trends are Reactors. Reactors are organizations in which top
management frequently perceive change and uncertainty occurring in their organizational
environments but are unable to respond effectively.
52.
___________ involves surveillance of a firm's external
environment to predict environmental changes to come and
detect changes already under way
A. Environmental scanning
B. Environmental monitoring
C. Competitive intelligence
D. Environmental forecasting
Answer & Solution
Answer: Option A
Solution:
Environmental scanning involves surveillance of a firm's external environment to predict

environmental changes to come and detect changes already under way. Environmental scanning is the
process of gathering information about events and their relationships within an organization's internal
and external environments. The basic purpose of environmental scanning is to help management
determine the future direction of the organization.
53.
Kets de Vries (1996) suggested strategic leaders have two
key roles to play. Which two roles are they?
A. Transformational and Effective
B. Charismatic and Effective
C. Transformational and Charismatic
D. Charismatic and Architectural

Answer & Solution
Answer: Option D
Solution:
Kets de Vries (1996) suggested strategic leaders have two key roles to play that are Charismatic and
Architectural. In the charismatic role, leaders envision a better future and empower and energize their
subordinates. In the architectural role, leaders address issues related to organizational design and
control and reward systems.
54.
_____________ involves the development of projections
about the direction, scope, speed and intensity of
environmental change
B. Environmental monitoring
C. Competitive intelligence
D. Environmental forecasting
Answer & Solution
Answer: Option D
Solution:
Environmental forecasting involves the development of projections about the direction, scope, speed
and intensity of environmental change. Environmental forecasting is the process of predicting and
calculating the potential intensity, duration, timeframe, and nature of various external forces that can
affect the business activities of a company, interrupt its plans, and force it to introduce changes to its
objectives and strategies.
55.
What form of strategy formation would be expected to be
found in Defender organizations?
A. Formal planning
B. Visionary
C. Adaptive
D. Incremental
Answer & Solution
Answer: Option A
Solution:
Formal planning form of strategy formation would be expected to be found in Defender organizations.
Most of the organizations follows formal planning. It is written and focuses specifically on the long
term goals of the organization. The planning which is discussed practically and the details,
explanations are noted down helps the organization achieve its objectives smoothly.
56.
_________ begins with identifying the industry's dominant
economic features and forming a picture of the industry
landscape
B. Industry analysis
C. Environmental analysis
D. Competitive analysis
Answer & Solution
Answer: Option B
Solution:
Industry analysis begins with identifying the industry's dominant economic features and forming a
picture of the industry landscape. An industry analysis is a business function completed by business
owners and other individuals to assess the current business environment. This analysis helps
businesses understand various economic pieces of the marketplace and how these various pieces may
be used to gain a competitive advantage.
57.
Strategy creation involves three strands. Which of the
following is not one of the three stands?
A. Planning
B. Vision
C. Entrepreneurship
D. Emergent strategies
Answer & Solution
Answer: Option C
Solution:
Strategy creation involves three strands. Entrepreneurship is not one of the three stands. These
strategies are cost leadership, differentiation, and focus.
58.
In business, __________ generally refers to the fight for
market share which serves the same basic customer needs
A. Competition
B. Composition
C. Rivalry
Answer & Solution
Answer: Option A
Solution:
In business, Competition generally refers to the fight for market share which serves the same basic
customer needs. Competition is the rivalry between companies selling similar products and services
with the goal of achieving revenue, profit, and market share growth.
59.
Which of the following is not one of the three elements of
strategy creation?
A. Sales
B. Innovation
C. Planning
D. Leadership
Answer & Solution
Answer: Option A
Solution:
Sales is not one of the three elements of strategy creation. The environment, the resources of your
organisation and the expectations of different stakeholders are three elements of strategy creation.
60.
A young industry that is beginning to form is considered to
be in __________ stage
A. Introduction
B. Growth
C. Shakeout
D. Maturity
Answer & Solution
Answer: Option A
Solution:
A young industry that is beginning to form is considered to be in Introduction stage. Demand for the
industry's outputs is low at this time because product and/or service awareness is still developing.
61.
What is an emergent strategy?
A. One with clear objectives leading to a clear strategy

B. One with no specific objectives, that is fully flexible, using opportunism to seize the
main chance at the right moment
C. One with a formal approach to adaptive strategy creation, so that in a turbulent

environment objectives and strategies can be adjusted
D. One that has a clear mission and directional objectives but that also recognizes the need
for flexibility
Answer & Solution
Answer: Option B
Solution:
One with no specific objectives, that is fully flexible, using opportunism to seize the main chance at the
right moment is an emergent strategy. Emergent strategy is a set of actions, or behavior, consistent
over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy.
When a deliberate strategy is realized, the result matches the intended course of action.
62.
What must the strategic visionary leader avoid in order to
ensure the prolonged success of a strategy?
A. Becoming blinkered by the success of one strategy to the detriment of others
B. Depending too heavily on colleagues
C. Becoming too ambitious
D. Being adaptable
Answer & Solution
Answer: Option A
Solution:
Becoming blinkered by the success of one strategy to the detriment of others must be the strategic
visionary leader avoid in order to ensure the prolonged success of a strategy.
63.
Explosive growth cannot be maintained indefinitely. Sooner
or later, the rate of growth slow and the industry enters the
A. Embroynic stage
B. Growth stage
C. Shakeout stage
D. Maturity stage
Answer & Solution
Answer: Option C
Solution:
Explosive growth cannot be maintained indefinitely. Sooner or later, the rate of growth slow and the
industry enters the Shakeout stage. Shakeout usually refers to the consolidation of an industry. Some
businesses are naturally eliminated because they are unable to grow along with the industry or are
still generating negative cash flows.
64.
The five forces model developed by ________ has been the
most commonly used analytical tool for examining
competitive environment
A. Michnal E Porter
B. Lewis Charter
C. Barrywell
D. Schwiz
Answer & Solution
Answer: Option A
Solution:
The five forces model developed by Michnal E Porter has been the most commonly used analytical
tool for examining competitive environment. This is useful, because, when you understand the forces
in your environment or industry that can affect your profitability, you'll be able to adjust your strategy
accordingly.
65.
What is an incremental strategy?
A. One that is formalized from the beginning and adhered to along the way exactly
B. One that evolves according to past experiences and changing circumstances
C. One that is formalized, but is slightly flexible if necessary
D. One that has the potential to open up new opportunities along the way which can be
incorporated into the long term strategy
Answer & Solution
Answer: Option B
Solution:
One that evolves according to past experiences and changing circumstances is an incremental
strategy. Incremental strategic planning identifies the changes an organization needs to implement in
order to improve specific conditions, whether these are community conditions or organizational
conditions. Incremental plans provide very clear direction on political and funding priorities.
66.
Name one of the strategic pressures that could weaken an
unprepared organization?
A. Exploitation of opportunities
B. Lax controls that indulge flexibility
C. Adaptation along the strategic path
D. Too many controls at the expense of flexibility
Answer & Solution
Answer: Option D
Solution:
Too many controls at the expense of flexibility one of the strategic pressures that could weaken an
unprepared organization.
67.
The first of Porters Five Forces model is the
A. Intensity of rivalry among industry competitors
B. Threats of new entrants
C. Bargaining power of suppliers
D. Bargaining power of buyers
Answer & Solution
Answer: Option B
Solution:
The first of Porters Five Forces model is the threats of new entrants. Threat of new entrants refers to
the threat new competitors pose to existing competitors in an industry. Therefore, a profitable
industry will attract more competitors looking to achieve profits.
68.
__________ refers to the ability of buyers to bargain down
prices charged by firms in the industry or driving up the
costs of the firm by demanding better product quality and
service
A. Bargaining power of suppliers
B. Threats of new entrants
C. Bargaining power of buyers
D. Threat of substitute products
Answer & Solution

Answer: Option C
Solution:
Bargaining power of buyers refers to the ability of buyers to bargain down prices charged by firms in
the industry or driving up the costs of the firm by demanding better product quality and service. The
Bargaining Power of Buyers, one of the forces in Porter's Five Forces Industry Analysis Framework,
refers to the pressure that customers/consumers can put on businesses to get them to provide higher
quality products, better customer service, and/or lower prices.
69.
In military analogy, what is the outcome if in strategy
creation the organization has both capability and intent?
A. Capacity
B. Credibility
C. Emergent strategy
D. Intended strategy
Answer & Solution
Answer: Option B
Solution:
In military analogy, Credibility is the outcome if in strategy creation the organization has both
capability and intent. Strategic credibility has to do with how favourably key stakeholders view the
strategic foundations of the firm.
70.
What is the key variable in executing visionary strategy
creation at the competitive strategy level?
A. Seizing the opportunities presented
B. Formalized planning
C. Innovation
D. Learning

Answer & Solution
Answer: Option C
Solution:
Innovation is the key variable in executing visionary strategy creation at the competitive strategy level.
Innovation involves deliberate application of information, imagination and initiative in deriving greater
or different values from resources, and includes all processes by which new ideas are generated and
converted into useful products.
********************Chapter4********************************************************
*
1.
__________ are the resources, skills or other advantages a

firm enjoys relative to its competitors
A. Weakness
B. Strength
C. Threat
D. Opportunities
Answer & Solution
Answer: Option B
2.
If unprepared, what strategic pressures are recognized as key

factors that can weaken the organization?
A. Competitive and environmental pressures
B. Control at the expense of flexibility
C. Lack of planners
D. Competitive and environmental pressures, and excessive control

Answer & Solution
Answer: Option D
Solution:
If unprepared, Competitive and environmental pressures, and excessive control strategic
pressures are recognized as key factors that can weaken the organization.
3.
A _________ is a limitation or deficiency in resources, skills

and capabilities that seriously impede effective performance
A. Strength
B. Threat
C. Opportunities
D. Weakness
Answer & Solution
Answer: Option D
Solution:
A Weakness is a limitation or deficiency in resources, skills and capabilities that seriously
impede effective performance. The organizational weaknesses that have the potential to lead
the organization to inefficiency and ineffectiveness should be known and improved.
4.
Robert Kalpan and David developed the balanced score card

in the early _____ as a performance measurement system
A. 1991
B. 1990
C. 1992
D. 1995
Answer & Solution
Answer: Option B
Solution:
Robert Kalpan and David developed the balanced score card in the early 1990 as a
performance measurement system. Performance measurement is the process of collecting,
analyzing and/or reporting information regarding the performance of an individual, group,
organization, system or component.
5.
What is said to be the key factor in maintaining organizational

growth (e.g., Hurst 1995)?
A. Entrepreneurial vision
B. Planning
C. Innovation
D. Flexibility
Answer & Solution
Answer: Option D
Solution:
Flexibility is said to be the key factor in maintaining organizational growth (e.g., Hurst 1995).
Strategic flexibility is the organization's. capability to identify major changes in the external
environment, quickly commit. resources to new courses of action in response to those changes,
and recognize and act. promptly when it is time to halt or reverse existing resource
commitments.
6.
______________ are defined as resources, skills and

attributes of an organization that are essential to deliver
success in the market place
A. Balanced score card

B. Industrial analysis
C. Core competencies
D. Critical success factors
Answer & Solution
Answer: Option D
Solution:
Critical success factors are defined as resources, skills and attributes of an organization that are
essential to deliver success in the market place. A critical success factor (often abbreviated
“CSF”) may sound complicated, but it's actually a pretty simple concept.
7.
Which of the following is the best reason for why strategic

planning is still important today?
A. Without a formal strategic plan a company cannot expect to compete effectively
B. Without a strategic plan an organization can drift without purpose or definition
C. Without it, companies would exist without cause or co-ordination
D. Because of slower economic growth, globalization and technological change
Answer & Solution
Answer: Option D
Solution:
Strategic planning is still important today because A critical success factor (often abbreviated
“CSF”) may sound complicated, but it's actually a pretty simple concept. Strategic planning is
a process in which organizational leaders determine their vision for the future as well as
identify their goals and objectives for the organization.
8.
________ is a widely used framework to summarize a

company's situation or current position
A. SWOT analysis
B. TOWS matrix
C. Ansoff's matrix
D. BCG matrix
Answer & Solution
Answer: Option A
Solution:
SWOT analysis is a widely used framework to summarize a company's situation or current
position. SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework
used to evaluate a company's competitive position and to develop strategic planning. SWOT
analysis assesses internal and external factors, as well as current and future potential.
9.
What is top-down planning?
A. This takes place in someone's head, and the decisions may not be written down in any
extensive form It is often practiced by entrepreneurial managers with real flair
B. This requires managers to spend time discussing the future opportunities and threats and
areas in which the organization might develop
C. This involves managers throughout the organization, and ensures that everyone involved
in implementing plans will be consulted
D. This relates to decisions taken at the higher parts of the organization and passed onto
other managers for implementation These managers will have had little or no input into the
planning process
Answer & Solution
Answer: Option D
Solution:
Top-down planning relates to decisions taken at the higher parts of the organization and passed
onto other managers for implementation. These managers will have had little or no input into
the planning process. Top-Down Planning is a method of planning, defining objectives and
ways to achieve them through the top down. First, global (framework) goals are set, and ways
how to achieve them. They are gradually moved to lower and lower levels of the organizational
hierarchy to be developed and specified.
10.
Which of the following is true for small businesses in relation

to strategic planning?
A. It belongs in all organizations
B. It is too expensive
C. It only belongs in large organizations
D. The benefits are too long term
Answer & Solution
Answer: Option A
Solution:
It belongs in all organizations is true for small businesses in relation to strategic planning.
Strategic planning is a process in which organizational leaders determine their vision for the
future as well as identify their goals and objectives for the organization.
11.
The concept Core competence was developed by
A. Schwiz Marker
B. Peter Schiffman
C. Prahalad and Gary
Answer & Solution
Answer: Option C
Solution:
The concept Core competence was developed by Prahalad and Gary. It can be defined as "a
harmonized combination of multiple resources and skills that distinguish a firm in the
marketplace" and therefore are the foundation of companies' competitiveness.
12.
In __________ strategy firms try to achieve a high levels of

local responsiveness by making their product or service
offering to the requirement of the countries they operate
A. Global
B. Multidomestic
C. International
D. Transnational
Answer & Solution
Answer: Option B
Solution:
In Multidomestic strategy firms try to achieve a high levels of local responsiveness by making
their product or service offering to the requirement of the countries they operate. A
multidomestic strategy is an international marketing approach that chooses to focus advertising
and commercial efforts on the needs of a local market rather than taking a more universal or
global approach.
13.
According to Ringbakk (1971) and Steiner (1972) which of the

following should be avoided when creating a formal plan?
A. Seeing planning as a support activity in strategic decision making
B. Seeing planning as a once-a-year ritual
C. Flexibility
D. Involving implementers in planning

Answer & Solution
Answer: Option B
Solution:
According to Ringbakk (1971) and Steiner (1972) Seeing planning as a once-a-year ritual
should be avoided when creating a formal plan. In formal planning, the managers look forward
for a change when it is to be made use of.
14.
In __________ strategy assumptions are made that

consumers needs are similar worldwide
A. Global
B. Multidomestic
C. International
D. Transnational
Answer & Solution
Answer: Option A
Solution:
In Global strategy assumptions are made that consumers needs are similar worldwide. A global
strategy refers to the plans an organization has developed to target growth beyond its borders.
Specifically, it aims to increase the sales of goods or services abroad. 'Global strategy' is, in
fact, a shortened term that covers three strategies: international, multinational, and global.
15.
What does SPACE stand for?
A. Sales, Position, and ACtion Evaluation
B. Strategic Profit And Credit Evaluation
C. Sales, Profit, ACtion and Evaluation

D. Strategic Position and ACtion Evaluation
Answer & Solution
Answer: Option D
Solution:
SPACE stand for Strategic Position and Action Evaluation. It is “an ap
16.
What is the planning gap?
A. A concept that is used to clarify the extent of revenue or profits gap that might emerge if
current strategies are left unchanged
B. The time between the strategic plan being devised and the time it is actually
implemented
C. The time between the conception of a strategic plan and the formalization of it
D. Any part of a plan that has not been formalized which allows for flexibility and the
introduction of any new developments that could enhance the current strategy
Answer & Solution
Answer: Option A
Solution:
The planning gap is a concept that is used to clarify the extent of revenue or profits gap that
might emerge if current strategies are left unchanged. Gap analysis can identify gaps in the
market. Thus, comparing forecast profits to desired profits reveals the planning gap. This
represents a goal for new activities in general, and new products in particular. The planning
gap can be divided into three main elements: usage gap, existing gap, and product gap.
17.
______________ strategy involves adopting a combined

approach of low costs and high local respnsiveness
simultaneously by the firms for their products and services
A. Global
B. Multidomestic
C. International
D. Transnational
Answer & Solution
Answer: Option D
Solution:
Transnational strategy involves adopting a combined approach of low costs and high local
respnsiveness simultaneously by the firms for their products and services. A transnational
strategy is a set of planned actions defined by a company to have operations in markets abroad.
This term generally applies to the methods and structures that allow a firm to initiate and
maintain functions in foreign countries while preserving central coordination at one specific
location.
18.
___________ is also known as corporate appraisal, appraisal

of internal factors and audit of organizational competence
D. Business analysis
Answer & Solution
Answer: Option A
Solution:
Organizational analysis is also known as corporate appraisal, appraisal of internal factors and
audit of organizational competence. Organizational analysis is the process of appraising the
growth, personnel, operations, and work environment of an entity. Undertaking an
organizational analysis is beneficial as it enables management to identify areas of weakness,
and then find approaches for eliminating the problems.
19.
The understanding of what key element is essential for
successful strategic planning?
A. Understanding the needs and expectations of stakeholders
B. Understanding competencies
C. Understanding the processes of strategic change
D. Understanding how to plan
Answer & Solution
Answer: Option C
Solution:
Understanding the processes of strategic change is essential for successful strategic planning.
Strategic planning is a process in which organizational leaders determine their vision for the
future as well as identify their goals and objectives for the organization.
20.
_________________ is the process through which an

organization evaluates its capability so as to have competitive
advantage at market place
A. Environmental analysis
B. Organizational analysis
Answer & Solution
Answer: Option B
Solution:
Organizational analysis is the process through which an organization evaluates its capability so
as to have competitive advantage at market place. Organizational analysis is the process of
appraising the growth, personnel, operations, and work environment of an entity. Undertaking
an organizational analysis is beneficial as it enables management to identify areas of weakness,
and then find approaches for eliminating the problems.
21.
Which of these is not a role for a planner as discussed by

Robinson (1986)
A. To help managers make decisions regarding strategic changes
B. To enable good managers to plan
C. To state objectives
D. To concentrate on understanding the future
Answer & Solution
Answer: Option C
Solution:
To state objectives is not a role for a planner as discussed by Robinson (1986).
22.
______________ is called as a bundle of resources
A. Industry
B. Unit
C. Organization
D. Management
Answer & Solution
Answer: Option C
Solution:
Organization is called as a bundle of resources. An organization is a group of people who work
together, like a neighborhood association, a charity, a union, or a corporation. Organization is
also the act of forming or establishing something (like an organization).
23.
Which of the following is not en element of the growth/market

options matrix developed by Ansoff (1987)?
A. Market development
B. Diversification
C. Product development
D. Market segmentation
Answer & Solution
Answer: Option D
Solution:
Market segmentation is not en element of the growth/market options matrix developed by
Ansoff (1987). The Ansoff Matrix was developed by H. Igor Ansoff and first published in the
Harvard Business Review in 1957, in an article titled "Strategies for Diversification." It has
given generations of marketers and business leaders a quick and simple way to think about the
risks of growth.
24.
Which of the following is not a key planning element of

spheres of influence?
A. Buffer zones
B. Forward positions
C. Cost base
D. Vital interests
Answer & Solution
Answer: Option C
Solution:
Cost base is not a key planning element of spheres of influence. The cost base of a capital gains
tax (CGT) asset is generally the cost of the asset when you bought it, plus certain other costs
associated with acquiring, holding and disposing of the asset.
25.
____________ assesses the whole strategic management

process
A. Strategic audit
B. Company audit
C. Business audit
Answer & Solution
Answer: Option A
Solution:
Strategic audit assesses the whole strategic management process. A strategic audit is an in-
depth review to determine whether a company is meeting its organizational objectives in the
most efficient way. Additionally, it examines whether the company is utilizing it
26.
__________ of an organization deals with investigation of

organizational strengths and weaknesses by focusing on
factors which are relevant to it
A. External analysis
B. Internal analysis
Answer & Solution

Answer: Option B
Solution:
Internal analysis of an organization deals with investigation of organizational strengths and
weaknesses by focusing on factors which are relevant to it. An internal analysis is an
exploration of your organization's competency, cost position and competitive viability in the
marketplace. Conducting an internal analysis often incorporates measures that provide useful
information about your organization's strengths, weakness, opportunities and threats – a SWOT
analysis.
27.
Which of the following is one of the factors related to the

issue of the feasibility of a strategy?
A. Skills and resources, available and needed
B. Levels of return expected
C. Finance and other resource availability
D. Effect on strategic perspective
Answer & Solution
Answer: Option C
Solution:
Finance and other resource availability is one of the factors related to the issue of the feasibility
of a strategy. Financial resources is a term covering all financial funds of the organization.
From an economic perspective financial resources are the part of the organization’s assets
(property).
28.
_________ strategies are also known as grand or root

strategies
A. Corporate
B. Business
C. Functional
D. Operational
Answer & Solution
Answer: Option A
Solution:
Corporate strategies are also known as grand or root strategies. A corporate strategy entails a
clearly defined, long-term vision that organizations set, seeking to create corporate value and
motivate the workforce to implement the proper actions to achieve customer satisfaction.
29.
Which of the following is not one of the contextual aspects

that have a critical impact on strategic change?
A. Structural factors
B. Environmental factors
C. Personal factors
D. Financial factors
Answer & Solution
Answer: Option D
Solution:
Financial factors is not one of the contextual aspects that have a critical impact on strategic
change. A factor is an intermediary agent that finances receivables. A factor is essentially a
funding source that agrees to pay the company the value of an invoice less a discount for
commission and fees.
30.
_________ strategy is much talked and publicized in the

present Indian environment
A. Corporate
B. Business
C. Functional
D. Growth
Answer & Solution
Answer: Option D
Solution:
Growth strategy is much talked and publicized in the present Indian environment. A growth
strategy is a plan of action that allows you to achieve a higher level of market share than you
currently have. Contrary to popular belief, a growth strategy is not necessarily focused on
short-term earnings—growth strategies can be long-term, too.
31.
Developing a __________ is like having a dream to be covered

into reality in future
A. Mission
B. Objectives
C. Goals
D. Vision
Answer & Solution
Answer: Option D
Solution:
Developing a vision is like having a dream to be covered into reality in future. An aspirational
description of what an organization would like to achieve or accomplish in the mid-term or
long-term future. It is intended to serves as a clear guide for choosing current and future
courses of action.
32.
Which of the following is not a key theme in market

development?
A. Identifying new uses for existing products and services
B. Strategic positioning
C. Developing new products for new markets and segments
D. Identifying new markets and segments
Answer & Solution
Answer: Option C
Solution:
Developing new products for new markets and segments is not a key theme in market
development. New product development (NPD) is the process of bringing a new product to the
marketplace.
33.
First step in developing a vision statement is
A. Targeting the vision
B. Developing future scenarios
C. Setting vision context
D. Conducting vision audit
Answer & Solution
Answer: Option D
Solution:
First step in developing a vision statement is conducting vision audit. The vision for your
organization should be aggressive, yet attainable. Your organization will never be greater than
the vision you create in this process.
34.
___________arises when a firm is able to perform an activity

that is distinct from competitors
A. competitive advantage
B. focus
C. cost leadership
D. logic
Answer & Solution
Answer: Option A
Solution:
Competitive advantage arises when a firm is able to perform an activity that is distinct from
competitors. Competitive advantage refers a company's ability to outperform rivals due to
unique, high demand, or superior quality products or services.
35.
Sound strategic choices will always address four issues.

Which of the following is one of those reasons?
A. Availablility of resources
B. Strategic thinking
C. Strategic fit
D. Financial returns
Answer & Solution
Answer: Option D
Solution:
Sound strategic choices will always address four issues. Financial returns is one of those
reasons. A return, also known as a financial return, in its simplest terms, is the money made or
lost on an investment over some period of time. A return can be expressed nominally as the
change in dollar value of an investment over time.
36.
SBU stands for
A. satisfied business unit
B. stratified business unit

C. strategic building unit
D. strategic business unit
Answer & Solution
Answer: Option D
Solution:
SBU stands for strategic business unit. A strategic business unit, popularly known as SBU, is a
fully-functional unit of a business that has its own vision and direction.
37.
The word strategy originated from ___________
A. stratagos'
B. stratum
C. statistics
D. straight
Answer & Solution
Answer: Option A
Solution:
The word strategy originated from stratagos. The term “strategy” is derived indirectly from the
Classic and Byzantine (330 A.D.) Greek “strategos,” which means “general.”
38.
Which of the following is a consideration when assessing the

appropriateness of a strategy?
A. Synergy
B. Stakeholders
C. Competitive advantage
D. Resources
Answer & Solution
Answer: Option D
Solution:
Resources is a consideration when assessing the appropriateness of a strategy. A resource is a
source or supply from which a benefit is produced and that has some utility. Resources can
broadly be classified upon their availability — they are classified into renewable and non-
renewable resources.
39.
ETOP stands for___________
A. Environmental threat and opportunity profile
B. Economic threat and Opportunity profile
C. Enhanced technology and opportunity profile
D. none of these
Answer & Solution
Answer: Option A
Solution:
ETOP stands for Environmental threat and opportunity profile. ETOP analysis (environmental
threat and opportunity profile) is the process of gathering information about events and their
relationships within an organization's internal and external environments.
40.
Which of the following is a consideration when assessing the

feasibility of a strategy?
A. Timing
B. Planning gap
C. Synergy
D. Culture
Answer & Solution
Answer: Option A
Solution:
Timing is a consideration when assessing the feasibility of a strategy. Feasibility is concerned
with the resources required to implement the strategy are available, can be developed or
obtained.
41.
Firms that practice unrelated mergers___________
A. conglomerate
B. hostile
C. friendly
D. retrenchment
Answer & Solution
Answer: Option A
Solution:
Firms that practice unrelated mergers are conglomerate. A conglomerate merger is a merger
between firms that are involved in totally unrelated business activities.
42.
Swot Analysis is done to know the
A. strengths
B. Threats and strengths
C. Weaknesses and opportunities

D. Threats, strengths Weaknesses and opportunities
Answer & Solution
Answer: Option D
Solution:
Swot Analysis is done to know the Threats, strengths Weaknesses and opportunities. SWOT
Analysis is a simple but useful framework for analyzing your organization's strengths,
weaknesses, opportunities, and threats. It helps you to build on what you do well, to address
what you're lacking, to minimize risks, and to take the greatest possible advantage of chances
for success.
43.
A company specializing in producing mass market cars

acquires a company which specializes in financial services.
The new company can now offer financial services to its car
purchasers. What form of diversification is this?
A. Resource-based
B. Unrelated
C. Routine-based
D. Replication-based
Answer & Solution
Answer: Option B
Solution:
A company specializing in producing mass market cars acquires a company which specializes
in financial services. The new company can now offer financial services to its car purchasers.
Unrelated form of diversification is this. Unrelated Diversification is a form of diversification
when the business adds new or unrelated product lines and penetrates new markets.
44.
Which of these is not a factor causing weak synergy?
A. Underestimated weaknesses
B. Competitor activity
C. Premium paid
D. Making too many resources available to the integration program
Answer & Solution
Answer: Option D
Solution:
Making too many resources available to the integration program is not a factor causing weak
synergy. Weak synergy was defined there as group performance that exceeds the performance
of its average member when working alone.
45.
Which of these is not one of Drucker???s (1982) five rules for

successful acquisitions?. Determine the exact contribution
the organization can make to the acquiring company.
A. Value the people of the acquired company
B. Within a year, promote managers across company boundaries
C. Value the products, services and customers of the acquired company
D. Value the products of the acquired company
Answer & Solution
Answer: Option B
Solution:
Within a year, promote managers across company boundaries is the exact contribution the
organization can make to the acquiring company.
46.
Many merger discussions breakdown or are abandoned.

Which of these is not a reason why?
A. Egos can get in the way
B. Reluctance to accept which will become ???number two???
C. The bid is deemed hostile leading to aggressive defense
D. Inadequate consultation with shareholders who then intervene
Answer & Solution
Answer: Option C
Solution:
Many merger discussions breakdown or are abandoned. The bid is deemed hostile leading to
aggressive defense is not a reason. A merger refers to an agreement. It is a mutually binding
contract in which two companies join together to form one company.
47.
Research into diversification and acquisition can be divided

into 4 schools. Which of the following is not one of the
schools?
A. Environmental
B. Financial
C. Accounting
D. Economic
Answer & Solution
Answer: Option A
Solution:
Research into diversification and acquisition can be divided into 4 schools. Environmental is
not one of the schools. Diversification acquisition is a corporate action whereby a company
takes a controlling interest in another company to expand its product and service offerings.
48.
If a business is blinkered, technology shy, and
'impoverished', what does this signal?
A. A weak strategic plan
B. A planning gap
C. A lack of innovation and vision
D. Weak strategic leadership
Answer & Solution
Answer: Option D
Solution:
Strategic leaders live in the details, and they know everything will likely not happen as it is
supposed to. Therefore, these individuals will attempt to anticipate problems and plan for them.
They will look for weak areas and will try to work with teams to keep from falling into a
problem area.
49.
When a company is experiencing an economic recession this

is a good time to do what?
A. Reduce costs and assets
B. Refocus
C. Simplify
D. Invest
Answer & Solution
Answer: Option B
Solution:
When a company is experiencing an economic recession this is a good time to refocus. The
ReFocus Group assists organizations to develop and implement dynamic strategic plans that
are valuable to the organization, helping to define its culture, focus its long-term vision, and
identify short-term actions steps that motivate proaction.
50.
Turnaround strategies involve changes at what level of

strategy?
A. Corporate
B. Functional
C. Competitive
D. All levels
Answer & Solution
Answer: Option C
Solution:
Turnaround strategies involve changes at Competitive level of strategy. Turnaround strategy
means to convert, change or transform a loss-making company into a profit-making company.
It means to make the company profitable again. The main purpose of implementing a
turnaround strategy is to turn the company from a negative point to a positive one.
51.
Acquisitions often fail to deliver the successes that were

predicted prior to acquisition. What is the main reason for this
failure?
A. Premium price
B. Poor strategic leadership
C. Goodwill
D. Synergy
Answer & Solution
Answer: Option B
Solution:
Acquisitions often fail to deliver the successes that were predicted prior to acquisition. Poor
strategic leadership is the main reason for this failure. Strategic leaders act in ways that manage
the tension between success in daily tasks and success in the long term. They facilitate other's
strategic actions, too, by providing a balance of direction and autonomy, of learning from
actions and rewarding appropriate risk-taking.
52.
Which of these is not an issue in selecting a business as a

divestment candidate?
A. Current market position
B. Product life-cycle
C. Alternate uses for resources
D. The size of the business
Answer & Solution
Answer: Option D
Solution:
The size of the business is not an issue in selecting a business as a divestment candidate.
Divestment is a form of retrenchment strategy used by businesses when they downsize the
scope of their business activities. Divestment is a form of retrenchment strategy used by
businesses when they downsize the scope of their business activities. Divestment usually
involves eliminating a portion of a business. Firms may elect to sell, close, or spin-off a
strategic business unit, major operating division, or product line. This move often is the final
decision to eliminate unrelated, unprofitable, or unmanageable operations.
53.
Which of the following is an aspect of implementation that

can be changed indirectly if necessary?
A. Organizational structure
B. Information systems
C. Quality
D. Procedures
Answer & Solution
Answer: Option C
Solution:
Quality is an aspect of implementation that can be changed indirectly if necessary. The quality
strategy is a vital element to building the quality process and expectations of the organization.
It is important that it reflects the business mission and provides vision, values and goals to the
employees.
54.
A small company, with power concentrated in the hands of

one central figure, tends to be what?
A. Centralized and formal
B. Centralized and informal
C. Decentralized and formal
D. Decentralized and informal
Answer & Solution
Answer: Option B
Solution:
A small company, with power concentrated in the hands of one central figure, tends to be
centralized and informal. Centralized authority refers to an organizational management
structure where most of the major decision-making power and authority rests in the hands of a
concentrated group of leaders.
55.
Which one of the following types of organizations would

benefit from a matrix structure?
A. Diverse independent businesses in a conglomerate

B. Organizations growing through merger and acquisition
C. Small companies with few plants and limited product or service diversity
D. Small, sophisticated service companies
Answer & Solution
Answer: Option D
Solution:
Small, sophisticated service companies one of the following types of organizations would
benefit from a matrix structure. A matrix organizational structure is a company structure in
which the reporting relationships are set up as a grid, or matrix, rather than in the traditional
hierarchy. In other words, employees have dual reporting relationships - generally to both a
functional manager and a product manager.
56.
Which of these is not a reason for why employees resist the

implementation of strategic changes?
A. Anxiety regarding jobs
B. Lack of necessary strategic resources
C. Lack of knowledge
D. Poor strategic leadership
Answer & Solution
Answer: Option B
Solution:
Lack of necessary strategic resources is not a reason for why employees resist the
implementation of strategic changes. Strategic implementation is a process that puts plans and
strategies into action to reach desired goals. The strategic plan itself is a written document that
details the steps and processes needed to reach plan goals, and includes feedback and progress
reports to ensure that the plan is on track.
57.
Which of these is not a main determinant of
centralization/decentralization?
A. Geographical considerations (e g , location etc)
B. Costs
C. Size
D. Demographical considerations (e g , age; ethnicity etc)
Answer & Solution
Answer: Option D
Solution:
Demographical considerations (e g , age; ethnicity etc) is not a main determinant of
centralization/decentralization.
58.
Which of these is not an identified form of organizational

structure?
A. Intrapreneurial
B. Functional
C. Divisional
D. Matrix
Answer & Solution
Answer: Option A
Solution:
Intrapreneurial is not an identified form of organizational structure. Intrapreneurs are
employees who work within a business in an entrepreneurial capacity, creating innovative new
products and processes for the organization.
59.
When are holding company structures are most useful?
A. For organizations in stable environments
B. Where appropriate business unit splits exist
C. For companies pursuing restructuring strategies
D. For large, multinational companies
Answer & Solution
Answer: Option C
Solution:
Holding company structures are most useful for For companies pursuing restructuring
strategies. An organizational restructuring strategy involves redesigning operations and
management reporting structures to address and correct the operational issues that led to a
company's distressed position.
60.
Which of these are characteristic of matrix structures?
A. Decentralization and co-ordination
B. Centralization and co-ordination
C. Decentralization and control
D. Centralization and control
Answer & Solution
Answer: Option A
Solution:
Decentralization and co-ordination are characteristic of matrix structures. Matrix structures
facilitate coordination when the organization has many complex and interdependent activities.
In addition, matrix structures facilitate the efficient allocation of specialist
61.
What is likely to be the effect of a logical corporate strategy
but poor strategy implementation.
A. Strategic weaknesses and underachievement
B. Fragmented performance through strategic and structural flaws
C. Structural and stylistic flaws
D. Effectiveness but little efficiency
Answer & Solution
Answer: Option C
Solution:
Structural and stylistic flaws is likely to be the effect of a logical corporate strategy but poor
strategy implementation.
62.
Which of these is not a valid reason in support of focused

strategies?
A. Greater control
B. Reduction of weak business to develop a strong core
C. Competence consolidation
D. Cost reduction
Answer & Solution
Answer: Option A
Solution:
Greater control is not a valid reason in support of focused strategies. A focus strategy is usually
employed where the comopany knows its segment and has products to competitively satisfy its
needs. Focus strategy is one of three generic marketing strategies.
63.
Which of the following is not a strategic criteria for deciding
which firms to retain in the organizational core?
A. The company???s mission
B. Longevity
C. Financial performance over time
D. Relatedness of technologies
Answer & Solution
Answer: Option B
Solution:
Longevity is not a strategic criteria for deciding which firms to retain in the organizational
core. Longevity is most commonly used to describe the length of one's lifetime, but it can also
mean a long duration, such as one's longevity working for a certain company for an extended
period of time.
64.
Which of these is not an activity associated with

restructuring?
A. Acquiring unrelated businesses
B. Intervening in business processes
C. Hoarding new businesses
D. Value optimization
Answer & Solution
Answer: Option C
Solution:
Hoarding new businesses is not an activity associated with restructuring. Hoarding is the
purchase of large quantities of a commodity by a speculator with the intent of benefiting from
future price increases.
65.
Corporate resource allocation may be different depending on

the speed of growth of the organization. Which of the
following is inappropriate when facing rapid growth?
A. Opportunities for synergy
B. Past allocations and budgets
C. Look to share activities
D. Assess desirability of outcomes to organizational strategy
Answer & Solution
Answer: Option B
Solution:
Corporate resource allocation may be different depending on the speed of growth of the
organization. Past allocations and budgets is inappropriate when facing rapid growth. Resource
allocation is a process and strategy involving a company deciding where scarce resources
should be used in the production of goods or services. A resource can be considered any factor
of production, which is something used to produce goods or services.
66.
Which of the following is not an aspect of a definition of the

term budgets?
A. Concerned with allocation of resources and investment
B. A strategic plan outlining means to utilize budget, make sales, and generate profits
C. Numerical or financial expression of money to be spent by departments and for what

purpose
D. Information on cash-flow
Answer & Solution

Answer: Option B
Solution:
A strategic plan outlining means to utilize budget, make sales, and generate profits is not an
aspect of a definition of the term budgets. A budget is an estimation of revenue and expenses
over a specified future period of time and is usually compiled and re-evaluated on a periodic
basis.
67.
What are designed to guide managers in the pursuit and

achievement of strategies and objectives?
A. Procedures
B. Budgets
C. Policies
D. Plans
Answer & Solution
Answer: Option C
Solution:
Policies are designed to guide managers in the pursuit and achievement of strategies and
objectives. Policies are instrument for strategy implementation. This thesis defines policy much
more narrowly as specific guides to managerial action and decisions in the implementation of
strategy.
68.
Strategy effectiveness and competitive success is dependent

on which of the following groups of competencies?
A. Change, planning, learning
B. Content, change, planning
C. Content, change, learning
D. Learning, planning, content

Answer & Solution
Answer: Option C
Solution:
Strategy effectiveness and competitive success is dependent on Content, change, learning
groups of competencies. Strategic success requires a clear understanding of the needs of the
market, and the satisfaction of targeted customers more effectively and more profitably than by
competitors. Real competitive advantage implies companies are able to satisfy customer needs
more effectively than their competitors.
69.
Which of the following competencies relates to functionality?
A. Providing excellent quality which is recognized by customers
B. Developing and introducing new processes for cost savings and speedier decision-
making
C. Manage 'green' issues to avoid crises or create competitive advantage
D. Avoid business failures by becoming and staying crisis averse
Answer & Solution
Answer: Option B
Solution:
Developing and introducing new processes for cost savings and speedier decision-making
competencies relates to functionality. Strategic management include a set of decisions and
actions resulting in the formulation and implementation of strategies designed to achieve the
ultimate objectives of an organisation. The strategic management encompasses tasks pertaining
strategic planning, implementation planning and monitoring.
70.
Doing things right and doing the right things are also known
as?
A. Efficiency and effectiveness
B. Strategic competency and congruence
C. Strategic competency and strategy creation

D. Corporate strategy and synergy
Answer & Solution
Answer: Option A
Solution:
Doing things right and doing the right things are also known as Efficiency and effectiveness.
Strategic management decisions that promote efficiency tend to be aimed at reducing the use of
resources through maximizing return. Any action taken to reduce inventory waste, for example,
would be a strategic management decision aimed at greater efficiency. Management
effectiveness can be measured by results. Goals such as increasing market share, improving
customer satisfaction ratings and achieving desired revenue levels come under the heading of
management effectiveness.
******************Chapter5**********************************************
**
1.
Which of the following elements of strategy affect the process

of strategy creation and implementation?
A. Synergy
B. The strategic leader???s perspective on strategy
C. Structure
D. Strategic paradoxes
Answer & Solution
Answer: Option D
Solution:
Strategic paradoxes elements of strategy affect the process of strategy creation and
implementation. The strategy paradox is a consequence of the conflict between commitment
and uncertainty, i.e., strategic uncertainty. Commitments are what allow an organization to
create and capture value. Uncertainty creates risk and opportunity
2.
Miles and Snow (1994) identify four main reasons for failure.
Which of the following is one of those reasons?
A. Lack of competitive advantage
B. Lack of strategy competency
C. Lack of strategic resources
D. Poor judgement leading to poor, inappropriate strategic decisions
Answer & Solution
Answer: Option D
Solution:
Miles and Snow (1994) identify four main reasons for failure. Poor judgement leading to poor,
inappropriate strategic decisions is one of those reasons. Miles and Snow suggest that business
level strategies generally fall into one of four categories: prospector, defender, analyzer, and
reactor.
3.
How does Checkland (1981) describe an organization?
A. A collection of people who are trying to act with purpose
B. Systems that comprise a collection of people who are trying to act with purpose
C. A collection of people that act with little purpose
D. A collection of systems and functions, inclusive of its people
Answer & Solution
Answer: Option B
Solution:
Checkland (1981) describe an organization as Systems that comprise a collection of people
who are trying to act with purpose.
4.
How might an organization spot, create, and exploit new

opportunities ahead of its rivals?
A. Through managers in the various businesses working together, sharing information and
capabilities, helping each other, and creating synergy
B. Through managers in the various businesses sharing information, capabilities, and

creating synergy
C. Through managers in the various businesses working together, sharing information, and
sharing capabilities
D. Through managers in the various businesses working together to create strategic

competencies for the organization in order to pursue opportunities
Answer & Solution
Answer: Option A
Solution:
Through managers in the various businesses working together, sharing information and
capabilities, helping each other, and creating synergy an organization spot, create, and exploit
new opportunities ahead of its rivals.
5.
Which of the following is not a competence recognized by

Richardson and Thompson (1994)?
A. Strategic thinking
B. Managing paradoxes
C. Innovative climate
D. Providing excellent quality
Answer & Solution
Answer: Option B
Solution:
Managing paradoxes is not a competence recognized by Richardson and Thompson (1994).
Paradox management describes how a great manager can successfully balance these paradoxes.
By using paradox management, a business can simultaneously encourage both competition and
collaboration, rather than being able to have only one of the two
6.
If an organization is to survive, which of the following is most

essential?
A. Strong financial performance
B. Committed employees
C. High level of service
D. Customer retention
Answer & Solution
Answer: Option C
Solution:
If an organization is to survive, High level of service is most essential. At the highest level, the
minimum attributes that the customer/stakeholder expects in the service include: High quality,
Customer friendly, Environmentally responsible, etc.
7.
The corporate level is where top management directs:
A. all employees for orientation
B. its efforts to stabilize recruitment needs
C. overall strategy for the entire organization
D. overall sales projections
Answer & Solution
Answer: Option C
Solution:
The corporate level is where top management directs overall strategy for the entire
organization. A corporate-level strategy is when a business makes a decision that affects the
whole company. A corporate-level strategy affects a company's finances, management, human
resources, and where the products are sold.
8.
Value for shareholders of a firm is measured by:
A. customer comments
B. stock performance and profitability
C. sales revenue
D. satisfactory employee targets
Answer & Solution
Answer: Option B
Solution:
Value for shareholders of a firm is measured by stock performance and profitability.
Shareholder value is the value enjoyed by a shareholder by possessing shares of a company. It
is the value delivered by the company to the shareholder.
9.
The three organizational levels are:
A. corporate level, business level, functional level
B. corporate level, business unit level, functional level
C. corporate strategy level, business unit level, functional level
D. corporate strategy level, business level, specialist level
Answer & Solution
Answer: Option A
Solution:
The three organizational levels are corporate level, business level and functional level. The
corporate level involves the entire organization. Business units include divisions, product lines
or other centers of business activity within your organization. The functional level refers to
organizational departments such as human resources, marketing, operations and IT.
10.
Cross-functional teams are:
A. a small group of people from the same department who work on projects together
B. a small group of people who come together to resolve business unit issues
C. a small group of specialists who collaborate on a task force
D. a small group of people from different departments who are mutually accountable to a
common set of performance goals
Answer & Solution
Answer: Option D
Solution:
Cross-functional teams are a small group of people from different departments who are
mutually accountable to a common set of performance goals. A cross-functional team is a
group of people with different functional expertise working toward a common goal. It may
include people from finance, marketing, operations, and human resources departments.
Typically, it includes employees from all levels of an organization.
11.
The business unit strategy has three major components:
A. mission, business, and SBU goals
B. marketing, advertising and pricing objectives
C. mission, business unit goals, and competencies
D. business mission, department mission, and daily plans
Answer & Solution

Answer: Option C
Solution:
The business unit strategy has three major components mission, business unit goals, and
competencies. The major parts of a standard strategic plan include the following: Mission,
vision, and aspirations, Core values, Strengths, weaknesses, opportunities, and threats,
Objectives, strategies, and operational tactics, Measurements and funding streams.
12.
Disney is in the business of:
A. theme parks or movies
B. creating entertainment, fun and fantasy
C. building theme parks
D. designing new imaginative characters
Answer & Solution
Answer: Option B
Solution:
Disney is in the business of creating entertainment, fun and fantasy. The Walt Disney
Company is one of the most creative and successful forces in the entertainment industry. The
company is best known for bringing decades of fantasy to families through its motion pictures,
television series, and amusement parks.
13.
The Holiday Inn, Burlington statement, "If a customer has a

need or want, we fill it." is an example of a:
A. Business unit goals
B. Marketing objectives
C. Business unit mission
D. Goal of a business segment

Answer & Solution
Answer: Option B
Solution:
The Holiday Inn, Burlington statement, "If a customer has a need or want, we fill it." is an
example of a Marketing objectives. Marketing objectives are goals set by a business when
promoting its products or services to potential consumers that should be achieved within a
given time frame.
14.
A useful framework used to assess a company's

investments/divisions is called:
A. unit production analysis
B. corporate insight analysis
C. company productivity analysis
D. business portfolio analysis
Answer & Solution
Answer: Option D
Solution:
A useful framework used to assess a company's investments/divisions is called business
portfolio analysis. A business portfolio analysis is essentially a process of looking at a
company's products and services and categorizing them based on how well they're performing
and their competitiveness.
15.
Cash cows are SBU's that typically generate:
A. problems for product managers
B. paper losses in the long run
C. large awareness levels but few sales
D. a lot of competition
Answer & Solution
Answer: Option D
Solution:
Cash cows are SBU's that typically generate a lot of competition. A Cash Cow is a metaphor
used for a business or a product, which exhibits a strong potential in terms of returns in a low-
growth market. The rate of return from this business is usually greater than the market growth
rate. A company does not have to invest much in the business apart from the initial outlay.
Once the company recovers its initial investment, it does not have to put in more cash to keep
the business growing.
16.
Business unit competencies should be distinctive enough to

provide a(n):
A. clear understanding of who you want to lead the company
B. competitive advantage
C. opportunity to compete on a productivity basis
D. additional strategic mission
Answer & Solution
Answer: Option B
Solution:
Business unit competencies should be distinctive enough to provide a competitive advantage.
Business competency is a set of particular abilities and knowledge that sets a company apart
from its competitors. In highly successful companies, core competencies have most likely
developed in areas where they add the most value to products.
17.
TQM is a strategy that is designed to change the quality of a

product to satisfy customer needs by using the concept of
_________:
A. benchmarking
B. brainstorming
C. reverse brainstorming
D. product maintenance
Answer & Solution
Answer: Option A
Solution:
TQM is a strategy that is designed to change the quality of a product to satisfy customer needs
by using the concept of benchmarking. Benchmarking, is a tool of strategic management, that
allows the organization to set goals and measure productivity, on the basis of the best industry
practices. It is a practice in which quality level is used as a point of reference to evaluate things
by making a comparison.
18.
Firms may view growth opportunities in these terms:
A. Current markets and current products
B. Current and new markets, and current products
C. New markets and new products
D. Current and new markets, and current and new products
Answer & Solution
Answer: Option D
Solution:
Firms may view growth opportunities in these terms Current and new markets, and current and
new products. A growth company tends to have very profitable reinvestment opportunities for
its own retained earnings. Thus, it typically pays little to no dividends to stockholders opting
instead to put most or all of its profits back into its expanding business.
19.
The strategic marketing process is how an organization

allocates its marketing mix resources to reach its:
A. stated business ideas

B. potential
C. target markets
D. competition
Answer & Solution
Answer: Option C
Solution:
The strategic marketing process is how an organization allocates its marketing mix resources to
reach its target markets. Strategic Marketing is a process of planning, developing and
implementing maneuvers to obtain a competitive edge in your chosen niche. This process is
necessary to outline and simplify a direct map of the company's objectives and how to achieve
them.
20.
An effective short-hand summary of the situation analysis is

a:
A. BCG analysis
B. SWOT analysis
C. SBU analysis
D. Competition analysis
Answer & Solution
Answer: Option A
Solution:
An effective short-hand summary of the situation analysis is a BCG analysis. BCG matrix is a
framework created by Boston Consulting Group to evaluate the strategic position of the
business brand portfolio and its potential. It classifies business portfolio into four categories
based on industry attractiveness (growth rate of that industry) and competitive position
(relative market share).
21.
In the strategic marketing process, once you get results you
go into the:
A. control phase
B. marketing plan
C. planning phase
D. marketing program
Answer & Solution
Answer: Option A
Solution:
In the strategic marketing process, once you get results you go into the control phase. The
evaluation phase is the checking phase. This process involves ensuring that the results of the
program are in line with the goals set. The marketing team, especially the manager will need to
observe any deviations in the plan and quickly correct negative deviations to get back on
course.
22.
Ben & Jerry had four market-product strategies to expand

sales. They included (1) market penetration, (2) product
development, (3) market development and:
A. current customer retention
B. defensive synergy
C. diversification
D. product simplification
Answer & Solution
Answer: Option C
Solution:
Ben & Jerry had four market-product strategies to expand sales. They included (1) market
penetration, (2) product development, (3) market development and (4) diversification.
23.
Aggregating prospective buyers into groups is called:
A. market categorization
B. market segmentation
C. modeling
D. BCG matrix analysis
Answer & Solution
Answer: Option B
Solution:
Aggregating prospective buyers into groups is called market segmentation. Market
segmentation is the process of dividing a market of potential customers into groups, or
segments, based on different characteristics. The segments created are composed of consumers
who will respond similarly to marketing strategies and who share traits such as similar
interests, needs, or locations.
24.
cohesive marketing mix consists of the product, promotion,

price, and
A. personnel
B. production
C. advertising
D. communication
Answer & Solution
Answer: Option D
Solution:
Cohesive marketing mix consists of the product, promotion, price, and communication. A
cohesive marketing strategy is one that takes all your different platforms of promoting your
business and aligns them to the same strategy.
25.
One key to effective implementation is setting:
A. schedule of events
B. deadlines
C. milestones
D. good managers in motion
Answer & Solution
Answer: Option D
Solution:
One key to effective implementation is setting good managers in motion. Implementing
Effective Interventions is a process of assuring that key aspects of promising approaches are
put into practice as intended and to meet local needs.
26.
When actual performance results are better than what the

plan called for, managers should:
A. ignore it
B. sell more products
C. issue more stock options to employees
D. increase prices
Answer & Solution
Answer: Option D
Solution:
When actual performance results are better than what the plan called for, managers should
increase prices.
27.
Which of the following is NOT a characteristic of strategic

management that makes it different from other types of
management?
A. It is interdisciplinary
B. It has an external focus
C. It has an internal focus
D. It concerns the present direction of the organization
Answer & Solution
Answer: Option D
Solution:
Characteristic of strategic management that does not makes it different from other types of
management is that it concerns the present direction of the organization.
28.
The basic activities of strategic management include:
A. offense, defense, and control
B. situation analysis, strategy formulation, implementation, and evaluation
C. development, control, and management
D. ethics, management, and practice
Answer & Solution
Answer: Option B
Solution:
The basic activities of strategic management include situation analysis, strategy formulation,
implementation, and evaluation. The process of strategic management includes goal setting,
analysis, strategy formation, strategy implementation, and strategy monitoring.
29.
An organization's strategies should be designed so that they

incorporate:
A. opportunities and threats
B. resources and capabilities
C. only traditional values of past organizations
D. opportunities, threats, resources, and capabilities
Answer & Solution
Answer: Option B
Solution:
An organization's strategies should be designed so that they incorporate resources and
capabilities. An organizational strategy is the sum of the actions a company intends to take to
achieve long-term goals. Together, these actions make up a company's strategic plan. Strategic
plans take at least a year to complete, requiring involvement from all company levels.
30.
Situation analysis involves the process of:
A. designing and choosing appropriate organizational strategies
B. analyzing the current environment of the organization
C. analyzing the external environment only
D. evaluating the internal aspects of the organization
Answer & Solution

Answer: Option B
Solution:
Situation analysis involves the process of analyzing the current environment of the
organization. Situation analysis is defined as an analysis of the internal and external factors of
a business. It clearly identifies a business's capabilities, customers, potential customers and
business environment, and their impact on the company.
31.
Situation analysis allows the organization to examine:
A. external factors only
B. internal factors only
C. the organization's top management only
D. both external and internal factors
Answer & Solution
Answer: Option D
Solution:
Situation analysis allows the organization to examine both external and internal factors.
Situation analysis is defined as an analysis of the internal and external factors of a business. It
clearly identifies a business's capabilities, customers, potential customers and business
environment, and their impact on the company.
32.
Which of the following is an issue considered in developing

corporate strategies?
A. What business(es) are we in?
B. What direction are we going?
C. What resources do we have to implement our strategies?
D. What businesses are we in and what to do with those businesses?

Answer & Solution
Answer: Option D
Solution:
What businesses are we in and what to do with those businesses? is an issue considered in
developing corporate strategies?
33.
Which of the following is NOT a major element of the strategic

management process?
A. Formulating strategy
B. Implementing strategy
C. Evaluating strategy
D. Assigning administrative tasks
Answer & Solution
Answer: Option D
Solution:
Assigning administrative tasks is NOT a major element of the strategic management process.
The process of strategic management includes goal setting, analysis, strategy formation,
strategy implementation, and strategy monitoring.
34.
Which of the following statements is NOT true regarding

A. They are concerned with the broad and more long-term issues of the organization
B. They are concerned with how the organization is going to compete in a specific business
or industry
C. They are concerned with the direction the organization is headed

D. They are concerned with the business(es) that the organization is in and the businesses
they want to be in
Answer & Solution
Answer: Option B
Solution:
They are concerned with how the organization is going to compete in a specific business or
industry is not true regarding corporate strategies.
35.
An example of a corporate strategy would involve the

decision to:
A. increase the price of the Hummer
B. spin Taco Bell off from Pepsi
C. combine marketing functions in the Northeast and the Southeast
D. increase the advertising budget for Coca-Cola
Answer & Solution
Answer: Option B
Solution:
An example of a corporate strategy would involve the decision to spin Taco Bell off from Pe
36.
Which of the following management accounting systems

places a very strong emphasis on incorporating data relating
to its competitors in the preparation of management reports?
A. Activity based management
B. Flexible budgeting
C. Strategic management accounting
D. Sales variance analysis
Answer & Solution
Answer: Option C
Solution:
Strategic management accounting systems places a very strong emphasis on incorporating data
relating to its competitors in the preparation of management reports. Strategic management
accounting is about having an accounting system that checks, accommodates, supports and
controls your strategic management goals.
37.
What term best describes the use of both financial and non-
financial measures in assessing whether an entity has
achieved its objectives?
A. Balanced scorecard
B. Benchmarking
C. Performance measurement
D. Target setting
Answer & Solution
Answer: Option C
Solution:
Performance measurement best describes the use of both financial and non-financial measures
in assessing whether an entity has achieved its objectives. Performance measurement is
generally defined as regular measurement of outcomes and results, which generates reliable
data on the effectiveness and efficiency of programs. Resources (human resources, employee
time, funding) used to conduct activities and provide services.
38.
______ is any sharp disagreement or collision of interests and

ideas.
A. Issues management
B. Conflict positioning
C. A conflict
D. A crisis
Answer & Solution
Answer: Option C
Solution:
A conflict is any sharp disagreement or collision of interests and ideas. Conflict is serious
disagreement and argument about something important. If two people or groups are in conflict,
they have had a serious disagreement or argument and have not yet reached agreement.
39.
Environmental scanning occurs in what phase of strategic

conflict management?
A. Reactive
B. Proactive
C. Recovery
D. Strategic
Answer & Solution
Answer: Option B
Solution:
Environmental scanning occurs in Proactive phase of strategic conflict management. Conflict
management is the practice of being able to identify and handle conflicts sensibly, fairly, and
efficiently. Since conflicts in a business are a natural part of the workplace, it is important that
there are people who understand conflicts and know how to resolve them. This is important in
today's market more than ever. Everyone is striving to show how valuable they are to the
company they work for and at times, this can lead to disputes with other members of the team.
40.
______ takes place in the recovery phase of strategic conflict
management
A. Conflict positioning
B. Reputation management
C. Risk communication
D. Issues tracking
Answer & Solution
Answer: Option B
Solution:
Reputation management takes place in the recovery phase of strategic conflict management.
Reputation management (sometimes referred to as rep management, online reputation
management or ORM) is the practice of attempting to shape public perception of a person or
organization by influencing online information about that entity.
41.
______ is any verbal or written exchange that attempts to

communicate information regarding risk to public health and
safety and the environment.
A. Image restoration
B. Risk communication
C. Conflict positioning
D. Reputation management
Answer & Solution
Answer: Option B
Solution:
Risk communication is any verbal or written exchange that attempts to communicate
information regarding risk to public health and safety and the environment. Risk
communication refers to the exchange of real-time information, advice and opinions between
experts and people facing threats to their health, economic or social well-being.
42.
This is the last stage in the conflict management lifecycle.
B. Risk communication
C. Image restoration
D. Issues management
Answer & Solution
Answer: Option C
Solution:
Image restoration is the last stage in the conflict management lifecycle. Image Restoration is
the operation of taking a corrupt/noisy image and estimating the clean, original image.
Corruption may come in many forms such as motion blur, noise and camera mis-focus.
43.
What do you understand by the term 'a prospector

organisation'?
A. An organisation that represents a good prospect for a firm looking to make an

acquisition
B. An organisation with good growth prospects
C. An organisation that has recently been founded as an entrepreneurial start-up
D. An organisation that actively seeks new opportunities and change
Answer & Solution
Answer: Option D
Solution:
'A prospector organisation' means An organisation that actively seeks new opportunities and
change. Prospector organizations face the entrepreneurial problem of locating and exploiting
new product and market opportunities.
44.
Which of the following is not a limitation of SWOT (Strengths,

Weaknesses, Opportunity, Threats) analysis?
A. Organizational strengths may not lead to competitive advantage
B. SWOT gives a one-shot view of a moving target
C. SWOT's focus on the external environment is too broad and integrative
D. SWOT overemphasizes a single dimension of strategy
Answer & Solution
Answer: Option C
Solution:
SWOT's focus on the external environment is too broad and integrative is not a limitation of
SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis.
45.
A marketing department that promises delivery quicker than

the production department's ability to produce is an example
of a lack of understanding of the
A. synergy of the business units
B. need to maintain the reputation of the company
C. organizational culture and leadership
D. interrelationships among functional areas and firm strategies
Answer & Solution

Answer: Option D
Solution:
A marketing department that promises delivery quicker than the production department's
ability to produce is an example of a lack of understanding of the interrelationships among
functional areas and firm strategies. The Marketing Department is the key to good marketing
and sales. It promotes and establishes a business in its niche, based on the products or services
the business is offering. It identifies the areas in which the product fits and where the business
should focus its marketing strategy and, therefore, spend its budget for the maximum coverage
and results.
46.
Which of the following lists is comprised of support activities:
A. human resource management, information systems, procurement, and firm infrastructure
B. customer service, information systems, technology development, and procurement
C. human resource management, technology development, customer service, and procurement
D. human resource management, customer service, marketing and sales, and operations
Answer & Solution
Answer: Option A
Solution:
Human resource management, information systems, procurement, and firm
infrastructure comprises of support activities.
47.
Although firm infrastructure is quite frequently viewed only as
overhead expense, it can become a source of competitive advantage.
Examples include all of the following except:
A. negotiating and maintaining ongoing relations with regulatory bodies
B. marketing expertise increasing a firm's revenues and enabling it to enter new markets
C. effective information systems contributing significantly to a firm's overall cost leadership strategy
D. top management providing a key role in collaborating with important customers
Answer & Solution
Answer: Option B
Solution:
Although firm infrastructure is quite frequently viewed only as overhead
expense, it can become a source of competitive advantage. Examples include all
of the following except marketing expertise increasing a firm's revenues and
enabling it to enter new markets. Firm infrastructure refers to an
organization's structure and its management, planning, accounting, finance and
quality-control mechanisms.
48.
The competencies or skills that a firm employs to transform inputs into
outputs are:
A. tangible resources
B. intangible resources
C. organizational capabilities
D. reputational resources
Answer & Solution
Answer: Option C
Solution:
The competencies or skills that a firm employs to transform inputs into
outputs are organizational capabilities. An organizational capability is a
company's ability to manage resources, such as employees, effectively to gain
an advantage over competitors. The company's organizational capabilities must
focus on the business's ability to meet customer demand.
49.
An array of firm resources include interpersonal relations among
managers in the firm, its culture, and its reputation with its customers
and suppliers. Such competitive advantages are based upon
A. physical uniqueness
B. path dependency
C. social complexity
D. tangible resources
Answer & Solution
Answer: Option C
Solution:
An array of firm resources include interpersonal relations among managers in
the firm, its culture, and its reputation with its customers and suppliers.
Such competitive advantages are based upon social complexity. Social
complexity is the study of the phenomena of human existence – emigration
patterns, armed conflicts, political movements, marriage practices, natural
disasters, etc, etc – and the many possible arrangements of relationships
between those discrete phenomena.
50.
A company's ability to meet its short-term financial obligations is
measured by which of the following categories?
A. liquidity ratios
B. profitability ratios
C. activity ratios
D. leverage ratios
Answer & Solution
Answer: Option A
Solution:
A company's ability to meet its short-term financial obligations is measured
by liquidity ratios. Liquidity ratios are an important class of financial
metrics used to determine a debtor's ability to pay off current debt
obligations without raising external capital
51.
The "balanced scorecard" supplies top managers with a
_____________ view of the business.
A. long-term financial
B. detailed and complex
C. simple and routine
D. fast but comprehensive
Answer & Solution
Answer: Option D
Solution:
The "balanced scorecard" supplies top managers with a fast but comprehensive
view of the business. A balanced scorecard is a strategic management
performance metric used to identify and improve various internal business
functions and their resulting external outcomes. Balanced scorecards are used
to measure and provide feedback to organizations.
52.
Industry boundaries are blurring at an incredible rate as companies are
recognizing that new opportunities lie at the intersection of two or
more industries this is called ________.
A. globalization
B. customization
C. Industry convergence
D. heightened competition
Answer & Solution
Answer: Option C
Solution:
Industry boundaries are blurring at an incredible rate as companies are
recognizing that new opportunities lie at the intersection of two or more
industries this is called industry convergence. Industry convergence
represents the most fundamental growth opportunity for organizations and will
redefine industry boundaries by shifting the focus from individual products to
cross-industry value experiences, based on digital business principles.
53.
What kind of organizational structure combines a vertical chain of
command with horizontal reporting requirements?
A. line authority
B. matrix
C. functional
D. quality circle
Answer & Solution
Answer: Option B
Solution:
Matrix kind of organizational structure combines a vertical chain of command
with horizontal reporting requirements. Matrix organization represents a
middle course. Project and functional organizations exist side by side in a
matrix structure. Matrix organizations are combination of vertical as well as
horizontal relationships and are extremely useful in meeting the challenges of
new and complex problems.
54.
What kind of training program is most appropriate for a simple task?
A. on-the-job training
B. vestibule training
C. laboratory training
D. away-from-the-job training
Answer & Solution
Answer: Option A
Solution:
On-the-job training kind of training program is most appropriate for a simple
task. On-the-job training, also known as OJT, is a hands-on method of teaching
the skills, knowledge, and competencies needed for employees to perform a
specific job within the workplace. Employees learn in an environment where
they will need to practice the knowledge and skills obtained during their
training.
55.
Possibly the most important pre-20th century influence on
management was:
A. Scientific management
B. The industrial revolution
C. The division of labour
D. Therbligs
Answer & Solution
Answer: Option A
Solution:
Possibly the most important pre-20th century influence on management was
Scientific management. The Scientific Management Theory is well known for its
application of engineering science at the production floor or the operating
levels.
56.
Strategic stretch involves:
A. The fit between the organisation and its environment
B. Creating new opportunities by stretching and exploiting capabilities in new ways
C. The skills of the senior management
D. Utilising all the resources of an organisation to their full capacity

Answer & Solution
Answer: Option B
Solution:
Strategic stretch involves creating new opportunities by stretching and
exploiting capabilities in new ways. Strategic Stretch refers to the planning
period adopted by an organisation or company while Straregic Intent refers to
the sratement of desired organisational leadership that an organisation
intends or wishes to achieve in future.
57.
What are core competences?
A. Resources which critically underpin competitive advantage and that others cannot obtain
B. Activities and processes needed to meet customers' minimum requirements and therefore to continue
to exist
C. Key skills required for success in a particular business
D. Activities that underpin competitive advantage and are difficult for competitors to imitate or obtain
Answer & Solution
Answer: Option D
Solution:
Core competences means activities that underpin competitive advantage and are
difficult for competitors to imitate or obtain. Core competencies are the
resources and capabilities that comprise the strategic advantages of a
business. A modern management theory argues that a business must define,
cultivate, and exploit its core competencies in order to succeed against the
competition.
58.
Best in Class Benchmarking seeks to assess organisational
performance against:
A. The nearest geographical competitor

B. The competitor who is 'best in class' wherever that may be
C. The competitor who is the best in the industry
D. The nearest principal competitor
Answer & Solution
Answer: Option B
Solution:
Best in Class Benchmarking seeks to assess organisational performance against
the competitor who is 'best in class' wherever that may be. Benchmarking is
also a way of measuring your firm's strategies and performance against
“best‐in‐class” firms, both inside and outside your own industry.
59.
Cost efficiency is determined by which of the following drivers?
A. Supply Costs, Experience, Product/Process Design and Economies of Scale
B. Supply Costs & Economies of Scale
C. Product/Process Design and Economies of Scale
D. Experience
Answer & Solution
Answer: Option A
Solution:
Cost efficiency is determined Supply Costs, Experience, Product/Process Design
and Economies of Scale. Cost efficiency is the strategic choice for many
construction companies.
60.
The three stages of strategic management are
A. strategy formulation, strategy implementation, and strategy execution
B. strategy formulation, strategy execution, and strategy assessment
C. strategy formulation, strategy implementation, and strategy evaluation
D. stratify assessment, strategy execution, and strategy evaluation
Answer & Solution
Answer: Option C
Solution:
The three stages of strategic management are strategy formulation, strategy
implementation, and strategy evaluation. Strategy formulation is the process
of establishing the organization's mission, objectives, and choosing among
alternative strategies.
61.
Job titles that refer to strategists include which of the following?
A. External audit
B. Owner, entrepreneur, executive director, and accountant
C. Chief executive officer, salesman, dean, and lawyer
D. Owner, dean, president, and executive director

Answer & Solution
Answer: Option D
Solution:
Job titles that refer to strategists include Owner, dean, president, and
executive director. A job title can describe the responsibilities of the
position, the level of the job, or both. For example, job titles that include
the terms “executive,” “manager,” “director,” “chief,” “supervisor,”
etc. are typically used for management jobs.
62.
Relative deficiency or superiority is important information in
performing which activity?
A. External audit
B. Allocating resources
C. Internal audit
D. Evaluating strategies
Answer & Solution
Answer: Option C
Solution:
Relative deficiency or superiority is important information in performing
Internal audit. Internal audits evaluate a company's internal controls,
including its corporate governance and accounting processes. They ensure
compliance with laws and regulations and help to maintain accurate and timely
financial reporting and data collection.
63.
How often should strategic-management activities be performed?
A. Annually
B. Quarterly
C. Monthly
D. Continuously
Answer & Solution
Answer: Option D
Solution:
Continuously strategic-management activities should be performed. Strategic
management is a continuous process that appraises the business and industries
in which the organization is involved, its competitors; and fixes goals to
meet all the present and future potential competitors and then reassesses each
strategy.
64.
Who is most responsible for developing, communicating, and
enforcing the code of business ethics for a firm?
A. Strategists
B. Line managers
C. Staff managers
D. All managers
Answer & Solution
Answer: Option A
Solution:
Strategists is most responsible for developing, communicating, and enforcing
the code of business ethics for a firm. A strategist is someone who is skilled
in planning the best way to gain an advantage or to achieve success.
65.
Strategy-implementation activities include
A. conducting research
B. measuring performance
C. preparing a TOWS matrix
D. establishing annual objectives
Answer & Solution
Answer: Option D
Solution:
Strategy-implementation activities include establishing annual objectives. The
strategic plan addresses the what and why of activities, but implementation
addresses the who, where, when, and how.
66.
In a large organization, strategic management activities occur at what
level(s)?
A. Corporate and divisional
B. Functional, business and corporate
C. Strategic business unit

D. Divisional
Answer & Solution
Answer: Option B
Solution:
In a large organization, strategic management activities occur at Functional,
business and corporate. Strategy formulation, implementation, and evaluation
activities occur at three hierarchical levels in a large organization:
corporate, divisional or strategic business unit, and functional.
67.
Conducting research, integrating intuition with analysis, and making
decisions are all __________ activities.
A. strategy-formulation
B. strategy-implementation
C. long-range planning
D. short-range planning
Answer & Solution
Answer: Option A
Solution:
Conducting research, integrating intuition with analysis, and making decisions
are all strategy-formulation activities. Strategy formulation is the process
by which an organization chooses the most. appropriate courses of action to
achieve its defined goals. This process is. essential to an organization's
success, because it provides a framework for the. actions that will lead to
the anticipated results.
68.
Which of these questions is addressed by a mission statement?
A. What do we want to become?
B. What is our business?
C. How many employees must we have?
D. Who do we want to serve?
Answer & Solution
Answer: Option B
Solution:
What is our business? is addressed by a mission statement. A mission statement
defines what an organization is, why it exists, its reason for being. At a
minimum, your mission statement should define who your primary customers are,
identify the products and services you produce, and describe the geographical
location in which you operate.
From our catalogue pages:
Chapter 01
Question 1
To find out what an organization's strategy is, you should:

Correct answer:
b) Look at what the organization actually does
Question 2
Which of the following statements is nottrue when describing a successful strategy?
You did not answer the question.
Correct answer:
d) It guarantees long term survival
Question 3
In the context of strategic management resources can be defined as:
Correct answer:
c) Something that an organization owns, controls or has access to on a semi-permanent basis
Question 4
In the context of strategic management, stakeholders can be defined as:
You did not answer the questio

Correct answer:
d) An individual or group with an interest in the organizations activities and who seeks to influence
them
Question 5
In the case where an organization acquires its supplier, this is an example of:
Correct answer:
c) Backwards vertical integration
Question 6
When a firm seeks the benefits of global integration and local adaptation, it is best described as which
type of strategy?
Correct answer:
a) Transnational
Feedback:
There are different ways of structuring and controlling an organization according to what type of
international presence is being sought.
Page reference:21
Question 7
Knowledge which is difficult to define and codify is known as:

Correct answer:
c) Tacit
Question 8
Competitive advantage based on the creation of opportunities using internal resources is

characterized by which approach/view?
Correct answer:
c) The resource-based view
Question 9
'Reputation' in the context of an organization's resources can provide competitive advantage because:
Correct answer:
a) It is difficult to copy
Question 10
A strategic manager that seeks to reach acceptable profit targets as opposed to making as much profit
as possible is making decisions of which type?
Correct answer:
b) Satisficing
Chapter 02
Results
You have answered 0 out of 10 questions correctly.
Your percentage score is 0%.
Question 1
A strategic decision can be distinguished from other types of decisions by three factors,
these are magnitude, time-scale and:

Correct answer:
a) Commitment
Feedback:
A decision can be considered to be strategic if it involves a relatively large part of the
organization, if it is over the medium to long-term and involves a large commitment of
resources that cannot be easily reversed.
Page reference: 47
Question 2
'Logical incrementalism' can be described as:

Correct answer:
b) Emergent
Feedback:
Mintzberg suggests that most organizations develop their strategies in this way through
continual experimentation. In this way strategies emerge rather than come about through
deliberate design.
Page reference: 56
Question 3
An organization in which strategy development is characterized by internal political

negotiation and self-interest is operating in which strategy-making mode?

Correct answer:
b) The muddling through mode
Feedback:
There are different 'modes' of strategy development that can co-exist in organizations. We
should not view strategy as merely being a deliberate plan put together by top management.
There are many other explanations about how strategy develops in organizations.
Page reference: 57
Question 4
'Influence' is defined as the ability to ____________ someone to something they would not
otherwise have done.

Correct answer:
d) Persuade
Feedback:
An understanding of the power dynamics in an organization can aid understanding of how
strategies came about.
Page reference: 57
Question 5
McDonalds is deciding whether to expand into manufacturing kitchen equipment in China.

At what level is this decision likely to be made?

Correct answer:
b) Corporate
Feedback:
Corporate level decisions concern where to invest. A business level decision would be how
to achieve competitive advantage in the Chinese business unit.
Page reference: 60
Question 6
The authors believe there are three tests that can be applied to judge whether a strategy is
'good'. These are:

Correct answer:
a) Fit, distinctiveness, sustainability
Feedback:
Distinctiveness and fit on its own is not enough for long-term survival. Strategies also have
to be sustainable.
Page reference: 62
Question 7
Diversification into many unrelated areas is an example of:

Correct answer:
a) Risk management
Feedback:
This is a form of risk management. It is the opposite extreme to 'all eggs in one basket'.
However, it is sometimes not an effective way of dealing with risk because a diverse
portfolio can become very difficult to manage and can increase complexity.
Page reference: 65
Question 8
According to Porter, dealing with the paradox of premature commitment versus not enough
commitment involves some kind of:

Correct answer:
a) Trade-off
Feedback:
This is one of the central problems of strategic management. Not enough commitment
means that opportunities can be lost but too much commitment can mean a high level of
sunk costs. This is a problem that strategic managers have to weigh up.
Page reference: 66
Question 9

Correct answer:
a) Executive remuneration, disclosure of information, auditing and accounting procedures,
and organizations management structures
Feedback:
There have been various initiatives in different parts of the world to improve aspects of
corporate governance. As a result of these, new guidelines are recommended and
incorporated into corporate reporting and management procedures.
Page reference: 73
Question 10
The principal-agent problem is concerned with:

Correct answer:
b) Appropriation of shareholders investment by a firms managers
Feedback:
The managers of the business should run it on behalf of its owners, but have the potential
to act in their own interests rather than those of the firm's shareholders.
Page reference: 73
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About the book
Find out more, read a sample chapter, or order an inspection copy if you are a lecturer, from theHigher
Education website
Copyright © OChapter 03
Results
Question 1
In terms of the PESTLE analysis, the liberalizing of international trade and tariff regimes
could go in which section or sections?

Correct answer:
c) Political and economic and legal
Feedback:
Some issues fall into more than one PESTLE category. This does not matter -the PESTLE
categories are a heuristic device to help analyse the environment as comprehensively as
possible.
Page reference: 105
Question 2
An 'industry recipe' can be defined as:

Correct answer:
a) An accepted pattern of operating and competing
Feedback:
The 'industry recipe' can be likened to an organizational culture except it is industry-wide.
For example, it is conventional for retailers to have seasonal sales and this is not seen as an
aggressive move. However, sales could instigate a price-war in other industries.
Page reference: 113
Question 3
Typically, profits are highest in which stage of the industry life-cycle?

Correct answer:
c) Maturity
Feedback:
The industry life-cycle model is a simple model for identifying competitive behaviour at
different stages of industry development. However, not all industries follow this pattern.
Profits are usually highest at the maturity stage because of the efficiencies developed by
this time.
Page reference: 115
Question 4
Which of the following industries is least likely to follow the conventional life-cycle
model?

Correct answer:
d) Hairdressing
Feedback:
Hairdressers are always going to be needed unless people find good ways of cutting their
own hair. There are lifecycles at product level within the hairdressing industry but
hairdressing itself is unlikely to go into complete decline.
Page reference: 114-17
Question 5
Brandenburger and Nalebuff added a sixth force to Porter's Five Forces. It is known as:

Correct answer:
b) The power of complementors
Feedback:
Brandenburger and Nalebuff's contention is that some industries rely on other industries for
survival such as the personal computer industry which require a supply of software.
Similarly, televisions require TV programmes, and cinemas require films. Complementors
shouldn't be confused with substitutes or suppliers.
Page reference: 118
Question 6
The Six Forces framework is based on the principle of:

Correct answer:
d) Structure - conduct - performance
Feedback:
This model assumes that the structure of an industry shapes how organizations conduct
themselves and this determines the profits that are possible in that industry. This view has
been vigorously opposed by many theorists some of whom represent the resource-based
view of the firm.
Page reference: 118
Question 7
In the Six Forces, the 'threat of new entrants' relates to:

Correct answer:
a) Barriers to entry
Feedback:
This force can be seen from two points of view - from the outsider's view (barriers to entry)
and from those already in the industry (threat of new entrants).
Page reference: 121
Question 8
An industry characterized by irregular patterns of stability, rapid technological change,

high uncertainty and global competition can be described as:

Correct answer:
a) Hypercompetitive
Feedback:
Hypercompetitive industries is a term coined by D'Aveni. In these conditions, deliberate
strategies are perhaps unrealistic because the environment is moving too fast. Strategy is
more likely to be developed in an opportunistic fashion.
Page reference: 128
Question 9
A situation in which the joint moves of two firms can determine how much money each
firm can make or lose can be explained using the story of:

Correct answer:
c) The Prisoners Dilemma
Feedback:
The 'prisoner's dilemma' story famously describes the situation where two prisoners don't
know what the other will do but they must both make a choice as to how they should act.
Organizations can find themselves in the same situation. Game theory can be used to
analyse the competitive moves of organizations.
Page reference: 130
Question 10
In the context of environmental analysis, 'munificence' means:

Correct answer:
a) The extent to which resources are freely available to support firms in an industry and
enable them to grow
Feedback:
The other aspects of the environment that an organization should know are its dynamism
(how changeable), and complexity (degree of diversity), which an organization has some
control over by limiting its own diversity.
Page reference: 138
Chapter 04
Results
Question 1
A 'market driven' firm will typically:

Correct answer:
b) Define the target market and produce products that will satisfy those customers needs
Feedback:
Some products might be the result of inventions that have no obvious market at the outset.
A market driven firm will start with the needs of the customer. A product-oriented firm
will in a way create needs that the customer didn't know they had.
Page reference: 157
Question 2
Segmentation is a way of:

Correct answer:
a) Subdividing markets
Feedback:
Segmentation can be applied to customers and businesses. It is a way of subdividing them
into distinct groups with similar characteristics. Different variables can be used as a means
of segmenting customers and businesses.
Page reference: 158
Question 3
A B2C market is:

Correct answer:
b) Business to consumer
Feedback:
This is the conventional marketing and strategy term for marketing to consumers. The
other term is B2B which is marketing to businesses. These distinctions have been made
because consumers and businesses have different needs and so will be segmented in
different ways.
Page reference: 158
Question 4
Segmentation is a compromise between two ideals: mass marketing and:

Correct answer:
a) Customization
Feedback:
This is a type of trade-off. It is not feasible to produce a customized product for each
customer or business because it is usually too expensive. On the other hand, not all
consumers have the same needs and so mass marketing is not always appropriate. We are
moving towards mass customization because of technology advancements.
Question 5
Porter's generic strategies are:

Correct answer:
b) Cost leadership, differentiation, cost focus, focus differentiation
Feedback:
Porter's generic strategies model is very well known but it has attracted a lot of criticism
for being too simplistic and not being upheld by empirical testing.
Page reference: 173
Question 6
According to Porter, if an organization does not follow either a cost leadership strategy or a
differentiation strategy they are:

Correct answer:
b) Stuck in the middle
Feedback:
Porter's 'stuck in the middle' argument has been disproved on many occasions. It is possible
to follow both generic strategies and succeed. For example, Ikea and H&M.
Page reference: 174
Question 7
According to Bowman's generic strategies model a high price, low-perceived value strategy
is only feasible in:

Correct answer:
b) A monopoly
Feedback:
This strategy can only persist if the firm is in a monopoly or a virtual monopoly.
Page reference: 175
Question 8
Treacy and Wiersema identify 3 ways a firm may get competitive advantage. These are:

Correct answer:
b) Operational excellence, customer intimacy, product leadership
Feedback:
The three strategies imply different customer choices and value chains. A few rare
companies may be able to master two of them simultaneously though Treacy and
Wiersema suggest that firms do better to focus their efforts on mastering one.
Page reference: 175
Question 9
In Porter's Generic Strategies model, a focus strategy involves:

Correct answer:
b) Selling to a narrow customer segment
Feedback:
There is a problem in defining what a broad and narrow segment is; this is an inherent
weakness in the model. For example, targeting women between 60-70 of a particular
income, but to the whole of Europe - is this a broad or a narrow segment?
Page reference: 174
Question 10
H&M, the clothes retailer is for most of its products following which generic strategy?

Correct answer:
b) Hybrid
Feedback:
At business level, organizations could follow different generic strategies for different
products. For example, Marks and Spencers includes budget lines in its clothes range (as a
way of defending against low price producers such as Primark) as well as mid-priced
clothes to a broad target and expensive clothes to a narrow target. H&M is mostly
following a hybrid strategy - low price and high perceived value, but it does have some
higher priced clothes in collaboration with designers such as Karl Lagerfeld and Stella
McCartney.
Page reference: 177
Chapter 05
Results
Question 1
Substantial changes to the range of offerings or the markets served or both are known as:

Correct answer:
b) Diversification
Feedback:
Diversification can occur if this product range is new or substantially altered or if serving
new markets.
Page reference: 192
Question 2
At corporate level, diversification comes about when a firm is involved in two or more:

Correct answer:
d) Industries
Feedback:
Diversification can occur at business level or corporate level. Corporate-level
diversification implies involvement in several industries.
Page reference: 193
Question 3
On average, the highest levels of profitability are shown by:

Correct answer:
b) Firms with a moderately diverse range of related products and businesses
Feedback:
Moderately diversified firms outperform highly focused ones, which in turn perform better
than highly diversified organizations. Related diversification gives better results than
unrelated.
Page reference: 207
Question 4
Economies of scale are derived from:

Correct answer:
a) Achieving cheaper unit costs through making larger quantities
Feedback:
Economies of scale should not be confused with economies of scope which means sharing
resources and activities across a number of business units. Increased scale may allow an
organization to get discounts on its raw materials, but this is not always the case, and when
it is there are other benefits as well.
Page reference: 195
Question 5
Which of the following outcomes is NOT an advantage of a completely vertically

integrated business?

Correct answer:
c) Lowering of risk is achieved
Feedback:
Whilst vertical integration can increase control over quality and lower transaction costs,
there is the disadvantage of requiring specialized knowledge of different business activities,
such as manufacturing and retailing in the case of Zara and Benetton. Lowering of risk is
not achieved because the business is only operating in one industry.
Question 6
Which of the following might be sources of synergy between two business units?

Correct answer:
a) They have similar customers and use the same distribution channels
Feedback:
Synergy is where two or more units or companies work better together than they do apart.
If they have the same customers and distribution channels, they may be able to share
warehouses, databases, and marketing. Commonplace similarities, like having a website or
a similar location, are unlikely to give rise to significant advantage through sharing
between the businesses. Using the profits from one business to subsidize another is not
always a good idea - and is risk reduction, not synergy.
Page reference: 204
Question 7
Which of the following might NOT be an advantage of increasing the number of countries
in which a clothing firm does business?

Correct answer:
b) Increased efficiency
Feedback:
By expanding into new markets, a firm gets access to new ideas, hits the profitability of
competitors who are active in those markets and is likely to increase its prestige with
lenders and shareholders. However, the complexity of the business will increase - and so
will overheads costs. This may be offset by some economies of scale, but since tastes in
clothing vary between countries, these may not be that large.
Page reference: 195
Question 8
Which of the following are NOT likely to be sources of relatedness between businesses?

Correct answer:
a) Similarities in size
Feedback:
Relatedness between businesses comes from being able to share specialized knowledge -
for example about processes, customers, or industry success. It is unlikely that two
businesses will have something worthwhile in common just because they are the same size.
Question 9
Synergies allow businesses to add value to one another whereas the extent to which the
corporate centre can add value to each of its businesses is called:

Correct answer:
a) Relatedness
Feedback:
Synergy and relatedness are connected in that the degree of synergy possible does depend
on the degree of relatedness of the businesses.
Page reference: 212
Question 10
Learning from trying out new and different things is termed:

Correct answer:
c) Exploration
Feedback:
Exploration is the term for this type of learning - it may lead to increased absorptive
capacity, but is not the same thing. Exploitation is a different kind of learning, from
refining things the organization already does.
Page reference: 202
Chapter 06
Results
Question 1
The value chain is subdivided into two main headings. These are primary activities and:

Correct answer:
b) Support activities
Feedback:
The value chain can be seen as the chain of events that a product service passes through
from inception to customer.
Question 2
In the value chain, primary activities are:

Correct answer:
a) Directly involved in the production, marketing and delivery of the product or service
Feedback:
The primary activities are conventionally known as product design and development,
inbound logistics, operations, outbound logistics, marketing and after-sales service.
Page reference: 229
Question 3
The 'operations' in a passenger airline service would be:

Correct answer:
b) Getting passengers and baggage from A to B by means of flying in an aircraft
Feedback:
It is sometimes difficult to fit Porter's value chain framework to some types of firm because
the value chain is tailored to a manufacturing firm. The important thing about the value
chain is how the different activities are linked together to provide overall value.
Page reference: 229
Question 4
One of the strategic decisions relating to the value chain concerns vertical integration. This
would involve:

Correct answer:
b) Deciding whether the activity should be performed within the organization or by a
different firm
Feedback:
The extent of vertical integration has important implications for control and profit
potential. If an organization does an activity itself, it has more control. However, an outside
organization might perform the activity better because it specializes in that area.
Page reference: 230
Question 5
Firm A has decided to use an outside travel firm for making travel arrangements but it is
based on the premises of Firm A. This is an example of:

Correct answer:
c) Insourcing
Feedback:
This can be seen as the best of both worlds because the travel firm specializes in making
travel arrangements and its activities can be closely monitored by Firm A.
Page reference: 231
Question 6
A network of firms providing different parts of a value-chain in the production of a product

or service is known as:
Correct answer:
d) Co-specialization
Feedback:
This is common in high-technology markets. Firms are loosely bound by contractual
arrangements rather than full ownership. For example, a mobile phone manufacturer could
use another organization to write the phone software and yet another firm to design the user
interface icons.
Page reference: 231
Question 7
A firm outsources many of its value chain activities. Compared to a firm that does
everything in-house this is likely to incur:

Correct answer:
a) Higher transaction costs, lower control
Feedback:
Transaction costs are likely to be higher for firms using outsourcing. Control is likely to be
lower for firms using outsourcing. These are two of the trade-offs that have to be
considered in making 'make or buy' decisions.
Page reference: 232
Question 8
When a firm promises more than it can actually deliver to win a contract, this is known as:

Correct answer:
a) Adverse selection
Feedback:
This is a type of transaction cost that firms need to consider. In the desperation to win a
contract firms can often mislead the firm putting out to tender.
Page reference: 234
Question 9
Which of the following outcomes is a potential benefit of outsourcing?

Correct answer:
a) Higher flexibility
Feedback:
Outsourcing can increase flexibility because additional suppliers can be sourced or more
materials ordered. If the firm is making everything themselves, they have to be able to
adjust to changes in demand which may incur redundancy or high staff costs (through
employing staff when demand is low).
Page reference: 234
Question 10

Correct answer:
d) Two firms come together to form a third, legally separate firm
Feedback:
Joint ventures are a useful way of collaborating with another firm for a specific purpose
without bearing the costs and complexity of a full merger.
Page reference: 239
Chapter 07
Results
Question 1
Knowledge that exists in an organization but is difficult to write down and codify is known
as:

Correct answer:
b) Tacit knowledge
Feedback:
Tacit knowledge is knowledge that we are unaware of in an explicit sense. For example, we
cannot really express how we ride a bike or tell a joke. This type of knowledge is very
difficult to copy and therefore is very powerful in strategic terms.
Page reference: 284
Question 2
Tacit knowledge is seen as important feature of competitive advantage in which approach

to strategy?

Correct answer:
a) Resource-based view of the firm
Feedback:
The RBV emerged in the 1990s and challenged the positioning approach which sees
correct positioning in the correct industry as the basis of success. The RBV sees
competitive strategy as being derived from the way a firm uses its resources.
Page reference: 284
Question 3
The Resource-based view of the firm could also be described as:

Correct answer:
b) The inside-out approach
Feedback:
The RBV can be described as an 'inside-out' approach because competitive advantage is
seen as being derived from inside the firm, rather than outside the firm.
Page reference: 284
Question 4
Firms that are able to build relational capital are more able to:

Correct answer:
d) Transfer knowledge to their alliance partners
Feedback:
Relational capital is about using relationships to make the activities of the organization
more effective. They may be able to increase turnover, but other factors are likely to be
more important here - like producing products that customers want
Page reference: 295
Question 5
An organization has competitive advantage in the markets in which it competes but its
culture is rather inwards looking and complacent. In this situation it is unlikely that
competitive advantage will be:

Correct answer:
c) Sustainable
Feedback:
For an organization to survive in the long term, it needs to renew its resources. This is less
likely to happen in an organization that has become complacent and is 'resting on its
laurels'.
Page reference: 285
Question 6
The VIRUS acronym in relation to strategic resources stands for:

Correct answer:
d) Value, Inimitable, Rare, Un-Substitutable
Feedback:
For a resource to be considered as 'strategic' as opposed to 'threshold' it needs to meet the
four criteria summarized in the VIRUS acronym.
Question 7
If a resource is 'inimitable' a competitor finds it:

Correct answer:
d) Difficult to copy
Feedback:
If a resource is difficult for competitors to acquire or imitate it can be considered as a
strategic resource but it must also be valuable, rare and there should not be freely available
substitutes.
Page reference: 285
Question 8
The things that an organization does with its strategic assets are known as:
Correct answer:
b) Competences
Feedback:
Competences are referred to by some authors as capabilities. If they meet the VIRUS
criteria, they are referred to as core competences and core or distinctive capabilities.
Page reference: 288
Question 9
Which type of asset is rarely strategic?

Correct answer:
b) Financial assets
Feedback:
Financial assets are rarely strategic because firms have access to banks, stock markets and
venture capitalists. It is only in rare industries that firms need to have exceptionally good
access to funds, what we call 'deep pockets', in order for financial assets to be considered
strategic.
Page reference: 289
Question 10
Which type of assets can be considered as the most heterogeneous?

Correct answer:
a) Human
Feedback:
Human assets can be considered as the most heterogeneous because people vary so much in
their abilities and personality. A particular combination of personal attributes can provide
an organization with almost a 'one-off' asset. For example, people like Richard Branson,
Jeff Bezos, Steve Jobs and Sir Alex Ferguson might fall into this category. The problem
comes when these people inevitably have to be replaced.
Page reference: 290
Chapter 08
Results
Question 1
When there is a fit between the goals of the organization and the goals of individuals, this
is known as:

Correct answer:
b) Goal congruence
Feedback:
The organization architecture and culture should promote goal congruence because
decision making is more effective if everyone is pulling together.
Page reference: 323
Question 2
Which of the following is correct?

Correct answer:
a) An organizations structure would be expected to evolve as it grew larger and more
diverse
Feedback:
You would expect an organization's structure to evolve over time; stability is sometimes
helpful, but some organizations change their structure often. While the move from simple
through-functional to divisional structure is a common pattern, it is not followed by
everyone. Some organizations stick with the functional structure or prefer a networked one.
Networked structures have advantages - but they do not apply for every organization or
context!
Question 3
The shape or format of reporting and decision making relationships can be defined as the
organizational:

Correct answer:
c) Hierarchy
Feedback:
An organization's hierarchy is part of its architecture. As well as the actual design of the
hierarchy, organizational culture also influences to effectiveness of the hierarchy in
achieving organizational goals.
Page reference: 323
Question 4
The main components of an organization's architecture are structural hierarchy, values and
belief systems, contracts and relationships and (two more):

Correct answer:
d) Control systems and information infrastructure
Feedback:
Some elements of the organization's architecture can be seen as overlapping with the
organization's culture.
Page reference: 324
Question 5
A 'vertical architecture' is one which:

Correct answer:
c) Extends beyond the boundaries of legal ownership
Feedback:
Many organizations work with a network of organizations through use of outsourcing and
have to work with employees that are not part of their firm.
Page reference: 325
Question 6
Organizational structures and systems can be judged using five dimensions (ABCDE) to
assess whether they are achieving an appropriate balance. These five dimensions are
Autonomy, Bureaucracy, Cultural Control, Decentralization and:

Correct answer:
b) Economic Incentives
Feedback:
The appropriate balance of these five variables will vary according to the external and
internal context of the organization.
Page reference: 327
Question 7
Employees who work in an autonomous fashion are:

Correct answer:
a) Given freedom to make decisions
Feedback:
Giving employees autonomy is beneficial in a number of ways. For example they can be
more creative and entrepreneurial. However, not all employees like autonomy and prefer
strict guidance.
Page reference: 326
Question 8
Bureaucracy is sometimes seen as a negative thing but it has some benefits for
organizations. Which of the following is NOT a benefit of bureaucracy?

Correct answer:
c) It can increase organizational flexibility
Feedback:
Bureaucracy is more likely to decrease flexibility because it forces decisions into a fixed
mould.
Question 9
Successful business relationships tend to:

Correct answer:
a) Combine relational contracts - to build trust in the long term - with transactional
contracts to cover specific situations
Feedback:
Paradoxically, although few business relationships endure forever, there are benefits from
treating them as infinite rather than finite games. Building trust and relational contracts can
help firms compete in the long term; however, successful business relationships tend to
mix formal (transactional) and informal (relational) contracts. Any transactional contract
that tried to anticipate every possible problem would be unworkably long and complicated.
Page reference: 342
Question 10
Goffee and Jones use two variables to classify organizational cultures. These are:

Correct answer:
c) Sociability and Solidarity
Feedback:
Sociability is the degree of sincere friendliness between employees. Solidarity is the extent
to which people share common objectives. Four cultural types were developed around
these variables and these types are seen as being more or less appropriate for certain
contexts.
Page reference: 345
Chapter 09
Results
Question 1
A holding company is:

Correct answer:
b) A decentralized organization with a small head office that organizes finance for the
subsidiaries
Feedback:
Holding companies have a distant relationship with their businesses but act as a target
setter and provider of finance. They do not seek synergies between the businesses, or have
much advisory or planning input.
Page reference: 368
Question 2
A firm has a functional director for six areas and an area director for three functions. There,
staff at each area/function will be reporting to 2 bosses. This firm has which type of
structure?

Correct answer:
b) Matrix structure
Feedback:
In a matrix structure staff members at each intersection of the matrix are likely to report to
2 or more bosses. Although the matrix structure can offer advantages such as economies of
scale and knowledge sharing, it can result in problems of accountability and responsibility.
Question 3
An organization structure that is in the main a functional or divisional structure but also
includes project teams to deal with specific issues is called:

Correct answer:
d) A hybrid structure
Feedback:
Organizations often use different types of structure for different parts of the organization.
Some parts of the organization are relatively stable because they are dealing with a
predictable environment, but some parts need to be flexible and may not be permanent.
Page reference: 372
Question 4
An organization that divides its structure into two main parts - one dealing with product
groups and one dealing with customer segments is called:

Correct answer:
a) A front-back structure
Feedback:
This type of structure enables a high degree of flexibility because the customer facing units
are not restricted to selling products from just the factories in one division.
Page reference: 372
Question 5
The essential question that a corporate parent needs to ask is:

Correct answer:
a) Does it add value to its individual businesses
Feedback:
This is the key question that a corporate parent needs to ask. Some businesses in its
portfolio might be better off on their own or with another corporate parent. If a corporate
parent cannot add value to a particular business then it has no reason to own it, and it is
unlikely that it will be able to take advantage of any relatedness between businesses or to
stimulate synergies.
Page reference: 376
Question 6
A corporate parent can offer an individual business a number of 'propositions'. These are
build propositions, stretch propositions, link propositions, select propositions and:

Correct answer:
c) Leverage propositions
Feedback:
These are all potential ways that a parent can add value to its businesses. The leverage
proposition is where the corporate parent can offer a particular resource that has not yet
been utilized such as a brand or a valuable relationship with a particular government.
Page reference: 377
Question 7
The parenting style 'financial control' will tend to be most suitable in which type of
portfolio?

Correct answer:
b) Stable businesses with low investment needs
Feedback:
The different parenting styles are broad descriptions of ways of allocating corporate
management attention across a range of businesses. Each will tend to be suited to a
particular context.
Page reference: 379
Question 8
Which type of corporate parenting style has the closest relationship with its individual
businesses?

Correct answer:
d) Strategic planning
Feedback:
The strategic planner will tend to work with SBUs in developing strategy and consists of
managers with a high level of expertise and skills in the industry. A smaller range of
businesses is likely compared to the strategic control corporate parent.
Page reference: 381
Question 9
What is the main reason why organizations enter alliances?

Correct answer:
b) To obtain synergies between other organizations resources and their own
Feedback:
Successful alliances allow partner organizations selective access to each others' resources,
in a way that generates beneficial synergies for everyone. Increased absorptive capacity
and learning is a benefit of alliances, but not the main one. Some organizations do enter
alliances in order to copy their partners, but these 'learning races' rarely lead to successful
alliances. An alliance is rarely a good direct alternative to an acquisition, which is
preferable only under certain circumstances.
Page reference: 386
Question 10
Which of the following is NOT an important element to look for when selecting an alliance
partner?

Correct answer:
a) Very similar culture and resources
Feedback:
It is important that the cultures are compatible - but not that they are the same. Some of the
most effective alliances are between different cultures that learn to work together. And
each partner should contribute different, complementary resources to the alliance - overlap
is to be avoided.
Page reference: 387
Chapter 10
Results
Question 1
It was recognized in the 1990s that physical assets are not the only thing that needs to be
included in the valuation of a firm. In Europe, firms also included a supplement detailing
the:

Correct answer:
b) Intellectual capital
Feedback:
Intellectual capital is the knowledge and other intellectual assets within a firm. It became
an additional item of valuation on some firms' balance sheets.
Page reference: 408
Question 2
A graph showing a rise in demand over a number of years can be described as:

Correct answer:
b) Information
Feedback:
For this graph to be classified as 'knowledge', the reader would need to know what it means
for the organization perhaps by combining this graph with other information. Data,
information and knowledge take different forms. Knowledge is arguably the most powerful
and useful entity to the organization.
Page reference: 408
Question 3
Something that you learn to do by practicing rather than from reading a manual is known
as:

Correct answer:
c) Embodied knowledge
Feedback:
Riding a bike is a good example of embodied knowledge. You can only learn it by doing it.
The knowledge is in the 'body' rather than in a manual.
Page reference: 409
Question 4
Knowledge that is known to a specific set of people who understand what particular
references mean, whereas people outside of that group don't know what they mean is
known as:
Correct answer:
d) Symbolic knowledge
Feedback:
This type of knowledge builds group identity and exclusivity. Whilst it is useful within the
group, in terms of a whole organization it can be destructive and divisive.
Page reference: 409
Question 5
Organizations that are good at developing relevant capabilities to respond to a changing

context are known as:

Correct answer:
c) Learning organizations
Feedback:
There is a large body of literature about learning organizations. A learning organization is
one that can respond to changes in its environment through a process of adaptation. It has a
culture conducive to learning and the acceptance of change.
Page reference: 412
Question 6
An organization adjusts its pricing in response to falling customer demand. This is an

example of which type of learning?

Correct answer:
a) Single-loop learning
Feedback:
Single-loop learning does not challenge underlying assumptions held within the
organization.
Question 7
Which of the following attributes is NOT seen as being necessary for an organization to
become a 'learning organization'?

Correct answer:
a) Cultural diversity
Feedback:
Whilst cultural diversity could increase the number of viewpoints in an organization and
thus increase overall knowledge, there is no reason why a culturally homogeneous
organization should not become a learning organization.
Page reference: 413
Question 8
One of the traps into which organizations can fall with respect to organizational learning is
that they misread the reasons for success or failure. This trap is known as:

Correct answer:
b) Superstitious learning
Feedback:
Organizations can sometimes interpret a situation incorrectly. For example, they attribute
success to their own competences rather than the fact that they are in an expanding market.
Page reference: 414
Question 9
Knowledge management is concerned with the emergence, storage and ______________

of knowledge.

Correct answer:
b) Transfer
Feedback:
Knowledge management has been extensively written about. It involves trying to capture
the different forms of knowledge within an organization and gain some advantage over
competitors through its effective use. Knowledge sharing is seen as being a key facet of
knowledge management which improves an organization's ability to be a learning
organization.
Page reference: 417
Question 10
One of the main problems with explicit knowledge is that:

Correct answer:
b) It is easier to obtain it
Feedback:
Knowledge is easier to share if it is in an explicit form. However, this makes it potentially
easier for competitors to use it. Therefore, organizations need to find ways of protecting
their knowledge assets.
Page reference: 419
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:

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:
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.
Question 3
Which of the following is the least useful measurement of performance?
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:
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.
Question 5
A raw number such as profit is not all that useful on its own. It is more useful to use:
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:
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?
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?
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:
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:
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
Chapter 12
Results
Question 1
When formulating strategic options, it is a valid option to 'do nothing'. However, this can lead to:
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:
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.
Question 3
A hospital manager needs to consider how to organize resources to cope with elderly patients. The
manager is dealing with:
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.
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:
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.
Question 5
Which of the following strategies could be considered a 'breakthrough' strategy?
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:
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.
Question 7
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:
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:
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:
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
Chapter 13
Results
Question 1
Which of the following would NOT normally be an advisable strategy in the introductory stage of the
industry life cycle?
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.
Question 2
Which of the following would NOT normally be an advisable strategy in a progressive mature industry?
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.
Question 3
Which of the following industries would be classified as a 'creative' industry?
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:

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:
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:

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.
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?
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:
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:
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?
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.
Chapter 15
Results
Question 1
Which of the following is NOT a feature of a typical entrepreneur?
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?
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:
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:
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:
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:
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?
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:
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?
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:
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.
Chapter 16
Results
Question 1
There are different magnitudes of strategic change. 'Modular transformation' can be defined as:
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?
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:
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?
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:
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:
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:
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:
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:
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:
Correct answer:
a) Managing up
Feedback:
Managing up includes understanding and dealing with stakeholder priorities.
Page reference: 724
Chapter 17
Results
Question 1
Collins (2001) defines five levels of leader. 'Level 5' leadership can be described as:
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:
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?
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?
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:
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:
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.
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:
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:
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:
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:
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
Chapter 11
Question 1
Correct answer:
a) Qualitative
Feedback:
Page reference: 454
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
Feedback:
practice.
Page reference: 456
Question 4

Correct answer:
Feedback:
Question 5
Correct answer:
a) A ratio
Feedback:
Page reference: 457
Question 6
Correct answer:
b) Cash burn
Feedback:
Page reference: 460
Question 7
Correct answer:
c) Debtequity ratio
Feedback:
Page reference: 460
Question 8
Correct answer:

Feedback:
Page reference: 463
Question 9
Correct answer:
Feedback:
Page reference: 464
Question 10
Correct answer:
Feedback:
Page reference: 465
Chapter 12
Results
Question 1
Correct answer:

Feedback:
Page reference: 504
Question 2
known future and:
Correct answer:
Feedback:
Question 3
Correct answer:
d) A known future

Feedback:
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:

Feedback:
Page reference: 508
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 513
Question 8
Correct answer:
Feedback:
Page reference: 515
Question 9
Correct answer:
Feedback:
Page reference: 516
Question 10
Correct answer:
c) Float-off
Feedback:
Page reference: 519
Chapter 13
Results

Question 1
Correct answer:
Feedback:
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
b) Pharmaceuticals
Feedback:
Page reference: 565
Question 4
Correct answer:
Feedback:
Page reference: 554
Question 5
Correct answer:
d) Functionality
Feedback:
Page reference: 555
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 562
Question 8
Correct answer:
Feedback:
Page reference: 562
Question 9
to the future and:

Correct answer:
Feedback:
Page reference: 569
Question 10
Correct answer:
Feedback:
Chapter 15
Results
Question 1
Correct answer:
Feedback:
Page reference: 642
Question 2
Correct answer:
Feedback:
Page reference: 641
Question 3
Correct answer:
c) Maturity
Feedback:
development.
Page reference: 642
Question 4
Correct answer:
Feedback:
Page reference: 645
Question 5
are all:
Correct answer:
Feedback:
Page reference: 646
Question 6
Correct answer:
Feedback:
Page reference: 647
Question 7
Correct answer:
Feedback:
Page reference: 649
Question 8
Correct answer:
Feedback:
Page reference: 649
Question 9
Correct answer:
Feedback:
Page reference: 663
Question 10
called:
Correct answer:
Feedback:
Chapter 16
Results
Question 1
Correct answer:
Feedback:
Page reference: 691
Question 2

Correct answer:
Feedback:
Page reference: 695
Question 3
Correct answer:
b) Moral legitimacy
Feedback:
Page reference: 699
Question 4
Correct answer:
Feedback:
power.
Page reference: 701
Question 5
Correct answer:
c) Coalition
Feedback:
Page reference: 701
Question 6
Correct answer:
adopted
Feedback:
Page reference: 704
Question 7
Correct answer:
a) Source of Issue
Feedback:
Page reference: 711
Question 8
programmes are:
Correct answer:
vision of change
Feedback:
Page reference: 715
Question 9
Correct answer:
Feedback:
Page reference: 722
Question 10
Correct answer:
a) Managing up
Feedback:
Page reference: 724
Chapter 17
Results
Question 1
Correct answer:
d) Executive
Feedback:
Page reference: 744
Question 2
Correct answer:
Feedback:
Page reference: 744
Question 3
Correct answer:
Feedback:
war.
Page reference: 744
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 745
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 757
Question 8
Correct answer:
acquisition.
Feedback:
compatibility.
Question 9
Correct answer:
Feedback:
Page reference: 767
Question 10
Correct answer:
Feedback:
Page reference: 772
Chapter 01
Question 1
Correct answer:
Question 2
Correct answer:
Question 3
Correct answer:
Question 4
Correct answer:
them
Question 5
Correct answer:
Question 6
type of strategy?
Correct answer:
a) Transnational
Feedback:
Page reference:21
Question 7
Correct answer:
c) Tacit
Question 8

Correct answer:
Question 9
Correct answer:
Question 10
Correct answer:
b) Satisficing
Chapter 02
Results
Question 1

Correct answer:
a) Commitment
Feedback:
Page reference: 47
Question 2

Correct answer:
b) Emergent
Feedback:
deliberate design.
Page reference: 56
Question 3


Correct answer:
Feedback:
Page reference: 57
Question 4

Correct answer:
d) Persuade
Feedback:
Page reference: 57
Question 5


Correct answer:
b) Corporate
Feedback:
Page reference: 60
Question 6
'good'. These are:

Correct answer:
Feedback:
to be sustainable.
Page reference: 62
Question 7

Correct answer:
a) Risk management
Feedback:
Page reference: 65
Question 8

Correct answer:
a) Trade-off
Feedback:
Page reference: 66
Question 9

Correct answer:
Feedback:
Page reference: 73
Question 10

Correct answer:
Feedback:
Page reference: 73
 reset
 +A
 -A
 4
About the book
Education website
Results
Question 1

Correct answer:
Feedback:
possible.
Page reference: 105
Question 2

Correct answer:
Feedback:
Page reference: 113
Question 3

Correct answer:
c) Maturity
Feedback:
this time.
Page reference: 115
Question 4
model?

Correct answer:
d) Hairdressing
Feedback:
Question 5

Correct answer:
Feedback:
Page reference: 118
Question 6

Correct answer:
Feedback:
view of the firm.
Page reference: 118
Question 7

Correct answer:
Feedback:
Page reference: 121
Question 8


Correct answer:
a) Hypercompetitive
Feedback:
Page reference: 128
Question 9

Correct answer:
Feedback:
Page reference: 130
Question 10

Correct answer:
enable them to grow
Feedback:
Page reference: 138
Chapter 04
Results
Question 1

Correct answer:
Feedback:
Page reference: 157
Question 2

Correct answer:
Feedback:
Page reference: 158
Question 3
A B2C market is:

Correct answer:
Feedback:
different ways.
Page reference: 158
Question 4

Correct answer:
a) Customization
Feedback:
Question 5

Correct answer:
Feedback:
Page reference: 173
Question 6
Correct answer:
Feedback:
Page reference: 174
Question 7

Correct answer:
b) A monopoly
Feedback:
Page reference: 175
Question 8

Correct answer:
Feedback:
Page reference: 175
Question 9

Correct answer:
Feedback:
Page reference: 174
Question 10

Correct answer:
b) Hybrid
Feedback:
McCartney.
Page reference: 177
Chapter 05
Results
Question 1

Correct answer:
b) Diversification
Feedback:
new markets.
Page reference: 192
Question 2

Correct answer:
d) Industries
Feedback:
Page reference: 193
Question 3

Correct answer:
Feedback:
unrelated.
Page reference: 207
Question 4

Correct answer:
Feedback:
Page reference: 195
Question 5


Correct answer:
Feedback:
Question 6

Correct answer:
Feedback:
Page reference: 204
Question 7

Correct answer:
Feedback:
Page reference: 195
Question 8

Correct answer:
Feedback:
Question 9

Correct answer:
a) Relatedness
Feedback:
Page reference: 212
Question 10

Correct answer:
c) Exploration
Feedback:
Page reference: 202
Chapter 06
Results
Question 1

Correct answer:
Feedback:
Question 2

Correct answer:
Feedback:
Page reference: 229
Question 3

Correct answer:
Feedback:
Page reference: 229
Question 4
would involve:

Correct answer:
different firm
Feedback:
Page reference: 230
Question 5

Correct answer:
c) Insourcing
Feedback:
Page reference: 231
Question 6


Correct answer:
Feedback:
interface icons.
Page reference: 231
Question 7

Correct answer:
Feedback:
Page reference: 232
Question 8

Correct answer:
Feedback:
Page reference: 234
Question 9

Correct answer:
Feedback:
Page reference: 234
Question 10

Correct answer:
Feedback:
Page reference: 239
Chapter 07
Results
Question 1
as:

Correct answer:
b) Tacit knowledge
Feedback:
Page reference: 284
Question 2

to strategy?

Correct answer:
Feedback:
Page reference: 284
Question 3

Correct answer:
Feedback:
Page reference: 284
Question 4

Correct answer:
Feedback:
Page reference: 295
Question 5

Correct answer:
c) Sustainable
Feedback:
laurels'.
Page reference: 285
Question 6

Correct answer:
Feedback:
Question 7

Correct answer:
Feedback:
substitutes.
Page reference: 285
Question 8
Correct answer:
b) Competences
Feedback:
Page reference: 288
Question 9

Correct answer:
b) Financial assets
Feedback:
strategic.
Page reference: 289
Question 10

Correct answer:
a) Human
Feedback:
Page reference: 290
Chapter 08
Results
Question 1
is known as:

Correct answer:
b) Goal congruence
Feedback:
Page reference: 323
Question 2

Correct answer:
diverse
Feedback:
context!
Question 3
organizational:

Correct answer:
c) Hierarchy
Feedback:
Page reference: 323
Question 4

Correct answer:
Feedback:
Page reference: 324
Question 5

Correct answer:
Feedback:
Page reference: 325
Question 6

Correct answer:
Feedback:
Page reference: 327
Question 7

Correct answer:
Feedback:
strict guidance.
Page reference: 326
Question 8

Correct answer:
Feedback:
mould.
Question 9

Correct answer:
Feedback:
Page reference: 342
Question 10

Correct answer:
Feedback:
contexts.
Page reference: 345
Chapter 09
Results
Question 1

Correct answer:
subsidiaries
Feedback:
Page reference: 368
Question 2
structure?

Correct answer:
b) Matrix structure
Feedback:
Question 3

Correct answer:
Feedback:
Page reference: 372
Question 4

Correct answer:
Feedback:
Page reference: 372
Question 5

Correct answer:
Feedback:
Page reference: 376
Question 6

Correct answer:
Feedback:
Page reference: 377
Question 7
portfolio?

Correct answer:
Feedback:
particular context.
Page reference: 379
Question 8
businesses?

Correct answer:
Feedback:
Page reference: 381
Question 9

Correct answer:
Feedback:
Page reference: 386
Question 10
partner?

Correct answer:
Feedback:
is to be avoided.
Page reference: 387
Chapter 10
Results
Question 1
the:

Correct answer:
Feedback:
Page reference: 408
Question 2

Correct answer:
b) Information
Feedback:
Page reference: 408
Question 3
as:

Correct answer:
Feedback:
Page reference: 409
Question 4
known as:

Correct answer:
Feedback:
Page reference: 409
Question 5


Correct answer:
Feedback:
Page reference: 412
Question 6


Correct answer:
Feedback:
organization.
Question 7

Correct answer:
Feedback:
Page reference: 413
Question 8

Correct answer:
Feedback:
Page reference: 414
Question 9

of knowledge.

Correct answer:
b) Transfer
Feedback:
organization.
Page reference: 417
Question 10

Correct answer:
Feedback:
Page reference: 419

Chapter 11
Question 1
Correct answer:
a) Qualitative
Feedback:
Page reference: 454
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
Feedback:
practice.
Page reference: 456
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
a) A ratio
Feedback:
Page reference: 457
Question 6
Correct answer:
b) Cash burn
Feedback:
Page reference: 460
Question 7
Correct answer:
c) Debtequity ratio
Feedback:
Page reference: 460
Question 8
Correct answer:
Feedback:
Page reference: 463
Question 9
Correct answer:
Feedback:
Page reference: 464
Question 10
Correct answer:
Feedback:
Page reference: 465

Chapter 12
Results
Question 1
Correct answer:
Feedback:
Page reference: 504
Question 2
known future and:

Correct answer:
Feedback:
Question 3
Correct answer:
d) A known future
Feedback:
Question 4

Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 508
Question 6

Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 513
Question 8
Correct answer:
Feedback:
Page reference: 515
Question 9
Correct answer:
Feedback:
Page reference: 516
Question 10
Correct answer:
c) Float-off
Feedback:
Page reference: 519
Chapter 13
Results
Question 1
Correct answer:
Feedback:
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
b) Pharmaceuticals
Feedback:
Page reference: 565
Question 4
Correct answer:
Feedback:
Page reference: 554
Question 5
Correct answer:
d) Functionality
Feedback:
Page reference: 555
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 562
Question 8
Correct answer:
Feedback:
Page reference: 562
Question 9
to the future and:
Correct answer:
Feedback:
Page reference: 569
Question 10
Correct answer:
Feedback:
Chapter 15
Results
Question 1

Correct answer:
Feedback:
Page reference: 642
Question 2
Correct answer:
Feedback:
Page reference: 641
Question 3
Correct answer:
c) Maturity
Feedback:
development.
Page reference: 642
Question 4
Correct answer:
Feedback:
Page reference: 645
Question 5
are all:
Correct answer:

Feedback:
Page reference: 646
Question 6
Correct answer:
Feedback:
Page reference: 647
Question 7
Correct answer:
Feedback:
Page reference: 649
Question 8
Correct answer:
Feedback:
Page reference: 649
Question 9
Correct answer:
Feedback:
Page reference: 663
Question 10
called:
Correct answer:
Feedback:
Chapter 16
Results
Question 1
Correct answer:
Feedback:
Page reference: 691
Question 2
Correct answer:
Feedback:
Page reference: 695
Question 3
Correct answer:
b) Moral legitimacy
Feedback:
Page reference: 699
Question 4
Correct answer:
Feedback:
power.
Page reference: 701
Question 5
Correct answer:
c) Coalition
Feedback:
Page reference: 701
Question 6
Correct answer:
adopted
Feedback:
Page reference: 704
Question 7
Correct answer:
a) Source of Issue
Feedback:
Page reference: 711
Question 8
programmes are:
Correct answer:
vision of change
Feedback:
Page reference: 715
Question 9
Correct answer:
Feedback:
Page reference: 722
Question 10
Correct answer:
a) Managing up
Feedback:
Page reference: 724
Chapter 17
Results
Question 1
Correct answer:
d) Executive
Feedback:
Page reference: 744
Question 2
Correct answer:
Feedback:
Page reference: 744
Question 3
Correct answer:
Feedback:
war.
Page reference: 744
Question 4

Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 745
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 757
Question 8
Correct answer:
acquisition.
Feedback:
compatibility.
Question 9
Correct answer:
Feedback:
Page reference: 767
Question 10
Correct answer:
Feedback:
Page reference: 772
Chapter 11
Question 1
Correct answer:
a) Qualitative
Feedback:
Page reference: 454
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
Feedback:
practice.
Page reference: 456
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
a) A ratio
Feedback:
Page reference: 457
Question 6
Correct answer:
b) Cash burn
Feedback:
Page reference: 460
Question 7
Correct answer:
c) Debtequity ratio
Feedback:
Page reference: 460
Question 8
Correct answer:
Feedback:
Page reference: 463
Question 9
Correct answer:
Feedback:
Page reference: 464
Question 10
Correct answer:
Feedback:
Page reference: 465
Chapter 12
Results
Question 1
Correct answer:
Feedback:
Page reference: 504
Question 2
known future and:
Correct answer:
Feedback:
Question 3
Correct answer:
d) A known future
Feedback:
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 508
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 513
Question 8
Correct answer:
Feedback:
Page reference: 515
Question 9
Correct answer:
Feedback:
Page reference: 516
Question 10
Correct answer:
c) Float-off
Feedback:
Page reference: 519

Chapter 13
Results
Question 1
Correct answer:
Feedback:
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
b) Pharmaceuticals
Feedback:
Page reference: 565
Question 4
Correct answer:
Feedback:
Page reference: 554
Question 5
Correct answer:
d) Functionality
Feedback:
Page reference: 555
Question 6
Correct answer:

Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 562
Question 8
Correct answer:
Feedback:
Page reference: 562
Question 9
to the future and:
Correct answer:
Feedback:
Page reference: 569
Question 10
Correct answer:
Feedback:
Chapter 15
Results
Question 1
Correct answer:
Feedback:
Page reference: 642
Question 2
Correct answer:
Feedback:
Page reference: 641
Question 3
Correct answer:
c) Maturity
Feedback:
development.
Page reference: 642
Question 4
Correct answer:
Feedback:
Page reference: 645
Question 5
are all:
Correct answer:
Feedback:
Page reference: 646
Question 6
Correct answer:
Feedback:
Page reference: 647
Question 7
Correct answer:
Feedback:
Page reference: 649
Question 8

Correct answer:
Feedback:
Page reference: 649
Question 9
Correct answer:
Feedback:
Page reference: 663
Question 10
called:

Correct answer:
Feedback:
Chapter 16
Results
Question 1
Correct answer:
Feedback:
Page reference: 691
Question 2
Correct answer:
Feedback:
Page reference: 695
Question 3
Correct answer:
b) Moral legitimacy
Feedback:
Page reference: 699
Question 4
Correct answer:
Feedback:
power.
Page reference: 701
Question 5
Correct answer:
c) Coalition
Feedback:
Page reference: 701
Question 6
Correct answer:
adopted
Feedback:
Page reference: 704
Question 7
Correct answer:
a) Source of Issue
Feedback:
Page reference: 711
Question 8
programmes are:
Correct answer:
vision of change
Feedback:
Page reference: 715
Question 9
Correct answer:
Feedback:
Page reference: 722
Question 10
Correct answer:
a) Managing up
Feedback:
Page reference: 724
Chapter 17
Results

Question 1
Correct answer:
d) Executive
Feedback:
Page reference: 744
Question 2
Correct answer:
Feedback:
Page reference: 744
Question 3
Correct answer:
Feedback:
war.
Page reference: 744
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 745
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 757
Question 8
Correct answer:
acquisition.
Feedback:
compatibility.
Question 9
Correct answer:
Feedback:
Page reference: 767
Question 10
Correct answer:
Feedback:
Page reference: 772
Chapter 01
Question 1
Correct answer:
Question 2
Correct answer:
Question 3
Correct answer:
Question 4
Correct answer:
them
Question 5
Correct answer:
Question 6
type of strategy?
Correct answer:
a) Transnational
Feedback:
Page reference:21
Question 7
Correct answer:
c) Tacit
Question 8

Correct answer:
Question 9
Correct answer:
Question 10
Correct answer:
b) Satisficing
Chapter 02
Results
Question 1

Correct answer:
a) Commitment
Feedback:
Page reference: 47
Question 2

Correct answer:
b) Emergent
Feedback:
deliberate design.
Page reference: 56
Question 3


Correct answer:
Feedback:
Page reference: 57
Question 4

Correct answer:
d) Persuade
Feedback:
Page reference: 57
Question 5


Correct answer:
b) Corporate
Feedback:
Page reference: 60
Question 6
'good'. These are:

Correct answer:
Feedback:
to be sustainable.
Page reference: 62
Question 7

Correct answer:
a) Risk management
Feedback:
Page reference: 65
Question 8

Correct answer:
a) Trade-off
Feedback:
Page reference: 66
Question 9

Correct answer:
Feedback:
Page reference: 73
Question 10

Correct answer:
Feedback:
Page reference: 73
 reset
 +A
 -A
 4
About the book
Education website
Results
Question 1

Correct answer:
Feedback:
possible.
Page reference: 105
Question 2

Correct answer:
Feedback:
Page reference: 113
Question 3

Correct answer:
c) Maturity
Feedback:
this time.
Page reference: 115
Question 4
model?

Correct answer:
d) Hairdressing
Feedback:
Question 5

Correct answer:
Feedback:
Page reference: 118
Question 6

Correct answer:
Feedback:
view of the firm.
Page reference: 118
Question 7

Correct answer:
Feedback:
Page reference: 121
Question 8


Correct answer:
a) Hypercompetitive
Feedback:
Page reference: 128
Question 9

Correct answer:
Feedback:
Page reference: 130
Question 10

Correct answer:
enable them to grow
Feedback:
Page reference: 138
Chapter 04
Results
Question 1

Correct answer:
Feedback:
Page reference: 157
Question 2

Correct answer:
Feedback:
Page reference: 158
Question 3
A B2C market is:

Correct answer:
Feedback:
different ways.
Page reference: 158
Question 4

Correct answer:
a) Customization
Feedback:
Question 5

Correct answer:
Feedback:
Page reference: 173
Question 6

Correct answer:
Feedback:
Page reference: 174
Question 7

Correct answer:
b) A monopoly
Feedback:
Page reference: 175
Question 8

Correct answer:
Feedback:
Page reference: 175
Question 9

Correct answer:
Feedback:
Page reference: 174
Question 10

Correct answer:
b) Hybrid
Feedback:
McCartney.
Page reference: 177
Chapter 05
Results
Question 1

Correct answer:
b) Diversification
Feedback:
new markets.
Page reference: 192
Question 2

Correct answer:
d) Industries
Feedback:
Page reference: 193
Question 3

Correct answer:
Feedback:
unrelated.
Page reference: 207
Question 4

Correct answer:
Feedback:
Page reference: 195
Question 5


Correct answer:
Feedback:
Question 6

Correct answer:
Feedback:
Page reference: 204
Question 7

Correct answer:
Feedback:
Page reference: 195
Question 8

Correct answer:
Feedback:
Question 9

Correct answer:
a) Relatedness
Feedback:
Page reference: 212
Question 10

Correct answer:
c) Exploration
Feedback:
Page reference: 202
Chapter 06
Results
Question 1

Correct answer:
Feedback:
Question 2

Correct answer:
Feedback:
Page reference: 229
Question 3

Correct answer:
Feedback:
Page reference: 229
Question 4
would involve:

Correct answer:
different firm
Feedback:
Page reference: 230
Question 5

Correct answer:
c) Insourcing
Feedback:
Page reference: 231
Question 6


Correct answer:
Feedback:
interface icons.
Page reference: 231
Question 7

Correct answer:
Feedback:
Page reference: 232
Question 8

Correct answer:
Feedback:
Page reference: 234
Question 9

Correct answer:
Feedback:
Page reference: 234
Question 10

Correct answer:
Feedback:
Page reference: 239
Chapter 07
Results
Question 1
as:

Correct answer:
b) Tacit knowledge
Feedback:
Page reference: 284
Question 2
to strategy?

Correct answer:
Feedback:
Page reference: 284
Question 3

Correct answer:
Feedback:
Page reference: 284
Question 4

Correct answer:
Feedback:
Page reference: 295
Question 5

Correct answer:
c) Sustainable
Feedback:
laurels'.
Page reference: 285
Question 6

Correct answer:
Feedback:
Question 7

Correct answer:
Feedback:
substitutes.
Page reference: 285
Question 8
Correct answer:
b) Competences
Feedback:
Page reference: 288
Question 9

Correct answer:
b) Financial assets
Feedback:
strategic.
Page reference: 289
Question 10

Correct answer:
a) Human
Feedback:
Page reference: 290
Chapter 08
Results
Question 1
is known as:

Correct answer:
b) Goal congruence
Feedback:
Page reference: 323
Question 2

Correct answer:
diverse
Feedback:
context!
Question 3
organizational:

Correct answer:
c) Hierarchy
Feedback:
Page reference: 323
Question 4

Correct answer:
Feedback:
Page reference: 324
Question 5

Correct answer:
Feedback:
Page reference: 325
Question 6

Correct answer:
Feedback:
Page reference: 327
Question 7

Correct answer:
Feedback:
strict guidance.
Page reference: 326
Question 8

Correct answer:
Feedback:
mould.
Question 9

Correct answer:
Feedback:
Page reference: 342
Question 10

Correct answer:
Feedback:
contexts.
Page reference: 345
Chapter 09
Results
Question 1

Correct answer:
subsidiaries
Feedback:
Page reference: 368
Question 2
structure?

Correct answer:
b) Matrix structure
Feedback:
Question 3

Correct answer:
Feedback:
Page reference: 372
Question 4

Correct answer:
Feedback:
Page reference: 372
Question 5

Correct answer:
Feedback:
Page reference: 376
Question 6

Correct answer:
Feedback:
Page reference: 377
Question 7
portfolio?

Correct answer:
Feedback:
particular context.
Page reference: 379
Question 8
businesses?

Correct answer:
Feedback:
Page reference: 381
Question 9

Correct answer:
Feedback:
Page reference: 386
Question 10
partner?

Correct answer:
Feedback:
is to be avoided.
Page reference: 387
Chapter 10
Results
Question 1
the:

Correct answer:
Feedback:
Page reference: 408
Question 2

Correct answer:
b) Information
Feedback:
Page reference: 408
Question 3
as:

Correct answer:
Feedback:
Page reference: 409
Question 4
known as:

Correct answer:
Feedback:
Page reference: 409
Question 5


Correct answer:
Feedback:
Page reference: 412
Question 6


Correct answer:
Feedback:
organization.
Question 7
Correct answer:
Feedback:
Page reference: 413
Question 8

Correct answer:
Feedback:
Page reference: 414
Question 9

of knowledge.

Correct answer:
b) Transfer
Feedback:
organization.
Page reference: 417
Question 10

Correct answer:
Feedback:
Page reference: 419

Chapter 11
Question 1
Correct answer:
a) Qualitative
Feedback:
Page reference: 454
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
Feedback:
practice.
Page reference: 456
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
a) A ratio
Feedback:
Page reference: 457
Question 6
Correct answer:
b) Cash burn
Feedback:
Page reference: 460
Question 7
Correct answer:
c) Debtequity ratio
Feedback:
Page reference: 460
Question 8
Correct answer:
Feedback:
Page reference: 463
Question 9

Correct answer:
Feedback:
Page reference: 464
Question 10
Correct answer:
Feedback:
Page reference: 465
Chapter 12
Results
Question 1
Correct answer:
Feedback:
Page reference: 504
Question 2
known future and:
Correct answer:
Feedback:
Question 3
Correct answer:
d) A known future
Feedback:
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 508
Question 6

Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 513
Question 8

Correct answer:
Feedback:
Page reference: 515
Question 9
Correct answer:
Feedback:
Page reference: 516
Question 10

Correct answer:
c) Float-off
Feedback:
Page reference: 519
Chapter 13
Results
Question 1
Correct answer:
Feedback:
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
b) Pharmaceuticals
Feedback:
Page reference: 565
Question 4
Correct answer:
Feedback:
Page reference: 554
Question 5
Correct answer:
d) Functionality
Feedback:
Page reference: 555
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 562
Question 8
Correct answer:
Feedback:
Page reference: 562
Question 9
to the future and:
Correct answer:
Feedback:
Page reference: 569
Question 10
Correct answer:
Feedback:
Chapter 15
Results
Question 1

Correct answer:
Feedback:
Page reference: 642
Question 2
Correct answer:
Feedback:
Page reference: 641
Question 3

Correct answer:
c) Maturity
Feedback:
development.
Page reference: 642
Question 4
Correct answer:
Feedback:
Page reference: 645
Question 5
are all:
Correct answer:
Feedback:
Page reference: 646
Question 6
Correct answer:
Feedback:
Page reference: 647
Question 7
Correct answer:

Feedback:
Page reference: 649
Question 8
Correct answer:
Feedback:
Page reference: 649
Question 9
Correct answer:
Feedback:
Page reference: 663
Question 10
called:
Correct answer:
Feedback:
Chapter 16
Results

Question 1
Correct answer:
Feedback:
Page reference: 691
Question 2
Correct answer:
Feedback:
Page reference: 695
Question 3
Correct answer:
b) Moral legitimacy
Feedback:
Page reference: 699
Question 4
Correct answer:
Feedback:
power.
Page reference: 701
Question 5
Correct answer:
c) Coalition
Feedback:
Page reference: 701
Question 6
Correct answer:
adopted
Feedback:
Page reference: 704
Question 7
Correct answer:
a) Source of Issue
Feedback:
Page reference: 711
Question 8
programmes are:
Correct answer:
vision of change
Feedback:
Page reference: 715
Question 9
Correct answer:
Feedback:
Page reference: 722
Question 10
Correct answer:
a) Managing up
Feedback:
Page reference: 724
Chapter 17
Results
Question 1
Correct answer:
d) Executive
Feedback:
Page reference: 744
Question 2
Correct answer:
Feedback:
Page reference: 744
Question 3
Correct answer:
Feedback:
war.
Page reference: 744
Question 4

Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 745
Question 6

Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 757
Question 8
Correct answer:
acquisition.
Feedback:
compatibility.
Question 9
Correct answer:
Feedback:
Page reference: 767
Question 10
Correct answer:
Feedback:
Page reference: 772
Chapter 11
Question 1
Correct answer:
a) Qualitative
Feedback:
Page reference: 454
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
Feedback:
practice.
Page reference: 456
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
a) A ratio
Feedback:
Page reference: 457
Question 6
Correct answer:
b) Cash burn
Feedback:
Page reference: 460
Question 7
Correct answer:
c) Debtequity ratio
Feedback:
Page reference: 460
Question 8
Correct answer:
Feedback:
Page reference: 463
Question 9
Correct answer:
Feedback:
Page reference: 464
Question 10
Correct answer:
Feedback:
Page reference: 465
Chapter 12
Results
Question 1
Correct answer:
Feedback:
Page reference: 504
Question 2
known future and:
Correct answer:
Feedback:
Question 3
Correct answer:
d) A known future
Feedback:
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 508
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 513
Question 8
Correct answer:
Feedback:
Page reference: 515
Question 9
Correct answer:
Feedback:
Page reference: 516
Question 10
Correct answer:
c) Float-off
Feedback:
Page reference: 519

Chapter 13
Results
Question 1
Correct answer:
Feedback:
Question 2
Correct answer:
Feedback:
Question 3
Correct answer:
b) Pharmaceuticals
Feedback:
Page reference: 565
Question 4
Correct answer:
Feedback:
Page reference: 554
Question 5
Correct answer:
d) Functionality
Feedback:
Page reference: 555
Question 6
Correct answer:

Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 562
Question 8
Correct answer:
Feedback:
Page reference: 562
Question 9
to the future and:
Correct answer:
Feedback:
Page reference: 569
Question 10
Correct answer:
Feedback:
Chapter 15
Results
Question 1
Correct answer:
Feedback:
Page reference: 642
Question 2
Correct answer:
Feedback:
Page reference: 641
Question 3
Correct answer:
c) Maturity
Feedback:
development.
Page reference: 642
Question 4
Correct answer:
Feedback:
Page reference: 645
Question 5
are all:
Correct answer:
Feedback:
Page reference: 646
Question 6
Correct answer:
Feedback:
Page reference: 647
Question 7
Correct answer:
Feedback:
Page reference: 649
Question 8

Correct answer:
Feedback:
Page reference: 649
Question 9
Correct answer:
Feedback:
Page reference: 663
Question 10
called:

Correct answer:
Feedback:
Chapter 16
Results
Question 1
Correct answer:
Feedback:
Page reference: 691
Question 2
Correct answer:
Feedback:
Page reference: 695
Question 3
Correct answer:
b) Moral legitimacy
Feedback:
Page reference: 699
Question 4
Correct answer:
Feedback:
power.
Page reference: 701
Question 5
Correct answer:
c) Coalition
Feedback:
Page reference: 701
Question 6
Correct answer:
adopted
Feedback:
Page reference: 704
Question 7
Correct answer:
a) Source of Issue
Feedback:
Page reference: 711
Question 8
programmes are:
Correct answer:
vision of change
Feedback:
Page reference: 715
Question 9
Correct answer:
Feedback:
Page reference: 722
Question 10
Correct answer:
a) Managing up
Feedback:
Page reference: 724
Chapter 17
Results

Question 1
Correct answer:
d) Executive
Feedback:
Page reference: 744
Question 2
Correct answer:
Feedback:
Page reference: 744
Question 3
Correct answer:
Feedback:
war.
Page reference: 744
Question 4
Correct answer:
Feedback:
Question 5
Correct answer:
Feedback:
Page reference: 745
Question 6
Correct answer:
Feedback:
Question 7
Correct answer:
Feedback:
Page reference: 757
Question 8
Correct answer:
acquisition.
Feedback:
compatibility.
Question 9
Correct answer:
Feedback:
Page reference: 767
Question 10
Correct answer:
Feedback:
Page reference: 772
lOMoARcPSD|8128761
Sm mcqs 1 - List of MCQ for Strategic Management
MBA (Savitribai Phule Pune University)
StuDocu is not sponsored or endorsed by any college or university

Downloaded by Anand Dhavale (ananddhavale.ad@gmail.com)
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MBA@IICMR
MBA-II, Semester- III
Course Code: 301
Course Name: Strategic Management
Multiple Choice Questions
1) Above-average returns are:
a. higher profits than the firm earned last year.

b. higher profits than the industry average over the last 10 years.
c. profits in excess of what an investor expects to earn from a historical
pattern of performance of the firm.
d. profits in excess of what an investor expects to earn from
other investments with a similar level of risk.
2) The strategic management process is
a. a set of activities that will assure a temporary advantage and average

returns for the firm.
b. a decision-making activity concerned with a firm's internal resources,
capabilities, and competencies, independent of the conditions in
its externalenvironment.1
c. a process directed by top-management with input from other stakeholders
that seeks to achieve above-average returns for investors through effective use

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of the organization's resources.

d. the full set of commitments, decisions, and actions required for the firm to
achieve above-average returns and strategic competitiveness.
3) All of the following are assumptions of the industrial organization (I/O)

model EXCEPT
a. Organizational decision makers are rational and committed to acting in the

firm’s best interests.
b. Resources to implement strategies are firm-specific and attached to firms
over the long-term.
c. The external environment is assumed to impose pressures and constraints that
determine the strategies that result in above-average returns.
d. Firms in given industries, or given industry segments, are assumed to control
similar strategically relevant resources.
All of the following are assumptions of the resource-based model EXCEPT
a. Each firm is a unique collection of resources and capabilities.

b. The industry's structural characteristics have little impact on a firm's
performance over time.
c. Capabilities are highly mobile across firms.
d. Differences in resources and capabilities are the basis of competitive
advantage.
4) In the resource-based model, which of the following factors would

be considered a key to organizational success?
a. unique market niche

b. weak competition
c. economies of scale
d. skilled employees

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5) All of the following are resources of an organization EXCEPT
a. an hourly production employee's ability to catch subtle quality defects

in products.
b. oil drilling rights in a promising region.
c. weak competitors in the industry.
d. a charity's endowment of $400 million..
6) The resource-based model of the firm argues that
a. all resources have the potential to be the basis of sustained

competitive advantage.
b. all capabilities can be a source of sustainable competitive advantage.
c. the key to competitive success is the structure of the industry in which the
firm competes.
d. resources and capabilities that are valuable, rare, costly to imitate, and
non-substitutable form the basis of a firm's core competencies.
7) The goal of the organization's ____ is to capture the hearts and minds
of employees, challenge them, and evoke their emotions and dreams.
a. vision
b. mission
c. culture
d. strategy
8) A firm's mission

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a. is a statement of a firm's business in which it intends to compete and the

customers which it intends to serve.
b. is an internally-focused affirmation of the organization's financial, social, and
ethical goals.
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
9) An analysis of the economic segment of the external environment would

include all of the following EXCEPT
a. interest rates.
b. international trade.
c. the strength of the U.S. dollar.
d. the move toward a contingent workforce.
10) Product differentiation refers to the:
a. ability of the buyers of a product to negotiate a lower price.

b. response of incumbent firms to new entrants.
c. belief by customers that a product is unique.
d. fact that as more of a product is produced the cheaper it becomes per unit.
11) Which of the following is NOT an entry barrier to an

industry? a. expected competitor retaliation
b. economies of scale
c. customer product loyalty
d. bargaining power of suppliers

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12) Switching costs refer to the:
a. cost to a producer to exchange equipment in a facility when new

technologies emerge.
b. cost of changing the firm's strategic group.
c. one-time costs suppliers incur when selling to a different customer.
d. one-time costs customers incur when buying from a different supplier.
13) New entrants to an industry are more likely when (i.e., entry barriers are
low when...)
a. it is difficult to gain access to distribution channels.

b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
14) Suppliers are powerful when:
a. satisfactory substitutes are available.

b. they sell a commodity product.
c. they offer a credible threat of forward integration.
d. they are in a highly fragmented industry.
15) The highest amount a firm can charge for its products is most
directly affected by
a. expected retaliation from competitors.

b. the cost of substitute products.
c. variable costs of production.
d. customers' high switching costs.
Answer: b. the cost of substitute products.

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16) All of the following are forces that create high rivalry within an industry
EXCEPT
a. numerous or equally balanced competitors.
b. high fixed costs.
c. fast industry growth.
d. high storage costs.
17) According to the five factors model, an attractive industry would have
all of the following characteristics EXCEPT:
a. low barriers to entry.

b. suppliers with low bargaining power.
c. a moderate degree of rivalry among competitors.
d. few good product substitutes.
18) Internal analysis enables a firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
19) An external analysis enables a firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
20) ____ is/are the source of a firm's ____, which is/are the source of the
firm's ____.

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a. Resources, capabilities, core competencies

b. Capabilities, resources, core competencies
c. Capabilities, resources, above average returns
d. Core competencies, resources, competitive advantage
21) Compared to tangible resources, intangible resources are
a. of less strategic value to the firm.

b. not the focus of strategic analysis.
c. a more potent source of competitive advantage.
d. more likely to be reflected on the firm's balance sheet.
22) Which of the following is a true statement about capabilities?
a. Capabilities emerge over time through complex interactions of

tangible and intangible resources.
b. Valuable capabilities are based almost entirely on tangible resources.
c. Capabilities based on human capital are more vulnerable to
obsolescence than other intangible capabilities because of the tendency for
employee knowledge to become outdated.
d. The link between firm financial performance and capabilities is dependent
on whether the capabilities are based on tangible or intangible resources.
23) To be a core competency, a capability must satisfy all of the

following criteria EXCEPT:
a. be technologically innovative.
b. be hard for competing firms to duplicate.
c. be without good substitutes.
d. be valuable to customers.

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24) Capabilities that other firms cannot develop easily are classified as
a. costly to imitate.
b. rare.
c. valuable.
d. nonsubstitutable.
25) Costly-to-imitate capabilities can emerge for all of the following reasons
EXCEPT
a. lack of scientific transference.

b. social complexity.
c. unique historical conditions.
d. causal ambiguity.
26) Gamma, Inc., has struggled for industry dominance with Ardent, Inc.,
its main competitor, for years. Gamma has gathered and analyzed large
amounts of competitive intelligence about Ardent. It has observed as much of
the firm's internal functioning and technology as it can legally, yet Gamma
cannot understand why ABC has a competitive advantage over it. The source
of ABC's success is
a. impregnable.
b. causally ambiguous.
c. rationally obscure.
d. elusive.

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27) Firms that achieve competitive parity can expect to:
a. earn below-average returns.

b. earn average returns.
c. earn above-average returns.
d. initially earn above-average returns, declining to average returns.
28) Business-level strategies detail commitments and actions taken to provide

value to customers and gain competitive advantage by exploiting core
competencies in
a. the selection of industries in which the firm will compete.

b. specific product markets.
c. primary value chain activities.
d. particular geographic locations.
29) The three dimensions of a firm's relationships with customers include all
the following EXCEPT
a. exclusiveness.
b. affiliation.
c. richness.
d. reach.
30) The effectiveness of any of the generic business-level strategies

is contingent upon
a. customer needs and competitors' strategies.

b. the match between the opportunities and threats in its external market
and the strengths and weaknesses of its internal environment.
c. the trends in the general consumer base and the robustness of the global and
industry economy.
d. the firm's competitive scope and its competitive advantage.

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31) A cost leadership strategy targets the industry's ____ customers.
a. most typical
b. poorest
c. least educated
d. most frugal
32) When the costs of supplies increase in an industry, the low-cost leader
a. may continue competing with rivals on the basis of product features.

b. will lose customers as a result of price increases.
c. will be unable to absorb higher costs because cost-leaders operate on very
narrow profit margins.
d. may be the only firm able to pay the higher prices and continue to earn
average or above- average returns.
33) The typical risks of a differentiation strategy do NOT include which of the
following?
a. Customers may find the price differential between the low-cost product and
the differentiated product too large.
b. Customers' experience with other products may narrow customers'
perception of the value of a product's differentiated features.
c. Counterfeit goods are widely available and acceptable to customers.
d. Suppliers of raw materials erode the firm's profit margin with price
increases.
34) Competitive rivalry has the most effect on the firm's ____ strategies than
the firm's other strategies.

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a. business-level
b. corporate-level
c. acquisition
d. international
35) Multimarket competition occurs when firms
a. sell different products to the same customer.

b. have a high level of awareness of their competitors' strategic intent.
c. simultaneously enter into an attack strategy.
d. compete against each other in several geographic or product markets.
36) Competitive dynamics refers to the
a. circumstances where competitors are aware of the degree of their mutual

interdependence resulting from market commonality and resource similarity.
b. set of competitive actions and competitive responses the firm takes to build
or defend its competitive advantages and to improve its market position.
c. total set of actions and responses taken by all firms competing within a
market.
d. ongoing set of competitive actions and competitive responses between
competitors as they maneuver for advantageous market position.
37) Firms with few competitive resources are more likely
a. to not respond to competitive actions.

b. respond quickly to competitive actions.
c. delay responding to competitive actions.

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d. respond to strategic actions, but not to tactical actions.
38) Which of the following would be an example of a strategic action?
a. a "two movies for the price of one" campaign by Blockbuster Video

b. use of product coupons by a local grocer
c. entry into the European market by Home Depot
d. fare increases by Southwest Airlines
39) The chief disadvantage of being a first mover is the
a. high degree of risk.

b. high level of competition in the new marketplace.
c. inability to earn above-average returns unless the production process is very
efficient.
d. difficulty of obtaining new customers.
.
40) Competitors are more likely to respond to competitive actions that are
taken by
a. differentiators.
b. larger companies.
c. first movers.
d. market leaders.
Answer: d. market leaders.
41) Ninety percent of Wm. Wrigley Company's total revenue comes from
chewing gum. This is an example of
a. market commonality.
b. standard-cycle markets.
c. economies of scale.

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d. market dependence.
42) All competitive advantages do not accrue to large sized firms. A major
advantage of smaller firms is that they
a. are more likely to have organizational slack.

b. can launch competitive actions more quickly.
c. have more loyal and diverse workforces.
d. can wait for larger firms to make mistakes in introducing innovative
products.
43) A sustained or sustainable competitive advantage requires that:
a. the value creating strategy be in a formulation stage.

b. competitors be simultaneously implementing the strategy.
c. other companies not be able to duplicate the strategy.
d. average returns be earned by the company.
44) An integrated and coordinated set of commitments and actions designed

to exploit core competencies and gain a competitive advantage in a specific
product market is a definition of:
a. business strategy.
b. core competencies.
c. sustained competitive advantage.
d. strategic mission.
45) In evaluating its customers, which of the following is NOT a relevant

question?
a. How will core competencies meet the customer's needs?

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b. Who is the customer?

c. What are the customers' needs?
d. How will our top management team interact with the customer?
46) Customer needs are related to the:
a. characteristics that can be used to subdivide a large market into segments.

b. set of values exhibited by a group of customers.
c. use of core competencies to implement a strategy.
d. benefits and features of a good or service that customers want to
purchase.
47) A company using a narrow scope in its business strategy is:
a. following a cost leadership business strategy.

b. focusing on a broad array of geographic markets.
c. limiting the group of product segments served.
d. likely to earn only average returns.
48) A cost leadership strategy provides goods or services with features that
are:
a. acceptable to customers.
b. unique to the customer.
c. highly valued by the customer.
d. able to meet unique needs of the customer
49) When the costs of supplies increase in an industry, the low-cost leader
may:
a. continue competing with rivals on the basis of product features.

b. lose customers as a result of price increases.
c. make it difficult for new entrants to the industry to achieve above-average
returns.
d. be the only firm able to pay the higher prices and continue to earn

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average or above- average returns.
50) The risks of a cost leadership strategy include:
a. becoming "stuck in the middle."

b. production and distribution processes becoming obsolete
c. the ability of competing firms to provide similar features in a product.
d. customers deciding the product isn't worth what the firm must charge for it.
51) A firm successfully implementing a differentiation strategy would expect:
a. customers to be sensitive to price increases.

b. to charge premium prices.
c. customers to perceive the product as standard.
d. to automatically have high levels of power over suppliers.
Answer: b. to charge premium prices.
52) A differentiation strategy provides products that customers perceive

as having:
a. acceptable features.
b. features of little value relative to the value provided by the low-cost leader's
product.
c. features for which the customer will pay a low price.
d. features that are non-standardized for which they are willing to pay a
premium.
53) When implementing a focus strategy, the firm seeks:

a. to be the lowest cost producer in an industry.
b. to offer products with unique features for which customers will pay a
premium.
c. to avoid being stuck in the middle.
d. to serve the specialized needs of a market segment.
Answer: d. to serve the specialized needs of a market segment.

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54) T or F? Firms operating in the same market, offering similar products and
targeting similar customers are competitors.
Answer: T
55) T or F? Intensified rivalry within an industry results in decreased average

profitability for the firms within it
Answer: T
56) T or F? Competitive dynamics indicates that firms and their strategic

actions are independent
Answer: F
57) T or F? Extensive market commonality guarantees intense competition in

an industry
Answer: F
58) T or F? Two firms that have similar resources, but do not share markets
would not be direct and mutually acknowledged competitors.
Answer: T
59) T or F? Wal-Mart has recently moved to Alsatia, Missouri. Several local

small retailers have decided that choosing not to respond to Wal-Mart's
competitive actions is a viable long-term option, because although the
companies have high market commonality they have little resource
similarity. These small retailers are correct in their decision
Answer: F
60) T or F? A competitive action is a strategic or tactical action taken by a

firm to gain or defend a competitive advantage.

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Answer: T
61) T or F? First movers can gain a sustained competitive advantage when

they reduce their costs through reverse engineering
Answer: F
62) T or F? Product quality is a universal theme and is a necessary, but not

a sufficient, condition for competitive success.
Answer: T
63) T or F? The probability of a competitive response to a competitive

action is based partly on the reputation of the competitor
Answer: T
64) Which of the following is not one of the appeals of an

unrelated diversification strategy?
A. The ability to spread business risk over truly diverse businesses (as
compared to related diversification which is limited to spreading risk only
among businesses with strategic fit)
B. An ability to employ the company's financial resources to maximum
advantage by investing in whatever industries/businesses offer the best profit
prospects
C. Superior top management ability to cope with the wide variety
of problems encountered in managing a broadly diversified group of
businesses

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65) Which of the following is not among the disadvantages and managerial
problems encountered by companies pursuing unrelated diversification
strategies?
A. Being without the added source of competitive advantage that cross-business

strategic fit provides
B. Spreading corporate resources too thinly over too many different lines of
business
C. The strain it places on corporate-level management in trying to stay on top
of fresh industry developments and the strategic progress and plans of each business
subsidiary
D. Ending up with too many cash hog businesses (as compared to
related diversification strategies where cash hog businesses are rare)
66) The two biggest drawbacks or disadvantages of

unrelated diversification are
A. The difficulties of passing the cost-of-entry test and the ease with which top
managers can make the mistake of diversifying into businesses where competition
is too intense
B. The difficulties of capturing financial fit and having insufficient financial
resources to spread business risk across many different lines of business
C. Demanding managerial requirements and being without the added
source of competitive advantage that cross-business strategic fit provides
67) The two biggest drawbacks or disadvantages of

unrelated diversification are
A. Underemphasizing the importance of resource fit and the strong likelihood of

diversifying into businesses that top management does not know all that much about

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B. Insufficient cash flows to finance so many different lines of business and a lack
of uniformity among the strategies of the businesses it has diversified into C.
Volatile sales and profits and making the mistake of diversifying into too many
cash cow businesses
D. The difficulties of competently managing many different businesses and
being without the added source of competitive advantage that cross-business
strategic fit provides
68) A fundamental weakness of unrelated diversification is
A. The tendency of corporate managers to place too much emphasis on

investing in cash cows rather than promising cash hogs
B. Reducing a company's access to economies of scope
C. Greater potential for there to be too much diversity among the competitive
strategies of the various business subsidiaries
D. The greater risk of getting trapped in tough struggles with strong
competitors
E. That the greater the number of businesses a company is in and the more
diverse they are, the harder it is for corporate managers to stay abreast of what's
happening in each industry and each subsidiary, know much about the problems and
issues each business
69) A fundamental weakness of unrelated diversification is
A. The tendency of corporate managers to place too much emphasis

on investing in cash cows rather than promising cash hogs
B. Reducing a company's access to economies of scope
C. Greater potential for there to be too much diversity among the competitive
strategies of the various business subsidiaries
D. The greater risk of getting trapped in tough struggles with strong competitors
E. That the greater the number of businesses a company is in and the more
diverse they are, the harder it is for corporate managers to stay abreast of
what's happening in each industry and each subsidiary, know much about the
problems and issues each business confronts and know what to do if a

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business unit stumbles and its results suddenly head downhill
70) To identify a diversified company's strategy, one should consider

such factors as
A. The extent to which the firm is broadly or narrowly diversified, whether
it is pursuing related or unrelated diversification (or a mixture of both) and the
recent moves it has made to divest businesses acquire new
businesses and strengthen the positions of existing businesses
B. Whether the company is focusing on "milking its cash cows" or "feeding its
cash hogs."
C. The technological proficiencies, labor skill requirements and functional area
strategies characterizing each of the firm's businesses
71) When identifying a diversified company's present corporate strategy,

which of the following would not be something to look for?
A. Recent moves to build positions in new industries

B. The company's approach to allocating investment capital and resources
across its present businesses
C. Recent management actions to strengthen the company's positions in existing
businesses
D. Recent moves to divest weak or unattractive business units
E. Actions over the past few years to substitute global strategies for multi-
country strategies in one or more business units
72) Which of the following is not a major consideration in evaluating the

pluses and minuses of a diversified company's strategy?
A. Checking whether the company's resources fit the requirements of its

present business lineup
B. Scrutinizing each industry/business to determine where driving
forces are strongest/weakest and how many profitable strategic groups the

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company has diversified into

C. Ranking the performance prospects of the various businesses from best to
worst and determining what the corporate parent's priorities should be in
allocating resources to its different businesses
73) Evaluating a diversified company's corporate strategy and critiquing the

pluses and minuses of its business lineup involves
A. A SWOT analysis of each industry in which the firm has a business interest
B. Applying the cost-of-entry test, the better-off test, the profitability test
and the shareholder value test to each business and industry represented in the
company's business portfolio
C. Evaluating the strategic fits and resource fits among the various sister
businesses and deciding what priority to give each of the
company's business units in allocating resources
74) Which one of the following is not an important aspect of evaluating the
merits of a diversified company's strategy?
A. Assessing the competitive strength of each business the company has

diversified into
B. Determining which business units are cash cows and which ones are cash
hogs and then evaluating how soon the company's cash hogs can be
transformed into cash cows
C. Evaluating the strategic fits and resource fits among the various sister
businesses
75) Which of the following is not generally something that ought to be

considered in evaluating the attractiveness of a diversified company's
business makeup?
A. Market size and projected growth rate, industry profitability and the
intensity of competition
B. Industry uncertainty and business risk
C. The frequency with which strategic alliances and collaborative

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partnerships are used in each industry, the extent to which firms in the
industry utilize outsourcing and whether the industries a company has
diversified into have common key success factors
76) Assessments of the long-term attractiveness of each industry represented

in a diversified company's lineup of businesses should be based on
A. A complete value-chain analysis of each industry

B. Whether the industries have the same kinds of driving forces
C. How many companies in each industry are making money and how many are
losing money
D. Quantitative industry attractiveness scores derived from rating each
industry on several relevant attractiveness measures (weighted according to
their relative importance in determining overall attractiveness)
77) The chief purpose of calculating quantitative

industry attractiveness scores for each industry a company has diversified
into is to
A. Determine which industry is the biggest and fastest growing

B. Get in position to rank the industries from most competitive to least
competitive
C. Provide a basis for drawing analysis-based conclusions about the
attractiveness of the industries a company has diversified into, both
individually and as a group and further to provide an indication of which
industries offer the best and worst long-term prospects
78) A weighted industry attractiveness assessment is generally analytically

superior to an unweighted assessment because
A. A weighted ranking identifies which industries offer the best/worst long-term

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profit prospects
B. An unweighted ranking doesn't discriminate between strong and weak
industry driving forces and industry competitive forces
C. It does a more accurate job of singling out which industry key success factors are
the most important
D. An unweighted ranking doesn't help identify which industries have the
easiest and hardest value chains to execute
E. The various measures of attractiveness are not likely to be equally
important in determining overall attractiveness
79) When industry attractiveness ratings are calculated for each of the
industries a multi-business company has diversified into, the results help
indicate
A. Which industries appear to be the best and worst ones to be in and the
attractiveness of all the industries as a group from the standpoint of the
company's long-term performance
B. Which industries have attractive key success factors and which industries
have unattractive key success factors
C. Which industries have the biggest economies of scale and which industries
have the greatest economies of scope and the overall potential for cost reduction in
the industries as a group
80) Calculating quantitative attractiveness ratings for the industries a

diversified company has invested in
A. Allows a company to rank the competitive advantage opportunities in

each industry from best to worst
B. Helps identify which industries have the best/worst prospects for
revenue growth
C. Identifies which industry has the best/worst value chain from the standpoint
of cost reduction potential
D. Provides a basis for deciding whether a diversified company has good
prospects for growth and profitability, given the attractiveness ratings of the
industries in which it has business interests

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81) Assessments of how a diversified company's subsidiaries compare

in competitive strength should be based on such factors as
A. Vulnerability to seasonal and cyclical downturns, vulnerability to driving

forces and vulnerability to fluctuating interest rates and exchange rates
B. Relative market share, ability to match or beat rivals on key product
attributes, brand image and reputation, costs relative to competitors and
ability to benefit from strategic fits with sister businesses
C. The appeal of its strategy, relative number of competitive capabilities, the
number of products in each businesses product line, which businesses have the
highest/lowest market shares and which businesses earn the highest/lowest profits
before taxes
82) The basic purpose of calculating competitive strength scores for each of
a diversified company's business units is to
A. Rank the business unit from best to worst in terms of potential for cost
reduction and profit margin improvement
B. Determine how strongly positioned each business unit is in its industry
and the extent to which it already is or can become a strong market
contender
C. Determine which business unit has the greatest number of resource strengths,
competencies and competitive capabilities and which one has the least
83) Using relative market share to assess a business's competitive strength

is analytically superior to straight percentage measures of market share
because relative market share
A. Is a better measure of a business's potential for increased sales
and profitability
B. Is a better indicator of competitive strength than is a simple percentage
measure of market share—for instance, a company with a 20% share is in a
much stronger competitive position if its largest rival has a share of 10%
(which means its relative market share is 2.0) than it is if its largest rival

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has a 30% market share (in which case the company's relative market
share is only 0.67)
84) A weighted competitive strength analysis of a diversified

company's business units is conceptually stronger than an unweighted
analysis because
A. It provides a more accurate assessment of the strength of cross-business

strategic fits
B. It provides better indication of which business units have the best strategy
(vis-à-vis the rival in their respective industry)
C. The different measures of competitive strength are unlikely to be
equally important
85) The value of determining the relative competitive strength of each business
a company has diversified into is
A. To have a quantitative basis for identifying which businesses have

large/small competitive advantages or competitive disadvantages vis-à-vis the
rivals in their respective industries
B. To have a quantitative basis for rating them from strongest to weakest
in terms of contributing to the corporate parent's revenue growth
C. To compare resource strengths and weaknesses, business by business
D. To have a quantitative basis for rating them from strongest to weakest
in contending for market leadership in their respective industries
86) The nine-cell industry attractiveness-competitive strength matrix
A. Is useful for helping decide which businesses should have high, average
and low priorities in allocating corporate resources
B. Indicates which businesses are cash hogs and which are cash cows
C. Pinpoints what strategies are most appropriate for businesses positioned in
the three top cells of the matrix but is less clear about the best strategies for

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businesses positioned in the bottom six cells
87) The most important strategy-making guidance that comes from drawing a
9-cell industry attractiveness-competitive strength matrix is
A. Which businesses in the portfolio have the most potential for strategic fit and
resource fit
B. Why cash cow businesses are more valuable than cash hog businesses
C. That corporate resources should be concentrated on those businesses
enjoying both a higher degree of industry attractiveness and competitive
strength and that businesses having low competitive strength in relatively
unattractive industries should be looked at for possible divestiture
88) One of the most significant contributions to strategy-making in diversified

companies that the 9-cell industry attractiveness/competitive strength matrix
provides is
A. Identifying which businesses have strategies that should be continued, which

business have strategies that need fine-tuning and which businesses have strategies
that need major overhaul
B. That businesses having the greatest competitive strength and positioned
in the most attractive industries should have the highest priority for corporate
resource allocation and that competitively weak businesses in relatively
unattractive industries should have the lowest priority and perhaps even be
considered for divestiture
C. Pinpointing what strategies are most appropriate for businesses positioned in
the four corners of the matrix (although the matrix reveals little about the best
strategies for businesses positioned in the remainder of the matrix)
89) In a diversified company, a business subsidiary has more competitive

advantage potential when

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A. It is a cash cow
B. It has value chain relationships with other business subsidiaries that present
competitively valuable opportunities to transfer skills or technology or
intellectual capital from one business to another, combine the performance of
related activities and reduce costs, share use of a well-respected brand name or
collaborate to create new competitive capabilities C. It is the company's biggest
profit producer or is capable of becoming the biggest
90) Checking a diversified company's business portfolio for the competitive

advantage potential of cross-business strategic fits does not involve
ascertaining
A. The extent to which sister business units have value chain match-ups that
offer opportunities to combine the performance of related value chain activities and
reduce costs
B. The extent to which sister business units have value chain match-ups that
offer opportunities to transfer skills or technology or intellectual capital from one
business to another
C. The extent to which sister business units have opportunities to share use of a
well-respected brand name
D. The extent to which sister business units have value chain match-ups that
offer opportunities to create new competitive capabilities or to leverage existing
resources
E. Which business units are cash cows and which ones are cash hogs
91) Checking a diversified firm's business portfolio for the competitive

advantage potential of cross-business strategic fits entails consideration of
A. Whether the parent's company's competitive advantages are being deployed
to maximum advantage in each of its business units
B. Whether the competitive strategies employed in each business act to
reinforce the competitive power of the strategies employed in the company's
other businesses
C. Whether the competitive strategies in each business possess good strategic
fit with the parent company's corporate strategy
D. The extent to which there are competitively valuable relationships
between the value chains of sister business units and what opportunities they
present to reduce costs, share use of a potent brand name, create
competitively valuable new capabilities via cross-business collaboration or

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transfer skills or technology or intellectual capital from one business to

another
92) Which of the following is not a part of checking a diversified company's

business units for cross-business competitive advantage potential?
A. Ascertaining the extent to which sister business units have value chain
match-ups that offer opportunities to combine the performance of related value
chain activities and reduce costs
B. Ascertaining the extent to which sister business units have value chain
match-ups that offer opportunities to transfer skills or technology or intellectual
capital from one business to another
C. Ascertaining the extent to which sister business units are making
maximum use of the parent company's competitive advantages
93) A diversified company's business units exhibit good resource fit when
A. Each business is a cash cow

B. A company has the resources to adequately support the requirements of
its businesses as a group without spreading itself too thin and when individual
businesses add to a company's overall strengths
C. Each business is sufficiently profitable to generate an attractive return
on invested capital
94) The businesses in a diversified company's lineup exhibit good resource fit
when
A. The resource requirements of each business exactly match the resources the
company has available
B. Individual businesses add to a company's resource strengths and when a

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company has the resources to adequately support the requirements of its

businesses as a group without spreading itself too thin
C. Each business is generates just enough cash flow annually to fund its own capital
requirements and thus does not require cash infusions from the corporate parent
95) A "cash cow" type of business
A. Generates unusually high profits and returns on equity investment

B. Is so profitable that it has no long-term debt
C. Generates positive cash flows over and above its internal requirements, thus
providing a corporate parent with cash flows that can be used for financing new
acquisitions, investing in cash hog businesses and/or paying dividends
96) A "cash hog" type of business
A. Is one that is losing money and requires cash infusions from its corporate
parent to continue operations
B. Is one that generates cash flows that are too small to fully fund its
operations and growth
C. Generates negative cash flows from internal operations and thus
requires cash infusions from its corporate parent to report a profit
97) The difference between a "cash-cow" business and a "cash hog" business
is that
A. A cash cow business is making money whereas a cash hog business is losing
money
B. A cash cow business generates enough profits to pay off long-term debt
whereas a cash hog business does not
C. A cash cow business generates positive retained earnings whereas a cash hog
business produces negative retained earnings

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D. A cash cow business produces large internal cash flows over and above
what is needed to build and maintain the business whereas the internal cash
flows of a cash hog business are too small to fully fund its operating needs
and capital requirements
98) The tests of whether a diversified company's businesses exhibit

resource fit do not include
A. Whether the excess cash flows generated by cash cow businesses are
sufficient to cover the negative cash flows of its cash hog businesses
B. Whether a business adequately contributes to achieving the corporate parent's
performance targets
C. Whether the company has adequate financial strength to fund its
different businesses and maintain a healthy credit rating
D. Whether the corporate parent has sufficient cash to fund the needs of its
individual businesses and pay dividends to shareholders without having to
borrow money
99) Which one of the following is not part of the task of checking a diversified
company's business line-up for adequate resource fit?
A. Determining whether the excess cash flows generated by cash cow

businesses are sufficient to cover the negative cash flows of its cash hog
businesses
B. Determining whether recently acquired businesses are acting to strengthen a
company's resource base and competitive capabilities or whether they are causing
its competitive and managerial resources to be stretched too thinly across its
businesses (sometimes newly-acquired businesses soak up a disproportionate share
of management's time and put a strain on other company resources)
C. Determining whether some business units have value chain match-ups
that offer opportunities to transfer skills or technology or intellectual capital
from one business to another

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100)Which one of the following is not a particularly relevant consideration in

deciding what the priorities should be for allocating resources to the various
businesses of a diversified company?
A. Whether and how corporate resources and capabilities can be used to

enhance the competitiveness of particular business units
B. What competitive strategy the business is presently using
C. Whether a business exhibits good strategic fit and resource fit with sister
businesses
101) Which one of the following is the best guideline for deciding what the
priorities should be for allocating resources to the various businesses of a
diversified company?
A. Businesses with high industry attractiveness ratings should be given top

priority and those with low industry attractiveness ratings should be given low
priority
B. Business subsidiaries with the brightest profit and growth prospects and solid
strategic and resource fits generally should head the list for corporate resource
support
C. The positions of each business in the nine-cell attractiveness-strength
matrix should govern resource allocation
102) Which one of the following is not a reasonable option for deploying a
diversified company's financial resources
A. Making acquisitions to establish positions in new businesses or to

complement existing businesses
B. Concentrating most of a company's financial resources in cash cow
businesses and allocating little or no additional resources to cash hog
businesses until they show enough strength to generate positive cash flows
C. Funding long-range R&D ventures aimed at opening market opportunities in

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new or existing businesses
103) The strategic options to improve a diversified company's overall

performance do not include which of the following categories of actions?
A. Broadening the company's business scope by making new acquisitions in
new industries
B. Increasing dividend payments to shareholders and/or repurchasing
shares of the company's stock
C. Restructuring the company's business lineup and putting a whole new face on
the company's business makeup
104) Once a company has diversified into a collection of related or unrelated

businesses and concludes that some strategy adjustments are needed, which one
of the following is not one of the main strategy options that a company can
pursue?
A. Pursue multinational diversification

B. Restructure the company's business lineup
C. Craft new initiatives to build/enhance the reputation of the
company's brand name
105) Retrenching to a narrower diversification base
A. Is usually the most attractive long-run strategy for a broadly diversified

company confronted with recession, high interest rates, mounting competitive
pressures in several of its businesses and sluggish growth
B. Has the advantage of focusing a diversified firm's energies on building
strong positions in a few core businesses rather the stretching its resources
and managerial attention too thinly across many businesses
C. Is an attractive strategy option for revamping a diverse business lineup that

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lacks strong cross-business financial fit
106) In which of the following instances is retrenching to a narrower

diversification base not likely to be an attractive or advisable strategy for a
diversified company?
A. When a diversified company has struggled to make certain businesses

attractively profitable
B. When a diversified company has too many cash cows
C. When one or more businesses are cash hogs with questionable long-term
potential
107) Strategies to restructure a diversified company's business lineup involves
A. Revamping the value chains of each of a diversified company's businesses

B. Focusing on restoring the profitability of its money-losing businesses and
thereby improving the company's overall profitability
C. Revamping the strategies of its different businesses, especially those that are
performing poorly
D. Divesting some businesses and acquiring new ones so as to put a new
face on a diversified company's business makeup
108) Corporate restructuring strategies
A. Involve making radical changes in diversified company's business

lineup, divesting some businesses and acquiring new ones so as to put a new
face on the company's business lineup
B. Entails reducing the scope of diversification to a smaller number of
businesses
C. Entail selling off marginal businesses to free up resources for
redeployment to the remaining businesses

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109) What sets a multinational diversification strategy apart from

other diversification strategies is
A. The presence of extra degrees of strategic fit and more economies of scope
B. The potential to have a higher degree of technological expertise
C. A diversity of businesses and a diversity of national markets
110) The sources of a competitive advantage for a diversified multinational

corporation do not include
A. Transferring competitively valuable resources from one business to another

and one country to another
B. The ability to exploit opportunities for both cross-business and cross-country
collaboration and strategic coordination
C. Leveraging use of a well-known and competitively powerful brand name
D. Pursuing cross-business economy of scope opportunities and striving to fully
capture scale economies
E. Trying to maximize the number of cash cow businesses and minimize the
number of cash hog businesses
111) Which one of the following is not a way for a company to build
competitive advantage by pursuing a multinational diversification
strategy?
A. Fully capturing economies of scale and experience curve effects as well

as cross-business economies of scope
B. Using cross-business or cross-country market subsidization to outcompete
rivals
C. Fully capturing both cross-business financial fits and cross-country financial
fits

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112) One of the biggest Internet-related strategic issues facing many businesses
is
A. Whether to have a company Web site

B. Whether and how to incorporate use of Internet technology applications in
performing various internal value chain activities
C. How best to try to offset the company's competitive disadvantage vis-à-vis
rivals that already sell direct to buyers at their Web site
D. Whether to form a strategic alliance with a pure dot-com enterprise
E. What role the company's Web site should play in the company's competitive
strategy
113) Which of the following is not one of the options that companies have for
using the Internet as a distribution channel to access buyers?
A. Establishing a company Web site so as to have an Internet presence

B. Operating a Web site that provides existing and potential customers with
extensive product information but that relies on click-throughs to distribution
channel partners to handle orders and sales transactions
C. Using online sales at the company's Web site as a relatively
minor distribution channel for achieving incremental sales
114) One very important advantage of a product-information-only Web site

strategy is
A. Lower advertising costs and lower customer service costs

B. Avoiding the extra costs associated with operating Web site e-stores
C. Added ability to interest potential buyers in purchasing the
company's products
D. Avoiding channel conflict

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115) The advantages of a brick-and-click strategy include
A. Being able to attract bargain-hunting shoppers by selling the company's

merchandise online at lower prices than in traditional retail stores
B. Being able to offer a much wider product line than is stocked at brick-and-
mortar stores
C. Low incremental investments to establish a Web site, the ability to
access a wider customer base and the ability to use existing distribution
centers and/or company store locations for picking orders from on-hand
inventories and making deliveries
116) Two big appeals of a brick-and-click strategy are
A. Lower advertising costs and enhanced ability to charge lower prices than
rivals
B. Economically expanding a company's geographic reach and giving
existing and potential customers another choice of how to communicate with
the company, shop for company products, make purchases or resolve
customer service problems
C. Low incremental investments to establish a Web site and the ability of
customers to use existing company store locations to view and inspect items
prior to purchase
117) A company that elects to use the Internet as its exclusive channel
for accessing buyers must address such strategic issues as
A. Whether it will have a broad or narrow product offering

B. How it will deliver unique value to buyers
C. How it will draw traffic to its Web site and then convert page views into
revenues
D. Whether it will perform order fulfillment activities internally or
outsource them
E. All of the above

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118) Assuming a company elects to use the Internet as its exclusive channel
for accessing buyers, then which of the following is not one of the strategic
issues that it will need to address?
A. Whether to pursue a competitive advantage based on low-costs,

differentiation or more value for the money
B. How to deliver unique value to buyers
C. How to draw traffic to its Web site and then convert page views into
revenues
D. Whether to employ a forward integration strategy
119) In which of the following instances is being a first-mover not particularly

advantageous?
A. When a pioneer is using a low-cost provider strategy
B. When buyers are not loyal to pioneering firms in making repeat
purchases
C. When a pioneer is pursuing product innovation
120) Because when to make a strategic move can be just as important as what
move to make, a company's best option with respect to timing is
A. To be the first mover

B. To be a fast follower
C. To be a late mover (because it is cheaper and easier to imitate the
successful moves of the leaders and moving late allows a company to avoid the
mistakes and costs associated with trying to be a pioneer—first-mover
disadvantages usually overwhelm first-mover advantages)
D. To be the last-mover—playing catch-up is usually fairly easily and nearly
always much cheaper than any other option
E. To carefully weigh the first-mover advantages against the first-mover
disadvantages and act accordingly

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121) When the race among rivals for industry leadership is a marathon rather
than a sprint,
A. It is best to be a fast follower rather than a first mover or a slow mover

B. Fast followers find it easy to leapfrog the pioneer with even better next-
generation products of their own
C. A slow mover may not be unduly penalized and first-mover advantages
can be fleeting
122) First-mover disadvantages arise when
A. The costs of pioneering are much higher than being a follower and only
negligible buyer loyalty or cost savings accrue to the pioneer
B. Technological change is rapid and following rivals find it easy to
leapfrog the pioneer with next-generation products of their own
C. The pioneer's skills, know-how and products are easily copied or even bested
by late movers
D. All of these
123) In which of the following cases are first-mover disadvantages not likely to
arise?
A. When the costs of pioneering are much higher than being a follower and only
negligible buyer loyalty or cost savings accrue to the pioneer
B. When new infrastructure is needed before market demand can surge
C. When the pioneer's skills, know-how and products are easily copied or even
bested by late movers

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124) The task of crafting corporate strategy for a diversified

company encompasses
A. Picking the new industries to enter and deciding on the means of entry
B. Initiating actions to boost the combined performance of the businesses the
firm has entered
C. Pursuing opportunities to leverage cross-business value chain relationships
and strategic fits into competitive advantage
D. Establishing investment priorities and steering corporate resources into the
most attractive business units
E. All of these
125) Which one of the following is not one of the elements of crafting corporate
strategy for a diversified company?
A. Picking new industries to enter and deciding on the means of entry

B. Choosing the appropriate value chain for each business the company has
entered
C. Pursuing opportunities to leverage cross-business value chain relationships
and strategic fits into competitive advantage
126) Diversification merits strong consideration whenever a single-business

company
A. Has integrated backward and forward as far as it can

B. Is faced with diminishing market opportunities and stagnating sales in
its principal business
C. Has achieved industry leadership in its main line of business
127) Diversification ought to be considered when
A. A company's profits are being squeezed and it needs to increase its net
profit margins and return on investment

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B. A company lacks sustainable competitive advantage in its present business

C. A company begins to encounter diminishing growth prospects in its
mainstay business
128) Diversification becomes a relevant strategic option in all but which one of
the following situations?
A. When a company spots opportunities to expand into industries whose

technologies and products complement its present business
B. When a company is only earning a low profit margin in its principal
business
C. When a company has a powerful and well-known brand name that can be
transferred to the products of other businesses and thereby used as a lever for
driving up the sales and profits of such businesses
129) Diversifying into new businesses is justifiable only if it
A. Results in increased profit margins and bigger total profits

B. Builds shareholder value
C. Helps acompany escape the rigors of competition in its present business
130) To create value for shareholders via diversification, a company must
A. Get into new businesses that are profitable

B. Diversify into industries that are growing rapidly
C. Spread its business risk across various industries by only acquiring firms that
are strong competitors in their respective industries
D. Diversify into businesses that can perform better under a single

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corporate umbrella than they could perform operating as independent,

stand-alone businesses
131) The three tests for judging whether a particular diversification move
can create value for shareholders are
A. The attractiveness test, the profitability test and the shareholder value test
B. The strategic fit test, the competitive advantage test and the return on
investment test
C. The resource fit test, the profitability test and the shareholder value test
D. The attractiveness test, the cost-of-entry test and the better-off test
132) To test whether a particular diversification move has good prospects for
creating added shareholder value, corporate strategists should use
A. The profit test, the competitive strength test, the industry attractiveness test
and the capital gains test
B. The better-off test, the competitive advantage test, the profit expectations test
and the shareholder value test
C. The barrier to entry test, the competitive advantage test, the growth test
and the stock price effect test
D. The strategic fit test, the industry attractiveness test, the growth test,
the dividend effect test and the capital gains test
E. The attractiveness test, the cost of entry test and the better-off test
133) The attractiveness test for evaluating whether diversification into

a particular industry is likely to build shareholder value involves
determining whether

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A. Conditions in the target industry are sufficiently attractive to permit

earning consistently good profits and returns on investment
B. The potential diversification move will boost the company's competitive
advantage in its existing business
C. Shareholders will viewed the contemplated diversification move as attractive
134) The cost-of-entry test for evaluating whether diversification into a

particular industry is likely to build shareholder value involves
A. Determining whether a newly entered business presents opportunities to

cost-efficiently transfer competitively valuable skills or technology from one
business to another
B. Determining whether the cost to enter the target industry will strain
the company's credit rating
C. Considering whether a company's costs to enter the target industry are
low enough to preserve attractive profitability or so high that the potentials for
good profitability and return on investment are eroded
135) The better-off test for evaluating whether a particular diversification

move is likely to generate added value for shareholders involves
A. Assessing whether the diversification move will make the company

better off because it will produce a greater number of core competencies
B. Assessing whether the diversification move will make the company better off
by improving its balance sheet strength and credit rating
C. Assessing whether the diversification move will make the company better off
by spreading shareholder risks across a greater number of businesses and industries
D. Evaluating whether the diversification move will produce a 1 + 1 =3
outcome such that the company's different businesses perform better
together than apart and the whole ends up being greater than the sum of the
parts

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136) Acquisition of an existing business is an attractive strategy option for

entering a promising new industry because it
A. Is an effective way to hurdle entry barriers, is usually quicker than trying

to launch a brand-new start-up operation and allows the acquirer to move
directly to the task of building a strong position in the target industry
B. Is less expensive than launching a new start-up operation, thus passing the
cost-of-entry test
C. Is a less risky way of passing the attractiveness test
137) Internal start-up of a new business subsidiary can be a more attractive

means of entering a desirable new business than is acquiring an existing
firm already in the targeted industry when
A. The costs associated with internal startup are less than the costs of
buying an existing company and the company has ample time and adequate
resources to launch the new internal start-up business from the ground up
B. There is a small pool of desirable acquisition candidates
C. The target industry is growing rapidly and no good joint venture partners are
available
138) The most popular strategy for entering new businesses and
accomplishing diversification is
A. Forming a joint venture with another company to enter the target industry
B. Internal startup
C. Acquisition of an existing business already in the chosen industry
139) A company can best accomplish diversification into new industries by

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A. Outsourcing most of the value chain activities that have to be performed in the
target business/industry
B. Acquiring a company already operating in the target industry, creating a
new subsidiary internally to compete in the target industry or forming a joint
venture with another company to enter the target industry
C. Integrating forward or backward into the target industry
140) Which one of the following is not a factor that makes it appealing to
diversify into a new industry by forming an internal start-up subsidiary to
enter and compete in the target industry?
A. When internal entry is cheaper than entry via acquisition

B. When a company possesses the skills and resources to overcome entry
barriers and there is ample time to launch the business and compete effectively
C. When adding new production capacity will not adversely impact the
supply demand balance in the industry by creating oversupply conditions
D. When the industry is growing rapidly and the target industry is
comprised of several relatively large and well-established firms
141) Diversifying into a new industry by forming a new internal subsidiary to

enter and compete in the target industry is attractive when
A. All of the potential acquisition candidates are losing money

B. It is impractical to outsource most of the value chain activities that have to
be performed in the target business/industry
C. There is ample time to launch the new business from the ground up and
entry barriers can be hurdled at acceptable cost
142) A joint venture is an attractive way for a company to enter a new industry
when
A. A firm is missing some essential skills or capabilities or resources and

needs a partner to supply the missing expertise and competencies or fill the
resource gaps

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B. It needs access to economies of scope and good financial fits in order to be

cost-competitive
C. It is uneconomical for the firm to achieve economies of scope on its own
initiative
143) A joint venture is an attractive way for a company to enter a new industry
when
A. The pool of attractive acquisition candidates in the target industry

is relatively small
B. It needs better access to economies of scope in order to be cost-competitive
C. The industry is growing slowly and adding too much capacity too soon could
create oversupply conditions
D. The firm has no prior experience with diversification and the industry is on
the verge of explosive growth
E. The opportunity is too risky or complex for a company to pursue alone,
a company lacks some important resources or competencies and needs a
partner to supply them and/or a company needs a local partner in order to
enter a desirable business in a foreign country
144) The essential requirement for different businesses to be "related" is that
A. Their value chains possess competitively valuable cross-business

relationships
B. The products of the different businesses are bought by much the same types
of buyers
C. The products of the different businesses are sold in the same types of
retail stores
145) Businesses are said to be "related" when
A. They have several key suppliers and several key customers in common

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B. Their value chains have the same number of primary activities C.

Their products are both sold through retailers
D. Their value chains possess competitively valuable cross-business
relationships that present opportunities to transfer resources from one
business to another, combine similar activities and reduce costs, share use of
a well-known brand name and/or create mutually useful resource strengths
and capabilities
146) Which of the following is the best example of related diversification?
A. An airline firm acquiring a rent-a-car company

B. A greeting card manufacturer deciding to open a chain of stores to retail its
lines of greeting cards
C. A manufacturer of ready-to-eat cereals acquiring a producer of cake
mixes and baking products
147) Which of the following is the best example of related diversification?
A. A beer brewer acquiring a maker of aluminum cans

B. A manufacturer of canoes diversifying into the production of tennis rackets
C. A PC producer deciding to diversify into producing and marketing its
own brands of MP3 players and LCD TVs
148) A big advantage of related diversification is that
A. It offers ways for a firm to realize 1 + 1 = 3 benefits because the value

chains of the different businesses present competitively valuable cross-
business relationships
B. It is less capital intensive and usually more profitable than
unrelated diversification
C. It involves diversifying into industries having the same kinds of key success

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factors
149) Which of the following is not one of the appeals of related diversification?
A. It can offer opportunities for transferring expertise, technology and other

capabilities from one business to another
B. It can offer opportunities for reducing costs and for leveraging use of a
competitively powerful brand name
C. Related diversification is particularly well-suited for the use of offensive
strategies and capturing valuable financial fits
150) Which of the following is an important appeal of a related diversification

strategy?
A. Related diversification is an effective way of capturing valuable financial fit

benefits
B. Related diversification offers more competitive advantage potential than
does unrelated diversification
C. Related diversification offers significant opportunities to strongly
differentiate a company's product offerings from those of rivals
151) A company pursuing a related diversification strategy would likely

address the issue of what additional industries/businesses to diversify into by
A. Locating businesses with well-known brand names and large market shares
B. Identifying industries with the least competitive intensity
C. Identifying an attractive industry whose value chain has good strategic
fit with one or more of the firm's present businesses

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152) One strategic fit-based approach to related diversification would be to
A. Diversify into new industries that present opportunities to transfer

competitively valuable expertise, technological know-how or other
skills/capabilities from one sister business to another
B. Diversify into those industries where the same kinds of driving forces and
competitive forces prevail, thus allowing use of much the same competitive
strategy in all of the business a company is in
C. Acquire rival firms that have broader product lines so as to give the
company access to a wider range of buyer groups
153) The best place to look for cross-business strategic fits is
A. In R&D and technology activities

B. In supply chain activities
C. In sales and marketing activities
D. In production and distribution activities
E. Anywhere along the respective value chains of related businesses—no
one place is best
154) Cross-business strategic fits can be found
A. In unrelated as well as related businesses and in the markets of

foreign countries as well as in domestic markets
B. Only in businesses whose products/services satisfy the same general types
of buyer needs and preferences
C. Mainly in either technology related activities or sales and marketing
activities
D. Chiefly in the R&D portions of the value chains of unrelated businesses
E. Anywhere along the respective value chains of related businesses

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155) Which of the following statements about cross-business strategic fit in a

diversified enterprise is not accurate?
A. Strategic fit between two businesses exists when the management know-how
accumulated in one business is transferable to the other
B. Strategic fit exists when two businesses present opportunities to economize
on marketing, selling and distribution costs
C. Competitively valuable cross-business strategic fits are what enable
related diversification to produce a 1 + 1 = 3 performance outcome
D. Strategic fit is primarily a byproduct of unrelated diversification and
exists when the value chain activities of unrelated businesses possess
economies of scope and good financial fit
156) Economies of scope
A. Are cost reductions that flow from operating in multiple businesses

B. Arise only from strategic fit relationships in the production portions of the
value chains of sister businesses
C. Are more associated with unrelated diversification than
related diversification
157) Economies of scope
A. Stem from the cost-saving efficiencies of operating over a wider geographic

area
B. Have to do with the cost-saving efficiencies of distributing a firm's product
through many different distribution channels simultaneously
C. Stem from cost-saving strategic fits along the value chains of related
businesses

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158) Which of the following best illustrates an economy of scope?
A. Being able to eliminate or reduce costs by combining related value-chain

activities of different businesses into a single operation
B. Being able to eliminate or reduce costs by performing all of the value chain
activities of related sister businesses at the same location
C. Being able to eliminate or reduce costs by extending the firm's scope of
operations over a wider geographic area
159) What makes related diversification an attractive strategy is

A. The ability to broaden the company's product line
B. The opportunity to convert cross-business strategic fits into competitive
advantages over business rivals whose operations don't offer comparable
strategic fit benefits
C. The potential for improving the stability of the company's financial
performance
160) A diversified company that leverages the strategic fits of its related
businesses into competitive advantage
A. Has a distinctive competence in its related businesses

B. Has a clear path to achieving 1 + 1 = 3 gains in shareholder value
C. Has a clear path to global market leadership in the industries where it has
related businesses
161) A strategy of diversifying into unrelated businesses
A. Is aimed at achieving good financial fit (whereas related diversification aims

at good strategic fit)

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B. Is the best way for a company to pass the attractiveness test in choosing
which types of businesses/industries to enter
C. Discounts the value and importance of strategic fit benefits and instead
focuses on building and managing a group of businesses capable of delivering
good financial performance irrespective of the industries these businesses are
in
162) Different businesses are said to be "unrelated" when
A. They are in different industries

B. The products of the different businesses are not bought by the same types of
buyers or sold in the same types of retail stores
C. The products of the different businesses satisfy different buyer needs
D. The businesses have different supply chains and different types of suppliers
E. There is an absence of competitively valuable strategic fits between their
respective value chains
163) The basic premise of unrelated diversification is that
A. The least risky way to diversify is to seek out businesses that are leaders
in their respective industry
B. The best companies to acquire are those that offer the greatest economies of
scope rather than the greatest economies of scale
C. The best way to build shareholder value is to acquire businesses with strong
cross-business financial fit
D. Any company that can be acquired on good financial terms and that has
satisfactory growth and earnings potential represents a good acquisition and a
good business opportunity
164) Which of the following is the best example of unrelated diversification?

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A. A chain of radio stations acquiring TV stations

B. An electrical equipment manufacturer acquiring an athletic footwear
company
C. A producer of canned soups acquiring a maker of breakfast cereals
165) In companies pursuing a strategy of unrelated diversification,
A. The main basis for competitive advantage and improved shareholder value is
increased ability to achieve economies of scope
B. Each business is on its own in trying to build a competitive edge and the
consolidated performance of the businesses is likely to be no better than the
sum of what the individual businesses could achieve if they were independent
C. There is a strong chance that the combined competitive advantages of the
various businesses will produce a 1 + 1 = 3 performance outcome as opposed to just
a 1 + 1 = 2 performance outcome
166) In diversified companies with unrelated businesses, the strategic attention

of top executives tends to be focused on
A. Screening acquisition candidates and evaluating the pros and cons or

keeping or divesting existing businesses
B. Identifying acquisition candidates that can pass the better-off test
C. Identifying opportunities to achieve greater economies of scope
167) Which of the following is not likely to command much strategic attention
from the top executives of companies pursuing an unrelated diversification
strategy?
A. Acquiring new businesses with attractive profit prospects

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B. Whether existing businesses should be retained or divested based on their

ability to meet corporate targets for profit and returns on investment
C. Looking for new businesses that present good opportunities for
achieving economies of scope
168) Which of the following merits top priority attention by top executives of
companies pursuing an unrelated diversification strategy?
A. Acquiring new businesses that utilize much the same technology as existing
businesses
B. Whether to keep or divest businesses whose competitive strategies do not
match the overall competitive strategy of the corporation
C. Looking for new businesses having attractive distribution-related and
customer-related strategic fits with existing businesses
D. Identifying acquisition candidates that are financially distressed, can be
acquired at a bargain price and whose operations can, in management's
opinion, be turned around with the aid of the parent company's financial
resources and managerial know-how
169) With an unrelated diversification strategy, the types of companies that

make particularly attractive acquisition targets are
A. Financially distressed companies with good turnaround potential,

undervalued companies that can be acquired at a bargain price and
companies that have bright growth prospects but are short on investment
capital
B. Companies offering the biggest potential to reduce labor costs
C. Cash cow businesses with excellent financial fit
170) A key issue in companies pursuing an unrelated diversification strategy is
A. How wide a net to cast in building a portfolio of unrelated businesses

B. Whether to keep or divest businesses whose technological approaches do not

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match the overall technology and R&D strategy of the corporation

C. How quickly to divest businesses whose competitive strategies do not closely
match the competitive strategies of sister businesses
171) One of the chief advantages of an unrelated diversification strategy is that

it
A. Expands a firm's competitive advantage opportunities to include a

wider array of businesses
B. Spreads the stockholders' risks across a group of truly diverse
businesses
C. Increases strategic fit opportunities and the potential for a 1 + 1 =3 outcome
on the bottom line
172) What sets focused (or market niche) strategies apart from low-cost
leadership and broad differentiation strategies is
A. The extra attention paid to top-notch product performance and product

quality
B. Their concentrated attention on serving the needs of buyers in a
narrow piece of the overall market
C. Greater opportunity for competitive advantage
173) Companies pursuing a focused low-cost or focused differentiation strategy

strive to
A. Build a value-based competitive advantage keyed to product uniqueness

B. Develop the capability to simultaneously serve buyers in a variety of distinct
and different market segments
C. Do a better job of serving the needs and expectations of buyers in the
target market niche than other competitors in the industry

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174) A focused low-cost strategy seeks to achieve competitive advantage by
A. Outmatching competitors in offering niche members an absolute rock-

bottom price
B. Delivering more value for the money than other competitors
C. Performing the primary value chain activities at a lower cost per unit
than can the industry's low-cost leaders
D. Dominating more market niches in the industry via a lower cost and a lower
price than any other rival
E. Serving buyers in the target market niche at a lower cost and lower
price than rivals
175) The chief difference between a low-cost leader strategy and a focused low-
cost strategy is
A. Whether the product is strongly differentiated or weakly differentiated from

rivals
B. The degree of bargaining power that buyers have
C. The size of the buyer group that a company is trying to appeal to
176) A focused differentiation strategy aims at securing competitive advantage
A. By providing niche members with a top-of-the-line product at a premium

price
B. By catering to buyers looking for an upscale product at an attractively
low price
C. With a product offering carefully designed to appeal to the unique
preferences and needs of a narrow, well-defined group of buyers

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177) A focused low-cost strategy can lead to attractive competitive

advantage when
A. Buyers are looking for the best value at the best price
B. Buyers are looking for a budget-priced product
C. Buyers are price sensitive and are attracted to brands with low switching
costs
D. Demand in the target market niche is growing rapidly and a company can
achieve a big enough volume to fully capture all the available scale economies
E. A firm can lower costs significantly by limiting its customer base to a
well-defined buyer segment; its two options for achieving a low-cost
advantage are (1) out-managing rivals in controlling the factors that drive
costs and (2) reconfiguring its value chain in ways that deliver a cost edge
over rivals
178) The chief difference between a broad differentiation strategy and a

focused differentiation is
A. The size of the buyer group that a company is trying to appeal to

B. The degree of bargaining power that buyers have
C. Whether the product is strongly differentiated or weakly differentiated from
rivals
179) Which one of the following does not represent market circumstances that
make a focused low-cost or focused differentiation strategy attractive?
A. When it is costly or difficult for multi-segment competitors to put

capabilities in place to meet the specialized needs of the target market niche and at
the same time satisfy the expectations of their mainstream customers
B. When the industry has many different segments and market niches, thereby
allowing a focuser to pick an attractive niche suited to its resource strengths and
capabilities
C. When industry leaders do not see that having a presence in the niche is
crucial to their own success

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D. When the target market niche is not overcrowded with a number of other
rivals attempting to focus on the same niche
E. When buyers are not strongly brand loyal and most industry
competitors are pursuing some sort of a focused strategy
180) The risks of a focused strategy based on either low-cost or differentiation

include
A. The chance that competitors outside the niche will find effective ways to
match the focuser's capabilities in serving the target niche
B. The potential for the preferences and needs of niche members to shift
over time towards many of the same product attributes and capabilities desired
by buyers in the mainstream portion of the market
C. The potential for the segment to become so attractive that it is soon
inundated with competitors, intensifying rivalry and splintering sales, profits
and growth prospects
D. The potential for segment growth to slow to such a small rate that a focuser's
prospects for future sales and profit gains become unacceptably dim
E. All of these
181) The production emphasis of a company pursuing a broad differentiation

strategy usually involves
A. A search for continuous cost reduction without sacrificing acceptable quality

and essential features
B. Strong efforts to be a leader in manufacturing process innovation
C. Efforts to build-in whatever differentiating features that buyers are
willing to pay for and striving for product superiority
182) The marketing emphasis of a company pursuing a broad differentiation

strategy usually is to

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A. Underprice rival brands with comparable features

B. Tout differentiating features and charge a premium price that more
than covers the extra costs of differentiating features
C. Out-advertise rivals and make frequent use of discount coupons
183) The marketing emphasis of a company pursuing a focused low-cost

provider strategy usually is to
A. Tout the company's lower prices

B. Tout the lack of frills and extras
C. Out-advertise rivals and make frequent use of discount coupons
D. Communicate the attractive features of a budget-priced product
offering that fits niche members' expectations
184) One of the big dangers in crafting a competitive strategy is that managers,
torn between the pros and cons of the various generic strategies, will opt for
A. A low-cost provider strategy because it is usually the safest, least risky

competitive strategy
B. A "stuck-in-the-middle" strategy
C. A broad differentiation strategy because it is frequently the most profitable
competitive strategy
185) Once a company has decided to employ a particular generic competitive

strategy, then it must make such additional strategic choices as
A. Whether to enter into strategic alliances or collaborative partnerships

B. Whether and when to employ offensive and defensive moves
C. What type of Web site strategy to employ

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186) Which one of the following is not a strategic choice that a company must
make to complement and supplement its choice of one of the five generic
competitive strategies?
A. Whether to enter into strategic alliances or collaborative partnerships

B. Whether and when to employ offensive and defensive moves
C. Whether to employ a market share leadership strategy
187) Strategic alliances
A. Are the cheapest means of developing new technologies and getting new
products to market quickly
B. Are collaborative arrangements where two or more companies join
forces to achieve mutually beneficial strategic outcomes
C. Are a proven means of reducing the costs of performing value chain
activities
188) A strategic alliance
A. Is a collaborative arrangement where companies join forces to defeat mutual

competitive rivals
B. Involves two or more companies joining forces to pursue vertical integration
C. Is a formal agreement between two or more companies in which there is
strategically relevant collaboration of some sort, joint contribution of
resources, shared risk, shared control and mutual dependence
189) Entering into strategic alliances and collaborative partnerships can be

competitively valuable because
A. Working closely with outsiders is essential in developing new

technologies and new products in virtually every industry
B. Cooperative arrangements with other companies are very helpful in

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racing against rivals to build a strong global presence and/or racing to seize
opportunities on the frontiers of advancing technology
C. They represent highly effective ways to achieve low-cost leadership and
capture first-mover advantages
190) The best strategic alliances
A. Are highly selective, focusing on particular value chain activities and on

obtaining a particular competitive benefit
B. Are those whose purpose is to create an industry key success factor
C. Are those which help a company move quickly from one strategic group
to another
191) Companies racing against rivals for global market leadership need
strategic alliances and collaborative partnerships with companies in
foreign countries in order to
A. Combat the bargaining power of foreign suppliers and help defend against
the competitive threat of substitute products produced by foreign rivals
B. Help raise needed financial capital from foreign banks and use the brand
names of their partners to make sales to foreign buyers
C. Get into critical country markets quickly and accelerate the process of
building a potent global presence, gain inside knowledge about unfamiliar
markets and cultures and access valuable skills and competencies that are
concentrated in particular geographic locations
192) A company racing to seize opportunities on the frontiers of advancing

technology often utilizes strategic alliances and collaborative partnerships in
order to
A. Discourage rival companies from merging with or acquiring the very

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companies that it is partnering with

B. Reduce overall business risk and raise entry barriers into the newly emerging
industry
C. Help master new technologies and build new expertise and competencies
faster than would be possible through internal efforts, establish a stronger
beachhead for participating in the target industry and open up broader
opportunities in the target industry by melding their capabilities with the
resources and expertise of partners
193) Which of the following is not a typical reason that many alliances prove
unstable or break apart?
A. Diverging objectives and priorities

B. An inability to work well together
C. The emergence of more attractive technological paths that are better pursued
alone or with other partners
D. Disagreement over how to divide the profits gained from joint
collaboration
194) Experience indicates that strategic alliances
A. Are generally successful

B. Work well in cooperatively developing new technologies and new products
but seldom work well in promoting greater supply chain efficiency
C. Work best when they are aimed at achieving a mutually beneficial
competitive advantage for the allies
D. Have a high "divorce rate."
195) Which of the following is not a factor that makes an alliance "strategic" as
opposed to just a convenient business arrangement?
A. The alliance is critical to the company's achievement of an important

objective

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B. The alliance helps block a competitive threat

C. The alliance helps open up important new market opportunities D.
The alliance helps build, enhance or sustain a core competence or
competitive advantage
E. The alliance helps the company obtain additional financing on better
credit terms
196) The Achilles heel (or biggest disadvantage/danger/pitfall) of

relying heavily on alliances and cooperative strategies is
A. That partners will not fully cooperate or share all they know, preferring
instead to guard their most valuable information and protect their more valuable
know-how
B. Becoming dependent on other companies for essential expertise and
capabilities
C. The added time and extra expenses associated with engaging in collaborative
efforts
197) Which of the following is not one of the factors that affects whether a
strategic alliance will be successful and realize its intended benefits?
A. Picking a good partner

B. Recognizing that the alliance must benefit both sides
C. Minimizing the amount of resources that the partners commit to the
alliance
198) Which one of the following is not a strategically beneficial reason why a
company may enter into strategic partnerships or cooperative arrangements
with key suppliers, distributors or makers of complementary products?
A. To improve access to new markets

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B. To expedite the development of promising new technologies or products C.

To enable greater vertical integration
199) The competitive attraction of entering into strategic alliances

and collaborative partnerships is
A. In allowing companies to bundle competencies and resources that are

more valuable in a joint effort than when kept separate
B. Speeding new products to market more quickly
C. Enabling greater vertical integration
200) The difference between a merger and an acquisition is that
A. A merger involves one company purchasing the assets of another company

with cash, whereas an acquisition involves a company acquiring another company
by buying all of the shares of its common stock
B. A merger is a pooling of equals whereas an acquisition involves
one company, the acquirer, purchasing and absorbing the operations of
another company, the acquired
C. In a merger the companies retain their original names whereas in an
acquisition the name of the company being acquired is changed to be the name of
the acquiring company
201) Which of the following is not a typical strategic objective or benefit that
drives mergers and acquisitions?
A. To gain quick access to new technologies or other resources and capabilities

B. To create a more cost-efficient operation out of the combined companies
C. To expand a company's geographic coverage

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D. To facilitate a company's shift from a broad differentiation strategy to a

focused differentiation strategy
202) Mergers and acquisitions are often driven by such strategic objectives as
to
A. Expand a company's geographic coverage or extend its business

into new product categories
B. Reduce the number of industry key success factors
C. Reduce the number of strategic groups in the industry
203) Merger and acquisition strategies

A. Are nearly always a superior strategic alternative to forming alliances
or partnerships with these same companies
B. May offer considerable cost-saving opportunities (perhaps helping to
transform otherwise high-cost companies into a competitor with average or
below-average costs) and can also be beneficial in helping a company try to
invent a new industry and lead the convergence of industries whose boundaries
are being blurred by changing technologies and new market opportunities
C. Are a particularly effective way of pursuing a blue ocean strategy and
outsourcing strategies
204) Mergers and acquisitions

A. Are nearly always successful in achieving their desired purpose
B. Frequently do not produce the hoped-for outcomes
C. Are generally less effective than forming alliances or partnerships with these
same companies
205) Vertical integration strategies

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A. Extend a company's competitive scope within the same industry by

expanding its operations across more parts of the industry value chain
B. Are one of the best strategic options for helping companies win the race for
global market leadership
C. Offer good potential to expand a company's lineup of products and services
206) The two best reasons for investing company resources in vertical
integration (either forward or backward) are to
A. Expand into foreign markets and/or control more of the industry value chain
B. Broaden the firm's product line and/or avoid the need for outsourcing
C. Enable use of offensive strategies and/or gain a first mover advantage
over rivals in revamping the industry value chain
D. Strengthen the company's competitive position and/or boost its
profitability
207) For backward vertical integration into the business of suppliers to be a

viable and profitable strategy, a company
A. Must first be a proficient manufacturer

B. Must be able to achieve the same scale economies as outside suppliers
and match or beat suppliers' production efficiency with no drop-off in
quality
C. Must have excess production capacity, so that it has ample in-house ability to
undertake additional production activities
208) The strategic impetus for forward vertical integration is to
A. Gain better access to end users and better market visibility

B. Achieve the same scale economies as wholesale distributors and/or
retail dealers

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C. Control price at the retail level
209) Which of the following is typically the strategic impetus for forward
vertical integration?
A. Being able to control the wholesale/retail portion of the industry value chain
B. Fewer disruptions in the delivery of the company's products to end-users
C. Gaining better access to end users and better market visibility
210) A good example of vertical integration is

A. A global public accounting firm acquiring a small local or regional public
accounting firm
B. A large supermarket chain getting into convenience food stores
C. A crude oil refiner purchasing a firm engaged in drilling and exploring
for oil
211) Which of the following is not a potential advantage of backward vertical

integration?
A. Reduced vulnerability to powerful suppliers (who may be inclined to

raise prices at every opportunity)
B. Reduced risks of disruptions in obtaining crucial components or support
services
C. Reduced costs
D. Reduced business risk because of controlling a bigger portion of the
overall industry value chain
212) Which of the following is not a strategic disadvantage of

vertical integration?
A. Vertical integration boosts a firm's capital investment in the industry, thus

increasing business risk if the industry becomes unattractive later
B. Vertical integration backward into parts and components manufacture can

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impair a company's operating flexibility when it comes to changing out the use of
certain parts and components
C. Vertical integration reduces the opportunity for achieving greater
product differentiation
213) Outsourcing strategies
A. Are nearly always a more attractive strategic option than merger and
acquisition strategies
B. Carry the substantial risk of raising a company's costs
C. Carry the substantial risk of making a company overly dependent on its
suppliers
D. Increase a company's risk exposure to changing technology and/or changing
buyer preferences
E. Involve farming out value chain activities presently performed in-house
to outside specialists and strategic allies
214) Outsourcing the performance of value chain activities presently performed

in-house to outside vendors and suppliers makes strategic sense when
A. An activity can be performed better or more cheaply by outside specialists

B. It allows a company to focus its entire energies on those activities that are at
the center of its expertise (its core competencies) and that are most critical to its
competitive and financial success
C. Outsourcing won't adversely hollow out the company's technical know-how,
competencies or capabilities
D. It reduces the company's risk exposure to changing technology
and/or changing buyer preferences
E. All of these
215) The two big drivers of outsourcing are
A. Increased ability to cut R&D expenses and increased ability to avoid the

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problems of strategic alliances

B. A desire to take advantage of the fact that outsiders can perform certain
activities better or cheaper and allowing a company to focus its entire energies
on those activities that are at the center of its expertise (its core competencies)
and that are most critical to its competitive and financial success
C. A desire to reduce the company's investment in fixed assets and the need to
narrow the scope of the company's in-house competencies and competitive
capabilities
216) Which of the following is not one of the benefits of outsourcing value
chain activities presently performed in-house?
A. Streamlining company operations in ways that improve organizational

flexibility and cut the time it takes to get new products into the marketplace
B. Allowing a company to concentrate on its core business, leverage its key
resources and do even better what it already does best
C. Helping the company assemble diverse kinds of expertise speedily and
efficiently
D. Preventing a company from hollowing out its technical know-how,
competencies or capabilities
217) Relying on outsiders to perform certain value chain activities offers such
strategic advantages as
A. Obtaining higher quality and/or cheaper components or services

B. Improving the company's ability to innovate by allying with "best-in-world"
suppliers
C. Reducing the company's risk exposure to changing technology and/or
changing buyer preferences
D. Increasing the firm's ability to assemble diverse kinds of expertise speedily
and efficiently
E. All of the above

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218) Outsourcing strategies can offer such advantages as
A. Increasing a company's ability to strongly differentiate its product and be

successful with either a broad differentiation strategy or a focused
differentiation strategy
B. Obtaining higher quality and/or cheaper components or services,
improving a company's ability to innovate and reducing its risk exposure
C. Speeding a company's entry into foreign markets
219) The big risk of employing an outsourcing strategy is
A. Causing the company to become partially integrated instead of being fully

integrated
B. Hollowing out a firm's own capabilities and losing touch with activities
and expertise that contribute fundamentally to the firm's competitiveness
and market success
C. Hurting a company's R&D capability
220) Which of the following is not one of the principal offensive strategy
options?
A. Leapfrogging competitors by being the first adopter of next-generation

technologies
B. Offering an equally good or better product at a lower price
C. Blocking the avenues open to challengers
221) Which one of the following is an example of an offensive strategy?
A. Blocking the avenues open to challengers

B. Signaling challengers that retaliation is likely

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C. Pursuing continuous product innovation to draw sales and market share away
from less innovative rivals
222) A blue ocean type of offensive strategy
A. Is an offensive attack used by a market leader to steal customers away from

unsuspecting smaller rivals
B. Involves a preemptive strike to secure an advantageous position in a fast-
growing market segment
C. Works best when a company is the industry's low-cost leader
D. Involves abandoning efforts to beat out competitors in existing markets
and, instead, inventing a new industry or new market segment that renders
existing competitors largely irrelevant and allows a company to create and
capture altogether new demand
223) A hit-and-run or guerilla warfare type of offensive strategy involves
A. Random offensive attacks used by a market leader to steal customers away

from unsuspecting smaller rivals
B. Undertaking surprise moves to secure an advantageous position in a fast-
growing and profitable market segment; usually the guerilla signals rivals that it
will use deep price cuts to defend its newly-won position
C. Work best if the guerilla is the industry's low-cost leader
D. Pitting a small company's own competitive strengths head-on against the
strengths of much larger rivals
E. Random raids by a small competitor to grab sales and market share
from complacent or distracted rivals
224) Launching a preemptive strike type of offensive strategy entails
A. Cutting prices below a weak rival's costs

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B. Moving first to secure an advantageous position that rivals are

prevented or discouraged from duplicating
C. Using hit-and-run tactics to grab sales and market share away from
complacent or distracted rivals
225) Which one of the following statements about offensive strategies is false?
A. It often takes the use of successful offensive strategies to build

to competitive advantage
B. One situation when a company needs to use offensive strategies is when it
has no choice but to try to whittle away at a strong rival's competitive advantage
C. Offensive strategies have much to recommend when a company sees
an opening to gain profitable market share at the expense of rivals
D. One of the most potent types of offensive strategy is to introduce new
features or models to fill vacant niches in a company's overall product
offering and thereby better match the product offerings of key rivals
226) Which one of the following is not a trait of a good strategic offensive?
A. Trying to build a more cost-efficient supply chain than rivals have

B. Being impatient with the status quo and displaying a strong bias for swift,
decisive actions to boost a company's competitive position vis-à-vis rivals
C. Applying resources where rivals are least able to defend themselves
227) Which one of the following is not a good type of rival for an offensive-
minded company to target?
A. Market leaders that are vulnerable

B. Runner-up firms with weaknesses in areas where the challenger is strong
C. Small local and regional companies with limited capabilities
D. Other offensive-minded companies with a sizable war chest of cash and
marketable securities

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228) Which one of the following statements regarding the basis for offensive
attack on rivals is false?
A. It is generally wise to use a company's resource strengths to attack rivals in

those competitive areas where they are strong
B. Ignoring the need to tie a strategic offensive to a company's strengths is like
going to war with a popgun
C. Strategic offensives should, as a general rule, be predicated on leveraging a
company's competitive assets—its core competencies, competitive capabilities and
other resource strengths
D. Offensive initiatives aimed at exploiting the competitive weaknesses of
rivals stand a better chance of success than do those that challenge a
competitor's strengths
E. Attacking a market leader is always unwise
229) The purposes of defensive strategies are to
A. Aggressively retaliate against rivals pursuing offensive strategies and

prevent against price wars
B. Lower the risk of being attacked by rivals, weaken the impact of any
attack that occurs and influence challengers to aim their offensive efforts at
other rivals
C. Guard against adverse changes in the company's macro-environment and
insulate the company from the impact of industry driving forces
230) Which one of the following is not a defensive option for protecting
a company's market share and competitive position?
A. Adding new features or models and otherwise broadening the product line to
close off vacant niches and gaps to opportunity-seeking challengers
B. Thwarting the efforts of rivals to attack with lower prices by maintaining

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economy-priced options of its own

C. Running comparison ads that call attention to weaknesses in rivals'
products
231) Which of the following is a potential defensive move to ward off challenger
firms?
A. Granting volume discounts or better financing terms to dealers/distributors

and providing discount coupons to buyers to help discourage them from
experimenting with other suppliers/brands
B. Signaling challengers that retaliation is likely in the event they launch
an attack
C. Lengthening warranties, offering free or low-cost training and support
services and providing coupons and sample giveaways to buyers most prone to
experiment with using rival brands
D. Maintaining a war chest of cash and marketable securities
E. All of these
232) A company's competitive strategy deals with
A. Management's game plan for competing successfully—the specific

efforts to please customers, offensive and defensive moves to counter the
maneuvers of rivals, the reactions and responses to whatever market
conditions prevail at the moment and the initiatives undertaken to improve the
company's market position
B. What its strategy will be in such functional areas as R&D, production,
sales and marketing, distribution, finance and accounting and so on
C. Its efforts to change its position on the industry's strategic group map
233) The objective of competitive strategy is to
A. Contend successfully with the industry's 5 competitive forces

B. Knock the socks off rival companies by doing a better job of satisfying

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buyer needs and preferences

C. Get the company into the best strategic group and then dominate it
234) A company achieves competitive advantage whenever
A. It is the acknowledged market share leader

B. It is the industry's acknowledged technology leader
C. It has greater financial resources than its rivals
D. It has a well-known and well-regarded brand name, prefers offensive
strategies to defensive strategies and has a strong balance sheet
E. It has some type of edge over rivals in attracting customers and
coping with competitive forces
235) A company can be said to have competitive advantage if
A. It is the acknowledged leader in product quality

B. It has a different value chain than rivals
C. It has some type of edge over rivals in attracting customers and coping
with competitive forces
236) While there are many routes to competitive advantage, they all involve
A. Building a brand name image that buyers trust

B. Delivering superior value to buyers and building competencies and
resource strengths in performing value chain activities that rivals cannot
readily match
C. Achieving lower costs than rivals and becoming the industry's sales and

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market share leader
237) The biggest and most important differences among the competitive
strategies of different companies boil down to
A. How they go about building a brand name image that buyers trust and
whether they are a risk-taker or risk-avoider
B. The different ways that companies try to cope with the five
competitive forces
C. Whether a company's market target is broad or narrow and whether
the company is pursuing a competitive advantage linked to low cost or
differentiation
238) Which of the following is not one of the five generic types of competitive
strategy?
A. A low-cost provider strategy

B. A broad differentiation strategy
C. A best-cost provider strategy
D. A focused low-cost provider strategy
E. A market share dominator strategy
239) The generic types of competitive strategies include
A. Build market share, maintain market share and slowly surrender

market share
B. Offensive strategies and defensive strategies
C. Low-cost provider, broad differentiation, best-cost provider, focused

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low-cost and focused differentiation
240) Which one of the following generic types of competitive strategy is

typically the best strategy for a company to employ?
A. A low-cost leadership strategy

B. A broad differentiation strategy
C. A best-cost provider strategy
D. A focused low-cost provider strategy
E. There is no such thing as a "best" competitive strategy; a company's
"best" strategy is always one that is customized to fit both industry and
competitive conditions and the company's own resources and competitive
capabilities
241) A low-cost leader's basis for competitive advantage is
A. Lower prices than rival firms

B. Using a low cost/low price approach to gain the biggest market share
C. High buyer switching costs
D. Meaningfully lower overall costs than competitors
242) How valuable a low-cost leader's cost advantage is depends on
A. Whether it is easy or inexpensive for rivals to copy the low-cost leader's

methods or otherwise match its low costs
B. How easy it is for the low-cost leader to gain the biggest market share
C. The aggressiveness with which the low-cost leader pursues converting the

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cost advantage into the absolute lowest possible costs
243) A low-cost leader can translate its low-cost advantage over rivals into
superior profit performance by
A. Cutting its price to levels significantly below the prices of rivals

B. Either using its low-cost edge to underprice competitors and attract
price sensitive buyers in large enough numbers to increase total profits or
refraining from price-cutting and using the low-cost advantage to earn a
bigger profit margin on each unit sold
C. Going all out to use its cost advantage to capture a dominant share of the
market
244) The major avenues for achieving a cost advantage over rivals include
A. Revamping the firm's value chain to eliminate or bypass some cost-

producing activities and/or out-managing rivals in the efficiency with
which value chain activities are performed
B. Having a management team that is highly skilled in cutting costs
C. Being a first-mover in adopting the latest state-of-the-art technologies,
especially those relating to low-cost manufacture
245) A competitive strategy of striving to be the low-cost provider is

particularly attractive when
A. Buyers are not very brand-conscious

B. Most rivals are trying to be best-cost providers
C. There are many ways to achieve product differentiation that have value to
buyers
D. Buyers are large and have significant power to bargain down prices;
buyers use the product in much the same ways; and buyers have low

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switching costs
246) Which of the following is not an action that a company can take to do
a better job than rivals of performing value chain activities more cost-
effectively?
A. Striving to capture all available economies of scale and learning/experience

curve effects
B. Trying to operate facilities at full capacity
C. Adopting labor-saving operating methods
D. Improving supply chain efficiency
E. Outsourcing all production-related activities
247) Which of the following is not one of the ways that a company can achieve a
cost advantage by revamping its value chain?
A. Cutting out distributors and dealers by selling direct to customers

B. Replacing certain value chain activities with faster and
cheaper online technology
C. Increasing production capacity and then striving hard to operate at full
capacity
248) To succeed with a low-cost provider strategy, company managers have to
A. Pursue backward or forward integration to detour suppliers or buyers with

considerable bargaining power and leverage
B. Move the performance of most all value chain activities to low-
wage countries
C. Sell direct to users of their product or service and eliminate use of wholesale and
retail intermediaries
D. Do two things: (1) do a better job than rivals of pursuing cost
savings throughout the value chain and (2) be proactive in revamping the

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firm's overall value chain to eliminate low value-added activities and

bypass "nonessential" cost-producing activities
249) Achieving a cost advantage over rivals entails
A. Concentrating on the primary activities portion of the value chain and

outsourcing all support activities
B. Being a first-mover in pursuing backward and forward integration
and controlling as much of the industry value chain as possible
C. Out-managing rivals in performing value chain activities cost-effectively
and finding creative ways to cut cost-producing activities out of the value chain
250) The best evidence that a company is the industry's low-cost provider is
that
A. It sells more of its product/service than its key competitors and is the
market share leader
B. It has lower overall per unit costs for its product/service than other
competitors in the industry
C. It has lower total operating costs on its income statement than do its
competitors
251) A company pursuing a low-cost leadership strategy must generally
A. Have products with good-to-excellent attributes so that its low prices will
provide customers with more value for the money
B. Have acceptable quality products that incorporate a good basic design
with few frills and offer a limited number of models/styles to select from
C. Have a wide selection of products that are of average or better quality

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252) Being the overall low-cost provider in an industry has the attractive
advantage of
A. Building strong customer loyalty and locking customers into its product
(because customers have such high switching costs)
B. Giving the firm a very appealing brand image
C. Putting a firm in position to compete offensively on the basis of low
price, win the business of price sensitive customers, set the floor on market
price and defend against price war conditions should they arise
253) A competitive strategy to be the low-cost provider in an industry works

well when
A. Price competition among rival sellers is especially vigorous

B. There are few ways to achieve product differentiation that have value to
buyers
C. Buyers incur low costs in switching their purchases from one seller/brand to
another
D. Industry newcomers use low introductory prices to attract buyers and build a
customer base
E. All of these
254) A competitive strategy predicated on low-cost leadership tends to work

best when
A. There are widely varying needs and preferences among the various buyers
of the product or service
B. There are many market segments and market niches, such that it is feasible
for a low-cost leader to dominate the niche where buyers want a budget-priced
product
C. Price competition is especially vigorous and the offerings of rival firms

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are essentially identical, standardized, commodity-like products
255) In which of the following circumstances is a strategy to be the industry's

overall low-cost provider not particularly well matched to the market
situation?
A. When the offerings of rival firms are essentially identical, standardized,

commodity-like products
B. When there are few ways to achieve differentiation that have value to buyers
C. When price competition is especially vigorous
D. When buyers have widely varying needs and special requirements and
the prices of substitute products are relatively high
256) A strategy to be the industry's overall low-cost provider tends to be more

appealing than a differentiation or best-cost or focus/market niche strategy
when
A. There are many ways to achieve product differentiation that buyers find
appealing
B. Buyers use the product in a variety of different ways and have high switching
costs in changing from one seller's product to another
C. The offerings of rival firms are essentially identical, standardized,
commodity-like products
257) In which of the following circumstances is a low-cost leadership strategy

not likely to be particularly successful?
A. When the industry's product is a standardized commodity

B. When buyers are looking for a good-to-excellent product at a bargain price
C. When the industry is composed of more than three strategic groups and
the companies in at least one of the groups are pursuing full vertical

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integration strategies
258) Which of the following is not one of the pitfalls of a low-cost provider
strategy?
A. Overly aggressive price-cutting

B. Trying to set the industry's price ceiling
C. Not emphasizing avenues of cost advantage that can be kept proprietary
or that relegate rivals to playing catch up
259) The essence of a broad differentiation strategy is to

A. Appeal to the high end part of the market and concentrate on providing a
top-of-the-line product to consumers
B. Incorporate a greater number of differentiating features into its
product/service than rivals
C. Lower buyer switching costs
D. Outspend rivals on advertising and promotion in order to inform
and convince buyers of the value of its differentiating attributes
E. Be unique in ways that are valuable and appealing to a wide range of
buyers
260) A company attempting to be successful with a broad differentiation

strategy has to
A. Study buyer needs and behavior carefully to learn what buyers consider
important, what they think has value and what they are willing to pay for
B. Incorporate more differentiating features into its product/service than rivals
C. Concentrate its differentiating efforts on marketing and advertising (where
almost all differentiating features are created)
261) Successful differentiation allows a firm to

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A. Be the industry's best-cost provider

B. Set the industry ceiling on price
C. Avoid being dragged into a price war with industry rivals and not be overly
concerned about whether entry barriers into the industry are high or low
D. Command a premium price for its product and/or increase unit sales
(because additional buyers are won over by the differentiating features),
and/or gain buyer loyalty to its brand (because some buyers prefer the
differentiating features and are thus brand loyal)
262) A company that succeeds in differentiating its product offering from those
of its rivals can usually
A. Avoid having to compete on the basis of simply a low price

B. Charge a price premium for its product (because buyers see its differentiating
features as worth something extra)
C. Increase unit sales (because of the attraction of its differentiating product
attributes)
D. Gain buyer loyalty to its brand (because some, maybe many, of its customers
will have a strong preference for the company's differentiating features)
E. All of the above
263) A broad differentiation strategy improves profitability when
A. It is focused on product innovation

B. Differentiating enhances product performance
C. The differentiating features appeal to sophisticated and prestigious buyers
D. Unit sales increase and the extra price the product commands exceeds
the added costs of achieving the differentiation
264) Whether a broad differentiation strategy ends up enhancing company

profitability depends mainly on whether

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A. Many buyers view the product's differentiating features as having value B.

Most buyers have similar needs and use the product in the same ways
C. Unit sales increase and the extra price the product commands exceeds the
added costs of achieving the differentiation
265) Using a broad differentiation strategy to produce an attractive competitive

advantage is least likely to be based on
A. Developing a superior performing product

B. Offering buyers a product which is superior in quality and reliability as
compared to rivals' brands
C. Giving consumers comprehensive support services
D. Providing buyers with a continuing stream of better-designed, better-
performing and more stylish products
E. Undercutting the prices being charged by rivals
266) Opportunities to differentiate a company's product offering

A. Are most reliably found in the R&D portion of the value chain
B. Are typically located in the sales and marketing portion of the value chain
C. Can exist in activities all along an industry's value chain
267) Easy-to-copy differentiating features
A. Cannot produce sustainable competitive advantage

B. Seldom are perceived by buyers as having much value
C. Tend to give buyers a high degree of power in bargaining for a lower price
268) The most appealing approaches to differentiation are
A. Those that are also being pursued by other rivals with

differentiation strategies

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B. Those that are the most costly to incorporate (because expensive attributes are
perceived by buyers as more valuable and worth paying more for)
C. Those that can be made even more attractive to buyers via clever advertising D.
Generally related to flavor and taste or sophisticated use of Internet technology
applications
E. Those that are hard or expensive for rivals to duplicate and that also
have considerable buyer appeal
269) Perceived value and signaling value are often an important part of a
successful differentiation strategy because
A. Of the diversity of buyer needs and preferences

B. Buyers seldom will pay for value they don't perceive, no matter how
real the value of the differentiating extras may be
C. Most buyers are heavily influenced by clever ads that signal value
270) A differentiation-based competitive advantage
A. Nearly always is attached to the quality and service aspects of a

company's product offering
B. Most usually is the result of highly effective marketing and advertising
C. Requires developing at least one distinctive competence that buyers consider
valuable
D. Hinges on a company's success in developing top-of-the-line product
features that will command the biggest price premium in the industry
E. Often hinges on incorporating features that (1) raise the performance of
the product or (2) lower the buyer's overall costs of using the company's
product or (3) enhance buyer satisfaction in intangible or non-economic ways
271) Which of the following is not one of the four basic routes to achieving a
differentiation-based competitive advantage?

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A. Delivering value to customers via competencies and competitive capabilities that

rivals don't have or can't afford to match
B. Incorporating features that raise product performance
C. Incorporating product attributes and user features that lower the buyer's
overall costs of using the company's product
D. Appealing to buyers who are sophisticated and shop hard for the best,
stand-out differentiating attributes
272) Achieving a differentiation-based competitive advantage can involve
A. Incorporating product attributes and user features that lower a buyer's overall
cost of using the product
B. Incorporating features that raise the performance a buyer gets from using the
product
C. Incorporating features that enhance buyer satisfaction in non-economic or
intangible ways
D. Delivering value to customers via competencies and competitive capabilities
that rivals don't have or can't afford to match
E. All of the above are viable ways of building competitive advantage via
differentiation
273) Broad differentiation strategies are well-suited for market circumstances

where
A. There are many ways to differentiate the product or service and many
buyers perceive these differences as having value
B. Most buyers have the same needs and use the product in the same ways
C. Buyers are susceptible to clever advertising
274) Broad differentiation strategies generally work best in market

circumstances where

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A. Buyer needs and preferences are too diverse to be fully satisfied by a

standardized product
B. Most buyers have similar needs and use the product in the same ways
C. The products of rivals are weakly differentiated and most competitors are
resorting to clever advertising to try to set their product offerings apart
275) A broad differentiation strategy works best in situations where
A. Technological change is slow-paced and new or improved products are

infrequent
B. Buyer needs and uses of the product are very similar
C. Buyers incur low costs in switching their purchases to rival brands
D. Buyers have a low degree of bargaining power and purchase the product
frequently
E. Technological change is fast-paced and competition revolves around
rapidly evolving product features
276) A broad differentiation strategy generally produces the best results in

situations where
A. Buyer brand loyalty is low

B. Buyer needs and uses of the product are diverse
C. New and improved products are introduced only infrequently
277) In which one of the following market circumstances is a broad

differentiation strategy generally not well-suited?

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A. When buyer needs and preferences are too diverse to be fully satisfied by a
standardized product
B. When few rivals are pursuing a similar differentiation approach
C. When the products of rivals are weakly differentiated and most
competitors are resorting to clever advertising to try to set their product
offerings apart
278) The pitfalls of a differentiation strategy include
A. Trying to differentiate on the basis of attributes or features that are easily

copied
B. Choosing to differentiate on the basis of attributes that buyers do not
perceive as valuable or worth paying for
C. Trying to charge too high a price premium for the differentiating features
D. Being timid and not striving to open up meaningful gaps in quality or
performance or service or other attractive differentiating attributes
E. All of these
279) Which of the following is not one of the pitfalls of pursuing a

differentiation strategy?
A. Trying to strongly differentiate the company's product from those of

rivals rather than be content with weak product differentiation
B. Over-differentiating so that the features and attributes incorporated exceed
buyer needs and requirements
C. Trying to charge too high a price premium for the differentiating features
280) Which one of the following statements about pursuing a broad

differentiation strategy is false?

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A. Any differentiating feature that works well is a magnet for imitators

B. The best opportunities for achieving strong product differentiation are in
the production technology and marketing portions of the value chain
C. A low-cost provider strategy can defeat a broad differentiation strategy when
buyers are satisfied with a basic product and don't think "extra" attributes are worth
paying a higher price
281) A company achieves best-cost provider status by
A. Selling a product with the best cost at the best price

B. Having the best cost (as compared to rivals) for each activity in the
industry's value chain
C. Providing buyers with the best attributes at the best cost
D. Incorporating attractive or upscale attributes into its product offering at
a lower cost than rivals
282) A firm pursuing a best-cost provider strategy
A. Seeks to be the low-cost provider in the largest and fastest growing (or best)
market segment
B. Tries to have the best cost (as compared to rivals) for each activity in the
industry's value chain
C. Tries to outcompete a low-cost provider by attracting buyers on the basis
of charging the best price
D. Seeks to deliver superior value to buyers by satisfying their expectations
on key quality/service/features/performance attributes and beating their
expectations on price (given what rivals are charging for much the same
attributes)

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283) Best-cost provider strategies
A. Aim at using the best operating practices to achieve lower costs and charge
lower prices than companies pursuing low-cost provider strategies
B. Involve charging a lower price for a product that has more upscale attributes
and features than the products offered by companies pursuing either focused
differentiation or broad differentiation strategies
C. Seek to attract buyers on the basis of charging the best price for a mid-
quality, average-performing product
D. Aim at giving customers more value for the money
284) The objective of a best-cost provider strategy is to
A. Deliver superior value to buyers by satisfying their expectations on

key quality/performance/features/service attributes and beating their
expectations on price (given what rivals are charging for much the same
attributes)
B. Offer buyers the industry's best-performing product at the best cost and best
(lowest) price in the industry
C. Attract buyers on the basis of having the industry's overall best-performing
product at a price that is slightly below the industry-average price
285) The competitive objective of a best-cost provider strategy is to
A. Outmatch the resource strengths of both low-cost providers and

differentiators
B. Position the company outside the competitive arena of low-cost producers
and differentiators
C. Meet or exceed buyer expectations on key
quality/performance/features/service attributes and beat their expectations on
price (given what rivals are charging for much the same attributes)—

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thereby achieving a value-based competitive advantage
286) For a best-cost provider strategy to be successful, a company must

have
287)
A. Excellent marketing and sales skills in convincing buyers to pay a premium
price for the attributes/features incorporated in its product
B. Resource strengths and competitive capabilities that allow it to
incorporate upscale attributes at lower costs than rivals whose products
have similar upscale attributes
C. Access to greater learning/experience curve effects and scale economies than
rivals
Answer:b
288) The competitive advantage of a best-cost provider is
A. Having the best value chain in the industry

B. Its brand name reputation
C. Its capability to incorporate upscale attributes at lower costs than rivals
whose products have similar upscale attributes
289) The target market of a best-cost provider is
A. Value-conscious buyers
B. Brand-conscious buyers
C. Price-sensitive buyers
290) Best-cost provider strategies are appealing in those market situations

where
A. Diverse buyer preferences make product differentiation the norm and

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where many buyers are sensitive to both price and value

B. A company is positioned between competitors who have ultra-low prices and
competitors who have top-notch products in terms of both quality and performance
C. Buyers are more quality-conscious than price-conscious
291) The big danger or risk of a best-cost provider strategy is
A. That buyers will be highly skeptical about paying a relatively low price
for upscale attributes/features
B. Not establishing strong alliances and partnerships with key suppliers
C. That low-cost leaders will be able to steal away some customers on the
basis of a lower price and high-end differentiators will be able to steal away
customers with the appeal of better product attributes
292) A company's biggest vulnerability in employing a best-cost provider

strategy is
A. Relying too heavily on outsourcing

B. Getting squeezed between the strategies of firms employing low-cost
provider strategies and high-end differentiation strategies
C. Getting trapped in a price war with low-cost leaders
293) Focused strategies keyed either to low-cost or differentiation are especially

appropriate for situations where
A. The market is composed of distinctly different buyer groups who have

different needs or use the product in different ways
B. Most other rival firms are using a best-cost producer strategy
C. Buyers have strong bargaining power and entry barriers are low

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294) __________ is based on the belief that the true measure of a really good
strategist is the ability to solve problems.
A.Managing by subjectives
B.Managing by extrapolation
C.Managing by crisis
D.Managing by hope
295) Long-term objectives are needed at the ____________ of an organization.
A.corporate and divisional levels

B.corporate levels
C.corporate, divisional, and functional levels
D.divisional and functional levels
296) __________ strategy is designed to fortify an organization's basic

distinctive competence.
A.Integrative
B.Retrenchment
C.Intensive
D.Diversification
297) Many, if not most, organizations pursue a:
A.concentric diversification.
B.combination strategy.
C.geographic strategy.
D.product development strategy.

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298) An example of _______ strategy is establishing Web sites to sell

products directly to consumers.
A.backward integration
B.conglomerate diversification
C.horizontal integration
C. forward integration
299) Which of the following is not a guideline for pursuing liquidation?
A.When divestiture has not been successful.

B.When an organization's only alternative is bankruptcy.
C.When the stockholders of the firm can minimize their losses by selling the
firm's assets.
D.When the organization has successfully pursued retrenchment.
300) A popular strategy that occurs when two or more companies form a
temporary partnership for the purpose of capitalizing on some opportunity is
called a(n):
A.merger.
B.joint venture.
C.acquisition.
D.takeover.
301) ______ includes increasing the number of salespersons, increasing

advertising expenditures, offering extensive sales promotion items, or
increasing publicity efforts.
A.Market Development

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B.Product development
C.Horizontal integration
D.Market penetration
302) ______________ is selling a division of an organization.
A.Franchising
B.Divestiture
C.Liquidation
D.Horizontal integration
303) When employing a ______ strategy, a firm must be careful not to use such
aggressive price cuts that their own profits are low or nonexistent.
A.differentiation
B.focus
C.cost leadership
D.product development
304) Managing by Crisis is based on the belief that the true measure of a really
good strategist is the ability to solve problems.
True
False
305) To successfully employ a focus strategy, a firm must ensure that its total
costs across its overall value chain are lower than competitors' total costs.
True
False

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306) High-velocity change is becoming more the rule rather than the exception.
True
False
307) bankruptcy applies to farmers.

True
False
308) Joint ventures are being used increasingly because they allow companies
to minimize risk.
True
False
309) Diversification strategies are becoming more popular as organizations are

finding it easier to manage diverse business activities.
True
False
310) Pioneering new and better technologies is an action based on the strategic
posture of leading change.
True
False
311) Patrick majored in entrepreneurship and computer science in college.

After graduation, he decided to start his own business as an e-business

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entrepreneur, founding an online B2B reverse auction company

called CompuSave.
a. After hiring several employees, Patrick requires that each person in this
company be involved in studying trends involving new technology,
competitors, and customers. These employees are involved in
______________.
i. external analysis
ii. internal environment
iii. strategic management
iv. strategic flexibility
312) Casey realizes that she has a personal characteristic that suggests she
is not comfortable interacting with strangers. She interprets this as a(n)
___________ if she is to get a job as a salesperson.
i. A.Alternative
ii. B.opportunity
iii. C.strength
iv. D.weakness
313) Casey majored in marketing and really enjoyed studies in market

research. Through research on the Internet and in the university library, she
discovers that this industry appears to have significant positive external trends. She
interprets this as a(n) ___________.
A. alternative
B. strength
C. weakness
D. opportunity
314) Casey has been involved in ______________ at a personal level.

A. opportunity analysis
B. risk avoidance
C. strategic planning
D. Stage decision making
315) You decide to concentrate on Taco Rocket’s primary business by only

increasing the menu to include new items such as enchiladas and rice bowls.
This is an example of what type of growth strategy?

lOMoARcPSD|8128761
A. lateral growth
C. concentration
D. related diversification
316) Your oldest supplier, Zorro Distributors, is a family-owned firm.

Recently, the firm’s president, Diego De La Vega, made the decision to retire.
To his disappointment, none of his five children stepped forward to take his
place at the helm of the firm. Sr.De La Vega is concerned that if he sells his
company to a larger distributor, many of his employees will lose their jobs.
You approach your old friend with a generous offer to buy Zorro and continue
its current operations. Should your offer be accepted, Taco Rocket would be
undertaking ___________.
A. lateral growth
B. unrelated diversification
C. forward vertical integration
D. backward vertical integration
317) You’ve decided to purchase a controlling interest in a chain of Oriental

fast-food restaurants, called Honk Kong Fooey. However, you have decided to
change the name of the chain to the Shanghai Grill. This move is most
representative of what type of growth strategy?
A. lateral growth
C. unrelated diversification
318) You decide to purchase a local five-store hardware chain because it was a good
investment. This is an example of _____________.
A. a lateral growth strategy

B. a combination purchase
C. related diversification
D. unrelated diversification

lOMoARcPSD|8128761
319) Because of the good profits and a fear of growing too fast, you
decide to keep Taco Rocket in the same business and do not change the menu.
You hope to retain the same market share and return-on-investment record.
This is considered a ______________ strategy.
A. stability
B. growth
C. combination
D. diversification
320) Colleen invested a dollar in the Powerball Lottery and won $60 million.
Subsequently, she decides to start her own business selling lawnmowers.
a. Colleen is successful after the first 3 years, and she is approached by a
competitor who is nearing retirement age. The competitor is interested in
selling his business to Colleen. For Colleen, this would be a(n) __________
strategy.
D. retrenchment
321) Colleen finds a business opportunity in a supplier who sells her wheels for
lawnmowers. This would be a(n) ____________ strategy.
322) A business broker hears that Colleen is interested in purchasing a business

and approaches her with an offer to sell her a company that owns a patent on a
new roofing product and who installs this new roofing in the southwestern
United States. If she buys this firm, she will be using a(n)
_____________ strategy.
i. unrelated diversification
ii. horizontal integration
iii. vertical integration
iv. related diversification

lOMoARcPSD|8128761
b. Initially she begins a business that has a single-line business. She realizes
that this organization will need a ____________ strategy.
A. business-level
B. organizational
C. operational-level
D. corporate-level
323) No matter which business Colleen decides to buy, she intends to operate
each business independently and allow each to determine its own strategy.
This will mean that each company will be a(n) _____________.
A. operational unit
B. strategic business unit
C. competitive advantage
D. legal subunit
324) Colleen decides that she wants to assemble lawn mowers. She decides that
she wants a business to develop a distinctive edge in producing high-quality
lawn mowers. This emphasis on quality is to be so strong that her company will
have a ___________ that will set her company apart from her competition.
A. core competence
B. competitive power
C. legal propriety
D. competitive advantage
325) You purchased Shanghai Grill and Zorro Distributors after being in
business for five years. What level of strategy integrates the strategies of
your various business units?
A. corporate level
B. business level
C. functional level
D. strategic level

lOMoARcPSD|8128761
326) You called the Boston Consulting Group (BCG), and they have provided
you with some advice based on their famous corporate portfolio matrix. Your
oldest holding, Taco Rocket, has not grown much in recent years, but due to
low debt, it generates a huge amount of cash. According to BCG, Taco Rocket
would be considered a ____________.
A. cash cow
B. star
C. question mark
D. dog
327) Recently, you also purchased a company that manufactures a new satellite
dish, allowing you to enter into the cable television market. The business is
profitable and growing, but the technological unknowns make it risky.
BGC considers it a ___________.
A. cash cow
B. star
C. question mark
D. dog
328) Another purchase you made was to acquire a local coffee-cart chain with
30 locations around the city. You don’t see it growing very much, but then, it
doesn’t cost much to operate. BCG would label this venture a
_____________.
A. cash cow
B. star
C. question mark
D. dog
329) You now need to decide how to best manage and utilize the large number
of assets represented by the numerous companies you own. For each SBU, you
must create a __________ strategy to determine how your corporation should
compete in each of its businesses.
A. corporate-level
B. business-level

lOMoARcPSD|8128761
C. functional-level
D. tactical
330) Your old friend, Ariel Eskenazi, is the owner and general manager
of Megabyte Center, a computer reseller and systems integrator located
in Panama City, Panama. Since leaving IBM to start a business in his home
country, Ariel’s company has steadily grown, due in large part to
the business partnerships he’s established over the years with large foreign
computer and software firms, such as Goldstar and Microsoft. These
relationships have helped his company win considerable market share
in Panama, as well as in other parts ofLatin America. However, since the
1999 turnover of the Panama Canal to the Panamanian government, there
has been a huge influx of foreign capital into Panama. For example, several
large Asian firms have made Panama a beachhead for their American
operations. Tourism is on the rise, with over a score of new hotels built in
the metropolitan area alone over the past 3 years. As a result, demand for
Megabyte’s products and services has increased markedly, but so has the level
and diversity of its competition. While Megabyte’s customer base has
remained fairly loyal, many longtime customers are beginning to demand
price concessions and enhanced service levels in return for their continued
business. Additionally, Ariel has learned recently that several of his former
suppliers and business partners are considering establishing local sales offices
of their own in Panama City. Ariel knows you are very
knowledgeable about competitive strategy and calls you asking for advice. You
begin by telling him a little about Michael Porter’s five forces theory
of competition and the three generic strategies.
a. Demand growth and increasing intensity and diversity of competition that
Ariel is facing is indicative of which one of Porter’s five forces?
A. threat of substitutes
B. threat of new entrants
C. bargaining power of customers
D. current rivalry
b. Once Ariel has assessed the five forces and determined the threats and
opportunities that exist in the current environment, you tell him that he is
then ready to select an appropriate competitive strategy. Porter outlines three
“generic” strategies: cost leadership, differentiation, and
____________.

lOMoARcPSD|8128761
A. niche
B. segmentation
C. focus
D. stuck in the middle
c. Because his customers are demanding price concessions and enhanced

service levels in return for their continued business, Ariel decides that he
wants to compete by offering unique products that are widely valued by
customers.. What strategy is Ariel following?
i. focus
ii. cost leadership
iii. differentiation
iv. stability
d. Ariel is considering forgoing the retail side of his business

entirely. Instead, he will redirect his resources toward reselling hardware and
software and providing systems integration services to the Latin American
governmental and industrial sectors. Such a move would be most representative
of which one of Porter’s generic strategies?
A. niche
B. segmentation
C. focus
D. stuck in the middle
331) The environmental segments that comprise the general environment

typically will NOT include
a. demographic factors.
b. socio-cultural factors.
c. substitute products or services.
d. technological factors.

lOMoARcPSD|8128761
332) In the airline industry, frequent-flyer programs, ticket kiosks, and e-

ticketing are all examples of capabilities that are
a. rare.
b. causally ambiguous.
c. socially complex.
d. valuable.
333) Business-level strategies are concerned specifically with:
a. creating differences between the firm's position and its rivals.

b. selecting the industries in which the firm will compete.
c. how functional areas will be organized within the firm.
d. how a business with multiple physical locations will operate one of those
locations.
334) When a product's unique attributes provide value to customers, the firm
is implementing
a. a differentiation strategy.
b. a cost leadership strategy.
c. an integrated cost leadership/differentiation strategy.
d. a single-product strategy.
335) A company pursuing a differentiation or focused differentiation strategy

would
a. have highly efficient systems linking suppliers' products with the firm's
production processes.
b. use economies of scale.
c. have strong capabilities in basic research.
d. make investments in easy-to-use manufacturing technologies.

lOMoARcPSD|8128761
336) T or F? A firm using a differentiation strategy can charge a

premium price.
Answer: T
337) On the whole there are more competitive responses to
a. strategic actions than to tactical actions.

b. tactical actions than to strategic actions.
c. buyer pressures than to supplier pressures.
d. the demands of the top management team than to industry structural
pressures
338) Investors in a company judge the adequacy of the returns on

their investment in relation to:
a. the returns on other investments of similar risk..

b. the stock market's overall performance.
c. the initial size of the investment.
d. the prime interest rate.
Answer: a. the returns on other investments of similar risk..
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100+ Multiple Choice Questions and

Answers on Strategic Management
(MCQs).
Strategic Management
MCQ: Multiple Choice
Questions and
Answers on Strategic
Management
3)The fundamental purpose for

the existence of any organization
is described by its
a. policies
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40 Movies That Are Considered To Be
4) mission Almost Flawless
Gloriousa | Sponsored
Read Next Story

5)procedures
d. strategy
Ans. b
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5) The fundamental purpose of

an organization’s mission
statement is to
a. create a good human relations

climate in the organization
b. define the organization’s purpose

in society
c. define the operational structure of

the organization
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d. generate good public relations for

the organization
Ans. b
3. The acronym SWOT stands for
a. Special Weapons for Operations

Timeliness
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b. Services, Worldwide Optimization,

40 Movies That Are Considered To Be Almost
and Transport Flawless
Read Next Story

c. Strengths Worldwide Overcome
Threats
d. Strengths, Weaknesses,
Opportunities, and Threats
Ans. d
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6) Which of the following is not

a characteristic of strategic
management that makes it
different from other types of
management?
a. It is interdisciplinary.
b. It has an external focus.
c. It has an internal focus.
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d. It concerns the present direction

of the organization.
Ans. d
9)Which of the following is an

issue considered in developing
a. What business(es) are we in? Flawless
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b. What direction are we going?
c. What resources do we have to

implement our strategies?
d. What businesses are we in and what

to do with those businesses?
Ans. c
2 Which of the following is NOT a

major element of the strategic
management process?
a. Formulating strategy
b. Implementing strategy
c. Evaluating strategy
c. Assigning administrative tasks
Ans. d
12) Competitive advantage can

best be described as:
a. increased efficiency.
b. what sets an organization apart.
c. a strength of the organization.40 Movies That Are Considered To Be

Almost Flawless
d. intangible resources. Read Next Story

Ans. a
2 ________________ is the
foundation of blue ocean strategy.
15) Innovation
16) Value creation
17) Value innovation
18) value cost trade-off
Ans. c
17) The various organizational

routines and processes that
determine how efficiently and
effectively the organization
transforms its inputs into outputs
are called:
2 strengths.
3 core competencies.
4 capabilities.
5 customer value.
Ans. b
40 Movies That Are Considered To Be Almost Flawless
10. When defining strategic Gloriousa | Sponsored
management the most important
Read Next Story
thing to remember is that it is:
a. Not as easy as you think
b. Mainly the province of senior

managers
c. A living evolving process
d. More conceptual than practical
e. A way of determining responsibilities
Ans. c
11. An organisation’s strategy:
a. remains set in place longer than

the mission and objectives
b. generally forms over a period of time

as events unfold
c. tends to be formed at the same time

the mission is developed and
objectives are formulated
d. is usually conceived at a single time

when managers sit down and work out
a comprehensive strategic plan for the
next 3-5 years
Ans. b
12. The primary focus of strategic
management is: Read Next Story
a. strategic analysis
b. the total organisation
c. strategy formulation
d. strategy implementation.
Ans. b
24) Which of the following is

not an advantage of strategic
management?
a. It provides organisations with a

clearer sense of direction and purpose
b. It helps improve the political,

economic, social and technological
environment of the organisation
c. It helps orientate management

decisions to relevant environmental
conditions
d. It helps organisations be proactive

rather than reactive
Ans. b
14. Which of the following defines

what business or businessesFlawlessthe
firm is in or should be in? Gloriousa | Sponsored
Read Next Story
a. Business strategy
b. Corporate strategy
c. Functional strategy
d. National strategy
Ans. b
2 Which of the following defines

how each individual business
unit will attempt to achieve its
mission?
a. Business strategy
c. Functional strategy
d. National strategy
Ans. a
27)Which of the following focuses

on supporting the corporate and
business strategies?
a. Competitive strategy
c. Operational strategy 40 Movies That Are Considered To Be

Almost Flawless
d. National strategy Read Next Story

e. Mission strategy
Ans. c
31)Which one of the following

is not a primary task of
strategic managers?
a. Establishing strategic objectives
b. Developing the steps to follow in

implementing operational level plans
c. Defining the business and developing

a mission
d. Developing a strategy
e. Implementing and evaluating the

chosen strategy
Ans. b
35)The task of strategy choice

involves:
a. developing plans and activities which

will improve the organisation’s
performance and competitive position
b. determining how the organisation can

be more market and efficiency orientedFlawless
c. monitoring whether the organisation Read Next Story
is achieving good financial performance

d. keeping the organisation free of debt
Ans. a
2 Which one of the following is at

the core of strategic management?
a. Choosing which organisational

objectives to focus on
b. Being alert for opportunities to

change work responsibilities
c. Adapting the organisation to a

changing external environment
d. Choosing whether to make decisions

autocratically or on the basis of
participation
Ans. c
36) The corporate level is where

top management directs:
a. all employees for orientation
b. its efforts to stabilize recruitment

needs
c. overall strategy for the

entire organization Almost Flawless
d. overall sales projections Read Next Story
Ans. c
38) The three organizational
levels are:
a. corporate level, business

level, functional level
b. corporate level, business unit level,

functional level
c. corporate strategy level, business

unit level, functional level
d. corporate strategy level,

business level, specialist level
Ans. a
40)Which of the following is

an example of competing on
quick response?
a. a firm produces its product with less

raw material waste than its competitors
b. a firm offers more reliable products

than its competitors
c. a firm’s products are introduced into

the market faster than its competitors’
40 Movies That Are Considered To
Flawless
d. a firm’s research and developmentGloriousa |
Be Almost
Sponsored
department generates many ideas for
Read Next Story

new products
Ans. c
41) Which one of the following is

NOT included in the Porter’s
Five Forces model:
a. Potential development of substitute

products
b. Bargaining power of suppliers
c. Rivalry among stockholders
d. Rivalry among competing firms
Ans. c
42) What is meant by the

term ‘Stakeholder’?
a. A person who is not related with

a business.
b. A person who is related with a

business.
c. A person who owns a business.
d. A person who purchases the shares of

a business. 40 Movies That Are Considered To Be Almost
Flawless
Ans. b Read Next Story

46)Of the following, which one
would NOT be considered one of
the components of a mission
statement?
a. The target market for XYZ is oil and

gas producers as well as producers of
chemicals.
b. XYZ shall hire only those individuals

who have with sufficient educational
levels so as to be of benefit to our
customers
c. The customers of XYZ shall include

global and local consumers of gas and
oil products and domestic users of
nontoxic chemicals
d. The technologies utilized by XYZ shall

focus upon development of alternative
sources of gas and oil so as to remain
competitive within the industry
Ans. b
50) The strategic

management process is
a. a set of activities that will assure a

temporary advantage and average
Flawless
returns for the firm. Gloriousa | Sponsored
Read Next Story

b. a decision-making activity concerned
with a firm’s internal resources,
capabilities, and competencies,
independent of the conditions in its
external environment.
c. a process directed by top-

management with input from other
stakeholders that seeks to achieve
above-average returns for investors
through effective use of the
organization’s resources.
d. the full set of commitments,

decisions, and actions required for the
firm to achieve above-average returns
and strategic competitiveness..
Ans. d
52) The goal of the

organization’s__________ is to
capture the hearts and minds of
employees, challenge them, and
evoke their emotions and dreams.
54) vision
55) mission

56) culture Almost Flawless
57) strategy Read Next Story

Ans. a
28. A firm’s mission
a. is a statement of a firm’s business

in which it intends to compete and the
customers which it intends to serve.
b. is an internally-focused affirmation
of the organization’s financial, social,
and ethical goals.
c. is mainly intended to emotionally

inspire employees and other
stakeholders.
d. is developed by a firm before the firm

develops its vision.
Ans. a
55) The environmental segments

that comprise the general
environment typically will NOT
include
a. demographic factors.
b. sociocultural factors.
c. substitute products or services .

Be Almost Flawless
d. technological factors.
Read Next Story
Ans. c
56) An analysis of the economic
segment of the external
environment would include all of
the following EXCEPT
a. interest rates.
b. international trade.
c. the strength of the U.S. dollar.
d. the move toward a contingent

workforce.
Ans. d
57) Product differentiation refers

to the:
a. ability of the buyers of a product

to negotiate a lower price.
b. response of incumbent firms to

new entrants.
c. belief by customers that a product is

unique.
d. fact that as more of a product is

produced the cheaper it becomes
per unit.
Almost Flawless
Ans. c
Read Next Story
58) Which of the following is NOT
an entry barrier to an industry?
a. expected competitor retaliation
b. economies of scale
c. customer product loyalty
d. bargaining power of suppliers
Ans. d
33. Switching costs refer to the:
a. cost to a producer to exchange

equipment in a facility when new
technologies emerge.
b. cost of changing the firm’s

strategic group.
c. one-time costs suppliers incur

when selling to a different customer.
d. one-time costs customers incur when

buying from a different supplier.
Ans. d
34. New entrants to an industry

are more likely when (i.e., entry
Flawless
barriers are low when…) Gloriousa | Sponsored
Read Next Story

a. it is difficult to gain access to
distribution channels.
b. economies of scale in the industry are

high.
c. product differentiation in the industry

is low.
d. capital requirements in the

industry are high.
Ans. c
35. Suppliers are powerful when:
a. satisfactory substitutes are available.
b. they sell a commodity product.
c. they offer a credible threat of

forward integration.
d. they are in a highly fragmented

industry.
Ans. c
59) The highest amount a firm can

charge for its products is most
directly affected by
a. expected retaliation from competitorsGloriousa|Sponsored.
Read Next Story
b. the cost of substitute products.

c. variable costs of production.
d. customers’ high switching costs.
Ans. b
60) All of the following are

forces that create high rivalry
within an industry EXCEPT
a. numerous or equally balanced

competitors.
b. high fixed costs.
c. fast industry growth.
d. high storage costs.
Ans. c
61) According to the five factors

model, an attractive industry
would have all of the following
characteristics EXCEPT:
a. low barriers to entry.
b. suppliers with low bargaining power.
c. a moderate degree of rivalry among

competitors. 40 Movies That Are Considered To Be Almost
Flawless
d. few good product substitutes. Read Next Story

Ans. a
62) Internal analysis enables a

firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
Ans. a
63) An external analysis enables a

firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
Ans. d
64) ________ is/are the source

of a firm’s________, which
is/are the source of the firm’s
________. 40 Movies That Are Considered To Be
Almost Flawless
a. Resources, capabilities, core Read Next Story
competencies
b. Capabilities, resources, core
competencies
c. Capabilities, resources, above

average returns
d. Core competencies, resources,

competitive advantage
Ans. a
65) In the airline industry,

frequent-flyer programs, ticket
kiosks, and e-ticketing are all
examples of capabilities that are
66) rare.
67) causally ambiguous.
68) socially complex.
69) valuable.
Ans. d
68) Firms with few competitive

resources are more likely
a. to not respond to competitive actions.

b. respond quickly to competitive
Flawless
actions. Gloriousa | Sponsored
Read Next Story
c. delay responding to competitive
actions.
d. respond to strategic actions, but not

to tactical actions.
Ans. c
70) Competitors are more likely to

respond to competitive actions
that are taken by
73) differentiators.
74) larger companies.
75) first movers.
76) market leaders.
Ans. d
76) What can be defined as the

art and science of formulating,
implementing and evaluating
cross-functional decisions that
enable an organization to achieve
its objectives?
a. Strategy formulation
b. Strategy evaluation Almost Flawless
c. Strategy implementation Read Next Story

d. Strategic management
e. Strategic leading
Ans. d

a cultural product?
79) Rites
80) Emotions
81) Rituals
82) Sagas
83) Symbols
Ans. b
81) Which individuals are most

responsible for the success
and failure of an organization?
84) Strategists
85) Financial planners
86) Personnel directors
87) Stakeholders 40 Movies That Are Considered To Be

Almost Flawless
88) Human resource
Read Next Story
managers
Ans. a
87) Which of the following is

an element of a firm’s remote
external environment?
90) Competition
91) Political agencies
92) Suppliers
93) Trade union
Ans. b
92) Long-term objectives should

be all of the following except:
95) measurable.
96) continually changing.
97) reasonable.
98) challenging.
99) consistent.
Ans. b
98) What are guides to decision40Movies That Are Considered To Be Almost

making? Flawless
Read Next Story
a. laws
100) rules
101) policies
102) procedures
103) goals
Ans. c
101) According to Greenley,

strategic management offers all of
these benefits except that
a. it provides an objective view of

management problems.
b. it creates a framework for internal

communication among personnel.
c. it encourages a favorable attitude

toward change.
d. it maximizes the effects of

adverse conditions and changes.
e. it gives a degree of discipline and

formality to the management of a
business.
Ans. d
52. The vision and mission Gloriousa | Sponsored
statement can often be found Read Next Story
a. in the SEC report.
b. in annual reports.
c. on customer receipts.
d. on supplier invoices.
e. on community news bulletins
Ans. b
106) Which group would be

classified as a stakeholder?
109) Communities
110) Banks
111) Suppliers
112) Employees
113) All of these
Ans. e
112) The process of performing

an external audit needs to
include:
a. only top level managers, as 40 Movies That Are Considered To Be

it’s a Almost Flawless
planning function.
b. as many managers and employees as
Read Next Story
possible.
c. primarily front-line supervisors
d. between 15 to 20 managers for it to be

valid
e. stockholders and external government

agencies
Ans. b

a stage of strategy formulation
techniques?
a. Formulation Framework
b. Matching stage
c. External factor evaluation
d. Decision stage
Ans. b
118) ST Strategies is an
important strategy to
a. Match weakness with opportunities of

the firm
b. Overcome external threats

c. Obtain benefit from its resourcesGloriousa | Sponsored
Read Next Story
d. Overcome its weakness and
reducing threats
Ans. b
121) The immediate

external environment
includes:
124) Divisions
125) S. B. U. s
126) Competitors
127) Management
Ans. c
128) The________ comprises

economic and social conditions,
political priorities and
technological developments, all
of which must be anticipated,
monitored, assessed and
incorporated into the executive’s
decision making.
a. Internal environment
b. Task environment
c. Operating environment Almost Flawless
d. Societal environment Read Next Story

Ans. d
131) Strategic management

involves the_______, directing,
_______
and controlling of a company’s
strategy-related decisions and
actions.
a. Financing; marketing
b. Planning; financing
c. Planning; organizing
d. Marketing; planning
Ans. c
60. A strategy is a company’s
a. Value statement
b. Pricing policy
c. Game Plan to outsmart competitor
d. Long-term objective
Ans. c
61. Strategy-formulation concepts
and tools 40 Movies That Are Considered To Be Almost Flawless

a. Do not differ greatly for different size Read Next Story
and type of organizations

b. Differ greatly for different size and
type of organizations
c. Do not differ greatly for profit or

nonprofit organizations but differ in
small and large organizations
d. None of the mentioned options
Ans. a
62. Annual objectives
a. Are not critical to success
b. Serve as guidelines for action,

directing and channeling efforts and
activities of organization members
c. Are not important for employee

motivation and identification
d. Do not provide a basis for

organizational design
Ans. b
63. Annual objectives
a. Need not to be consistent

b. Should be easily achievable
Almost Flawless
c. Should be measurable Read Next Story

d. Should be confidential and not to be
communicated throughout the
organization
Ans. c
134) Which of the following

resources is used by all
organizations to achieve
desired objectives?
a. Financial resources,
b. Physical resources,
c. Human resources
d. All of the mentioned options
Ans. d
65. Strategic management is
a. A pure science.
b. Based mainly on intuition.
c. Needed mainly when organizational

performance falls.
d. Based on the use of quantitative and

qualitative information. 40 Movies That Are Considered To Be Almost
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136) Large-scale, future-oriented
plans, for interacting with the
competitive environment to
achieve company objectives
refers to its
140) Strategy
141) Goals
142) Competitive analysis
143) Dynamic policies
Ans. a
143) Strategic issues require

which level of management
decisions?
146) Operative
147) Top
148) Front-line
149) Middle
Ans. b
149) Which of these basic questions

should a vision statement answer?
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b. Who are our employees?

c. Why do we exist?
d. What do we want to become?
Ans. d
69.________ is not part of an

external audit.
a. Analyzing competitors
b. Analyzing financial ratios
c. Analyzing available technologies d.
Studying the political environment
Ans. b
152) Strategic management

process activate in the sequence
of_______
a. Environmental scanning, Strategy

formulation, Implementation, control
and evaluation
b. Strategy formulation, Environmental

scanning, Implementation, control and
evaluation

c. Environmental scanning, Strategy
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and evaluation Read Next Story
d. Strategy formulation,
Implementation, control, evaluation,
Environmental scanning
Ans. a
155) KAPKAL Power’s interested

to achieve a 10 percent return on
equity (ROE) in their core electric
utility, 14 percent ROE on water
resource operations, and 15
percent ROE on support
businesses. It is _____________
158) Mission
159) Strategy
160) Objective
161) Policy
Ans. c
162) “A possible and desirable

future state of an organization” is
called:
165) Mission
166) Vision 40 Movies That Are Considered To Be

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167) Strategy
implementation Read Next Story
d. None of above
Ans. b
168) Strategic decisions are

based on what
managers_____________,
rather than on what
they__________.
a. Know; forecast
b. React to; anticipate
c. Forecast; know
d. Compromise with; analyze
Ans. c
171) “To improve economic

strength of society and function as
a good corporate citizen on a
local, state, and national basis in
all countries in which we do
business”. This is a mission
statement that contains:
174) Self-concept
175) Economic concern
176) Products or Services 40 Movies That Are Considered To Be

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Ans. d
177) Strategic-management audit
is known as:
a. Environmental scanning
b. Strategy formulation
c. Strategy control
d. Strategy evaluation
Ans. a
180)Forecasting tools can

be broadly categorized into
two groups. Those are:
a. Qualitative, Operational
b. Quantitative, Operational
c. Qualitative, Quantitative
d. Regression and time series analysis
Ans. c
77.____________ identifies a
firm’s major competitors and
their particular strengths and
weaknesses in relation to a sample
firm’s strategic position. Flawless
a. Competitive Profile Matrix Read Next Story

b. External Factor Evaluation matrix
c. Internal Factor Evaluation Matrix
d. Boston consulting group matrix
Ans. a
183) Organizing means an

identifiable group of people
contributing their efforts towards
the attainment of same goal. It is
important at the time of:
a. Environmental scanning
b. Strategy formulation
c. Strategy Implementation
d. Strategy evaluation
Ans. c
186) In a turbulent and

competitive free enterprise
environment, a firm will succeed
only if it takes a(n)
_____________ stance towards
change.
190) Reactive
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c. Anti-regulatory or anti-government
d. Vision and not mission
Ans. b
193) Which statement

best describes intuition?
a. It represents the marginal factor in

decision-making.
b. It represents a minor factor in

decision-making integrated with
analysis.
c. It should be coupled with analysis in

decision-making.
d. It is better than analysis in

decision-making.
e. It is management by ignorance.
Ans. c
196) What are the means by

which long-term objectives will
be achieved?
199) Strategies.
200) Strengths.
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d. Policies.
e. Opportunities.
Ans. a
202)Which of these basic questions

should a vision statement answer?
a. What is our business?
b. Who are our employees?
c. Why do we exist?
d. What do we want to become?
e. Who are our competitors?
Ans. d
206) When an industry

relies heavily on government
contracts, which forecasts can be
the most important part of an
external audit.
2 economic
3 political
4 technological
5 competitive 40 Movies That Are Considered To Be

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Ans. b
84.________ is not part of an

external audit.
a. Analyzing competitors
b. Analyzing financial ratios
q. Analyzing available technologies
d. Studying the political environment
e. Analyzing social, cultural,

demographic and geographic forces
Ans. b
209)Which individuals are

most responsible for the
success and failure of an
organization?
213) Strategists
214) Financial planners
215) Personnel directors
216) Stakeholders
217) Human resource

managers 40 Movies That Are Considered To Be
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216) Long-term objectives
should be all of the following
except:
2 Measurable.
3 Continually changing.
4 Reasonable.
5 Challenging.
6 Consistent.
Ans. b
218) What are guides to

decision making?
222) laws
223) rules
224) policies
225) procedures
226) goals
a. Communities
Ans. c
225) Which group would

be classified as a
stakeholder?
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228) Banks
229) Suppliers
230) Employees
231) All of the given options
Ans. e
231) Typically how many strategic

decision levels are in the corporate
decision-making hierarchy?
234) 3
235) 4
236) could be more than 5
237) 2
Ans. a
235) Which type of trend can

be exemplified by the
increasing numbers of two-
income households in a
society?
237) Social
238) Economic 40 Movies That Are Considered To Be

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239) Cultural Read Next Story

d. Technological
Ans. b
238)External assessment is
performed in which of the
strategic management phase?
a. Strategy formulation stage
b. Strategy implementation stage
c. Strategy evaluation stage
d. All of the given options
Ans. a
240) Political variables

have a significant effect on
a. Strategy formulation and

implementation
b. Strategy formulation and evaluation
c. Strategy implementation and

evaluation
d. Strategy formulation, implementation

and evaluation
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241) Strategic decisions
ostensibly commit the firm for
a. 1 -2 years
b. The short term
c. one years
d. A long time, typically five years
Ans. d
243)Social responsibility is
a critical consideration for a
company’s strategic
decision makers since
a. Stockholders demand it
b. The mission statement must express

how the company intends to contribute
to the societies that sustain it
c. It increases a company’s profits
d. It helps make decisions
Ans. b
95. “The perfect search engine

would understand exactly what
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what you want”, this statement is Read Next Story
included in the mission statement

of an online firm and is showing
which one of the following
components?
246) Self-concept
247) Concern for public image
248) A declaration of attitude
249) Philosophy
Ans. b
248) Which of the following

are signs of weakness in a
company’s competitive position?
a. A return-on-equity is below 25% and

earnings per share of less than Rs. 2.00
b. A price set by the firm higher than its

rivals
c. A declining market share, poor

product quality and few sales in market
d. Lower revenues and profit margin

and narrow product line than the
market leader
Ans. c Flawless
249) It directs at developing new Read Next Story
products before competitors do at

improving product quality or at
improving manufacturing
processes to reduce costs.
252) Marketing
253) Opportunity analysis
254) Research and development
255) Management
Ans. c
255) “Identifying and evaluating

key social, political, economic,
technological and competitive
trends and events”. Which of the
followings best describes this
statement?
a. Developing an effective mission

statement
b. Conducting an internal audit
c. Performing an external audit
d. Formulating strategy
Ans. c
99. What is the central purpose of
strategic evaluation? Read Next Story
a. Evaluate effectiveness of strategy to
achieve organisational objectives.
b. Evaluate effectiveness of control

system to measure achievements.
c. Evaluate effectiveness of strategies to

be implemented efficiently.
d. Evaluate effectiveness of the strategy

implementation process.
Ans. a
100. Strategy evaluation at

the_____________ level involves
using specific performance
measures-qualitative and
quantitative-for each functional
area.
258) organizational
259) operational
260) functional
261) production
Ans. c
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Section-1

1.Strategy is developed by the visionary chief executive in

Answer & Solution Discuss in Board Save for Later

Answer & Solution

A. Relative power only

B. Relative level of interest only

C. Relative power and interest

D. Relative power, interest, and amount of stock held

Answer & Solution Discuss in Board Save for Later

Answer & Solution

A. all commercial transactions between two or more countries

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Answer & Solution

A. When an organization has absolute power in its chosen marketplace

C. When an organization has limited power in its chosen marketplace

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Answer & Solution

A. Exploring future possibilities by looking at potential outcomes from particular causes

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Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

D. strategic levelAnswer & Solution Discuss in Board Save for Later

Answer & Solution

3.What are the means by which long term objectives will be

A. StrategiesB. PoliciesC. StrengthD. OpportunitieAnswer & Solution Discuss

4.Marketing strategy is a ___________ type of strategy

Answer & Solution Discuss in Board Save for Later

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

6.A possible and desirable future state of an organization is

B. Vision C. Strategy implementation D. Strategy formulation

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

A. Industry attractiveness and Business strength

B. Industry Growth rate and Business strength

C. Industry Attractiveness and Relative Market share

D. Industry growth rate and relative market share

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

D. More than 5 years

Answer & Solution Discuss in Board Save for Later

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

Answer & Solution Discuss in Board Save for Later

Answer & Solution

C. Socio cultural environment

Answer & Solution Discuss in Board Save for Later

Answer & Solution

D. All of the abvoe

Answer & Solution Discuss in Board Save for Later

Answer & Solution

A. few suppliers in the market

B. buyers purchases in small volume

C. buyers purchases in large volume