Business Policy Practice Exam
Course Introduction
Business Policy is a strategic management course that explores the frameworks, concepts, and analytical tools necessary to formulate, implement, and evaluate cross-functional decisions that enable organizations to achieve their long-term objectives. Emphasizing the integration of knowledge from marketing, finance, operations, and human resources, the course challenges students to analyze case studies, understand competitive environments, and develop effective corporate strategies. Topics include environmental scanning, strategy formulation, policy implementation, and performance assessment, preparing students to think critically about real-world business challenges and leadership roles in dynamic organizational contexts.
Recommended Textbook
Concepts in Strategic Management and Business Policy 14th Edition by Thomas L. Wheelen
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Page 2
Chapter 1: Basic Concepts in Strategic Management
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Sample Questions
Q1) A large, multidivisional business has three levels in its hierarchy of strategy:
A) Corporate - Business - Functional.
B) Environmental - Corporate - Functional.
C) Environmental - Enterprise - Corporate.
D) Business - Divisional - Functional.
E) Industry - Corporate - Divisional.
Answer: A
Q2) The monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation is referred to as
A) environmental scanning.
B) external scanning.
C) internal scanning.
D) strategy formulation.
E) strategy implementation.
Answer: A
Q3) The goal of NAFTA is complete economic integration.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Corporate Governance
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Sample Questions
Q1) The average board member of a U.S. Fortune 500 firm serves on ________ board(s).
A) 3
B) 6
C) 9
D) 12
E) only 1
Answer: A
Q2) More than ________ of outside directors surveyed said that they had been named as part of a lawsuit against the corporation.
A) 40%
B) 50%
C) 60%
D) 70%
E) 80%
Answer: A
Q3) A 2011 McKinsey and Company survey found that less than 10 percent of a board's time is spent on strategy.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Ethics and Social Responsibility in Strategic Management
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Sample Questions
Q1) Blindly following orders reflects which type of moral relativism?
A) naive relativism
B) role relativism
C) principled relativism
D) cultural relativism
E) social group relativism
Answer: B
Q2) Providing daycare centers to employees is an example of which of Carroll's responsibilities?
A) economic
B) legal
C) justice
D) ethical
E) discretionary
Answer: E
Q3) Friedman referred to the social responsibility of business as a "fundamentally subversive doctrine."
A)True
B)False
Answer: True
Page 5
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Chapter 4: Environmental Scanning and Industry Analysis
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Sample Questions
Q1) The two factors that tend to determine whether an industry will be primarily multidomestic or primarily global are (1) the pressure for coordination within the MNCs operating in that industry and (2)
A) the pressure for local responsiveness on the part of individual country markets.
B) the power of the local country governments to restrict MNC actions.
C) the need for brand management in the various MNCs operating within that industry.
D) the importance of differentiating with integrating mechanisms in regional cooperatives.
E) the likelihood of terrorist activity impacting that industry.
Q2) According to the text, one reason environmental uncertainty is a threat to strategic managers is because
A) it is a costly and time-consuming process.
B) it creates a new playing field in which creativity and innovation can play a major part in strategic decisions.
C) it forces the strategic manager to be more stable.
D) it hampers their ability to develop long-range plans.
E) there are too many uncontrollable variables.
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Page 6
Chapter 5: Internal Scanning and Organizational Analysis
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Sample Questions
Q1) A linked set of value-creating activities beginning with basic materials provided by suppliers and ending with distributors getting the final product into the hands of the ultimate consumer is called a
A) value chain.
B) continuum of sustainability.
C) strategic capability.
D) fully integrated activity set.
E) strategic group.
Q2) Cultural integration is the degree to which members of a unit accept the norms, values, or other culture content associated with the unit - showing the culture's depth.
A)True
B)False
Q3) The marketing mix refers to product, place, packaging, and price. A)True
B)False
Q4) What is R&D intensity?
Q5) What is corporate culture and what are the two distinct attributes of culture?
Q6) Discuss the three basic organizational structures.
Q7) Describe Barney's VRIO framework.
Page 7
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Chapter 6: Strategy Formulation: Situation Analysis and Business Strategy
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Sample Questions
Q1) SO strategies attempt to take advantage of opportunities by overcoming weaknesses.
A)True
B)False
Q2) Collusion is the active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand.
A)True
B)False
Q3) Those companies using cooperative strategies are generally not able to gain a competitive advantage.
A)True
B)False
Q4) The only way to gain competitive advantage within an industry is to use a competitive strategy.
A)True
B)False
Q5) What are Porter's four generic strategies?
Q6) What are the types of alliances that businesses can engage in?
Q7) Discuss the reasons a firm may form a strategic alliance.
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Chapter 7: Strategy Formulation: Corporate Strategy
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Q1) Which of the following describes a turnaround strategy?
A) a form of divestment and is appropriate when corporate problems can be traced to the poor performance of an SBU or product line
B) occurs when the corporation reduces the scope of some of its functional activities and becomes "captive" to another firm
C) emphasizes improving operational efficiency and is appropriate when a corporation's problems are pervasive, but not yet critical
D) occurs when a corporation liquidates all its assets
E) involves adding different products or divisions to the corporation
Q2) An example of forward quasi-integration would be a large pharmaceutical firm that acquires part interest in a drugstore chain in order to guarantee that its drugs have access to the distribution channel.
A)True
B)False
Q3) What is portfolio analysis?
Q4) A long-term contract is considered vertical integration.
A)True
B)False
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9
Chapter 8: Strategy Formulation: Functional Strategy and Strategic Choice
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Sample Questions
Q1) When Smith & Wesson puts its name on others' products like men's cologne, it is using which marketing strategy?
A) demand pricing
B) brand pricing
C) brand extension
D) penetration extension
E) demand extension
Q2) Give an example of a technological leader.
Q3) Three trends are evident in logistics: outsourcing, the use of the Internet, and A) centralization.
B) downsizing.
C) logistical partnerships.
D) computerization.
E) containerized shipping.
Q4) In a dynamic environment, using consensus to arrive at a strategic decision is not recommended. Why? What two techniques can strategic managers use to avoid the consensus trap?
Q5) Discuss W. Edward Deming's position on sole sourcing.
Q7) What is a functional strategy? Page 10
Q6) What are the strategies to avoid proposed by the authors?
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Chapter 9: Strategy Implementation: Organizing for Action
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Sample Questions
Q1) Which type of structure enables a corporation to centralize decision making along product lines and to reduce costs?
A) geographic-area structure
B) product-group structure
C) network structure
D) matrix structure
E) functional structure
Q2) A corporation run by a team of managers with functional specializations and which successfully operates in one industry is said to be a
A) Stage I company.
B) Stage II company.
C) Stage III company.
D) Stage IV company.
E) Stage V company.
Q3) The matrix of change was designed to help managers decide how quickly change should proceed, in what order changes should take place, whether to start at a new site, and whether the proposed systems are stable and coherent.
A)True
B)False
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Page 12
Chapter 10: Strategy Implementation: Staffing and Directing
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Q1) According to the text, a complete package for an executive working in another country costs
A) $50,000 to $75,000 annually.
B) $100,000 to $200,000 annually.
C) $150,000 to 250,000 annually.
D) $200,000 to $500,000 annually.
E) $300,000 to $1 million annually.
Q2) Corporate culture does not necessarily have to support the strategy of the firm.
A)True
B)False
Q3) According to Hofstede's cultural dimensions, which country scored among the lowest on uncertainty avoidance?
A) Malaysia
B) Mexico
C) Austria
D) United States
E) Great Britain
Q4) What three general practices were identified by Black and Gregersen in companies which do a good job of managing foreign assignments?
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Chapter 11: Evaluation and Control
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Q1) Management audits have been developed to evaluate activities such as corporate social responsibility, functional areas such as the marketing department, and divisions such as the international division.
A)True
B)False
Q2) Discuss the benchmarking process.
Q3) A study of 79 MNCs revealed that international transfer pricing from one country unit to another is primarily used to A) evaluate performance.
B) minimize taxes.
C) increase profits.
D) improve communication.
E) all of the above
Q4) The typical CEO pay package is composed of ________ long-term incentives.
A) 16%
B) 36%
C) 27%
D) 21%
E) 10%
Q5) What is the difference between EVA and MVA?
Page 14
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Chapter 12: Suggestions for Case Analysis
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Sample Questions
Q1) In performing a basic financial analysis, what five steps should be taken?
Q2) Fixed asset turnover is what type of financial ratio?
A) liquidity ratio
B) profitability ratio
C) leverage ratio
D) activity ratio
E) revenue ratio
Q3) The Z-value formula combines five ratios by weighting them according to their importance to a corporation's financial strength.
A)True
B)False
Q4) All of the following ratios are used in the calculation of a company's Z-value EXCEPT A) working capital/total assets.
B) retained earnings/total assets.
C) current assets/current liabilities.
D) market value of equity/total liabilities.
E) sales/total assets.
Q5) What are common-size statements?
Q6) What is the Z-value?
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