Business Strategy
Exam Answer Key
Course Introduction
Business Strategy is a course designed to equip students with the analytical tools and frameworks necessary to evaluate and formulate effective strategies for organizations operating in dynamic and competitive environments. The course examines key concepts such as competitive advantage, industry analysis, value creation, and strategy implementation. Through case studies, simulations, and practical applications, students learn how to assess external opportunities and threats, analyze organizational strengths and weaknesses, and develop coherent strategic plans that drive long-term success. Emphasis is placed on understanding how strategy aligns with organizational goals and adapting to changes in the market landscape.
Recommended Textbook
Concepts in Strategic Management and Business Policy 14th Edition by Thomas L. Wheelen
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Chapter 1: Basic Concepts in Strategic Management
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Sample Questions
Q1) Henry Mintzberg discovered that strategic formulation is a regular, continuous process.
A)True
B)False
Answer: False
Q2) A functional strategy may include competitive or cooperative strategies.
A)True
B)False
Answer: False
Q3) A budget is a statement of a corporation's programs in dollar terms. Which is NOT True of the budgetary function?
A) It is used in planning and control.
B) It serves as a detailed plan of strategy in action.
C) Only one budget is necessary to capture all programs.
D) It details the impact on the firm's future financial situation.
E) It is used as a means of measuring success based on certain criteria.
Answer: C
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Chapter 2: Corporate Governance
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Sample Questions
Q1) What are the responsibilities of top management?
Answer: Top management responsibilities involve getting things accomplished through and with others in order to meet the corporate objectives. Top management's job is thus multidimensional and is oriented toward the welfare of the total organization. Specific top management tasks vary from firm to firm and are developed from an analysis of the mission, objectives, strategies, and key activities of the corporation. Tasks are typically divided among the members of the top management team.
The CEO, with the support of the rest of the top management team, must successfully handle two primary responsibilities crucial to the effective strategic management of the corporation: (1) provide executive leadership and a strategic vision, and (2) manage the strategic planning process.
Q2) Which of the following is a trend in corporate governance?
A) Boards are getting less involved in shaping corporate strategy.
B) Shareholders are demanding that directors and top managers own less stock in the company.
C) Boards are establishing mandatory retirement ages for board members.
D) Boards are getting larger.
E) Boards are looking for fewer members with international experience.
Answer: C
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Page 4
Chapter 3: Ethics and Social Responsibility in Strategic Management
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Sample Questions
Q1) Moral relativism could enable a person to justify almost any sort of decision or action, so long as it is not declared illegal.
A)True
B)False
Answer: True
Q2) Discuss the three basic approaches to ethical behavior.
Answer: The three basic approaches to ethical behavior are the utilitarian approach, the individual rights approach, and the justice approach. The utilitarian approach proposes that actions and plans should be judged by their consequences. People should therefore behave in such a way that will produce the greatest benefit to society and produce the least harm or the lowest cost. The individual rights approach proposes that human beings have certain fundamental rights that should be respected in all decisions. The justice approach proposes that decision makers be equitable, fair, and impartial in the distribution of costs and benefits to individuals and groups.
Q3) Kohlberg places 80 percent of U.S. adults in the principled level of development.
A)True
B)False
Answer: False
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Chapter 4: Environmental Scanning and Industry Analysis
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Sample Questions
Q1) Industry analysis is primarily concerned with a corporation's
A) societal environment.
B) task environment.
C) sociocultural environment.
D) economic environment.
E) internal environment.
Q2) According to Miles and Snow, reactors are companies with a limited product line that focus on improving the efficiency of their existing operations.
A)True
B)False
Q3) An example of an economic variable in the societal environment is interest rates.
A)True
B)False
Q4) Which of the following is NOT a major force in the societal environment?
A) political-legal forces
B) labor forces
C) economic forces
D) technological forces
E) sociocultural forces
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Chapter 5: Internal Scanning and Organizational Analysis
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Sample Questions
Q1) Which of the following is a function of corporate culture?
A) It encourages a laissez faire set of attitudes.
B) It encourages flexibility and thus constant change.
C) It conveys a sense of identity for employees.
D) It generates creative approaches to new situations.
E) It focuses employee commitment on their own careers.
Q2) Describe Barney's VRIO framework.
Q3) Which of the following is NOT a support activity of the value chain?
A) procurement
B) technology development
C) human resource management
D) marketing and sales
E) strategic planning
Q4) General Electric is well known for its distinctive competency in management development.
A)True
B)False
Q5) Capabilities refer to a corporation's ability to exploit its resources.
A)True
B)False
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Chapter 6: Strategy Formulation: Situation Analysis and Business Strategy
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Sample Questions
Q1) If it is to be successful, Porter advises that a division possess strong marketing abilities, product engineering, a creative flair, strong capability in basic research and a corporate reputation for quality or technological leadership, for which one of the following generic competitive strategies?
A) focus
B) differentiation
C) overall cost leadership
D) vertical growth
E) concentration
Q2) SWOT is an acronym that stands for Strategy, Weaknesses, Opportunities, and Threats.
A)True
B)False
Q3) Most entrepreneurial ventures follow focus strategies.
A)True
B)False
Q4) What are Porter's four generic strategies?
Q5) What are cooperative strategies?
Q6) Discuss competitive strategy differences between a fragmented and a consolidated industry. Page 8
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Chapter 7: Strategy Formulation: Corporate Strategy
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Sample Questions
Q1) According to the BCG Growth Share Matrix, dogs should be either sold off or managed carefully for the small amounts of cash they can generate.
A)True
B)False
Q2) With conglomerate diversification, the focus is on
A) product-market synergy.
B) sound investment and value-oriented management.
C) employee satisfaction.
D) similar product offerings.
E) market demand.
Q3) According to the BCG Growth Share Matrix, those products with low market share in an unattractive industry that do NOT have the potential to bring in much cash are called A) cash cows.
B) lost leaders.
C) dogs.
D) question marks.
E) stars.
Q4) Discuss the three general orientations comprising directional strategy?
Q5) Define corporate parenting.
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Chapter 8: Strategy Formulation: Functional Strategy and Strategic Choice
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Sample Questions
Q1) All of the following are benefits for a company to raising its debt levels EXCEPT
A) deterrent to takeover by other firms.
B) improvement in productivity.
C) improvement in cash flows.
D) force management to focus on core businesses.
E) improvement in strategic options.
Q2) According to a 2012 survey by Deloitte Consulting, the most popular outsourced activity was
A) marketing.
B) sales.
C) finance.
D) R&D.
E) information technology.
Q3) The attractiveness of a strategic alternative is affected by its perceived compatibility with the key stakeholders in a corporation's task environment.
A)True
B)False
Q4) Give an example of a technological leader.
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Chapter 9: Strategy Implementation: Organizing for Action
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Sample Questions
Q1) Which type of structure was used by Nestle to tailor products to regional differences and to achieve regional coordination?
A) geographic-area structure
B) network structure
C) product-group structure
D) international structure
E) functional structure
Q2) Poor implementation is often blamed for strategic failure.
A)True
B)False
Q3) How does job rotation combat the adverse consequences of task specialization?
A) by altering the work to provide the worker with more control over activities
B) by moving workers through several jobs, thereby exposing them to increased task variety
C) by combining different tasks, thereby giving them more responsibilities
D) by giving the worker more autonomy through alterations in the job
E) by forming natural work units to provide the worker with more responsibility
Q4) What is reengineering? What are the principles for reengineering proposed by Michael Hammer?
Q5) What is the matrix of change? What types of questions does it answer?
Page 12
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Chapter 10: Strategy Implementation: Staffing and Directing
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Sample Questions
Q1) A dynamic industry expert is someone with an analytical mind who is highly knowledgeable in other industries and can manage diverse product lines.
A)True
B)False
Q2) According to the text, the process of replacing a key top manager is called
A) executive succession.
B) executive placement.
C) executive strategy.
D) executive search.
E) executive outside succession.
Q3) Strategic goals can be accomplished through defining an action plan. Which one of the following is NOT one of the components which make up an action plan?
A) the specific actions to be taken
B) who will perform the action
C) during what time frame the action will be completed
D) where the action will be done
E) what are the expected results of the action
Q4) What are the four elements of the MBO process?
Q5) What are the four general methods of managing two different cultures?
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Chapter 11: Evaluation and Control
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Sample Questions
Q1) A profit center is typically established whenever an organizational unit has control over both its resources and its products or services.
A)True
B)False
Q2) People tend to substitute behaviors that are recognized and rewarded for those behaviors that are ignored, without regard to their contribution to goal accomplishment.
A)True
B)False
Q3) Stickiness and eyeballs are two non-financial performance measures used by Internet business ventures.
A)True
B)False
Q4) The use of timely, quantifiable standards guarantees good performance.
A)True
B)False
Q5) Discuss the benchmarking process.
Q6) What is the most commonly used measure of corporate performance (in terms of profits)? Discuss the limitations of using this measure.
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Chapter 12: Suggestions for Case Analysis
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Sample Questions
Q1) Which financial ratio measures the extent to which the company's capital is in cash or cash equivalents?
A) quick ratio
B) current ratio
C) cash ratio
D) strategic ratio
E) inventory ratio
Q2) 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.
Q3) Ratios are only useful for large firms where their ratios may be compared with industry averages.
A)True
B)False
Q4) List Schilit's short checklist of items to examine for red flags.
Q5) In performing a basic financial analysis, what five steps should be taken?
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