Business Policy
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Course Introduction
Business Policy provides a comprehensive overview of the principles and practices that guide strategic decision-making in organizations. The course examines the formulation, implementation, and evaluation of policies that determine the direction and scope of businesses, emphasizing the integration of functional areas such as marketing, finance, operations, and human resources. Through case studies and real-world examples, students learn to analyze complex business environments, assess competitive dynamics, and develop strategies that align with organizational goals and stakeholder expectations. The course prepares students to think critically and act decisively in dynamic business contexts, fostering the skills necessary for effective leadership and policy-making in diverse industries.
Recommended Textbook
Strategic Management Theory and Cases An Integrated Approach 12th Edition by Charles
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W. L.
Chapter 1: Strategic Leadership: Managing the
Strategy-Making Process for Competitive Advantage
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Sample Questions
Q1) The feedback loop in the model of the strategic management process indicates that the process is ongoing; it never ends.
A)True
B)False
Answer: True
Q2) To increase shareholder value, managers must try to venture into new markets whether the results are profitable or not.
A)True
B)False
Answer: False
Q3) A strategy can be defined as a set of related actions that managers take to increase their company's performance.
A)True
B)False
Answer: True
Q4) Emergent strategies are the unplanned responses to unforeseen circumstances.
A)True
B)False
Answer: True
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Q1) Consider the macroenvironment facing a large, international airline headquartered in the United States (such as American or United). Give at least three examples of important trends or events from each of the five segments of the airline's macroenvironment (macroeconomic, technological, demographic, social, political, and legal), and explain whether each represents a threat or an opportunity for the firm.
Answer: The airline industry benefits from low interest rates, part of the macroeconomic environment, because it enables airlines to borrow the funds for purchasing new planes at lower cost.
Americans are taking shorter but more frequent vacations. This social trend presents an opportunity for airlines to sell more tickets.
Technological advances have allowed railroads to use fast, fuel-efficient bullet trains, which can economically substitute for planes on short, heavily-traveled commuter routes, such as along the Boston-New York-Washington corridor. This development threatens airlines because it reduces the number of tickets they can sell and the prices they can charge in those markets.
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Q1) The building blocks of competitive advantage are efficiency, quality, innovation and customer responsiveness.
A)True
B)False
Answer: True
Q2) A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers.
A)True
B)False
Answer: True
Q3) The ability of established competitors to imitate the competitive advantage of a rival is limited by factors such as existing strategic commitments and low absorptive capacity.
A)True
B)False
Answer: True
Q4) A resource is inimitable if competitors are able to copy it easily.
A)True
B)False
Answer: False
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Chapter 4: Building Competitive Advantage Through Functional-Level Strategies
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Sample Questions
Q1) A vital source of information about the causes of poor quality is the firm's own employees.
A)True
B)False
Q2) Through efficient logistics at Grasshopper Grocers, the stock in the stores is automatically replenished when the company receives an alert from customers that their stock is low. Management at Grasshopper Grocers uses a just-in-time inventory system.
A)True
B)False
Q3) Research and development (R&D) can help a company improve quality by:
A) designing products that are easy to manufacture.
B) pursuing economies of scale.
C) developing strategies on how to market products.
D) upgrading employee skill levels.
E) creating teams whose members coordinate their own activities.
Q4) Although important, unfortunately, innovation plays a minor role in achieving competitive advantage.
A)True
B)False
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Chapter 5: Business-Level Strategy
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Q1) Companies that successfully differentiate a product often charge _____ prices for them.
A) premium
B) exorbitant
C) low
D) average
E) escalating
Q2) When a company decides to serve a limited number of segments, or just one segment, it is pursuing a segmentation strategy.
A)True
B)False
Q3) The generic business-level strategies are cost leadership, differentiation, and mass marketing.
A)True
B)False
Q4) A low-cost company is often best positioned to survive price rivalry in its industry.
A)True
B)False
Q5) Define the generic business-level strategies companies pursue.
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Chapter 6: Business-Level Strategy and the Industry Environment
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Sample Questions
Q1) Music CDs and newspaper sales have been falling as users turn to the Internet for their music and news. Which of the following is NOT a strategy for companies in these declining industries?
A) Leadership
B) Chaining
C) Niche
D) Divestment
E) Harvest
Q2) Factors leading to the slow growth of demand in embryonic industries include all of the following except the:
A) poor quality of the first products.
B) lack of complementary products.
C) customer passion for the products.
D) high production costs of the products.
E) lack of distribution channels for the products.
Q3) Alpha corporation owns and controls several retail outlets and is pursuing a strategy called franchising.
A)True
B)False
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Chapter 7: Strategy and Technology
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Q1) An example of an important complementary asset is a state-of-the-art manufacturing facility.
A)True
B)False
Q2) Give an example of an industry that has recently undergone a technological paradigm shift. What impact did the shift have on established companies and on new entrants to the industry?
Q3) Network effects arise in an industry where:
A) the size of the network of complementary products is a primary determinant of demand for an industry's product.
B) a large network of companies in an industry use the same business model and strategies.
C) a company is able to adhere to the same technical standards across its network of outlets.
D) companies network together and lobby for establishing certain technical standards.
E) companies that are not in favor of a technical standard network together.
Q4) What are technical standards, why are they important, and how are they established?
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Chapter 8: Strategy in the Global Environment
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Q1) Strong pressures for convergence due to a shared history and culture, or the establishment of a trading block where there are deliberate attempts to harmonize trade policies, infrastructure, and regulations have contributed to the rise in what trend?
A) Regionalism
B) Globalization
C) Monopolies
D) Nationalism
E) Traditional Practices
Q2) What is meant by the term national competitive advantage, and what are the attributes of a nation that affect the global competitiveness of companies located within that nation?
Q3) The globalization of production has been decreasing as companies have been facing lower barriers to international trade and location economies.
A)True
B)False
Q4) What are the potential benefits and risks of global strategic alliances? What actions can a firm take to minimize the risks and maximize the benefits?
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Integration, and Strategic Outsourcing
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Q1) Which of the following is not a benefit of vertical integration?
A) Facilitated investments in specialized assets
B) Enhanced product quality
C) Improved scheduling
D) Lowered cost structure
E) Strengthened differentiation advantage
Q2) Strategic alliances are:
A) short-term agreements between two companies to jointly develop new products.
B) short-term agreements between two companies to jointly market new products that benefit all companies involved in creating the product.
C) short-term partnerships between two companies.
D) long-term commitments between two companies to share research and development activities.
E) long-term agreements between two or more companies to jointly develop products that benefit all companies involved in the alliance.
Q3) Horizontal integration almost always increases rivalry in an industry.
A)True
B)False
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Chapter 10: Corporate-Level Strategy: Related and Unrelated Diversification
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Q1) Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification?
A) The company has to achieve coordination between business units.
B) The company has narrow organizational competencies.
C) The company has superior strategic management and organizational design.
D) The company has no bureaucratic costs that arise from the number of businesses in its portfolio.
E) The company has no difficulty in keeping its corporate managers informed about the complexitities of each business.
Q2) Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope?
A) The strategy requires the head office to evaluate each business unit as a stand-alone operation.
B) The strategy allows a company to realize cost economies among business units.
C) The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale.
D) The strategy requires managers to be aware of the costs of coordination.
E) The strategy requires close coordination among different business units.
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) The purpose of governance mechanisms in corporations is to:
A) centralize company resources to the top management.
B) reduce the scope and frequency of the agency problems.
C) satisfy the requirements of the Securities and Exchange Commission (SEC).
D) limit corporate growth to manageable rates.
E) monitor the performance of the Board of Directors.
Q2) Strategic control systems are the primary governance mechanisms established within a company to reduce the scope of the agency problem between levels of management.
A)True
B)False
Q3) Which of the following is NOT an accurate statement about current levels of pay for CEOs of U.S.-based firms?
A) CEOs also earn from the stock options that they grant to managers.
B) Empire building helps CEOs increase their earnings.
C) CEO compensation is closely tied to corporate performance in most firms.
D) CEO pay is rising more rapidly than pay for other workers.
E) The level of CEO compensation is determined by the corporate Board of Directors.
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Chapter 12: Implementing Strategy Through Organization
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Q1) Effective strategy implementation is very important for cost leaders, but it is of less importance to differentiators.
A)True
B)False
Q2) PeopleFinder, a start-up social media network, is a decentralized organization. This means that the organization promotes flexibility and reduces bureaucratic costs; lower-level managers are authorized to make on-the-spot decisions.
A)True
B)False
Q3) Flat organizational structures are less flexible and tend to resist change.
A)True
B)False
Q4) Companies that are innovative and able to deal with environmental change with new strategies and structures probably have:
A) weak cultures.
B) strong functional cultures.
C) adaptive cultures.
D) prescriptive cultures.
E) cost-conscious culture.
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