Corporate Strategy
Chapter Exam Questions
Course Introduction
Corporate Strategy explores the frameworks and analytical tools that organizations use to achieve long-term objectives and maintain a competitive advantage. The course examines topics such as diversification, vertical integration, mergers and acquisitions, global expansion, and strategic alliances. Students learn how top management makes critical decisions regarding resource allocation, portfolio management, and the coordination of business units within complex organizational structures. Through case studies and real-world examples, the course emphasizes the development and execution of corporate-level strategies that align with company vision and respond to dynamic market environments.
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Strategic Management and Competitive Advantage 6th Edition by Jay B. Barney
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Page 2
Chapter 1: What Is Strategy and the Strategic Management Process
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Sample Questions
Q1) Mission statements often contain so many common elements that even if a firm's mission statement does not influence behavior throughout an organization,it is likely to have a significant impact on a firm's actions.
A)True
B)False
Answer: False
Q2) Which of the following statements regarding firm mission is accurate?
A)While some firms have used their missions to develop strategies that create significant competitive advantages,firm missions can hurt a firm's performance as well.
B)Virtually all firms have used missions to develop strategies that create significant competitive advantages,while very few firms have used missions that can hurt their performance.
C)It is very rare for firms to be able to use their missions to develop strategies that create significant competitive advantages,and most firm missions actually hurt their performance.
D)Missions tend to have very little impact on a firm's ability to create significant competitive advantages.
Answer: A
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Chapter 2: Evaluating a Firms External Environment
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Q1) The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choices.
A)micro-environment
B)general environment
C)task environment
D)internal environment
Answer: B
Q2) Mature industries are characterized by
A)an increase in total industry demand.
B)faster increases in production capacity.
C)a slowdown in the introduction of new products or services.
D)a decrease in the amount of international competition.
Answer: C
Q3) Suppliers are a greater threat to firms in an industry when suppliers are threatened by substitutes.
A)True
B)False
Answer: False
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Chapter 3: Evaluating a Firms Internal Capabilities
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Q1) Most firms have a resource base that is composed primarily of valuable but common resources and capabilities,some of which are essential if a firm is to gain competitive parity.
A)True
B)False
Answer: True
Q2) The fact that it would be would be difficult and costly for firms to match Bates' capabilities in the tool industry indicates that these capabilities are
A)imperfectly imitable.
B)causally ambiguous.
C)substitutable.
D)perfectly imitable.
Answer: A
Q3) Resources in the resource based view are defined as the tangible and intangible assets that a firm controls,which it can use to conceive and implement its strategies.
A)True
B)False
Answer: True
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5
Chapter 4: Cost Leadership
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Q1) Choices which firms make about the kinds of products and services they will sell that impact their relative cost position are known as
A)technological hardware.
B)policy choices.
C)technological software.
D)corporate level strategies.
Q2) There are physical limitations to the size of some manufacturing processes and when this size is exceeded,diseconomies of scale are experienced.
A)True
B)False
Q3) A cost-leadership competitive strategy helps reduce the threat of entry by creating cost-based barriers to entry.
A)True
B)False
Q4) Identify six sources of cost advantages for firms.
Q5) Identify which bases of cost leadership are more likely to be rare and costly to imitate.
Q6) What are the responsibilities of the CEO in a functional organization?
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Chapter 5: Product Differentiation
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Q1) In fragmented industries firms can use product differentiation to help consolidate a market.
A)True
B)False
Q2) Which of the following bases of product differentiation is usually costly to duplicate?
A)product features
B)links with other firms
C)reputation
D)product mix
Q3) More recent work contradicts the argument about being "stuck in the middle" and suggests that firms that are successful in both cost leadership and product differentiation often can expect to gain a sustained competitive advantage.
A)True
B)False
Q4) Discuss the similarities and differences of the organizational structures used by firms pursuing a cost-leadership and a product-differentiation strategy and discuss the importance of broad decision-making authority within a product-differentiation strategy.
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Chapter 6: Flexibility and Real Options
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Q1) Which of the following is NOT a type of option to combat technological and market uncertainty according to Rita McGrath and Ian MacMillan?
A)staged
B)scouting
C)stepping-stone
D)positioning
Q2) Taking multiple small positions in alternative technologies and waiting until technological uncertainty is resolved to invest is what is meant by a ________ option.
A)financial
B)positioning
C)stepping-stone
D)scouting
Q3) Strategic flexibility is most likely to be valuable under conditions of uncertainty. A)True
B)False
Q4) What is the difference between risk and uncertainty?
Q5) What are positioning options? How are they different from scouting options?
Q6) What are strategic options?
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Chapter 7: Collusion
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Q1) Generally,long-run profits for firms that cheat on purely collusive agreements in various ways fall somewhere between the perfect competition,zero-economic-profit solution and the perfect cooperation,shared-monopoly-profit solution.
A)True
B)False
Q2) One of the most significant organizational issues facing tacitly colluding firms concerns the efficiency of their operations.
A)True
B)False
Q3) Explicit collusion exists when firms in an industry directly negotiate agreements about how to reduce competition.
A)True
B)False
Q4) Which of the following is NOT a way to create economic profits via collusion?
A)Colluding to increase the bargaining power of buyers.
B)Colluding to reduce the threat of new competitors.
C)Colluding to reduce the threat of current competitors.
D)Colluding to reduce supplier leverage threats.
Q5) What is collusion?
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Chapter 8: Vertical Integration
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Q1) A firm may be able to gain an advantage from vertically integrating when it resolves some uncertainty it faces sooner than its competition.
A)True
B)False
Q2) In 1937,which Nobel Prize-winning economist first articulated the question of vertical integration,i.e.,which stages of the value chain should be included within a firm's boundaries and why?
A)Ronald Coase
B)Adam Smith
C)David Ricardo
D)Milton Freidman
Q3) A firm engages in backward vertical integration when it incorporates more stages of the value chain within its boundaries and those stages bring it closer to gaining access to raw materials.
A)True
B)False
Q4) Identify the three fundamental explanations of how vertical integration can create value and discuss how value is created under each.
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Page 10
Chapter 9: Corporate Diversification
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Q1) Over the last decade,more and more diversified firms have been abandoning efforts at managing each business's activities independently in favor of increased activity sharing.
A)True
B)False
Q2) One substitute for diversification that exists is that instead of obtaining cost or revenue advantages from exploiting economies of scope across businesses in a diversified firm,a firm may decide to simply grow and develop each of its businesses separately.
A)True
B)False
Q3) Shared activities that can provide the basis for operational economies of scope are quite common among related-constrained and related-linked diversified firms,as well as firms following an unrelated diversification strategy.
A)True
B)False
Q4) Identify and distinguish between the five different levels of diversification discussed in Chapter 7.
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Chapter 10: Organizing to Implement Corporate
Diversification
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Q1) Which role in the office of the president is responsible for strategy implementation?
A)chairman of the board
B)chief executive officer
C)chief operating officer
D)chief strategist
Q2) Transfer pricing should equal
A)selling price.
B)opportunity cost.
C)total cost.
D)marginal cost.
Q3) Discuss the role of transfer pricing systems in an M-form organization,identify difficulties with setting optimal prices,and identify four alternative transfer pricing schemes.
Q4) Divisions in an M-form organization should be large enough to represent identifiable business entities but small enough so that a division general manager can manage each one effectively.
A)True
B)False
Page 12
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Chapter 11: Strategic Alliances
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Sample Questions
Q1) While it is often the case that there will be important information asymmetries between firms in an alliance,these asymmetries are likely to be ________ when alliances partners come from different countries.
A)much less
B)about the same as
C)much greater
D)marginally greater
Q2) Learning race dynamics are particularly common in relations among large,well-established firms.
A)True
B)False
Q3) As long as the cost of ________ to enter a new industry is less than the cost of ________,an alliance can be a valuable strategic opportunity.
A)vertically integrating; learning new skills and capabilities
B)learning new skills and capabilities; using an alliance
C)using an alliance; learning new skills and capabilities
D)learning new skills and capabilities; vertically integrating
Q4) Describe five tools that firms can use to reduce the threat of cheating in strategic alliances.
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Chapter 12: Mergers and Acquisitions
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Q1) To be economically valuable,links between bidding and target firms must meet the same criteria as diversification strategies.
A)True
B)False
Q2) If bidding and target firms are strategically related,then the economic value of these two firms combined is greater than their economic value as separate entities.
A)True
B)False
Q3) Which of the following is a financial motivation for why bidding firms might want to engage in merger and acquisition strategies?
A)to increase leverage opportunities
B)to capture economies of scale
C)to adopt more efficient production or organizational technology
D)to engage in vertical integration
Q4) A privately held firm has not sold any shares on the public stock market. A)True
B)False
Q5) How are poison pills different from shark repellents?
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