Corporate Strategy
Chapter Exam Questions
Course Introduction
Corporate Strategy explores the overarching plans and actions an organization develops to achieve long-term objectives and maintain a competitive advantage within the marketplace. This course examines how businesses make decisions regarding growth, diversification, mergers and acquisitions, internationalization, and resource allocation. Through the analysis of real-world cases and strategic frameworks, students learn to evaluate industry environments, assess internal capabilities, and formulate strategies that align with organizational goals and changing market conditions. The course also discusses the challenges of implementation and the role of corporate governance, culture, and ethics in strategic decision-making.
Recommended Textbook
Strategic Management Theory An Integrated Approach 11th Edition by Charles W. L. Hill
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Chapter 1: Strategic Leadership: Managing the
Strategy-Making
Process
for Competitive Analysis
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Sample Questions
Q1) Good strategic leaders:
A)possess a willingness to delegate and empower subordinates.
B)control all facets of decision making.
C)make decisions without consulting others.
D)ensure uniformity of purpose through the authoritarian exercise of power.
E)are usually inconsistent in their approach.
Answer: A
Q2) Which of the following is not a characteristic of emotional intelligence?
A)Self-awareness
B)Self-regulation
C)Escalating commitment
D)Empathy
E)Social skills
Answer: C
Q3) General managers bear responsibility for the overall performance of the company or for one of its major selfcontained subunits or divisions.
A)True
B)False
Answer: True
Page 3
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Q1) Due to advances in medicine, Americans are currently living longer now than in the past.As a result, the sale of products that meet the needs of older individuals, such as devices that assist in walking and movement, have increased.In the context of an industry's macroenvironment, age is considered a:
A)technological force.
B)demographic force.
C)social force.
D)political force.
E)legal force.
Answer: B
Q2) A company's closest competitors are those in its strategic group, not those in other strategic groups in the industry.
A)True
B)False
Answer: True
Q3) Substitute products are not a threat if a company is the market leader.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Internal Analysis: Distinctive Competencies, Competitive
Advantage, and Profitability
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Q1) Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as Innovations.
A)process
B)product
C)customer
D)sector
E)absorptive
Answer: B
Q2) The more utility a company creates for its customers, the more flexibility it has in determining prices.
A)True
B)False Answer: True
Q3) Tangible resources include experiential knowledge and technological know-how.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Building Competitive Advantage Through Functional-Level Strategy
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Sample Questions
Q1) Diseconomies of scale are the unit cost increases associated with a large scale of output.
A)True
B)False
Q2) Which of the following statements about customer focus is false?
A)It must start at the top of the organization.
B)It is a central part of TQM.
C)It can be facilitated by soliciting feedback from the customer.
D)It requires that all employees see the customer as the focus of their activity.
E)It can be achieved solely by demonstrating leadership .
Q3) Employee productivity is:
A)a function of employee socialization.
B)one of the key determinants of a company's efficiency.
C)not subject to measurement.
D)typically not sustainable in the long run.
E)a function that does not affect a company's profitability.
Q4) Identify the two dimensions of quality and describe how companies can achieve them.
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Chapter 5: Building Competitive Advantage Through Business-Level Strategy
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Q1) Cool Looks produces a variety of clothing for various customer groups.Which of the following strategies is the finn most likely pursuing?
A)Cost leadership
B)Differentiation
C)Product substitution
D)Focus
E)Share building
Q2) One of the great advantages of successful value innovation is that it can catch rivals off guard and make it difficult for them to catch up.
A)True
B)False
Q3) Which of the following is NOT a principal danger of a low-cost position approach?
A)Powerful buyers
B)Technological change
C)hnitation of production techniques
D)Changes in consumer tastes
E)Rivals lowering their costs
Q4) Define the generic business-level strategies companies pursue.
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Chapter 6: Business-Level Strategy and the Industry Environment
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Q1) In a harvest strategy, a company:
A)significantly increases its investment in a business.
B)extracts maximum profits from its investments.
C)ventures into new market segments with new products.
D)expands the number of stores or properties.
E)significantly increases advertising expenditure.
Q2) Which of the following is a disadvantage of franchising?
A)It restricts the franchisor from expanding.
B)It results in the franchisor taking all the financial burden of the franchisees.
C)It results in the delegation of authority to franchisees and thus, the franchisor may not enjoy complete control.
D)It does not provide sufficient incentive to the franchisees to run operations effectively as the franchisees are <sup>not</sup><sup> </sup><sup>entrepreneurs.</sup>
E)It requires the franchisees to create a new business model and plan strategies.
Q3) Fragmented industries typically have high barriers to entry.
A)True
B)False
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Chapter 7: Strategy and Technology
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Q1) When two or more companies are competing with each other to get their technology adopted as a standard in an industry, and when network effects and positive feedback loops are important, the company that wins the format war will be the one whose strategy best exploits positive feedback loops.
A)True
B)False
Q2) The law of diminishing returns states that marginal costs fall as a company tries to expand output.
A)True
B)False
Q3) Give an example of an industry that has recently undergone a technological paradigm shift.What impact did the shift have on established companies and on new entrants to the industry?
Q4) An adequate supply of complements to a product results in:
A)more customers opting for the product.
B)higher switching costs.
C)a significant decrease in the sales of the product.
D)a significant decrease in customer demand for the product.
E)the company failing to win a format war.
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Chapter 8: Strategy in the Global Environment
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Q1) Swedish strength in fabricated steel products (such as ball bearings and cutting tools) has drawn on strengths in Sweden's specialty steel industry.This is an example of which of the following attributes that impact national competitive advantage?
A)Local demand conditions
B)Competitiveness of related and supporting industries
C)Intensity of rivalry in an industry
D)Factor endowments
E)Differences in distribution channels
Q2) By offering a standardized product to the global marketplace and manufacturing that product in each nation in which it does business irrespective of production costs, a multinational company can realize substantial scale economies.
A)True
B)False
Q3) If a company's competitive advantage derives from its control of proprietary teclrnological know-how, it should either license its teclrnology to others or pursue a joint venture.
A)True
B)False
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Q1) Horizontal integration may be thought of as:
A)moving into a new unrelated industry.
B)giving control to suppliers.
C)gaining control of distributors.
D)staying inside the industry in which the company currently operates.
E)combining functional units within the company.
Q2) Managers use corporate-level strategy to identify which industries a company should compete in to maximize longrun profitability.
A)True
B)False
Q3) In a strategic alliance, one of the companies that's part of the agreement benefits more than the other.
A)True
B)False
Q4) Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.
A)True
B)False
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Chapter 10: Corporate-Level Strategy: Related and Unrelated
Diversification
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Q1) If a company generates free cash flow, that money technically belongs to shareholders.
A)True
B)False
Q2) Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?
A)Poor post-acquisition integration
B)Overestimation of the potential gains to be derived from synergy
C)The high cost of making acquisitions
D)Lack of pre-acquisition screening
E)Overestimation of the potential costs of realizing synergies
Q3) Which of the following is the probable consequence of an inability to integrate two divergent corporate cultures after an acquisition?
A)Low management turnover
B)Poor commercialization of the product
C)An inability to realize potential gains from synergies
D)The stock of highly diversified companies is valued lower
E)Risks are shared by all
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) According to an SEC investigation, Computer Associates, one of the world's largest software companies, backdated contracts to boost the company's reported revenues.This is not prescribed as an ethical business practice.
A)True
B)False
Q2) Governance mechanisms help align the incentives between principals and agents, and help monitor and control agents.
A)True
B)False
Q3) Which of the following statements is true about corporate raiders?
A)They are underperforming corporations that have been acquired by other companies. B)They are government-funded organizations that help underperforming companies recover.
C)They may purchase stock in a company to take over the business and run it more efficiently.
D)They lack power to interfere with the top management decisions.
E)They discourage companies from pursuing strategies that help maximize stockholder wealth.
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Chapter 12: Implementing Strategy in Companies That
Compete in a Single Industry
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Q1) Organizational culture is:
A)the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.
B)the means through which a company assigns employees to specific tasks and roles and specifies how these tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to customers.
C)the process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully.
D)the clear and unambiguous chain of command that defrnes each manager's relative authority from the CEO down through top, middle, to first-line managers.
E)the principle that a company should design its hierarchy with the fewest levels of authority necessary to use organizational resources effectively.
Q2) Identify and discuss the three building blocks of organizational structure.
Q3) Describe what is meant by the terms restructuring and reengineering, and discuss when and why they would be used.
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Chapter 13: Implementing Strategy in Companies That
Compete Across Industries and Countries
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Q1) Gemini Pharmaceuticals Inc.is a large finn that operates in many industries.The various units of the firm like packaging and chemical laboratories function independently and have their own organizational structures.The operations and strategies of all the units are monitored by the corporate headquarters staff.Gemini Pharmaceuticals Inc.is mostly an example of a:
A)flat organizational hierarchy.
B)product structure.
C)brand structure.
D)matrix structure.
E)multidivisional structure.
Q2) Companies pursue a localization strategy when they want to maximize responsiveness to the unique needs of customers in each country.
A)True
B)False
Q3) A joint venture can be dangerous to a company if its partuer is acquired by a competitor.
A)True
B)False
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