Business Policy
Textbook Exam Questions
Course Introduction
Business Policy is a strategic management course that focuses on the formulation, implementation, and evaluation of policies that guide an organization toward achieving its long-term objectives. The course explores frameworks for analyzing both internal resources and external environments, enabling students to assess competitive positioning and identify strategic options. Topics include corporate, business, and functional-level strategy, governance, ethical considerations, and the integration of diverse business functions. Through case studies and practical applications, students develop critical thinking and decision-making skills essential for effective leadership in dynamic and complex business environments.
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Strategic Management Concepts BRV 1st Edition by
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Page 2
Jeffrey H. Dyer
Chapter 1: What Is Business Strategy?
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Q1) Summer Inc., a departmental store, wants to provide better service to its customers.This includes providing expertise in each type of product and brand.In order to accomplish this, the general manager of the store suggests that they should begin by identifying the different types of customers.By classifying customers, into various groups, such as mothers, athletes, tech-savvy customers and so on,, the store's customer care personnel can specialize on detailed product information.With the help of this classification, the store is able to provide better service to each customers by offering more brands to choose from.This scenario best illustrates _____.
A) segmentation analysis
B) group allocation
C) group dynamics
D) division dynamics
Answer: A
Q2) A company's primary purpose that often specifies the business or businesses in which the firm intends to compete -or the customers it intends to serve-refers to its
Answer: mission
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Chapter 2: Analysis of the External Environment: Opportunities and Threats
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Q1) Identify the five forces that shape the profit-making potential of an average firm in an industry.Discuss the basic steps involved in using the five forces analysis tool.
Answer: Michael Porter, a well-known strategy professor at Harvard, identified five forces that shape the profit-making potential of the average firm in an industry.Those five forces are:(1) rivalry, (2) buyer power, (3) supplier power, (4) threat of new entrants, and (5) threat of substitute products.
There are three basic steps involved in using the five forces analysis tool:
Step 1:Identify the specific factors relevant to each of the five major forces.
Step 2:Analyze the strength of each force.To what extent is it shaping the industry's attractiveness?
Step 3:Estimate the overall strength of the combined five forces to determine the general attractiveness of the industry, the expectation that an average firm in the industry can earn good profits.
Q2) Barriers that help keep firms using the same supplier or buyer by imposing extra costs for substituting suppliers or buyers are known as _____.
Answer: switching costs
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Chapter 3: Internal Analysis: Strengths, Weaknesses, and Competitive Advantage
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Q1) A media house wanted to report on the continued success of the software company, AlphaDigiPro Inc.The reporters decided to assess the company in two ways.They spoke to the top management employees and handed out questionnaires to other employees.The results of these data collection techniques helped the media house construct a good article.This scenario illustrates the use of _____.
A) focus groups
B) archival data
C) interviews
D) observation
Answer: C
Q2) Define resources.
Answer: Resources are what a firm employs to create value and competitive advantage.
Q3) A firm's advantage becomes stronger if it develops _____, processes that are designed to continuously expand existing resources or to improve or modify operating capabilities.
Answer: dynamic capabilities
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Chapter 4: Cost Advantage
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Q1) MediDose Inc., a pharmaceutical company, has been studying and experimenting with a few drugs.After 10 years of conducting and standardizing tests, the company comes up with positive results that would help many patients.These drugs become popular and effective among millions of patients and enable the company to expand its operations across the globe while spreading out the cost of the studies.Which of the following is the subject of economies of scale in the described scenario?
A) Research and development expenses
B) Advertising expenses
C) General and administrative costs
D) Production costs
Q2) Information that is not public and that is viewed as the property of the holder is called _____.
Q3) Which of the following statements is true of a company's general and administrative costs (G&A)?
A) They are part of a company's production costs.
B) They exclude the expenses of operating a company.
C) They include Research and Development (R&D) expenses.
D) They help a company with high sales volume that creates cost advantage by managing its G&A across more units.
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Chapter 5: Differentiation Advantage
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Q1) When firms rely on brand image to differentiate products, some of them associate their products with positive qualities in the minds of customers.These are known as
A) prestige brands
B) convenient brands
C) utility brands
D) functional brands
Q2) Kiara states that, as a customer, the pen she had recently purchased was a very convenient product.In terms of product differentiation, which of the following is Kiara most likely to denote?
A) The pen lasted longer than pens by other brands.
B) The pen came in different colors and shapes.
C) The pen was made with high-quality plastic.
D) The pen was easier to purchase than other products.
Q3) In terms of product differentiation, convenience refers to:
A) how long a product functions optimally.
B) how unique a product is when compared to others.
C) how efficient a product is in meeting consumers' primary needs.
D) how easy it is for customers to purchase a product.
Q4) _____ is grouping customers based on similar needs.
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Chapter 6: Corporate Strategy
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Questions
Q1) Brentwood Industries, a furniture company, bought a supplier factory that creates raw materials for the whole range of products Brentwood manufactures.Brentwood has made sure not to look for outside sources for providing the company's raw materials.Brentwood Industries is practicing _____.
A) market penetration
B) unrelated diversification
C) vertical integration
D) horizontal diversification
Q2) Virgo Inc.earns less than 70 percent of its revenue from manufacturing computers.It recently started manufacturing tablets.The company made use of existing technology and materials and decided to distribute the tablets through the same distributors used for its computers.In this scenario, Virgo Inc.chose _____.
A) related-constrained diversification
B) related-linked diversification
C) unrelated-constrained diversification
D) unrelated-linked diversification
Q3) How does diversification help exploit existing customer-facing resources?
Q4) Explain the ways in which diversification adds value.
Q5) What is a greenfield entry? When should a company use it?
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Chapter 7: Vertical Integration and Outsourcing
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Q1) Coral Corp.is a company that initially used to manufacture handbags.It has now set up a store in which it sells its own products rather than supplying them to different stores.This initiation by Coral Corp.best illustrates _____.
A) forward integration
B) backward integration
C) horizontal diversification
D) market penetration
Q2) Pulse Corp., a vertically integrated company, is finding it difficult to adapt to current technology that is capable of speeding up its manufacturing process.The company is used to performing work in a specific manner using the old technology.However, in order to maintain competitive advantage, it has to upgrade itself to the current technology.This scenario is an example of _____ that is one of the disadvantages of vertical integration.
A) loss of frequency
B) loss of focus
C) loss of flexibility
D) loss of facility
Q3) In the context of vertical integration, when is flexibility most valuable?
Q4) Explain the three Cs of vertical integration.
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Chapter 8: Strategic Alliances
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Q1) What are the four kinds of inputs and activities that might qualify as strategic inputs, which merit forming an alliance relationship? Explain the four inputs with suitable examples.
Q2) With respect to categories of issues, _____ issues deal with how decisions will be made, how profits will be split, and how disputes will be resolved.
Q3) _____ occurs when one partner in an alliance creates false expectations about the resources it brings to the relationship or fails to deliver what it originally promised.
A) Hold-up
B) Misrepresentation
C) Bondage
D) Profit stealing
Q4) An alliance is likely to rely most on relationships between individuals when it is based on _____.
A) legal contracts
B) collateral bonds
C) goodwill trust
D) shared ownership
Q5) What are the different types of nonequity alliances?
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Chapter 9: International Strategy
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Q1) Two marketing students, Fiona and Sayid, discuss the strategies of Star Seven Inc., a leading firm in the United States.Fiona believes that Star Seven entered a foreign market for the sake of efficiency, while Sayid argues that it entered for the purpose of expanding knowledge.Which of the following weakens Fiona's argument?
A) Star Seven aims to spread the costs of investments in plant and equipment across more sales in the new market.
B) Star Seven aims to serve multiple types of customers in the new market to gain new insights about its products.
C) Star Seven aims to sell products produced in excess at lower prices in the new market.
D) Star Seven aims to outsource some of its functions to reduce the labor and production costs.
Q2) Which of the following statements is true of wholly owned subsidiaries as means of entering international markets?
A) It requires the least investment for market entry.
B) It avoids sharing resources, risks, and rewards.
C) It overcomes trade and transportation barriers by producing locally.
D) It offers the least amount of control of all the various modes of entry.
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Chapter 10: Innovative Strategies That Change the Nature of Competition
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Q1) An automobile company used its profits from the sale of motorcycles to invest in the development of cars.These cars were less expensive but technologically more advanced than those of its competitors.This is an example of _____.
A) disintermediation
B) low-end disruptive innovations
C) standardization
D) high-end disruptive innovations
Q2) Flytech Inc.is an online store where people and businesses buy and sell a broad variety of goods and services.Various brands pay Flytech to advertise and sell their products online.Which of the following is being exemplified in this case?
A) A blue ocean strategy
B) A cross-sell strategy
C) A third-party pay strategy
D) A bundling strategy
Q3) _____ coined the term hypercompetition.
Q4) Define two general categories of innovations.
Q5) Creating new demand in an uncontested market space is called the _____.
Page 12
Q6) Explain the four stages of the product life cycle.
Q7) Explain mass customization with an example.
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Chapter 11: Competitive Strategy
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Q1) A _____ profile identifies characteristics of a competitor in order to assess how it might respond in the face of rival actions.
Q2) Peach Line Inc., manufacturers of furniture, identifies that its choice of suppliers is its weakness and makes this irrelevant by standardizing the production process irrespective of the source of raw materials.This way, its choice of suppliers does not become the target of competitors.Which of the following is exemplified in this case?
A) Knowing the strengths and weaknesses
B) Bringing strength against weakness
C) Neutralizing vulnerability
D) Developing strategies that cannot be easily copied
Q3) An organization wants to compete at an international level.It sets the company objectives and the assumptions to reinforce the objectives.Which of the following is being exemplified in this case?
A) Organizational chart
B) Structural graph
C) Strategic application
D) Competitor response profile
Q4) Briefly describe the game theory.
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Chapter 12: Implementing Strategy
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Q1) Mark Dinewell Inc., a well-established restaurant chain has vice presidents for different geographic regions and functional managers for each of those regions.Which of the following organizational elements is exemplified in this case?
A) Strategy
B) Structure
C) Style
D) Skill
Q2) Richardson Corp., a biotechnology company, wants to hire people who have the abilities to perform tasks, maintain interpersonal relationships, and focus on values of the organization.In the context of the 7 S model of organizational alignment, which of the following best exemplifies Richardson's approach?
A) Scorecard
B) Hard triangle
C) Guiding coalition
D) Soft square
Q3) What are the eight steps to successful change?
Q4) _____ begins when leaders recognize and publicly admit that the current situation is not producing acceptable or adequate results.
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Chapter 13: Corporate Governance and Ethics
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Q1) Newe Chemicals Inc.is a company that manufactures household chemicals.Its customers consist of people who purchase its products.They will be affected by the business through the:
A) wages it pays to its employees.
B) payment it makes to its suppliers.
C) earnings it generates for its investors.
D) advertising campaigns it uses to promote its products.
Q2) Peach Corp.operates a chain of supermarkets.The managers and employees of the company have been on strike for months due to their differences with its owners.As a result, the share price of the company has fallen to historic low.Globe Investments decides to purchase a majority of the shares of Peach Corp., confident that it can manage the company better.Globe Investments makes a public offer to purchase the shares of the investors who are dissatisfied with the performance of Peach Corp.The offer made by Globe Investments can be termed as a(n) _____.
A) proxy offer
B) tender offer
C) discount offer
D) private offer
Q3) In a company, who are called agents?
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Chapter 14: Strategy and Society
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Q1) John works for Roth Inc., a mining firm, which strictly adheres to the employment rules as prescribed by the labor commission.The firm employs individuals only above the age of 23 for occupations that could pose safety hazards.In this scenario, which of the following social responsibilities is fulfilled by Roth?
A) Philanthropic responsibility
B) Economic responsibility
C) Legal responsibility
D) Superordinate responsibility
Q2) Emily works as a consultant in a firm that provides consulting and business solutions to global organizations to enhance their productivity and drive corporate performance and value.In the context of the value net model, Emily's firm is most likely to be considered a _____.
A) competitor
B) principal investor
C) supplier
D) customer
Q3) Discuss the four roles played by stakeholders in the value net.
Q4) Discuss the role of a social entrepreneur in the creation of shared value.
Q5) Differentiate between institutional change and capacity building.
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