Business Strategy Review
Questions
Course Introduction
Business Strategy explores the fundamental concepts, frameworks, and tools used by organizations to achieve competitive advantage and long-term success. Through the analysis of real-world case studies and theoretical models, students learn how to assess industry dynamics, formulate strategic objectives, and make informed decisions in complex and uncertain environments. The course covers topics such as strategic positioning, resource allocation, business model innovation, and the impact of globalization, ethics, and digital transformation on strategic choices. By the end, students gain the skills necessary to evaluate organizational performance, anticipate strategic threats, and devise actionable plans that align with a companys goals and values.
Recommended Textbook
Essentials of Strategic Management 3rd Edition by Charles W. L. Hill
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Chapter 1: The Strategy-Making Process
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Sample Questions
Q1) The second component of the strategic management process is
A) an analysis of the organizations internal environment
B) development of the mission statement
C) a statement of the vision for the organization
D) an analysis of the organization's external environment
E) a statement of the key values of the organization
Answer: D
Q2) Functional managers bear responsibility for the overall performance of the company or one of its major self-contained subunits or divisions.
A)True
B)False
Answer: False
Q3) Strategy formulation involves putting the strategies (or plan) into action.
A)True
B)False
Answer: False
Q4) The CEO is a company's principal general manager.
A)True
B)False
Answer: True
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Chapter 2: The Mission, Governance, and Business Ethics
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Sample Questions
Q1) Explain the principles of agency theory, including the issues it addresses. What are some effective ways to deal with agency problems, as implied or stated by agency theory?
Answer: Agency theory addresses situations where one individual or group (the principals) relies on another individual or group (the agents) to make decisions and take actions on their behalf. In many of these situations, there are opportunities for mutual gain, but there are also opportunities for the agents to act in their own best interests, to the detriment of the principals. Opportunities for exploitation exist because agents have more access to information about the situation and to other resources than do the principals. Therefore, the principals cannot fully monitor the actions of the agents, and must trust the agents to some extent. One way to manage agency problems is to align the two parties' goals-that is, to create opportunities for mutual gain and reduce opportunities for one-sided gain. For example, if corporate managers are compensated based on stock price, then they are more likely to work toward that goal, which would also benefit stockholders. If managers are compensated based on the size of the firm, then they will work toward that goal, which may not be beneficial for stockholders. Another tactic is to reduce information asymmetry to the extent possible by overseeing or monitoring the principal's actions closely. However, there will always be a need for the principal to trust the agent to some extent.
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Chapter 3: External Analysis: the Identification of Opportunities and Threats
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Sample Questions
Q1) The starting point of strategy formulation is an analysis of the forces that shape competition in the industry in which a company is based.
A)True
B)False
Answer: True
Q2) The systematic analysis of forces in the industry environment using the Porter framework is a powerful tool that helps managers to think strategically.
A)True
B)False
Answer: True
Q3) All of the following are part of the shakeout stage of the industry life cycle except A) demand is limited to replacement demand.
B) demand approaches saturation levels.
C) rivalry between companies becomes intense.
D) capacity continues to grow.
E) companies cut prices.
Answer: A
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Page 5
Chapter 4: Building Competitive Advantage
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Sample Questions
Q1) Strong brand loyalty reduces customer defection rates.
A)True
B)False
Q2) Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?
A) R&D
B) Marketing and sales
C) Production
D) After-sales service and support
E) Human resources
Q3) If a company's profitability is higher than the industry average, it has a competitive advantage.
A)True
B)False
Q4) A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers.
A)True
B)False
Q5) Comment on this statement: "No competitive advantage lasts forever."
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Chapter 5: Business-Level Strategy and Competitive Positioning
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Sample Questions
Q1) A radio station has a distinctive competency in developing new products (shows) and wants to serve the upscale market. Which of the following is the most appropriate generic strategy for this company?
A) Cost leadership
B) Differentiation
C) Both cost leadership and differentiation
D) Focused low cost approach
E) Focused differentiation approach
Q2) A factor promoting the trend toward market fragmentation and niche marking is the substantial reeducation of the costs of differentiation as a result of flexible manufacturing.
A)True
B)False
Q3) A price-cutting strategy will always keep potential entrants from entering the industry.
A)True
B)False
Q4) For each of the generic strategies-cost leadership, differentiation, and focus-describe one advantage and one disadvantage.
Page 7
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Chapter 6: Strategy in the Global Environment
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Sample Questions
Q1) A company with a business-level strategy of cost leadership should pursue which of the following global expansion strategies?
A) Localization
B) Global standardization
C) International
D) Transnational
E) Simple
Q2) Companies that pursue a global standardization strategy are trying to develop a business model that simultaneously achieves low costs and differentiates the product offering across geographic markets.
A)True
B)False
Q3) The globalization of production has allowed firms to
A) increase their market share.
B) lower their cost structure.
C) respond to individual market segments.
D) avoid international competition.
E) meet all of these goals.
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Chapter 7: Corporate-Level Strategy and Long-Run Profitability
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Sample Questions
Q1) DaimlerChrysler was created by the combination of two firms (Daimler-Benz and Chrysler) who agreed to blend their firms to create a new company. This is an example of an acquisition.
A)True
B)False
Q2) The net result of the recent wave of mergers and acquisitions has been to increase the fragmentation in a wide range of industries.
A)True
B)False
Q3) Concentrating on a single business allows a company to "stick to the knitting" that is, to focus on doing what is knows best and avoid entering new businesses it knows little about and where it can create little value.
A)True
B)False
Q4) Vertical integration protects product quality, enabling a company to become a differentiated player in its core business.
A)True
B)False
Page 9
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Chapter 8: Strategic Change: Implementing Strategies to
Build and Develop a Company
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Sample Questions
Q1) Bottom-up change is generally slower than top-down change.
A)True
B)False
Q2) Which of the following is not a potential drawback to joint ventures?
A) Profits of the new business must be shared.
B) Partners share costs and risks of the new business.
C) Shared control results in conflicts.
D) Critical know-how may be given away
E) All of these are potential joint venture drawbacks.
Q3) The success of a strategic alliance includes all of the following except
A) partner selection
B) alliance structure
C) the way the alliance is managed
D) a, b, & c above
E) none of the above
Q4) A business process is any activity that takes place within a functional area (i.e., marketing, operations, R&D, etc.).
A)True
B)False
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Chapter 9: Implementing Strategy Through Organizational Design
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Sample Questions
Q1) Bill Gates' deliberate cultivation of values that encourage subordinates to perform in innovative and creative ways is an example of
A) organizational culture.
B) output control.
C) integration.
D) behavior control
E) standardization.
Q2) _______________ provides the vehicle through which managers can coordinate the activities of a company's various functions, divisions, and business units to take advantage of their skills and competencies.
A) Organizational structure
B) Decentralization
C) Organizational culture
D) Span of control
E) Strategic control
Q3) Product structures arrange and group people on the basis of their common expertise and experience or because they use the same resources.
A)True
B)False
Page 11
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