Business Consulting
Exam Answer Key
Course Introduction
Business Consulting offers students a comprehensive introduction to the principles, frameworks, and practical skills needed to assist organizations in solving complex challenges and improving performance. The course covers the consulting process from problem diagnosis and data analysis to solution development and implementation, while emphasizing effective client communication, ethical standards, and project management. Through real-world case studies, simulations, and collaborative projects, students gain hands-on experience in developing actionable recommendations for businesses across various industries. This course prepares students for careers in consulting by fostering analytical thinking, strategic planning, and collaborative teamwork abilities.
Recommended Textbook
Strategic Management An Integrated Approach 10th Edition by Charles W. L. Hill
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Page 2
Chapter 1: Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage
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Sample Questions
Q1) The primary goal of a SWOT analysis is to
A) benchmark a company's performance.
B) force managers to think creatively rather than analytically.
C) forecast future events.
D) develop short-run goals.
E) create, affirm, or fine-tune a company-specific business model.
Answer: E
Q2) Sam Walton wanted Walmart to keep costs low.Therefore,as an example to others,he drove his own car and furnished his office with plain,steel desks.In this case,Mr.Walton was displaying his
A) commitment.
B) ego.
C) astute use of power.
D) emotional intelligence.
E) eloquence.
Answer: A
Q3) SWOT analysis is implemented to fine-tune strategies.
A)True
B)False
Answer: True
Page 3
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Sample Questions
Q1) Beverage makers are finding that water sales are increasing due to consumers' preferences for healthy drinks.Which part of the macroenvironment does this represent?
A) Economic forces
B) Demographic forces
C) Embryonic forces
D) Political forces
E) Social forces
Answer: E
Q2) The Internet is an example of a
A) technological force.
B) social force.
C) political and legal force.
D) demographic force.
E) global force.
Answer: A
Q3) Intense rivalry lowers prices and raises costs.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Internal Analysis: Distinctive Competencies, Competitive
Advantage, and Profitability
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Sample Questions
Q1) Using the value chain model,which of the following primary activities is performed first,as inputs are transformed into outputs?
A) Research and development
B) Marketing and sales
C) Human resources
D) Production
E) After-sales service and support
Answer: A
Q2) Kim's T-shirt factory was expert at providing unique and high-quality but costly shirts.Even though the designs were very nice and the amount of detail increased over time,the high price meant that few customers bought shirts from her and her factory went bankrupt.Kim's factory failed due to
A) inertia.
B) prior strategic commitments.
C) the Icarus paradox.
D) lack of distinctive competencies.
E) lack of capabilities.
Answer: C
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Page 5
Chapter 4: Building Competitive Advantage Through Functional-Level Strategy
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Sample Questions
Q1) A vital source of information about the causes of poor quality are the firm's own employees.
A)True
B)False
Q2) When credit card companies such as Visa and Mastercard allow an individual to put one of their own photos on their account credit card,they are utilizing
A) mass customization.
B) a flexible manufacturing system.
C) quality as reliability mantra.
D) supply-chain management.
E) a just-in-time inventory system.
Q3) Through efficient logistics at Gina's Grocers,the stock in the stores is automatically replenished once every week.Management at Gina's Grocers uses a just-in-time inventory system.
A)True
B)False
Q4) You are a consultant offering advice to a large manufacturing firm about ways to increase its distinctive competency in innovation.What suggestions would you offer? Be specific and detailed in your answer.
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Chapter 5: Building Competitive Advantage Through Business-Level Strategy
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Sample Questions
Q1) A radio station has a distinctive competency in developing new products (shows)and wants to serve the upscale market.Which of the following is the most appropriate generic strategy for this company?
A) Cost leadership
B) Differentiation
C) Both cost leadership and differentiation
D) Focused low-cost approach
E) Focused differentiation approach
Q2) The main difference between companies following a cost leadership strategy and those following a focused cost leadership strategy is
A) standardized market price.
B) industry life cycle stage.
C) degree of market segmentation.
D) age of the market.
E) market trajectory.
Q3) Companies that successfully pursue a cost leadership strategy generally have a distinctive competency in research and development.
A)True
B)False
Page 7
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Chapter 6: Business-Level Strategy and the Industry Environment
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Sample Questions
Q1) To compete in the fragmented restaurant industry,Red Lobster Corporation built and now operates hundreds of stores across the United States and Canada.Red Lobster is using which type of strategy?
A) Acquisitions
B) Horizontal mergers
C) Franchising
D) Diversification
E) Chaining
Q2) Companies in a weak competitive position in the growth stage of the industry life cycle can use a market concentration strategy to find a viable competitive position.
A)True
B)False
Q3) A divestment strategy's success is often dependent upon good timing.
A)True
B)False
Q4) Reaching the early majority requires successful niche marketing and narrow market segmentation.
A)True
B)False
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Chapter 7: Strategy and Technology
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Sample Questions
Q1) Digitalization has made it more difficult to protect some intellectual property rights.
A)True
B)False
Q2) Matsushita licensed its VHS technology to rivals,while Sony kept its Beta technology proprietary.This action allowed Matsushita to
A) win the format war.
B) enter into an alliance with Sony.
C) earn marginally lower profits than Sony.
D) enjoy a laggard advantage.
E) bear switching costs better than Sony.
Q3) Marginal cost refers to the cost of A) switching to a new technology.
B) buying stock with loaned funds.
C) producing one extra unit of product.
D) realizing a profit.
E) motivating other firms to produce complements.
Q4) Give an example of an industry that has recently undergone a technological paradigm shift.What impact did the shift have on established companies? On new entrants to the industry?
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Chapter 8: Strategy in the Global Environment
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Sample Questions
Q1) Location economies refer to the economic benefits that arise from performing a value creation activity at central headquarters.
A)True
B)False
Q2) Foreign subsidiaries play a major role in shaping the future direction of a company pursuing a(n)
A) transnational strategy.
B) international strategy.
C) localization strategy.
D) joint venture.
E) global standardization strategy.
Q3) Companies that pursue a global standardization strategy are trying to develop a business model that simultaneously achieves low costs and differentiates the product offering across geographic markets.
A)True
B)False
Q4) List and briefly descibe each of the four basic global strategies.
Q5) Identify and discuss the general ways in which companies can increase their profitability and profit growth through global expansion.
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Sample Questions
Q1) Outsourcing
A) eliminates the need for a value chain.
B) reduces the firm's dependence on its value chain.
C) reorders the steps in a firm's value chain.
D) moves some value chain activities outside the firm.
E) strengthens the firm's capabilities in each value chain function.
Q2) Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products.Tina's Technologies is utilizing horizontal integration.
A)True
B)False
Q3) Vertical integration can strengthen a company's differentiation advantage.
A)True
B)False
Q4) When Citibank offers home mortgages and credit cards to its checking account customers,it is using horizontal integration strategy.
A)True
B)False
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Chapter 10: Corporate-Level Strategy: Related and Unrelated Diversification
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Sample Questions
Q1) An advantage of related diversification is that it allows a company to quickly gain entry into a new industry where barriers are high.
A)True
B)False
Q2) Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?
A) Diversify through acquisition
B) Do not diversify at all
C) Diversify with an internal new venture
D) Diversify with a joint venture
E) Diversify through vertical integration
Q3) Free cash flow refers to additional funds from a government stimulus program.
A)True
B)False
Q4) If a company generates free cash flow,that money technically belongs to shareholders.
A)True
B)False
12
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Sample Questions
Q1) Why are some managers thought to engage in empire building?
A) Growth results in large company size, and large size satisfies managers' needs for power, status, income, and job security.
B) The pursuit of growth represents the best way of maximizing the long-run profitability of the company.
C) Growth is designed to increase market share, which in turn increases company profits.
D) Companies that do not grow stagnate.
E) Stockholders would rather invest in large companies than in small ones.
Q2) Governance mechanisms help align the incentives between principals and agents and help monitor and control agents.
A)True
B)False
Q3) While many agency relationships work well,problems arise when agents and principals have different goals.
A)True
B)False
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Page 13
Chapter 12: Implementing Strategy in Companies That
Compete in a Single Industry
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Sample Questions
Q1) Restructuring always involves flattening the organizational hierarchy and downsizing the work force.
A)True
B)False
Q2) One of the main differences between a product team and a team in a matrix structure is that a matrix team is more permanent than a team in a product structure.
A)True
B)False
Q3) The specific collection of values,norms,beliefs,and attitudes shared by people and groups in a company is commonly referred to as
A) organizational fit.
B) organizational culture.
C) organizational development.
D) organizational positioning.
E) all of these.
Q4) Describe what is meant by the terms restructuring and reengineering,and discuss when and why they would be used.
Q5) Identify and discuss the three building blocks of organizational structure.
Page 14
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Chapter 13: Implementing Strategy in Companies That
Compete Across Industries and Countries
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Sample Questions
Q1) When implementing an international strategy,many companies create global divisions that they add to their existing divisional structures.
A)True
B)False
Q2) When Toyota first decided to manufacture and market cars in the United States,it entered into a ____ with General Motors.
A) strategic alliance
B) joint venture
C) global partnership
D) trade agreement
E) contingency plan
Q3) Explain the benefits of the multidivisional structure for managing a firm that competes in several industries.
Q4) The global-product strategy is weak when it comes to
A) manufacturing of products.
B) distribution of products.
C) responsiveness to customers.
D) all of these.
E) none of these.
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