Business Policy
Final Exam Questions
Course Introduction
Business Policy is a critical course that introduces students to the principles and frameworks essential for effective strategic management within organizations. It explores the formulation, implementation, and evaluation of business strategies, emphasizing how companies adapt to dynamic internal and external environments. By analyzing real-world case studies and engaging in strategic decision-making exercises, students develop skills in problem-solving, leadership, and critical thinking. The course covers topics such as competitive analysis, corporate governance, ethical considerations, and the integration of functional areas within a business. Ultimately, Business Policy prepares students to navigate complex business challenges and contribute meaningfully to organizational success.
Recommended Textbook
The Management of Strategy Concepts and Cases International Edition 10th Edition by Michael
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Page 2
Chapter 1: Strategic Management and Competitiveness
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Sample Questions
Q1) If McDonald's were to map the profit pool in the quick-service restaurant industry, it would do all of the following EXCEPT
A) Define the industry's boundaries and size.
B) Estimate the profit potential in each part of the value chain.
C) Focus on unattractive industries ignored by competitors.
D) Select the strategy to use where the largest profit pools are located.
Answer: D
Q2) The resource-based model of the firm argues that
A) all resources have the potential to be the basis of sustainable competitive advantage.
B) resources alone can be a source of sustainable competitive advantage.
C) the key to competitive success is the structure of the industry in which the firm competes.
D) resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
Answer: D
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3
Chapter 2: The External Environment: Opportunities,
Threats, Competition, and Competitor Analysis
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Sample Questions
Q1) The large expenditures on advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry?
A) Access to distribution channels.
B) Capital requirements.
C) Economies of scale.
D) Product differentiation.
Answer: D
Q2) (Refer to Case Scenario 1) The purpose of the Boys and Girls Club (BGC) is to instill in youth the tools and skills needed to become healthy adults, responsible citizens, and effective leaders. If the BGC were to initiate programs about women's issues, women in the workforce, workforce diversity, and changes in work and career preferences, it would be contributing to an understanding of which segment of the general environment?
A) Demographic
B) Sociocultural
C) Economic
D) Technological
Answer: B
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Chapter 3: The Internal Environment: Resources,
Capabilities, Competencies, and Competitive Advantages
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Sample Questions
Q1) Only capabilities that are valuable, common, costly to imitate, and substitutable can be strategic capabilities.
A)True
B)False
Answer: False
Q2) Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT
A) lack of scientific transference.
B) social complexity.
C) unique historical conditions.
D) causal ambiguity.
Answer: A
Q3) (Refer to Case Scenario 2) Which of the following represents the maximum level of performance ERPI should expect to achieve?
A) Below-average returns.
B) Average returns.
C) Average to above average returns.
D) Above average returns.
Answer: C
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Chapter 4: Business Level Strategy
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Sample Questions
Q1) Zara has pioneered "cheap chic" in clothing apparel. Zara offers current and desirable fashion goods at relatively low prices. To implement the strategy, Zara uses sophisticated designers and effective means of managing costs. These are all characteristics of which business level strategy?
A) Cost leadership
B) Differentiation
C) Integrated Cost Leadership/Differentiation
D) Stuck-in-the-middle
Q2) Which of the following is TRUE?
A) As customer loyalty increases, customers are more sensitive to price increases.
B) Customer loyalty has a positive relationship with firm profitability.
C) Customer loyalty is fragile and cannot reliably be considered a factor in firm success.
D) Customer loyalty is of importance only to firms using the differentiation strategy.
Q3) Describe the risks of a differentiation strategy.
Q4) The goal of business-level strategy is to earn above-average returns.
A)True
B)False
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Chapter 5: Competitive Rivalry and Dynamics
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Sample Questions
Q1) Quality begins at the bottom of the organization where employees must create values for quality that permeate the entire organization.
A)True
B)False
Q2) (Refer to Case Scenario 2) Is Wal-Mart a competitor or a customer of Plasco?
Q3) (Refer to Case Scenario 2) How can a small player like Zig be such a successful competitor against a large, established firm like Plasco?
Q4) Competition in the global automobile producer industry is characterized by________________ (Chapter 5 Strategic Focus)
A) lack of awareness and motivation.
B) high market commonality and low resource similarity.
C) high market commonality and high resource siimilarity.
D) reduced rivalry, especially in the production of fuel efficient cars.
Q5) Multimarket competition occurs when firms
A) sell different products to the same customer.
B) have a high level of awareness of their competitors' strategic intent.
C) simultaneously enter into an attack strategy.
D) compete against each other in several geographic or product markets.
Q6) What factors contribute to the likelihood of a response to a competitive action?
Page 7
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Chapter 6: Corporate Level Strategy
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Sample Questions
Q1) Synergy exists when the value created by business units working together exceeds the value that those same units create working independently.
A)True
B)False
Q2) Firms use corporate-level diversification strategies for all the following reasons EXCEPT
A) value-creating
B) value-neutral
C) value-reducing
D) value-diversifying
Q3) (Refer to Case Scenario 2) If Jewell Company is able to transfer its competence in cost-cuting and cost controls to Plastico (which has had difficulty controlling costs), it will have achieved the primary means whereby a related linked diversification strategy creates value.
A)True
B)False
Q4) (Refer to Case Scenario 2) How might JC's related diversification strategy result in economies of scope and market power?
Q5) What are the managerial motives to diversify?
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Chapter 7: Strategic Acquisition and Restructuring
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Sample Questions
Q1) Compared with downsizing, ____ has (have) a more positive effect on firm performance.
A) reconfiguring
B) downscoping
C) leveraged buyouts
D) acquisitions
Q2) The use of high levels of debt in acquisitions has contributed to
A) the increase in above-average returns earned by acquiring firms.
B) an increased risk of bankruptcy for acquiring firms.
C) the confidence of the stock market in firms issuing junk bonds.
D) an increase in investments that have long-term payoffs.
Q3) What is an LBO and what have been the results of such activities?
Q4) All of the following statements are correct EXCEPT
A) immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines.
B) shareholders of acquired firms often earn above-average returns from an acquisition.
C) the majority of acquisitions increase long-term value for the acquiring firm.
D) shareholders of acquiring firms typically earn returns from the transaction that are close to zero.
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Chapter 8: Global Strategy
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Sample Questions
Q1) Terrorism creates an economic risk for firms which
A) reduces the amount of investment foreign companies will make in a country perceived to be terror-prone.
B) is created by governmental bans on doing business with terrorist regimes.
C) is offset by the above-average returns for firms which have learned how to operate in such an environment.
D) is absorbed by firms which are highly geographically diversified and which operate in both secure and insecure locations.
Q2) As an indication of the importance of economies of scale, Ford Motor Company runs a single global business developing cars and trucks that can be built and sold through the world. By 2015, Ford intends for about 75% of the vehicles it sells to be variants of about 5 basic platforms.
A)True
B)False
Q3) A multidomestic strategy is an international strategy in which a firm's home office determines the strategies business units are to use in each region.
A)True
B)False
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Chapter 9: Cooperative Implications for Strategy
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Sample Questions
Q1) Tacit collusion tends to be least used as a business-level, competition-reducing strategy in highly concentrated industries such as airlines and breakfast cereals even though it results in higher prices for consumers.
A)True
B)False
Q2) In the franchising strategy, the most important competitive advantage for the franchisee is the franchisor's
A) brand name.
B) capital resources.
C) access to a consolidated market.
D) geographic locations.
Q3) To increase the likelihood of success between partners assuming that trust exists, ____ approach(es) should be used to manage cooperative strategies.
A) the cost minimization
B) the opportunity maximization
C) both the cost minimization and opportunity maximization
D) none of the these
Q4) Identify and define the two different types of network strategies.
Q5) Identify and define the different types of strategic alliances.
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Chapter 10: Corporate Governance and Ethics
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Sample Questions
Q1) Define the three internal corporate governance mechanisms and how they may be used to control and monitor managerial decisions.
Q2) Because top management decisions are usually complex and nonroutine, determining the quality of executive performance is beyond the power of boards of directors.
A)True
B)False
Q3) Which of the following statements is about corporate governance in Germany is FALSE?
A) The Vorstand (management board) of a German corporation makes decisions about strategy and management.
B) The Vorstand is elected by the firm's employees.
C) Employees, union members, and shareholders appoint members to the Aufsichsrat (the supervisory tier of the board).
D) Large institutional investors such as pension funds, and insurance companies are relatively insignificant owners of corporate stock.
Q4) (Refer to Case Scenario 1) What are the advantages and disadvantages of paying the new manager primarily cash pay?
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Chapter 11: Structure and Controls with Organizations
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Sample Questions
Q1) The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited
A) centralization.
B) coordination across divisions.
C) ability to meet local market needs.
D) potential for global efficiency.
Q2) One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so
A) indicates to competitors that the firm is vulnerable to a hostile takeover.
B) will only lead to inefficiencies.
C) requires the firm undertake multi-year restructuring period that will delay retirement.
D) suggests that their previous choices were not the best ones.
Q3) (Refer to Case Scenario 3) What is the corporate structural form used by Jewell?
A) functional structure
B) cooperative M-Form
C) SBU M-Form
D) competitive M-Form
Q4) Discuss the difference between strategic and financial controls.
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13
Chapter 12: Leadership Implications for Strategy
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Sample Questions
Q1) (Refer to Case Scenario 1) What value-creating legacy did Walt Disney leave to the Walt Disney Company?
Q2) The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the board of directors is composed of sympathetic outside members and insiders who report to the CEO.
A)True
B)False
Q3) Top management team members and CEOs who have long tenure on the team and in the organization have greater influence in board decisions.
A)True
B)False
Q4) Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior?
A) Effectively Managing the Firm's Resource Portfolio.
B) Determining Strategic Direction.
C) Regulating and Controlling Employees.
D) Sustaining an Effective Organizational Culture.
Q5) (Refer to Case Scenario 2) What culture did Mogens and Jack nurture in YTF?
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Chapter 13: Entrepreneurial Implications for Strategy
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Sample Questions
Q1) If the company's workers have scant existing knowledge, their "absorptive capacity" to learn new knowledge will be limited.
A)True
B)False
Q2) According to Peter Drucker,the primary goal of innovation is to A) promote social well being.
B) increase the number of jobs.
C) create wealth.
D) support national economies.
Q3) The network of strategic alliances built by an organization is a form of intellectual capital from which the organization can draw to develop innovations.
A)True
B)False
Q4) Acquisitions are a low risk approach to producing and managing innovation.
A)True
B)False
Q5) What is the importance of international entrepreneurship?
Q6) (Refer to Case Scenario 1) What resources appear to be missing?
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