Competitive Strategy
Exam Practice Tests
Course Introduction
Competitive Strategy explores the frameworks and analytical tools used by managers to position a firm effectively within its industry, achieve sustainable competitive advantage, and respond to dynamic market forces. The course examines key concepts such as industry analysis, value creation, differentiation, cost leadership, and game theory, emphasizing real-world applications through case studies and simulations. Students will develop critical thinking skills for assessing competitors, crafting strategic options, and making decisions that drive long-term business success in both established and emerging markets.
Recommended Textbook
Strategic Management Concepts and Cases Competitiveness 10th Edition by
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13 Chapters
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Page 2
Michael A. Hitt
Chapter 1: Strategic Management and Strategic Competitiveness
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) The profit pool is the
A) pool of assets that is distributed to investors.
B) total profits earned in an industry along all points of the value chain.
C) profits that are accrued when a firm earns above-average returns.
D) total profits that can be divided up among the competitors within an industry.
Answer: B
Q2) What are a firm's vision and mission? What is the value to the firm of having a specified vision and mission?
Answer: The firm's vision is a picture of what it wants to be and what it wants to ultimately achieve. The firm's mission is based on its vision. It specifies the business(es) in which the firm intends to compete and the customers it intends to serve. The value of having a vision and mission is that they inform stakeholders what the firm is, what it seeks to accomplish, and who it seeks to serve. A successful vision is inspirational. The mission is more concrete and guides employees' behavior as they achieve the firm's vision. Research shows that an effectively formed vision and mission positively impact firm performance in terms of growth in sales, profits, employment, and net worth.
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Chapter 2: The External Environment: Opportunities,
Threats, Industry Competition, and Competitor Analysis
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Product differentiation refers to the
A) ability of the buyers of a product to negotiate a lower price.
B) response of incumbent firms to new entrants.
C) belief by customers that a product is unique.
D) fact that as more of a product is produced the cheaper it becomes per unit.
Answer: C
Q2) The industry environment directly influences the firm and its competitive actions and responses.
A)True
B)False
Answer: True
Q3) Producing and selling "green" (environmentally friendly) products is one way that companies have responded to pressures from the physical environment (Chapter 2 Strategic Focus).
A)True
B)False
Answer: True
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Page 4
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) Older employees are less valuable resources to firms than younger employees, because the older employees have lower stocks of knowledge. Consequently, employee reductions should begin with early retirement inducements.
A)True
B)False
Answer: False
Q2) Firms that have strong positive relationships with suppliers and customers are said to have _________________, an essential ingredient to creating value.
A) customer value
B) social capital
C) effective marketing
D) an attractive industry
Answer: B
Q3) A global mind-set is free of the assumptions of a single country, culture, or context.
A)True
B)False
Answer: True
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Chapter 4: Business-Level Strategy
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Sample Questions
Q1) Virtually anything can be a basis for a firm to create a differentiated product or service.
A)True
B)False
Q2) (Refer to the above Case Scenario ) Is ICP's focused low-cost strategy appropriate for its industry? Why?
Q3) A manufacturer of jewelry imitates the style of a popular and expensive brand using manufactured stones rather than real gemstones and lesser grade metals rather than silver and gold. The manufacturer packages the jewelry in boxes of the same color imprinted with an almost identical logo. About 85 percent of the company's sales are through Internet sales. This example illustrates the competitive risk of ____ that threatens companies that use the differentiation strategy.
A) customer sensitive to price differentials
B) threat by the cost leader
C) customer experience
D) counterfeiting
Q4) Define strategy and business-level strategy. What is the difference between these two concepts?
Q5) What are the risks of an integrated cost leadership/differentiation strategy?
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Chapter 5: Competitive Rivalry and Competitive Dynamics
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Sample Questions
Q1) A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.
A)True
B)False
Q2) Competitors are more likely to respond to strategic or tactical actions when they are taken by a market leader.
A)True
B)False
Q3) In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is
A) similar competitive rivalry.
B) less competitive rivalry.
C) more competitive rivalry.
D) no competitive rivalry.
Q4) In the Chapter 5 Strategic Focus, companies such as Amazon, Oracle, HP and Dell competing in the cloud computing market have been able to develop sustainable competitive advantages.
A)True
B)False
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Chapter 6: Corporate-Level Strategy
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) Decisions to expand a firm's portfolio of businesses to reduce managerial risk can have a positive effect on the firm's value.
A)True
B)False
Q2) As the threat of corporate failure increases due to relatedness between a firm's business units, firms may decide to
A) increase the firm's level of retained resources.
B) diversify into less risky environments.
C) reduce the level of diversity in its investments.
D) pursue unproven product lines.
Q3) Corporate tax laws, rather than tax laws affecting individuals, have had the most impact on the firm's use of free cash flows for investment in acquisitions.
A)True
B)False
Q4) Companies in emerging markets frequently use the unrelated diversification strategy because of the absence of a "soft infrastructure" in those markets.
A)True
B)False
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Chapter 7: Merger and Acquisition Strategies
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174 Flashcards
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Sample Questions
Q1) United Technologies Corp. (UTC) uses acquisitions of firms such as Otis Elevator Company (elevators, escalators, and moving walkways) and Carrier Corporation (heating and air conditioning systems) as the foundation for implementing its related diversification strategy.
A)True
B)False
Q2) A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.
A)True
B)False
Q3) Ambrose is a scientist working for a pharmaceutical company. His company was acquired by a rival pharmaceutical company, and now it is involved in downsizing and downscoping. Ambrose is concerned about his job security, since he is actively involved in amateur sports in his community and does not wish to disrupt his current lifestyle. Ambrose's job will be most likely to be secure if
A) Ambrose's research is in a non-core activity.
B) the acquisition has been financed by junk bonds.
C) Ambrose is in a position to take a poison pill.
D) Ambrose is a key employee in the firm's primary business.
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Chapter 8: International Strategy
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Sample Questions
Q1) Identify and describe the modes of entering international markets. What are their advantages and disadvantages?
Q2) Acquisitions, greenfield ventures, and sometimes joint ventures are appropriate when firms want to establish a strong presence in an international market.
A)True
B)False
Q3) When a firm INITIALLY becomes internationally diversified, its returns
A) remain stable.
B) decrease.
C) become more variable.
D) increase.
Q4) In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the ____ in Porter's model.
A) strategy, structure and rivalry among firms
B) related and supporting industries
C) demand conditions
D) factors of production
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Chapter 9: Cooperative Strategy
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Sample Questions
Q1) Synergistic strategic alliances such as the Renault-Nissan alliance discussed in the Opening Case focus on economies of scope by sharing their resources and capabilities to develop manufacturing platforms that can be used to Renault or Nissan cars.
A)True
B)False
Q2) Which of the following is NOT a risk for firms engaged in cooperative strategies?
A) misrepresentation of a partner's competencies
B) partner acts opportunistically
C) insufficient variation in firms' core competencies
D) failure of partners to make complementary resources available to the partnership
Q3) The collaboration between Volvo Aero (a subsidiary of Sweden's AB Volvo) and U.S.-based Pratt & Whitney to produce a new jet engine would be characterized as a(an) A) collusive tactic.
B) merger.
C) cross-border strategic alliance.
D) international acquisition.
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Chapter 10: Corporate Governance
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170 Flashcards
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Sample Questions
Q1) Agency costs reflect all of the following EXCEPT ____ costs.
A) monitoring
B) enforcement
C) opportunity
D) incentive
Q2) The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT
A) making CEOs more accountable for their performance
B) challenges to the decisions of boards
C) focusing attention on ineffective boards of directors
D) a direct effect on firm performance
Q3) How does corporate governance foster ethical strategic decisions and how important is this to top-level executives?
Q4) The Chapter 10 Strategic Focus indicates that Rio Tinto's most effective internal corporate governance mechanism was its executive compensation system.
A)True
B)False
Q5) What is corporate governance and how is it used to monitor and control managers' decisions?
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Chapter 11: Organizational Structure and Controls
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Sample Questions
Q1) Firms seeking to compete on the basis of cost leadership particularly need support from the ____ and ____ functions.
A) finance, accounting
B) manufacturing, process R&D
C) product R&D, marketing
D) management information, finance
Q2) One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so
A) indicates to competitors that the firm is vulnerable to a hostile takeover.
B) will only lead to inefficiencies.
C) requires the firm undertake multi-year restructuring period that will delay retirement.
D) suggests that their previous choices were not the best ones.
Q3) In most cases, the focus strategy is best managed using a ____ structure.
A) simple
B) functional
C) multidivisional
D) vertical
Q4) Discuss the difference between strategic and financial controls.
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Chapter 12: Strategic Leadership
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Sample Questions
Q1) The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they
A) overemphasize financial controls and neglect strategic controls.
B) overemphasize strategic control and neglect financial controls.
C) overemphasize strategic and financial controls and neglect ethical controls.
D) neglect short-term controls of all kinds in favor of long-term strategic controls.
Q2) (Refer to the above Case Scenario) The Walt Disney Company had a plan for succession in the event of the death of Walt Disney. When Walt died before Christmas 1966, the new CEO continued Walt's dream and created innovations that allowed Disney to continue along its path to success with very little interruption.
A)True
B)False
Q3) Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?
A) appointing many outside board members.
B) increasing the firm's sales.
C) increasing the homogeneity of the top management team.
D) training and development programs.
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Chapter 13: Strategic Entrepreneurship
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Sample Questions
Q1) If the company's workers have scant existing knowledge, their "absorptive capacity" to learn new knowledge will be limited.
A)True
B)False
Q2) ____ is one of the reasons for the differences in rates of entrepreneurship among different countries.
A) Climate
B) Competitiveness
C) Culture
D) Constitution
Q3) Entrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of production.
A)True
B)False
Q4) According to the Chapter 13 Strategic Focus, research labs play an important role in 3M's innovation process; each of its six businesses has its own research lab which is product-focused.
A)True
B)False
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