Business Strategy
Chapter Exam Questions
Course Introduction
Business Strategy explores the principles and frameworks that guide organizations in achieving long-term competitive advantage and sustainable growth. Students will examine how companies analyze their internal capabilities and external environments, formulate strategic goals, and make decisions regarding market positioning, resource allocation, and business development. The course addresses topics such as industry analysis, strategic planning, corporate diversification, and growth strategies, while emphasizing the importance of leadership, ethical considerations, and adaptation to changing market conditions. Through case studies and practical applications, students will develop critical thinking skills necessary to craft and implement effective strategies in dynamic business environments.
Recommended Textbook
Crafting and Executing Strategy Concepts and Cases 22nd Edition by Thompson Jr
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Chapter 1: What Is Strategy and Why Is It Important?
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Sample Questions
Q1) A regional electric scooter manufacturer sells its scooter at a lower price than other manufacturers of two-wheeler scooters. What will make the product most attractive for customers?
A)low profit
B)high value
C)high cost
D)low value
E)low cost
Answer: B
Q2) A new entrant in a market dominated by established players introduces itself with copycat products of another competitor. Would this strategy work in the long-term for the firm? Justify your answer.
Answer: Mimicking the strategies of successful industry rivals-with either copycat product offerings or maneuvers to stake out the same market position-rarely works. Rather, every company's strategy needs to have some distinctive element that draws in customers and produces a competitive edge. Strategy, at its essence, is about competing differently-doing what rival firms do not do or what rival firms cannot do.
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Chapter 2: Charting a Companys Direction
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Q1) One of the important benefits of a well-conceived and well-stated strategic vision is to
A)clearly delineate how the company's business model will be implemented and executed.
B)clearly communicate management's aspirations for the company to stakeholders and help steer the energies of company personnel in a common direction.
C)set forth the firm budgetary objectives in clear and fairly precise terms.
D)help create a balanced scorecard approach to objective setting and not stretch the company's resources too thin across different products, technologies, and geographic markets.
E)indicate what kind of sustainable competitive advantage the company will try to create in the course of becoming the industry leader.
Answer: B
Q2) An organization's strategic plan consists of the actions that management plans to take in the near future. True or false? Explain and justify your answer.
A)True
B)False
Answer: True
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Chapter 3: Evaluating a Companys External Environment
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Q1) You have been asked to analyze the Value Net of the major regions of the California wine industry and have observed close relationships between wineries and local hospitality businesses (such as restaurants and lodging facilities)in the regions under study. Those local hospitality businesses can be said to be
A)cohabitors.
B)competitors.
C)cooperators.
D)complementors.
E)customers.
Answer: D
Q2) Competitive intelligence can be gleaned from A)company press releases, company websites, management presentations, annual reports, and 10-K filings.
B)SWOT analysis, PESTLE analysis, KSF analysis, and driving forces analysis.
C)strategic group maps, Value Net analysis, and five force analysis.
D)financial ratio analysis, KSF analysis, driving forces analysis, and five forces analysis.
E)KSF analysis, Value Net analysis, and driving forces analysis.
Answer: A
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Chapter 4: Evaluating a Companys Resources, Capabilities, and Competitiveness
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Q1) External threats to a company's future profitability and well-being do not include
A)the likely entry of potent new competitors
B)the lack of a well-known brand name with which to attract new customers and help retain existing customers
C)shifts in buyer needs and tastes away from the industry's product
D)costly new regulatory requirements
E)growing bargaining power on the part of the company's major customers and major suppliers
Q2) A company's dynamic capability is not manifested by its
A)capacity to improve existing resources and capabilities
B)ability to upgrade its R&D resources to drive product innovation
C)capacity to add new resources and capabilities to the competitive asset portfolio
D)ability to replace degraded resources with acquired capabilities
E)ability to keep antiquated resources by disregarding innovative capabilities
Q3) Describe a company (real or fictional)that is at a cost disadvantage compared to its rivals. What strategic moves should this company undertake to restore cost parity?
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Chapter 5: The Five Generic Competitive Strategies
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Q1) While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are
A)whether a company can build a brand name and an image that buyers trust.
B)whether a company's target market is broad or narrow and whether the company is pursuing a low-cost or differentiation strategy.
C)whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader's role.
D)whether a company can offer the lowest possible prices and whether the company can get the best suppliers in the market.
E)whether a company's overall costs are lower than competitors' and whether the company can achieve strong product differentiation.
Q2) The target market of a best-cost provider is
A)value-conscious buyers.
B)brand-conscious buyers.
C)price-sensitive buyers.
D)middle-income buyers.
E)young adults (in the 18-35 age group).
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Chapter 6: Strengthening a Companys Competitive Position
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Q1) Why might a company not choose to outsource certain value chain activities presently performed in-house?
A)because it streamlines company operations in ways that improve organizational flexibility and cuts the time it takes to get new products into the marketplace
B)because it allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best
C)because it helps the company assemble diverse kinds of expertise speedily and efficiently
D)because it enables a company to gain better access to end users and better market visibility
E)because it improves a company's ability to innovate
Q2) Identify and briefly discuss two "best targets" for offensive attacks by companies.
Q3) When is a strategic alliance most likely to be unsuccessful?
Q4) What are the merits of outsourcing the performance of certain value chain activities as opposed to performing them in-house? Under what circumstances does outsourcing make good strategic sense?
Q5) Discuss why timing of strategic moves is important.
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Chapter 7: Strategies for Competing in International Markets
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Q1) Explain why a company desirous of competing in foreign markets needs to pay careful attention to where it locates it value chain activities.
Q2) The difference between political risks and economic risks is that
A)political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies.
B)political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections.
C)political risks stem from hostility to foreign currencies, while economic risks stem from the instability of the monetary system.
D)political risks stem from exchange rate fluctuations, while economic risks stem from hostility to foreign business.
E)political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.
Q3) Briefly identify the special features of competing in foreign markets.
Q4) Identify and briefly describe a local company's strategic options in competing against global challengers.
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Chapter 8: Corporate Strategy
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Q1) What is meant by the term "resource fit" as it applies to evaluating a diversified company's business lineup?
Q2) Diversification ought to be considered when a A)company is under pressure to create a more attractive and cost-efficient value chain. B)company begins to encounter diminishing growth prospects in its mainstay business. C)company's profits are being squeezed and it needs to increase its net profit margins and return on investment.
D)company lacks sustainable competitive advantage in its present business.
E)company has run out of ways to achieve a distinctive competence in its present business.
Q3) Explain and provide examples comparing and contrasting cash cow businesses and cash hog businesses.
Q4) Carefully explain the difference between and the rationale for selecting a strategy of related diversification and/or a strategy of unrelated diversification.
Q5) Briefly discuss when it makes good strategic sense for a company to consider diversification.
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Chapter 9: Ethics, Corporate Social Responsibility,
Environmental Sustainability, and Strategy
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Q1) The results of strategies that cannot pass the test of moral scrutiny often are NOT manifested in
A)sharp drops in stock prices and lower dividends.
B)devastating public relations hits.
C)sizable fines.
D)criminal indictment and convictions of company executives.
E)increased customer loyalty.
Q2) A company's environmental sustainability strategy consists of its deliberate actions to
A)shelter the environmental impacts from the company's resources and competitive capabilities.
B)provide for the defense of natural resources usage within cross-border commitments.
C)moderate assurance for ecological support systems for future generations.
D)guard against ultimate endangerment of the business.
E)operate the business in a manner that promotes the longevity of sustainability effects.
Q3) A business should endeavor to be socially responsible in its actions and conduct under what set of circumstances?
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Chapter 10: Building an Organization Capable of Good Strategy Execution
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Sample Questions
Q1) When strategies fail, it is often because of
A)poor execution of the strategy.
B)shortfalls exposed with the strategic management design process.
C)inadequate support for the management team responsible for the planning process.
D)secondary operating practices that hinder the required changes.
E)lack of sufficient information about operating systems.
Q2) What business case could you make to Costco to empower its employees?
Q3) Which structure combines two or more organizational forms, with multiple reporting relationships, and is used to foster cross-unit collaboration?
A)matrix structure
B)composite structure
C)divisional structure
D)network structure
E)functional structure
Q4) A centralized organization structure is more likely to further the cause of good strategy execution than is a decentralized organization structure. True or false? Explain.
A)True
B)False
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Chapter 11: Managing Internal Operations
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Q1) Information systems provide managers with a means for monitoring all of the following EXCEPT
A)the results that flow from the actions of subordinates.
B)the performance of empowered workers.
C)weekly operating statistics.
D)employees with over-the-shoulder supervision.
E)daily operating statistics.
Q2) The backbone of the process of identifying, studying, and implementing best practices is
A)business process reengineering.
B)a corporate culture that has a core value of operating excellence.
C)benchmarking.
D)Six Sigma quality control techniques.
E)the innovative application of TQM techniques.
Q3) Suppose you are managing a local golf course. How might you go about developing and implementing an incentive compensation system that will help drive successful strategy execution?
Q4) Identify types of support systems that a company can install to support the execution of its strategy. How important are these systems to the strategy implementation process?
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Chapter 12: Corporate Culture and Leadership
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Q1) The leadership challenges that top executives face in making corrective adjustments when things are not going well include
A)knowing when to replace poorly performing workers and when to do a better job of coaching them to do the right things.
B)being able to discern whether to emphasize adjustments that will promote better achievement of strategic performance targets or whether to emphasize adjustments that will promote better achievement of financial performance targets.
C)undertaking a thorough analysis of the situation, exercising good business judgment in deciding what actions to take, and then ensuring good implementation of the corrective actions that are initiated.
D)having the analytical skills to separate the problems due to a bad strategy from the problems due to bad strategy execution.
E)deciding whether the company would be better off making adjustments that curtail the achievement of strategic objectives or that curtail the achievement of financial objectives or that curtail the achievement of some of both.
Q2) Briefly identify three types of unhealthy corporate cultures.
Q3) Explain how managerial leadership can foster a high-performance culture.
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