Business Policy
Exam Solutions
Course Introduction
Business Policy is a capstone course that integrates knowledge from various functional areas of business, such as management, marketing, finance, and operations, to analyze and formulate strategies for organizational success. The course focuses on the development and implementation of effective business policies and strategies in response to complex, real-world problems. Through case studies, simulations, and critical discussions, students learn to assess organizational environments, evaluate strategic alternatives, and make decisions that align with the overall objectives and competitive landscape of firms. Emphasis is placed on the role of leadership, ethical considerations, and sustainability in policy-making within both domestic and global contexts.
Recommended Textbook
Strategic Management Creating Competitive Advantages 4th Edition by Gregory Dess
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Page 2
Chapter 1: Strategic Management: Creating Competitive Advantages
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Sample Questions
Q1) Strategic management includes strategy analysis,strategy formulation,and strategy implementation.
A)True
B)False
Answer: True
Q2) Operational effectiveness includes all except A) benchmarking.
B) performing different activities than rivals.
C) business process re-engineering.
D) just-in-time.
Answer: B
Q3) The text discusses several characteristics of effective strategic objectives.List several of these and discuss why a firm's strategic objectives should meet these criteria. Answer: To be effective,strategic objectives must met the SMART criteria-specific,measureable,appropriate,realistic and timely.SMART objectives help to direct employees toward common goals,motivate and inspire employees,resolve conflicts,and provide the basis for rewards and incentives.
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Page 3
Chapter 2: Analyzing the External Environment of the Firm
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Sample Questions
Q1) A danger of forecasting discussed in the text is that A) in most cases, the expense of collecting the necessary data exceeds the benefit B) forecasting's retrospective nature provides little information about the future C) managers may view uncertainty as "black and white" while ignoring important "grey areas"
D) it can create legal problems for the firm if regulators discover the company is making forecast
Answer: C
Q2) Delayed marriages,fewer people in relevant age groups,and rising interest rates dampening demand for houses illustrates
A) that more than one segment of the general environment may affect an industry.
B) that the global environment is not as powerful an influence as thought.
C) that macroeconomic forces dominate the general environment.
D) that the competitive environment often has a strong influence on the general environment.
Answer: A
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4
Chapter 3: Assessing the Internal Environment of the Firm
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Sample Questions
Q1) Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations.
A)True
B)False
Answer: True
Q2) What are some ways in which a firm's general administration can help create (or enhance)competitive advantages?
Answer: General administration includes activities such as general management,planning,finance,accounting,legal and government affairs,and quality management and information systems.General administration typically supports the entire value chain and not individual activities.
Q3) A meaningful ratio analysis
A) must go beyond the calculation and interpretation of financial ratios.
B) is based primarily on leverage ratios.
C) involves only liquidity ratios.
D) involves profitability ratios at a single point in time.
Answer: A
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Chapter 4: Recognizing a Firms Intellectual Assets: Moving
Beyond a Firms Tangible Resources
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Sample Questions
Q1) Writers have defined intellectual capital as the difference between the market value and book value of a firm.
A)True
B)False
Q2) Rather than focus solely on financial considerations,many firms offer attractive benefits to entice employees to stay.These may include on-site stores,ATM's and athletic facilities.
A)True
B)False
Q3) The benefits of high social capital include
A) engagement and loyalty.
B) skill and ability.
C) values that are not a part of the company's culture.
D) low levels of persistence.
Q4) Discuss how technology has impacted the attraction,training,and retention of professionals.How has technology helped firms to enhance their human capital and social capital?
Q5) Why is the management of knowledge and knowledge professionals so critical in today's organizations?
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Chapter 5: Business-Level Strategy: Creating and Sustaining Competitive Advantages
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Sample Questions
Q1) A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.
A)True
B)False
Q2) Discuss how a competitive advantage can be attained through cost leadership using the value chain concept.
Q3) Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle.
A)True
B)False
Q4) Convincing rivals not to enter a price war,protection from customer pressure to lower prices,and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
A) overall cost leadership
B) differentiation
C) differentiation focus
D) cost leadership focus
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Chapter 6: Corporate-Level Strategy: Creating Value Through Diversification
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Sample Questions
Q1) When Canadian family-controlled firm Schneider's wanted to block Maple Leaf Foods,they looked to Springfield as a
A) greenmail.
B) golden parachute.
C) white knight.
D) poison pill.
Q2) Greenmail is an offer by a company,threatened by takeover,to offer its stock at a reduced price to a third party.
A)True
B)False
Q3) Summarize the disadvantages of mergers and acquisitions as a means of diversification.
Q4) What are the primary benefits associated with related diversification?
Q5) When management uses common production facilities or purchasing procedures to distribute different but related products,they are A) building on core competencies.
B) sharing activities.
C) achieving process gains.
D) using portfolio analysis.
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Chapter 7: International Strategy: Creating Value in Global Markets
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Sample Questions
Q1) In a global strategy a firm operates all its businesses under a single common strategy regardless of location.
A)True
B)False
Q2) The difference between a franchise and licensing contract is that
A) a franchise contract has a broader range of factors and is usually longer in duration. B) a franchise contract must include a foreign government. C) a licensing contract covers more aspects of operations.
D) a franchise contract involves less control and less risk.
Q3) According to the text,Canadian firms around the world were targets of animal rights groups who did not approve of seal hunting in Newfoundland.
A)True
B)False
Q4) A multidomestic strategy would likely include the use of high volume,centralized production facilities to maximize economies of scale.
A)True
B)False
Q5) Explain Michael Porter's "diamond of national advantage."
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Chapter 8: Entrepreneurial Strategy and Competitive Dynamics
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Sample Questions
Q1) Competitive dynamics may be understood as
A) intense rivalry among similar competitors.
B) strong buyer power.
C) a strong threat of substitutes.
D) strong supplier power.
Q2) Which of the following is not a tactic that falls within the piecemeal productivity improvements turnaround strategy?
A) speeding up collection of receivables.
B) improving business processes by re-engineering them.
C) reducing R&D and marketing expenses.
D) increasing capacity utilization.
Q3) During the introduction stage of the industry life cycle the major functional area or concern is research and development.
A)True
B)False
Q4) New entrants into markets,whether by start-ups or by incumbent firms,nearly always threatens existing competitors.
A)True
B)False
Page 10
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Chapter 9: Strategic Control and Corporate Governance
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Sample Questions
Q1) A strategy of related diversification requires most firms to organize around geographical areas or product lines.This type of organizational growth leads to a(n)
A) divisional structure.
B) functional structure.
C) matrix structure.
D) international structure.
Q2) A worldwide product division structure is used when global strategies require that each division be responsible for overall efficiency and performance.
A)True
B)False
Q3) Discuss the uses and challenges of the barrier-free organizational structure.
Q4) A divisional structure
A) is organized around functional area departments.
B) typically improves the performance of firms pursuing a strategy of vertical integration.
C) facilitates the development of general managers.
D) enhances centralized decision making.
Q5) Explain why there is no "one best way" to design strategic rewards systems.
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11
Chapter 10: Creating Effective Organizational Designs
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Sample Questions
Q1) What are the "traditional" approaches to strategic control?
Q2) The U.S.Congress introduced the Sarbanes-Oxley Act in 2002 to ensure better governance of public corporations-similar provisions have NOT been put in place in Canada.
A)True
B)False
Q3) Continuous monitoring enhances an organization's ability to respond with speed and flexibility.
A)True
B)False
Q4) All of the following are characteristics of effective reward and incentive systems except:
A) performance measures are clear and highly visible.
B) the structure is fixed to assure employees of consistency.
C) the compensation system is perceived as fair and equitable.
D) objectives are well understood, and broadly accepted.
Q5) Discuss the contingent nature of strategic controls.How would controls be different for firms pursuing overall low costs strategies versus differentiation strategies?
Q6) Discuss at least three external control mechanisms.
Page 12
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Chapter 11: Strategic Leadership: Creating a Learning
Organization and an Ethical Organization
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Sample Questions
Q1) Effective leadership is like a three-legged stool consisting of all of the following except
A) dedication to maintaining the status quo.
B) nurturing a culture dedicated to excellence and ethical behaviour.
C) determining a direction.
D) designing the organization.
Q2) Key principles involved in the accelerated learning program at General Electric include all of the following except
A) reach consensus about barriers.
B) develop a common language.
C) create an action plan.
D) train individuals rather than teams.
Q3) Which of the following does not explain why organizations are prone to inertia and slow to change?
A) Personal time constraints
B) Political barriers
C) Vested interests in the status quo
D) Organizational investments
Q4) Briefly discuss the three interdependent activities that are critical for effective leadership.
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Chapter 12: Managing Innovation and Fostering Corporate
Entrepreneurship
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Sample Questions
Q1) Financial resources are the only kind of resource a new venture needs.
A)True
B)False
Q2) Outline the five dilemmas that companies must wrestle with when pursuing innovation.
Q3) A venture opportunity may be justified regardless of whether or not it is attractive in the marketplace.
A)True
B)False
Q4) The discovery phase refers to the period when one becomes aware of a new business concept.
A)True
B)False
Q5) New-entry strategies typically fall into one of three categories: pioneering new-entry; imitative new-entry; or adaptive new entry.Outline the key strategic intentions of each and provide an example of each.
Q6) Outline the opportunity process and discuss the qualities necessary for an opportunity to become viable.
14
Q7) Explain what is meant by the term "entrepreneurial orientation" or EO.
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