Level 1: Objective Type (2 marks each)

1. The way in which a company decides to group its customers, based on important differences in their
needs and preferences, in order to gain a competitive advantage is termed as:-
(a) Market segmentation
(b) Process differentiation
(c) Market mapping
(d) Product differentiation

2. The 3 factors, barriers to imitation, the capability of competitors and the general dynamism of the
industry environment dictate:-
(a) Superior profitability
(b) Customer response time
(c) Process innovation
(d) Durability of competitive advantage

3. Almost every parent tends to believe that viewing violent programs on television is directly linked to
increase levels of aggressive behaviour in children. Research has found this to be untrue. The bias
that led to parents' erroneous conclusion is termed as:-
(a) Illusion of Control
(b) Representativeness
(c) Reasoning by Analogy
(d) Prior Hypothesis Bias

4. A company is said to have a competitive advantage over its rivals when its:-
(a) Revenues are greater than the average revenues of all firms in its industry
(b) Average revenues are greater than the average revenues of all firms in all the industries
(c) Profitability is greater than the average profitability of all firms in all industries
(d) Profitability is greater than the average profitability of all firms in its industry

5. In the process of formulating a mission statement, the first step is to define an organization's
business which in turn requires every company to ask three questions, namely, 'What is our
business'?, 'What will it be'? and:-
(a) When should we start?
(b) Why should we be?
(c) What should it be?
(d) How can we grow?

6. The presence of a(a)____________________is an indication of strategic planning as an ongoing

process.
(a) Top down approach Process movement Feedback loop SWOT analysis

7. The birth of Scotch Guard through an accident at 3M demonstrates that at times strategy can also
be a result of(a)____________________rather than well thought out plans.
(a) Casual outlook Slack approach Serendipity Lazing

8. The success of the sale of Honda Cubs through retail stores demonstrates the possibility of:-
(a) Deliberate strategy being the realized strategy
(b) Stated strategy being the realized strategy
(c) Planned strategy being the realized strategy
(d) Emergent strategy being the realized strategy

9. The recognition that uncertainty makes it difficult to forecast the future is what led to the pioneering
of this approach to planning:-
(a) Comprehensive approach
(b) Lackadaisical approach
(c) Planning approach
(d) Scenario approach

1
10. Among other components, what makes up Emotional Intelligence is:-
(a) Empathy
(b) Activity
(c) Research
(d) Character

11. Strategic leaders playing the power game with skill and attempting to build consensus for their
ideas
rather than use their authority to force ideas through is a characteristic of leaders, termed as:-
(a) Emotional Intelligence
(b) Classic Methods
(c) Astute Use of Power
(d) Networked Circles

12. When a strategist uses simple stories to make sense out of complex problems, he/she is
susceptible
to a bias termed as:-
(a) Reasoning by Analogy
(b) Illusion of Control
(c) Prior Hypothesis Bias
(d) Representativeness

13. (a)____________________requires the generation of both a plan and a critical analysis of the
plan.
(a) Devil's Advocacy Dialectic Enquiry Paraphrased Technique Cognitive Application
14. When strategic planners are formulated in a vacuum by Top Managers who have little
understanding
or appreciation of current operating realities, the approach they use is termed as:-
(a) Ivory Tower
(b) Unplanned Moves
(c) Disorganized Setup
(d) Cumulative Focus

15. Well constructed goals set by strategists must possess a characteristic of being:-
(a) Challenging but realistic
(b) Hard to achieve
(c) Realistic but not challenging
(d) Easy to achieve

16. In the Abel's framework for defining business, how customers needs are being satisfied would be
dictated by:-
(a) Distinctive Competencies
(b) Intellectual Capital
(c) Distinct Identity
(d) Emotional Capital

17. Cultural values can determine the way a company treats its employees, which can in turn
determine
productivity.
(a) True
(b) False

18. A company's closest competitors are those, who:-

(a) Make substitute products or services
(b) Make similar products or services
(c) Serve the same basic customer needs
(d) Operate within the same industry

2
19. The same basic customer needs that are served by a market define:-
(a) Market characteristics
(b) Market controls
(c) Industry boundary
(d) Industry competition
20. Distinct groups of customers within a market that can be differentiated from each other on the
basis
of their distinct attributes and specific demands is termed as:-
(a) Market segment
(b) Customer profile
(c) Industry boundary
(d) Competition analysis

21. Colgate toothpaste enjoys high patronage amongst Indian consumers making it difficult for any
new
entrant to wean away consumers to its own toothpaste offering. For Colgate, this brand loyalty acts
as a source of:-
(a) Learning curve effects
(b) Barrier to entry of potential competitors
(c) Economies of scale
(d) Switching costs

22. (a)____________________arise when a company can take advantage of its environment to

formulate and implement strategies that enable it to become more profitable.
(a) Risks Threats Opportunities Growth

23. A group of closely related industries is termed as:-

(a) Sector
(b) Cluster
(c) Segment
(d) Area

24. Superior production operations and processes due to experience, patents or secret processes can
help a company to attain:-
(a) Economies of Scale
(b) Absolute Cost Advantages
(c) Switching Costs
(d) Brand Loyalty

25. If a person currently uses Microsoft's Windows Operating System and has a library of related
software applications, for. e.g. word processing software and document files, it becomes expensive
for this person to switch to another computer operating system. In effect, Microsoft has this user:-
(a) Locked in
(b) Blocked in
(c) Closed in
(d) Shut in

26. One of the factors that dictates the intensity of rivalry in an industry is height of:-
(a) Customer barriers
(b) Exit barriers
(c) Entry barriers
(d) Merger barriers

27. Declining demand in an industry results in:-

(a) Lesser rivalry among companies in an industry
(b) No effect on rivalry
(c) Greater rivalry among companies in an industry

3
(d) Entry of new entrants into industry

28. The auto components supply industry, whose buyers are large automobile manufacturers such as
GM, Ford and Toyota is a good example of an industry in which:-
(a) Customers have strong bargaining power
(b) Substitutes have strong bargaining power
(c) Buyers have strong bargaining power
(d) Suppliers have strong bargaining power
29. There are no close substitutes for microprocessors. This give companies like Intel and AMD the
ability to charge higher prices than would be the case, if there were any substitutes for
microprocessors. In this scenario, the force, 'threat of substitutes' can be interpreted as:-
(a) Weak competitive force
(b) Neutral competitive force
(c) Strong competitive force
(d) All of the above

30. The implication of strategic group analysis on any company helps it in identifying:-
(a) Who its suppliers are
(b) Who its customers are
(c) Who its immediate competitors are
(d) All of the above

31. Within an industry, factors that inhibit the movement of companies between strategic groups is
termed as:-
(a) Entry barriers
(b) Growth barriers
(c) Merger barriers
(d) Mobility barriers

32. The shakeout stage in the industry life cycle ends, when it enters its:-
(a) Growth stage
(b) Embryonic stage
(c) Maturity stage
(d) Decline stage

33. One of the prime reasons behind the breakdown of an industry's state of equilibrium, resulting in
the
unfreezing and subsequent refreezing of the industry state is:-
(a) Quality
(b) Cost overruns
(c) Economies of scale
(d) Innovation

34. Interest rates have a strong influence on a company's cost of capital and therefore can effect the
company's ability to raise funds and invest in new assets.
(a) True
(b) False

35. Boeing Company's commercial jet aircraft, the 777, uses 132.500 engineered parts that are
produced around the world by 545 suppliers. This scenario demonstrates the effect of:-
(a) Globalization of customers
(b) Globalization of production
(c) Liberalization of customers
(d) Liberalization of markets

36. One of the four attributes of a national or country specific environment that has an important
impact
on global competitiveness of companies located within that nation is:-

4
(a) Industry life cycle
(b) Facility situations
(c) Manufacturing bases
(d) Factor endowments

37. BJ wholesale's profitability was 50% higher than the average for retailing industry in the United
states between the period 1996-2001. For this period BJ's can be termed as possessing:-
(a) Competitive advantage
(b) Guerilla marketing
(c) Innovative capabilities
(d) All of the above

38. The more firm specific and difficult to imitate is a resource, the more likely a company is said to
have
a:-
(a) Innovative capabilities
(b) Economies of scale
(c) Distinctive competency
(d) Learning effects

39. One of the four functions that make up the support activities in the value chain is:-
(a) Macro environment
(b) Materials management
(c) Feedback loop
(d) Superior innovation

40. Amongst resources that companies possess, 'Brand names' can be termed as:-
(a) Virtual resource
(b) Tangible resource
(c) Intangible resource
(d) Physical resource

1. Pressures of local responsiveness in a global scenario may arise from difference in

Distribution channels
Consumer tastes and preferences
Infrastructure
All of the above

2. A company is said to have a competitive advantage over its rivals when its
Profitability is greater than the average profitability of all firms in all industries
Average revenues are greater than the average revenues of all firms in all the industries
Revenues are greater than the average revenues of all firms in its industry
Profitability is greater than the average profitability of all firms in its industry

3. Varying the feature of a goods or services to tailor it to the unique needs or tastes of groups
of customers or in extreme cases, individual customer is termed as an act of
Design
Randomization
Customization
Manufacturing

5
4. Divesting a major product line or market in an organization can be termed as Retrenchment
strategy
true
false

5. Two reasons for mergers and acquisitions are, to:

increase managerial staff and to minimize economies of scale.
reduce tax obligations and increase managerial staff.
create seasonal trends in sales and to make better use of a new sales force.
provide improved capacity utilization and to gain new technology.

6. The 3 factors, barriers to imitation, the capability of competitors and the general dynamism
of the industry environment dictate: -
Durability of competitive advantage
Process innovation
Customer response time
Superior profitability

7. The ‘B’ in BCG matrix stands for ‘Balance’

True
False

8. Value can be defined as the combination of _______ which ensures the ultimate economy
and satisfaction of the customer.
Efficiency, quality, service and price
Efficiency, quality, service and size
Economy, quality, service and price
Efficiency, material, service and price

9. Texas Instruments, a technological innovator found that, with every doubling of

accumulated production volume of a transistor or semiconductor unit, costs declined to 73%
of their previous level. TI had hit upon, what is known as
Experience curve
Cost curve
Marginal cost curve
Production curve

10. Economies of scale are derived from

Using cheaper raw materials
Increasing the number of SBUs
Increasing the number of markets served
Achieving cheaper unit costs through making larger quantities

11. The last groups of customers to enter a market, who are inherently conservative and
technophobic, are
Innovators
Late entrants
Laggards

6
 Risk takers

12. Which of the following is not a stated advantages of a divisional structure?

it allows focus on market segments or different products manufactured.
it leads to a competitive climate within a firm.
accountability is clear.
it promotes specialisation of labour.

13. One of the reasons for a slow growth in market demand for new products in an embryonic
industry could be lack of
Customer groups
Economies of scale
Innovation capabilities
Complementary products

14. The process of merging or acquiring industry competitors to achieve advantages of greater
scale and scope is a strategy of
Vertical Integration
Taper Integration
National Integration
Horizontal Integration

15. Cost Leadership is a strategy can be especially effective when price competition among
rival sellers is vigorous and most buyers use the product in the same ways.
True
False

16. Which of the following is not a stated advantage of a divisional structure?

It allows focus on market segments or different
It leads to a competitive climate within a firm
Accountability is clear
It promotes specialization of labor

17. When consumers will bear the switching cost of adopting a new technology?
When new tech. companies persuade them
When they find the benefits of adoption outweigh
When they find the advertising appealing
All of the above

18. One of the reason for a slow growth in market demand for new products an embryonic
industry could be lack of: -
Customer groups
Economies of scale
Innovation capabilities
Complementary products

7
19. Cultural values can determine the way a company treats its employees, which can in turn
determine productivity.
True false

20. Company is said to have a competitive advantage over its rivals when
Profitability is greater than the average profitability of all
Average revenues are greater than the average revenue
Revenues are greater than the average revenues of all
Profitability is greater than the average profitability of

21. Texas Instruments, a technological innovator found that, with every doubling of
accumulated production volume of a transistor or emiconductor unit, costs declined to 73% of
their previous level. TI had it upon, what is known as
Experience curve
Cost curve
Marginal cost curve
Production curve

22. The _________ enables the strategists to take corrective action at the right time, in the
strategic control system
Information systems control
Stock level alert control
Employees performance evaluation
Premise control

23. Horizontal Integration can help eliminate excess capacity in an industry.

True False

The auto components supply industry, whose buyers are large automobile manufacturers such
as GM, Ford and Toyota is a good example of an industry in which: -
Substitutes have strong bargaining power
Customers have strong bargaining power
Buyers have strong bargaining power
Suppliers have strong bargaining power

24. Strategy formulation, implementation and evaluation activities occur at three hierarchical
levels in a large organization: corporate, divisional and functional
True False

25. In the process of formulating a mission statement, the first step is to define an
organization’s business which in turn requires every company to ask three questions, namely,
‘What is our business’?, ‘What will it be’? and: -
Why should we be?
What should it be?
When should we start?
How can we grow?

26. One of the factors that dictate the intensity of rivalry in an industry is height of: -

8
 Exit barriers
Customer barriers
Entry barriers
Merger barriers

27. The implication of strategic group analysis on any company helps it in identifying: -
Who its suppliers are
Who its immediate competitors are
Who its customers are
All of the above

28. Research suggests that on average, large scale entry into a new business is often a critical
pre-condition on new venture success.
True
False

29. The overall aim of the Balanced Scorecard is to balance financial objectives with strategic
objectives
True
False

30. According to Michael Porter, the core of efficiency management is strategy

True False

31. A firm’s competitive advantage that cannot be easily matched or imitated by competitors
are called:
External opportunities
Distinctive competencies
Special properties
Competitive ventures
32. A source of product differentiation may be based on the technical standard.
True
False

33. When a company offers low priced products to only one group of customers, it engages in
a strategy of
Cost leadership
Differentiation
Focus cost leadership
Focus differentiation

34. Declining demand in an industry results in: -

Lesser rivalry among companies in an industry
No effect on rivalry
Entry of new entrants into industry
Greater rivalry among companies in an industry

35. Which one of the following is not a stated advantage of a divisional structure?

9
 It allows local control of local situations
It leads to a competitive climate within a firm
It makes accountability clear
It promotes specialization of labor

36. Functional structures group people on the basis of their common expertise and experience
or because they use the same resource.
True
False

37. Market _______ is the process of identifying groups of customers with basically similar
wants, needs, preferences or buying behaviours
Development
Positioning
Segmentation
Targeting

38. Basic decisions a company must consider while entering an overseas market include: -
What offices to setup
What managers to hire
What scale to enter?
All of the above

39. Joint ventures are being used increasingly, because they allow companies to use
complementary competencies and minimize risk.
True
False

40. When a company develops a business model that allows them to achieve maximum local
responsiveness, they purse a strategy termed as: -
Global strategy
Multi-domestic strategy
International strategy
All of the above

41. There are no close substitutes for microprocessors. This give companies like Intel and AMD
the ability to charge higher prices than would be the case, if there were any substitutes for
microprocessors. In this scenario, the force, ‘threat of substitutes’ can be interpreted as: -
Strong competitive force
Neutral competitive force
Weak competitive force
All of the above

42. Interest rates have a strong influence on a company’s cost of capital and therefore can
affect the company’s ability to raise funds and invest in new assets.
True
False

10
******************************************************************************
*******

1. lower cost per unit, differentiation and focus are examples of

a) corporate level strategies
b) global level strategies
c) business level strategies
d) functional level strategies

2. vertical diversification integrates firms toward or backward in the product chain

Yes
No

3. the ----------- enables the strategists to take corrective action at the right time, in the
strategic control system
a) information systems control
b) stock level alert control
c) employees’ performance evaluation
d) premise control

4. cultural values can determine the way a company treats its employees, which can in turn
determine productivity.
True False

5. one of the four attributes of a national or country specific environment that has an
important impact on global competitiveness of companies located within that nation is:
a) facility situations
b) industry life cycle
c) manufacturing bases
d) factor endowments
6. an industry composed of large number of small and medium sized and few large companies
characterizes a:
a) fragmented industry
b) chained industry
c) pioneering industry
d) consolidated industry

7. market ------------- is the process of identifying groups of customers with basically similar
wants, needs, preferences or buying behaviors
a) development
b) positioning
c) segmentation
d) targeting

8. when a company offers low priced products to only one group of customers, it engages in a
strategy of:
a) cost leadership
b) differentiation

11
 c) focus cost leadership
d) focus differentiation

9. unit cost reductions associated with large scale output is termed as:
a) economies of scale
b) learning effects
c) mass production
d) flexible manufacturing

10. the most dynamic industries tend to be those with very high rate of product innovation
True False

11. developing a vision and mission, identifying an organization’s external opportunities and
threats, and determining internal strengths and weaknesses are all ----------- activities.
a) strategy-formulation
b) strategy-implementation
c) long-range planning
d) strategy evaluation

12. a steel company that supplies its iron ore, needs from company owned iron ore mines
exemplifies:
a) non-taper integration
b) taper integration
c) backward integration
d) forward integration

13. a company’s closest competitors are those, who:

a) serve the same basic customer needs
b) make similar products or services
c) make substitute products or services
d) operate within the same industry
14. a source of product differentiation may be based on the technical standard
True
False

15. Toyota’s lean production systems for making automobiles demonstrate the value of:
a) process innovation
b) product innovation
c) multiple innovations
d) radical innovations

16. when a company gets blinded by the wizardry of a new technology and fails to examine
whether there is customer demand for the product, it is said to suffer from:
a) technical short sight
b) positioning inefficiency
c) innovation deficiency
d) technological myopia

12
17. innovators and early adopters are typically reached through:
a) mass distribution channels
b) specialized distribution channels
c) do not require distribution channels
d) transit distribution channels

18. the shakeout stage in the industry life cycle ends, when it enters its:
a) decline stage
b) maturity stage
c) growth stage
d) embryonic stage

19. intel’s Pentium pro-microprocessor builds on the existing microprocessor architecture of

intel x86 series and so is an example of:
a) quantum innovation
b) incremental innovation
c) radical innovation
d) judgmental innovation

20. which of these involves comparing a firm against the best firms in the industry on a wide
variety of performance-related criteria?
a) competition dynamics
b) capital turn-over ratio
c) benchmarking
d) bcg matrix

21. a first mover advantage may be beneficial in establishing:

a) brand loyalty
b) lower costs
c) better advertising
d) all of the above
22. the more firm specific and difficult to imitate is a resource, the more likely a company is
said to have a:
a) economies of scale
b) distinctive competency
c) innovative capabilities
d) learning effects

23. strategy formulation, implementation and evaluation activities occur at three hierarchical
levels in a large organization: corporate, divisional and functional
True
False

24. the level of bureaucratic costs in a diversified organization is a function of number of:
a) employees on rolls
b) businesses in the company’s portfolio
c) brands in its portfolio
d) all of the above

13
25. which of the following practice involves the selling off portions of the company and
making severe employee reduction
a) re-engineering
b) organization design
c) re-structuring
d) value engineering

26. functional structures group people on the basis of their common expertise and experience
or because they use the same resource
True
False

27. superior production operations and processes due to experience, patents or secret
processes can help a company to attain:
a) brand loyalty
b) absolute cost advantages
c) switching costs
d) economies of scale

28. anything that a firm does especially well compared to rival firms, is referred to as
a) competitive advantage
b) opportunity cost
c) an external opportunity
d) lucky opportunity

29. which of the following is part of the strategic management model?

a) develop mission and vision statements
b) implement strategies
c) measure and evaluate performance
d) all of the above
30. which of the following is not a part of porter’s competitive forces in industry?
a) potential entry of new competitors
b) bargaining power of suppliers
c) development of substitute products
d) bargaining power of union

31. a strategy that can exploit local differences and achieve global efficiencies is called:
a) transnational
b) global
c) multi-domestic
d) international

32. amongst resources that companies possess, ‘brand names’ can be termed as:
a) physical resource
b) virtual resource
c) intangible resource
d) tangible resource

14
33. a popular strategy that occurs when two or more companies form a temporary
partnership for the purpose of capitalizing on some opportunity of using complementary
competencies is called a(n):
a) merger
b) vertical integration
c) acquisition
d) strategic alliance

34. change in company structure from divisional to matrix, would require changes in the
systems in various degrees.
True False

35. STEEP acronym refers to Strategic Technological Effectiveness Evaluation Process.

True False

36. In the Balanced Scorecard approach, ‘quality’ would come under which of the following
perspective?
The internal perspective

37. Which of the following is NOT TRUE about an organisation’s strategy?

a) Strategy determines how an organization will compete
B) Strategy is implemented through projects
C) Only top management must understand strategy
D) Project selection should be clearly aligned to strategy

38. The process whereby a firm examines the costs associated with organizational activities
from purchasing raw materials to manufacturing products to marketing those products is
called?
A) the resource-based approach.
B) value chain analysis.
C) strategic cost analysis.
D) the internal factor evaluation matrix.
E) cost-benefit analysis.
39. Which phase of strategy management is called the action phase
a. Strategy formulation
b. Strategy implementation
c. Strategy evaluation
d. Measuring performance

40. Value is something that customers assign to a product or service.

True
False

41. Colgate toothpaste enjoys high patronage amongst Indian consumers making it difficult for
any new entrant to wean away consumers to its own toothpaste offering for Colgate, this
brand acts as a source of
a) Barrier to entry of potential competitors

15
 b) Learning curve effects
c) Economies of scale
d) Switching costs

42. The strategic-management process

a) Occurs once a year
b) applies mostly to large businesses
c) undertaken only for re-structuring
d) is a continuous process

43. Lack of control over quality is major concern while franchising

True
False

44. One of the four functions that make up the support activities in the value chain is
a) Macro environment
b) materials management
c) feedback loop
d) superior innovation

45. The function that controls the transmission of physical materials through the Value Chain,
from procurement through production and into distribution is
a) Materials Management
b) Sales & Marketing
c) service chain
d) process approach

46. The value chain activities when grouped vertically by functions and horizontally by product
or project gives rise to
a) geographical structure
b) matrix structure
c) web structure
d) team structure

47. Well-constructed goals set by strategists must possess a characteristic of being

a) hard to achieve
b) realistic but not challenging
c) easy to achieve
d) challenging but realistic

48. Well-constructed goals set by strategists must possess a characteristic of being

a) Hard to achieve
b) realistic but not challenging
c) easy to achieve
d) challenging but realistic

49. The desire to share and influence the behavior of a person in a face to face interaction in
the pursuit of a company’s goal refers to

16
 a) formal control
b) personal control
c) direct control
d) all of the above

50. The process of measuring a company against the products, practices and services of some
its most efficient global competitors is a practice of
a) competency mapping
b) benchmarking
c) business process reengineering
d) enterprise resource planning

51. Cost reductions associated with sharing resources across businesses refer to economies of
a) scope
b) assets
c) scale
d) all of the above

52. An example of _______ strategy is establishing e-commerce web sites to sell products
directly to consumers
a) backward integration
b) conglomerate diversification
c) horizontal integration
d) forward integration

53. Within an industry, factors that inhibit the movement of companies between strategic
groups are termed as
a) mobility barriers
b) growth barriers
c) merger barriers
d) entry barriers

54. Most manufacturing companies generally begin their global expansion using the mode of
a) exporting
b) joint ventures
c) acquisitions
d) all of the above

55. Managers of most companies first consider diversification, when they generate
a) excess manpower
b) excess fixed assets
c) large cash accumulation
d) all of the above

56. divesting a major product line or market in an organization can be termed as

Retrenchment strategy

17
 True
False

57. Strategy implementation is often considered to be the most difficult stage in the strategic-
management process because it requires personal discipline, commitment and sacrifice.
True
False

58. the way in which a company decides to group its customers, based on important
differences in their needs and preferences, in order to gain a competitive advantage is termed
as
Market segmentation

59. a core competence is a unique strength of an organization which may not be shared by
others
False

QUESTIONS:

1. Which of the following statement are used to distinguish “long term” from the “short-
term” time horizons:
a) In long term all costs, including fixed, are variable
b) Long term is as long as the trend in external environment do not change
c) In the long term; the more things change the more they are the same
d) All of the above
e) a) and b) only

2. In Porter’s “Five Forces of Competition” model the relative power of Buyers as well
as Suppliers is determined by:
a) Cost structures and Pricing flexibility
b) Availability of Alternatives and Switching Cost
c) technological obsolescence and demography
d) all of the above
e) None of the above

3. Which of the following describe the elements of the Porter’s “Five Forces of
Competition” model will be affected by “Barriers to entry”
a) Rivalry among existing and New Entrants
b) Buyers and Suppliers
c) Buyers and Substitute Products
d) All of the Above
e) None of the above

4. There are two strategies available to a firm competing in perfectly competitive

products:

18
 a) Overall Cost leadership or Preemptive Capacity
b) Backwards or forwards Integration
c) Differentiation or cost leadership
d) Pacification or differentiation
e) Growth Vector or Synergy

5. Customer Value is a concept which includes:

a) Price and other aspects of customers “sacrifice”
b) Benefits derived from Quality of products and services
c) Designated value
d) All of the above
e) a. and b. only

6. Customer Value Triad includes:

a) Product, Service, and Price
b) Product, Promotion, and Placement
c) Class, Category, and Form
d) Components, Assembly, and Financing

7. Which of the following is true about the case of highly price inelastic demand for a
brand:
a) Consumers consider the brand to be undifferentiated from other brands in the
market
b) Increase in the brand’s price will decrease the quantity demanded, but will not
affect the revenues
c) Increase in the brand’s price will decrease the quantity demanded, but will
increase the revenues
d) All of the above
e) a. and b. only

8. Which of the following is true about the case of highly price elastic demand for a
brand:
a) Consumers consider the brand to be undifferentiated from other brands in the
market
b) Increase in the brand’s price will decrease the quantity demanded, but will not
affect the revenues
c) Increase in the brand’s price will decrease the quantity demanded, but will
increase the revenues
d) All of the above
e) a. and b. only

9. In markets characterized by a high elasticity of demand there will be downward

pressure of prices, over time:
a) True
b) False

19
10. A ratio containing relative change in firm’s Revenues and the % Change in
Income, for the corresponding time period, in the firm’s market are is:
a) Brand Development Index
b) Revenue Multiplier
c) Category Development Index
d) Income Elasticity of Revenues
e) Price Elasticity of Demand

11. You have computed Price elasticity of demand and realized it is positive (+). Most
likely the product in question is A:
a) Luxury, status product
b) Inferior product
c) Regular product
d) Over-produced product
e) None of the above

12. If the income Elasticity of demand for a product is negative, than the product is:
a) An inferior good
b) A luxury good
c) A “snob appeal” good
d) Has no substitutes
e) None of the above

13. What is the advantage of a price inelastic demand, to the marketer:

a) Reduced need for advertising
b) Increased revenues when price is increased
c) Increased fixed overhead
d) All of the above
e) None of the above

14. When analyst divides Fixed cost by the Unit Contribution Margin the resulting
numbers is:

a) Net contributing Margin

b) Capital Intensity of the business
c) Profit residuals, in dollars
d) Break-even Point, in a units
e) All of the above are essentially the same

15. Capital Intensity of a Firm is determined to a large degree by:

a) The nature of technology utilized in the Industry
b) Business strategy of a firm
c) Government regulations
d) Cost of capital
e) All of the above

20
16. “Pruning” is refers to selling or liquidating a product, product line, or a business. In
spite of a decline of Sales revenues, the ROE has increased. Which of the following is
(are) correct:
a) Profit Rate went-up in spite of the decline in revenues
b) Asset base declined but Asset turnover increased
c) Favorable changes in interest rates and exchange rates
d) All of the above
e) a) and b) only

17. Corporate strategy of a firm is a long-term plan of __________ in the external

environment.

a) Capitalizing on the trends

b) Disengaging from the trends
c) Gaining control over the trends
d) Reversing the trends
e) Any of the above

18. ____________ is concerned with the acceptance of firm’s outputs by the relevant
publics, and _______________ is concerned with the ratio of outputs-to-inputs.
a) Strategy ____ Tactics
b) Effectiveness______ Efficiency
c) Tactics ______ Strategy
d) Efficiency______ Effectiveness
e) a and b are true

19. “Top line” and “Bottom Line,” in financial accounting, refer to __________ and
________ , respectively:
a) Highest quality and lowest quality products in the product mix
b) Revenue and Profit
c) Highest priced and lowest priced inputs
d) High numbered and low numbered SKUs in company’s inventory
e) None of the above

20. Which of the following Growth Strategies (growth vector), all other factors being
equal, carries the highest level of risk:
a) Market Development
b) Product Development
c) Conglomerate Diversification
d) Assortment Manipulation
e) Market extension

21. Which strategic concept underlines the mergers as a path to growth and profitability:
a) Creation of a Perfect Competition
b) Decrease of the industry concentration
c) Synergy

21
 d) Dynergy
e) Exchange rates

22. Which of the following is correct about the Leveraged Buy-outs (LBOs):
a) Common stock is acquired by a group of investors
b) Loans from financial institutions are involved
c) Tax-deductibility of interest is an encouragement for LBO
d) All of the above
e) None of the above

23. Marketing strategy typically involves:

a) Determination of the impact of the external trends on the market
b) Evaluation and selection of segment(s) of interest
c) Development of most appropriate competitive positioning and marketing mixes
for the target segment consumers
d) All of the above
e) a) and b) only

24. Which of the following best describes the concept of corporate strategy:

a) Proposed symbiosis between the organism of the firm and the tends in external
environment
b) Combination of methods, processes and standard operating procedures
c) Plans for marketing a particular product mix
d) Plans to maximizing quarterly profitability
e) b.,c.,and d, together add up to the concept of corporate strategy

25. Which of the following best defines Competitive Advantage of a firm:

a. Dominance of a particular advertising medium

b. Exclusive arrangements with the dealers
c. Technically most advanced products
d. Best training program for sales personnel
e. Possession of a unique requirement for success in a given product/market scope

26. Which of the following statements best describe Synergy:

a. Measure of joint effects between two or more business factors

b. Strategy to deal with energy shortages
c. A proper mix of seasoned and young sales people
d. Diseconomies of scale
e. Any of the above

27. Which of the following describes the concept of Product/Market Scope:

a) A list of product and market in which a company operates

b) Scope of economies of scale, taking into account the size of the markets

22
 c) The nature of interaction between company's products and markets
d) All of the above
e) None of the above (see enclosed essay)

28. The “Discipline of the Market Leaders” advises that a firm should:
a) Put emphasis on only one of the elements of the “Customer Value Triad,” keeping
the two others at the level acceptable to the target market
b) Stick to a strategy, even if the environment changes
c) Maintain prices at the level compatible with the product image
d) Avoid the lure of diversification.
e) All of the above

29. Which of the following describe the uncontrollable elements of the external
environment:

a) Cultural/Social/Demographic
b) Legal/Political
c) Technological
d) All of the above
e) a. and b. only

30. Which of the following belong(s) to the description of the Product/Market Scope:

a) Cyclicality
b) Seasonally
c) Input intensity
d) All of the above
e) None of the above

31. Which of the following strategic issues are most likely to be considered by a
Vermont, USA ski manufacturer looking for international marketing opportunities in
Argentina:

a) Cyclicality
b) Seasonality
c) Capital intensity
d) Income elasticity of demand
e) Who knows, Argentina is in South America, there is no snow there!

32. Extreme Cyclicality of a business could be reduced by entering international markets

which:

a) Are large
b) Are in countries with stable government
c) Have different timing of the business cycle
d) Which are economically integrated with the home market

23
 e) Which are close geographically (low transportation cost)

33. McDonald's new product strategy resulting in the introduction of breakfast food was
an attempt to:

a) compete with factory cafeterias

b) respond to the trends in demographic environment
c) drastically change their image
d) all of the above
e) a) and c) only

34. Which of the following describe(s) the Growth Vector component of the corporate
strategy:

a) It addresses the changes in Product/Market Scope

b) It defines the sustainable growth for a given set of market conditions
c) It delineates the growth requirements in marketing, financial and organizational
terms
d) Is the present competitive advantage, leveraged in a growing markets
e) b. and d. only

35. Match the generic goals of any business enterprise, namely: - Survival::Growth::
Profitability - with the stages in the Product Life Cycle:
a) Introduction::Maturity :Growth
b) Introduction:: Growth::Maturity
c) Maturity::Growth:: Introduction
d) Growth:: Maturity:: Introduction
e) None of the above\

36. According to Michael Porter, ROI is a non-monotonic function of the Size of a firm.

ROI

SIZE
Small Large

Which of the following explain the causes of small firm's high ROI:

24
 a) Large Market Share
b) Customer focused R&D
c) Low unit fixed overhead
d) All of the above
e) b. and c. only

37. Which of the following recommendation(s) is(are) likely to allow a small firm to
grow without a significant drop in ROI:

a) Invest in the "state of the art" plant and equipment

b) Target segments which are similar (or otherwise synergistic) to the ones the firm
is targeting presently
c) Keep the rate of growth close to the Rate of Sustainable Growth
d) All of the above
e) Only b. and c.

38. The Rate of Sustainable Growth depends on:

a) Retention rate, Profit Margin, Assets Turnover, Leverage

b) Rate of market growth and Profit Margins
c) Rate of market growth, Retention rate, and Initial Market Share
d) Retention rate and past Return on Investment
e) Assets Turnover, Rate of market growth and Profit Margins

39. In essence, the Rate of Sustainable Growth is the Retention Rate multiplied by the
Return on the last period’s Equity:

a) True
b) False

40. In order to grow faster than the Rate of Sustainable Growth, a firm may increase one
or more levers (variables in the Rate of Sustainable Growth equation). The nice thing
about them (the levers) is that they could be changed independently of each other, in
accordance with the selected path of growth.

a) True
b) False

41. Degree of Operating Leverage is said to be a specific type of Elasticity. It measures

relative change in ___________ , associate with the relative change in ___________

a) EBIT: :SALES
b) SALES: : EBIT
c) FIXED COST : : EBIT
d) EPS: : EBIT
e) EPS: : SALES

25
42. Degree of Financial Leverage is said to be a specific type of Elasticity. It measures
relative change in ___________ , associate with the relative change in ___________ .
a) EBIT : :SALES
b) SALES : : EBIT
c) FIXED COST : : EBIT
d) EPS : : EBIT
e) EPS: : SALES

43. Degree of Combined Leverage is said to be a specific type of Elasticity. It measures

relative change in ___________ , associate with the relative change in ___________ .
a) EBIT : :SALES
b) SALES : : EBIT
c) FIXED COST : : EBIT
d) EPS : : EBIT
e) EPS: : SALES

44. Which of the following about the Financial and Operating Leverage is true:
a) Operating Leverage reflects the use of fixed assets in the operation of the firm
b) Degree of Operating Leverage is undefined for a firm operating at the break-even
point
c) As a matter of financial strategy, a firm may choose to have a high Operating but
a low Financial leverage
d) All of the above
e) a. and b. only

45. Changes in price and variable cost which change the break-even point of the firm do
not affect the Degree of Operating Leverage, as long as the level of Fixed cost
remains constant:
a) True
b) False

46. After several quarters of flat sales, and losses, a Ford Motor Company closed a few
plants. Marketing incentives resulted in a very modest increase in sales and a big
percent jump in Operating Profit. Which statements are true, from the information
provided:
a) Company is on its way to a turnaround
b) Marketing incentives will always lead to profit
c) Company’s net Profit has increased
d) Company is operating close to the Break-even Point
e) All of the above

47. ) in 1999 was $1. The Operating Leverage was 3 and the Financial Leverage was 2.
The estimated sales increase for 2000 was 5%. Thus, the estimated EPS for year
2000 is therefore:
a) $1.6

26
 b) $1.3
c) $1.5
d) $2.5
e) Undetermined, due to Y2K issue

48. A firm’s earning per share (EPS) in 1999 was $1. The Operating Leverage was 3 and
the Financial Leverage was 2. There was an estimated drop in sales for 2000 of 5%,
due to a recessionary economic environment. Thus, the estimated EPS for year
2000 is therefore:
a) $1.6
b) $1.3
c) $0.7
d) $0.325
e) Undetermined, due to Y2K issue

49. Financial Leverage is typically maximized by firms operating in mature industries

(markets) when the cash flow is high and stable:

a) True
b) False (high and stable cash flow means that the firm does not need financial
leverage)

50. One of the basic rules, but not only one, for deriving an optimal capital structure is
that as long as the After Tax Return on Assets exceed the Tax Sheltered Interest
Rate on Long Term Debt, the firm should increase the leverage as it will increase
the ROE (Return on Equity):

a) True
b) False

51. Financial Leverage is “symmetrical”, i.e. it equally applies to increase as well as

decrease in earnings, than it is also a measure of ‘riskiness” of a firm:
a) True
b) False

52. Retained Earnings account is often overlook source of cash for investments:
a) True
b) False

53. Which of the following is the Asset Turnover ratio a measure of:
a) Efficiency
b) Effectiveness
c) Capital intensity
d) Leverage
e) a. and c., only

27
54. Statement of Corporate Mission refers to the firm’s:

a) purpose and business philosophy

b) desired market share and profitability
c) desired market share and revenue growth
d) desire to survive, achieve profitability and growth
e) none of the above

55. Based on the definition given in class a firm may change its Goals but it cannot really
achieve them, as they are:

a) typically too ambitious

b) typically refer to very long run
c) open-ended attributes which the company wants to be known by
d) stated in qualitative terms
e) C. and D. only

56. “IBM is in a business of solving business problems, without creating new ones. IBM
accomplishes that by treating the customers and the employees with utmost respect”.
This quote represents IBM’s:

a) Objective
b) Method
c) Strategy
d) Mission

Managing Differences

Which of the following combinations forms a corporate strategic levers that can be used by Flick
a company that aims at adopting the Adaptation strategy in its globalization strategy?

a) Function and competence

b) Culture and administrative factors

c) Economy and products

d) Scope selection and partnership

Ans D

What are the two most adaptable AAA strategy alternatives to articulate the action agenda for
PMS?

a) Adaptation arbitrage and adaptation acquisition

b) Adaptation aggregation and Arbitrage aggression

28
c) Adaptation aggregation and adaptation arbitrage

d) Arbitrage aggression and adaptation arbitrage

Ans C

Which of the following is not part of the 3As of the AAA strategic triangle that any company
would use in developing the globalization scorecard?

a) Aggression

b) Adaptation

c) Aggregation

d) Arbitrage

Ans A

Can you Say What Your Strategy is?

An employee at Sky mart is preparing a company strategy statement. Which of the following is
not a basic element are that should be included in the strategy?

a) Scope definition

b) Market definition

c) Objective definition

d) Advantage definition

Ans D

A firm’s scope entails the clear definition of all of the following except

a) Customer

b) Vertical integration

c) Corporate mandate

d) Geographic location

Ans C

Wells Fargo a San Francisco Bank competes in a brokerage business. Which of the following
contexts illustrates the strategic spot where the company is most competitive?

29
a) Competitor offering/ Customer needs

b) Customer needs/ Company’s capabilities

c) Company’s capabilities/ Competitor offering

d) Competitor offering/ Technology

Ans B

Everyday Talk and Convincing Conversations: Utilizing strategic internal communication

Which of the following is not a central role of communication described by every day talk in
regard to relationships?

a) Formation

b) Creation

c) Maintenance

d) Eloquence

Ans D

Which amongst the following is not a common stumbling block in any organizational setting?

a) Strategic management

b) Organizational injustice

c) Misleading and holding information

d) Organizational dishonesty

Ans A

Which of the following is not a way through which the leaders in an organization would foster
positive talk among the members?

a) Leading by example

b) Building a positive internal brand

c) Laying off employees

d) Embracing the social media

30
Ans D

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.

1) Top-down planning that emphasizes formal strategy formulation and leaves the
implementation issues to lower management levels is known as 1) _______

A) basic financial planning.

B) strategic management.
C) forecast-based planning.
D) externally-oriented planning.
E) none of the above

2) Which of the following is NOT one the four triggering events listed in the text that are
the stimulus for a strategic change? 2) _______

A) new CEO
B) threat of a takeover
C) intervention by the organization's bank
D) awareness by management of decreased profitability
E) annual strategic planning conference

3) The ability of an organization to reshape its environment is described by 3)

_______
A) organizational citizenship theory.
B) organizational learning theory.
C) theory institution.
D) the strategic choice perspective.
E) population ecology theory.

4) FedEx stipulates specific employee behavior including how a driver dresses to how
keys are held when approaching a customer's door. This is an example of a 4)
_______

A) policy. B) program. C) budget. D) procedure E) control.

5) All of the following reflect activities of a learning organization EXCEPT 5)

_______
A) transferring knowledge quickly and efficiently throughout the organization.

31
B) learning from its own experiences and past history.
C) experimenting with new approaches.
D) alienating competitors in the industry.
E) solving problems systematically.

6) The mode of strategic decision-making typical of most universities, many large

hospitals, a large number of governmental agencies, and a surprising number of large
corporations is 6) _______

A) entrepreneurial.
B) logical incrementalism.
C) planning.
D) adaptive.
E) none of the above

7) Which of the following provides an example of the characteristics of a transformation

leader? 7) _______
A) Microsoft CEO, Steve Ballmer, crawled under tables to plug in PC monitors and
diagnosed problems with an operating system.
B) Phil Knight at Nike has energized his corporation and commanded respect.
C) Verizon Communications CEO Ivan Seidenberg showed his faith in his people by
letting his key managers handle important projects and represent the company in public
forums.
D) Louis Gerstner proposed a new vision for IBM to change its business model from
computer hardware to services.
E) All of the above.

8) Outside directors are defined as 8) _______

A) those individuals who scan the external environment.
B) individuals who organize and coordinate politically focused activities.
C) those individuals with public relations responsibilities.
D) board members who are also officers or executives employed by the corporation.
E) individuals on the board who are not employed by the board's corporation.

9) Under what circumstances does a DIRECT interlocking directorate exist? 9)

_______
A) When both management and the board establish corporate strategic management.
B) When two corporations have directors who serve on the board of a third firm.
C) When a corporation's employees are included on its board.
D) Occurs when one or more individuals on one board also serve on a board of a

32
second firm.
E) When all board members are also employed by the corporation.

10) The vast majority of inside directors are from all of the following EXCEPT: 10)
______
A) vice-president of operational units.
B) vice-president of functional units.
C) chief executive officer.
D) president of the corporation.
E) lower-level operating employee.

11) In implementing the Sarbanes-Oxley Act, the SEC required in 2003 that a company
disclose 11) ______
A) the CFO's pay.
B) if it has adopted a code of ethics that applied to the CEO and the CFO.
C) the number of insiders on their PR committee.
D) the CEO's pay.
E) all of the above

12) Which of the following is NOT descriptive of interlocking directorates? 12)

______
A) Interlocking directorates are more common in small, family-owned companies.
B) Interlocking directorates occur in about 20% of the 1000 largest US firms.
C) Interlocking directorates are a useful method for gaining inside information about an
uncertain environment.
D) Interlocking directorates occur because large firms have a large impact on other
corporations.
E) Interlocking directorates provide objective expertise about a firm's strategy.

13) Ethics is defined as 13) ______

A) consensually accepted standards of behavior for an occupation, trade, or
profession.
B) imposing one's morality upon another.
C) a general rule of conduct of personal behavior, based on religious or philosophical
grounds.
D) voluntary obligations assumed by an individual or organization.
E) formal codes that permit or forbid certain behaviors.

14) All of the following reasons provide rationale for unethical behavior EXCEPT
14) ______

33
A) agreement among stakeholders and business people about what is ethical.
B) the impact of cultural norms and values.
C) ambiguous rules.
D) difficulty of one group to understand another's actions.
E) differences in values between business people and key stakeholders.

15) All of the following are considered primary stakeholders EXCEPT 15) ______
A) governments.
B) creditors.
C) shareholders.
D) customers.
E) employees.

16) A code of ethics was important for two reasons. The first reason is that it clarifies
company expectations of employee conduct in various situations, and the second reason
is 16) ______

A) that it minimizes the possibility of mandatory regulations.

B) to reduce the burden on the judicial system.
C) that it makes clear that the company expects its people to recognize the ethical
dimensions in decision and actions.
D) that it encourages individuals to strive for good citizenship and corporations to
contribute positively to society.
E) to promote a high level of societal norms.

17) Which approach to ethical behavior can encourage selfish behavior when a person
defines a personal need or want as a "right"? 17) ______

A) categorical imperative
B) individual rights
C) moral relativism
D) utilitarian
E) justice approach

18) Which of the following is NOT descriptive of external environmental scanning?

18) ______
A) Used to monitor, evaluate, and disseminate information from the external environment
to key people within the corporation.
B) Used to identify strengths and weaknesses.
C) Used to identify opportunities and threats.

34
D) It is a tool that corporations use to avoid strategic surprise.
E) Used as a tool to ensure a corporation's long-term health.

19) The issues priority matrix used in environmental scanning is composed of two axis or
dimensions which are labeled 19) ______

A) industry growth rate and probable competitive position.

B) probability of occurrence and probable impact on the corporation.
C) importance to the industry and likelihood of occurrence.
D) issue importance and relative power of stakeholder groups.
E) probable industry attractiveness and business strength/competitive position.

20) What are the key environmental trends that are judged to have a medium to high
probability of occurrence and a medium to high probability of impact on the
corporation? 20) ______

A) scenarios
B) historical concerns
C) industry forces
D) external strategic factors
E) strategic issues

21) Which of the following is true in regards to competitive intelligence? 21) ______
A) The Economic Espionage Act makes it illegal to steal any material that a business has
taken "reasonable efforts" to keep secret.
B) The Society of Competitive Intelligence Professionals urges strategists to stay within
the law and to act ethically when searching for information.
C) A number of firms hire consultants with questionable reputations who do what is
necessary to get information when the selected methods do not meet SPIC ethical
standards or are illegal.
D) The Society of Competitive Intelligence Professionals states that illegal activities are
foolish because the vast majority of worthwhile competitive intelligence is available
publicly via annual reports, web sites, and libraries.
E) all of the above

22) One ground rule necessary for effective brainstorming is 22) ______
A) calculating future earnings of each idea.
B) critique each idea for rationality.
C) propose ideas without mentally screening them.
D) forecast the success of each idea.

35
E) scrutinize each idea generated.

23) A forecasting technique using quantitative measures that attempt to discover causal or
at least explanatory factors that link two or more time series together is called 23)
______

A) morphological analysis.
B) statistical modeling.
C) the delphi technique.
D) trend extrapolation.
E) trend-impact analysis.

24) Through market research, corporations can target their various products or services so
that management can discover what niches to seek or develop, and how to minimize
competitive pressure. This is descriptive of 24) ______

A) product life cycle.

B) marketing position.
C) market segmentation.
D) marketing leverage.
E) marketing mix.

25) The ratio of total debt to total assets is known as 25) ______
A) capital finance.
B) budgeting leverage.
C) capital budgeting.
D) financial budgeting.
E) financial leverage.

26) Which of the following statements is true concerning a corporate reputation? 26)
______
A) There is a positive relationship between corporate reputation and financial
performance.
B) It is a widely held perception of a company by the general public.
C) A good corporate reputation can be a strategic resource.
D) Reputation tends to be long-lasting and hard for others to duplicate.
E) all of the above

27) Which of the following is NOT a responsibility of a research and development

manager? 27) ______

36
A) Developing methods of embodying the new technology in new products and
processes.
B) Deploying resources so that the new technology can be successfully implemented.
C) Suggesting and implementing a corporation's technological strategy in light of its
corporate objectives and policies.
D) Choosing among alternative new technologies to use within the corporation.
E) Taking the design and operationalizing the plan into mass production.

28) The process of taking a new technology from the laboratory to the marketplace is
called 28) ______
A) the R & D mix.
B) technological competence.
C) technological discontinuity.
D) economies of scope versus operating leverage.
E) technology transfer.

29) Which one of the following is NOT one of the four methods to improve the
corporation's quality of work life? 29) ______

A) More responsive management

B) Restructuring work
C) Introduce innovative reward systems
D) Introduce participative problem-solving
E) Improve the work environment

30) Which of the following is true of defensive tactics? 30) ______

A) Defensive tactics divert attacks to less threatening avenues.
B) Defensive tactics lessen the intensity of an attack.
C) Defensive tactics reduce short-term profitability to ensure long-term profitability.
D) Defensive tactics aim to lower the probability of attack.
E) all of the above

31) The concept that advocates management's attempt to find a strategic fit between
external opportunities and internal strengths while working around external threats and
internal weaknesses is called 31) ______

A) situational analysis.
B) strategic evaluation.
C) objective analysis.
D) position analysis.

37
E) environmental analysis.

32) Which offensive tactic proposes an indirect approach against the established
competitor such as changing the rules of the game? 32) ______

A) flanking maneuver
B) frontal assault
C) bypass attack
D) guerilla warfare
E) encirclement

33) When a company following a differentiation strategy ensures that the higher price it
charges for its higher quality is not priced too far above the price of the competition, the
company is using the process of 33) ______

A) price fixing.
B) low-cost differentiation.
C) cost leadership.
D) cost proximity.
E) basic differentiation.

34) According to Porter, the term that applies to the breadth of a company's or business
unit's target market is called 34) ______

A) diversification.
B) concentration.
C) differentiation.
D) lower cost.
E) competitive scope.

35) In many cases, ________ integration is more profitable than ________

integration. 35) ______
A) backward; vertical
B) vertical; backward
C) mass; forward
D) backward; forward
E) forward; backward

36) The stability strategy is appropriate for all of the following circumstances
EXCEPT 36) ______

38
A) popular with small business owners who have found a niche and are happy with their
success.
B) most appropriate for reasonably successful corporations in a reasonably predictable
environment.
C) appropriate when the industry is in decline.
D) useful in the short-run but can be dangerous if followed too long.
E) appropriate when the industry is facing modest or no-growth potential.

37) One benefit of a U.S. company entering a joint venture with an international firm is
that it 37) ______
A) enhances the policy of the host country's takeover of the firm.
B) promotes skepticism among other countries not involved in the merger.
C) encourages competitors to work with the company.
D) reduces the risks of expropriation.
E) increases revenues by 20%.

38) A firm's expansion into other geographic locations and/or increasing the range of
products and services offered to current markets is called 38) ______

A) horizontal growth.
B) forward vertical growth.
C) backward vertical growth.
D) captive company strategy.
E) diversification.

39) An MNC uses which international strategy for entering a foreign market by
combining the higher labor skills and technology available in the developed countries
with the lower cost labor available in the developing countries? 39) ______

A) licensing
B) joint ventures
C) production sharing
D) acquisitions
E) exporting

40) When a company deals with obtaining raw materials, parts, and supplies needed to
perform the operations function, the company is developing its ________ strategy.
40) ______

A) purchasing

39
B) R & D
C) financial
D) human resource management
E) operations

41) When Intel opened four small-scale research facilities adjacent to universities to
promote the cross-pollination of ideas, they were using which approach to R & D?
41) ______

A) continuous improvement
B) technological leadership
C) differentiation
D) technology scouts
E) open innovation

42) Which of the following is NOT a goal of financial strategies? 42) ______
A) Attempt to maximize the financial value of the firm.
B) Provide the corporation with the appropriate financial structure and funds to achieve
its overall objectives.
C) Provide competitive advantage through a lower cost of funds and a flexible ability to
raise capital to support a business strategy.
D) Institute a new product development plan to generate profit potential.
E) Examine the financial implication of corporate and business level strategic options and
identify the best financial course of action.

43) When a company determines how and where a product or service is to be

manufactured, the level of vertical integration in the production process, the deployment
of physical resources, and relationships with suppliers, the company is developing its
________ strategy. 43) ______

A) R & D
B) human resource management
C) marketing
D) financial
E) operations

44) According to Porter, to achieve a cost advantage by following the functional strategy
of technological followership, a business unit should 44) ______

A) be the first firm down the learning curve.

40
B) pioneer the lowest-cost product design.
C) innovate in other activities to increase buyer value.
D) avoid R&D costs through imitation.
E) create low-cost ways of performing value activities.

45) The purchasing strategy in which two suppliers are the sole suppliers of different
parts, but are also the backup suppliers for each other's parts is 45) ______

A) multiple sourcing.
B) just-in-time sourcing.
C) sole sourcing.
D) parallel sourcing.
E) backup sourcing.

46) Which type of structure enables a corporation to centralize decision making along
product lines and to reduce costs? 46) ______

A) matrix structure
B) geographic-area structure
C) functional structure
D) product-group structure
E) network structure

47) The job characteristics model is a good example of 47) ______

A) job design.
B) job enrichment.
C) job rotation.
D) job enlargement.
E) all of the above

48) There are three distinct phases in the development of a matrix structure. Which phase
occurs when both the functional and product structures become permanent in a true dual-
authority structure? 48) ______

A) true dual-authority structure

B) immature matrix
C) temporary cross-functional task forces
D) mature matrix
E) product/brand management

41
49) The program which incorporates the statistical approach of Six Sigma with the lean
manufacturing program originally developed by Toyota is known as 49) ______

A) Flexible manufacturing.
B) Lean Six Sigma.
C) reengineering.
D) Job enlargement.
E) Just in time.

50) Which type of structure was used by American Cyanamid to introduce and manage a
similar line of products throughout the world? 50) ______

A) international structure
B) network structure
C) geographic-area structure
D) product-group structure
E) functional structure

51) What is the activity that occurs in Stage I of international development? 51)
______
A) The company operates in a global industry and establishes worldwide personnel, R &
D, and financing strategies.
B) The company exports, but trade is minor and handled by an export department.
C) The company invests in production facilities in key countries.
D) The company establishes local operating divisions in host countries to better serve
individual country markets.
E) The company establishes its own export division with sales offices in other countries.

52) According to Hofstede, which cultural dimension describes the extent to which a
society emphasizes the importance of hard work, education, and persistence as well as the
importance of thrift? 52) ______

A) uncertainty avoidance
B) masculinity-femininity
C) power distance
D) long-term orientation
E) individualism-collectivism

53) Which of the following is NOT a guideline proposed for successful downsizing?
53) ______

42
A) Make across-the-board cuts.
B) Invest in the remaining employees.
C) Contract out work that others can do cheaper.
D) Plan for long-run efficiencies.
E) Communicate the reasons for actions.

54) If a planned strategy is not compatible with the company's current culture, and
management is not willing to make major organizational changes required to manage
around the culture, what should the organization do? 54) ______

A) Manage around the culture by establishing a new structural unit to implement the new
strategy.
B) Implement the new strategy and identify how it is superior to the old strategy.
C) Find a joint-venture partner or contract with another company to carry out the
strategy.
D) Move forward very carefully by introducing small steps and modifications before full
implementation.
E) none of these

55) When Admiral was acquired by Maytag Corporation, the Admiral employees were
willing to accept the dominance of Maytag's strong quality-oriented culture. This
demonstrates which approach to managing culture? 55) ______

A) separation
B) segmentation
C) assimilation
D) deculturation
E) integration

56) One of the big common mistakes by corporations sending executives on global
assignments is NOT 56) ______
A) providing training for the regulatory environment.
B) educating executives about customs and values in other countries.
C) giving executives the opportunity to visit home.
D) raising their salaries.
E) providing excellent health care.

57) A responsibility center which measures performance in terms of the difference

between revenues (which measure production) and expenditures (which measure
resources) is a(an) 57) ______

43
A) investment center.
B) expense center.
C) standard cost center.
D) profit center.
E) revenue center.

58) Which method of matching executive rewards to the accomplishment of strategic

objectives is particularly appropriate for measuring and rewarding the performance of top
SBU managers and group-level executives when performance factors and their
importance vary from one SBU to another? 58) ______

A) long-term evaluation method

B) strategic-funds method
C) weighted-factor method
D) segmentation method
E) individual evaluation method

59) A survey of 600 business units found that compensation programs emphasizing
bonuses and other incentives were most used in those units emphasizing 59) ______

A) stability strategies.
B) international strategies.
C) growth strategies.
D) retrenchment strategies.
E) cooperative strategies.

60) If marketing attains its goal at the expense of rising production costs are raised for
the manufacturing department, the end result of marketing's achievements and
manufacturing's cost increases reflects 60) ______

A) behavior substitution.
B) suboptimization.
C) resource allocation.
D) strategy optimization.
E) resource optimization.

61) The example of turnkey projects can be

a.Goods exporters
b.Only Builders
c.service exporters

44
d.oil firms

What is more important in brand equity?

a. quality
b. quantity
c. customer perception
d. none of the above

45