Corporate Strategy
Exam Answer Key
Course Introduction
Corporate Strategy explores the frameworks, tools, and concepts that organizations use to achieve long-term objectives and sustain competitive advantage. This course examines how firms make decisions regarding diversification, mergers and acquisitions, internationalization, and resource allocation across multiple business units. Students will analyze real-world cases to understand how strategic direction is set at the highest level, the role of corporate governance, and how companies respond to evolving market dynamics. Emphasis is placed on the formulation and implementation of strategies that shape the scope and structure of organizations in rapidly changing environments.
Recommended Textbook Strategic Management Concepts BRV 1st Edition by
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Page 2
Jeffrey H. Dyer
Chapter 1: What Is Business Strategy?
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Q1) Appetit Corp.is a famous deli in the metropolitan city of Atika.The company became popular because of its consistency in the quality of bread it provided and its creativity in adding unique elements to create different flavors.One of Appetit's products is an infusion of peanut butter and barbeque sauce filled in a bun.Appetit Corp.also engages its customers in contests that ask them to make their own unique variety of bread, which later features among the company's products with the winner's name.All these factors have helped to create unique value that keeps its customers coming back for more.This scenario best illustrates Appetit Corp.'s _____.
A) capabilities
B) substitutes
C) values
D) resources
Answer: A
Q2) What does the term cost advantage mean?
Answer: It is an advantage that a firm has over its competitors in the activities associated with producing a product or service, thereby allowing it to produce the same product at lower cost.
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Chapter 2: Analysis of the External Environment: Opportunities and Threats
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Q1) WillowWorks LLC, a retail clothing store, has been sourcing its raw materials from a supplier named ThreadTym Corp.for the last five years.A change of management at ThreadTym resulted in an increase of the prices of the raw materials.As a result, WillowWorks purchases ThreadTym so that it can produce these products on its own.This scenario best illustrates _____.
A) network effect
B) forward integration
C) backward integration
D) switching cost
Answer: C
Q2) Royalz Inc.is an automobile company that requires a lot of raw material to manufacture its cars.Royalz Inc.buys these raw materials from other companies that sell car parts as products.From which of the following does Royalz Inc.source its inputs?
A) Producers
B) Customers
C) Suppliers
D) Employees
Answer: C
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Chapter 3: Internal Analysis: Strengths, Weaknesses, and Competitive Advantage
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Q1) All assets, capabilities, organizational processes, firm attributes, information, knowledge, and so on, controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness most accurately defines the term _____.
A) priorities
B) capabilities
C) resources
D) functions
Answer: C
Q2) Which of the following is true of a tangible resource?
A) It is an economically valuable asset such as brands and patents.
B) It has a physical presence such as land, machinery, and cash.
C) It includes employee and management skills and talents.
D) It includes organizational assets like knowledge and reputation.
Answer: B
Q3) Define resources.
Answer: Resources are what a firm employs to create value and competitive advantage.
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Chapter 4: Cost Advantage
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Q1) Blaze Corp., a car company, shared its costs of producing cars.It did so by introducing the production of car accessories that are used by customers to upgrade or customize their cars.Blaze Corp.started selling car accessories such as engine oils, wheels, and music player and thus shared its market research costs between cars and car accessories.This led to a definite decrease in the overall cost of production.This scenario best illustrates _____.
A) economies of scale
B) economies of finance
C) economies of wealth
D) economies of scope
Q2) The increased efficiency that results when employees perform a narrow range of tasks over and over again leading them to acquire specialized knowledge that helps them complete the task more efficiently accurately defines the term _____.
A) competitive parity
B) minimum efficient scale
C) task specialization
D) employee specialization
Q3) Information that is not public and that is viewed as the property of the holder is called _____.
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Chapter 5: Differentiation Advantage
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Q1) When firms rely on brand image to differentiate products, some of them associate their products with positive qualities in the minds of customers.These are known as
A) prestige brands
B) convenient brands
C) utility brands
D) functional brands
Q2) Whenever customers of Black Inc., a mobile manufacturer, have a complaint to make about a product not being up to the mark, the company makes it a point to contact the customer or even go to their homes to understand the issue.The company believes that this will help retain customers and create better products.Which step of the consumption chain is this scenario depicting?
A) The third step: how do consumers make their final selections?
B) The fifth step: how is your product/service delivered?
C) The sixth step: how is your product/service paid for?
D) The ninth step: what if customers aren't satisfied and need a return or exchange?
Q3) Explain product differentiation.
Q4) _____ is grouping customers based on similar needs.
Q5) What is customer segmentation? Mention the three types of customer segmentation.
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Chapter 6: Corporate Strategy
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Q1) Zia, the CEO of Indigo Corp., states that it is essential to diversify the company into new markets and to create new products.She believes that it is important and profitable to tap new customer bases and challenging markets as this experience will help the company grow financially as well as expand its knowledge base on strategic management.Which of the following statements strengthens Zia's belief?
A) Moderate diversification pays off but very high levels of diversification will lead to lower levels of performance.
B) The company will not be able to provide the same value and customer satisfaction when segmented.
C) Diversification will create a loss of revenue if the parent company decides to segment itself to different markets.
D) Diversification will reduce the company's overall cost of producing goods and services.
Q2) How does a related-constrained diversification differ from a related-linked diversification?
Q3) What are the two challenges related to acquisition premium that an acquiring firm faces when acquiring a target firm?
Q4) How does diversification help exploit existing customer-facing resources?
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Chapter 7: Vertical Integration and Outsourcing
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Q1) The sequence of all activities that are performed by a firm to turn raw materials into a finished product that is sold to a buyer best describes the term _____.
A) product line
B) task specialization
C) virtuous circle
D) value chain
Q2) Teal Motors Inc., an automobile company, outsources the manufacturing of most of the automobile parts to several other companies that specialize in making parts such as ignition boxes, coil wires, and grills.Teal Motors makes sure to get these parts manufactured at a much lesser rate than it would if it manufactures its own parts.In this scenario, Teal Motors Inc.is effectively avoiding a _____.
A) loss of identity
B) loss of frequency
C) loss of facility
D) loss of focus
Q3) What is the main difference between a company that is vertically integrated and a company that is vertically specialized?
Q4) What are some of the advantages of outsourcing?
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Chapter 8: Strategic Alliances
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Q1) Victor Corp., a high-end mobile manufacturer that targets business people, decides to increase its customer base.It forms a strategic alliance with Gray Inc.to produce new instruments designed to attract students.Gray helps design products that change how Victor is perceived by young customers.Which of the following is the primary objective of this strategic alliance?
A) To source inputs or activities that create more productivity
B) To source inputs or activities that influence the brand
C) To source inputs or activities that reduce the total costs
D) To source inputs or activities that increase productivity of existing products
Q2) John requires 500 shirts of a particular fabric and quality.He partners with Loumang Inc., a fabric manufacturing company, to develop certain customized inputs.Which of the following is being exemplified in this scenario?
A) A licensing agreement
B) A supply agreement
C) A distribution agreement
D) A profit agreement
Q3) What are the different types of nonequity alliances?
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Chapter 9: International Strategy
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Q1) Which of the following statements is true about a firm that adopts a global strategy?
A) It tailors its products and operations to individual markets.
B) It focuses on customer needs and preferences rather than standardization.
C) It focuses on economies of scale and leveraging firm capabilities.
D) It uses a different strategy in each of the countries where it competes.
Q2) What are the three primary strategies that firms can use to do business internationally?
Q3) Which of the following is most likely to be categorized as a market risk associated with entering a new market?
A) The local government introducing tariffs on foreign products
B) The local government requiring a certain percentage of managers to be locals
C) The currencies of countries fluctuating significantly when compared to the U.S. dollar
D) The distribution process being different from that in the United States
Q4) _____ is the need to tailor an organization's products, marketing, and distribution strategies to the local customers in a foreign country.
Q5) Granting another business the permission to use or sell a firm's product, technology, or process is called _____.
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Chapter 10: Innovative Strategies That Change the Nature of Competition
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Q1) Which of the following statements is true of the cross-sell strategy?
A) It focuses on a small product user base.
B) It offers premium features to free users.
C) It requires a high conversion rate.
D) It uses discounts to gain widespread initial use.
Q2) An automobile manufacturer creates high-performance products, which are new in the market.Since the product offers features that are unique, customers were willing to pay a high price for the product.However, after a couple of months, other brands offered the same features at a lower price, which made the innovators reduce the price as well.Which of the following innovations is being exemplified in this scenario?
A) A disintermediation strategy
B) A low-end disruptive innovation
C) A customization strategy
D) A high-end disruptive innovation
Q3) A(n) _____ describes the creation of a unique or novel concept, method or process that is often turned into a tangible outcome.
Q4) Define two general categories of innovations.
Q5) Explain the four stages of the product life cycle.
Q6) Creating new demand in an uncontested market space is called the _____.
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Chapter 11: Competitive Strategy
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Q1) An organization watches it rivals closely and chooses actions that mimic what its rivals are doing.This is an example of a _____.
A) structural analysis
B) tit-for-tat strategy
C) parallel game
D) simultaneous game
Q2) An insurance company has procured all the capacity available in its market for $100 million.Thus, the company has placed a lock on the resources that other firms may require to develop their products.Which of the following is being exemplified in this case?
A) A tit-for-tat strategy
B) A limited competitive access to scarce resources
C) A low-end disruptive innovation
D) The Nash equilibrium
Q3) Briefly describe competition under monopoly.
Q4) Which of the following statements is true about strategic groups?
A) They identify allies in business groups.
B) The firms within each group are unlikely to target the same customer segment.
C) The firms within each group compete in similar ways.
D) They exclude rivals who share a similar business model.
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Chapter 12: Implementing Strategy
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Q1) Porben Inc., a specialist educational firm, targets public universities, job fairs, and job portals during its recruitment process.It provides on-the-job training to the new employees of the company.In the context of the 7 S model of organizational alignment, which of the following is exemplified in this case?
A) Structure
B) Strategy
C) Style
D) Staffing
Q2) _____ begins when leaders recognize and publicly admit that the current situation is not producing acceptable or adequate results.
Q3) Reyes Corp., an event management firm, permits its employees to dress up for work in shorts, T-shirts, and flip-flops.In the context of the 7 S model of organizational alignment, which of the following is exemplified in this case?
A) Structure
B) Strategy
C) Skills
D) Style
Q4) Write a note on the principle of line of sight.
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Chapter 13: Corporate Governance and Ethics
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Q1) _____ are those values that define for an individual, group, or society things that are morally right or wrong.
Q2) A _____ is a formal declaration of a company's core values, business objectives, and ethical aspirations.
Q3) Which of the following statements is true of corporate culture?
A) An organization's culture, by itself, can be regarded as good.
B) Culture proves to be very weak because it cannot inform action without the need for supervision.
C) Put simply, culture is just how things are done in any organization.
D) It consists of behavioral assumptions that are considered inappropriate for organizational members.
Q4) Monica is a senior interior designer who works at 360 Marks Inc.As part of her compensation package, she is entitled to 2,000 shares of the company at $30 each.In this scenario, the type of compensation offered can be termed as a(n) _____.
A) stock option
B) stock grant
C) tender offer
D) initial grant
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Chapter 14: Strategy and Society
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Q1) Nick and Juliet work in an online retailing firm in Chicago.Nick believes that a company's primary social responsibility is economic in nature while Juliet believes that its primary responsibility is to contribute to the enhancement of the community in which it operates.Which of the following statements, if true, strengthens Nick's belief?
A) To thrive and grow, a firm must meet its philanthropic responsibilities.
B) Economic responsibility can be viewed as an obligation only if we view the firm as a contributing citizen to the communities in which it operates.
C) Unless a firm produces profitable products and becomes a sustainable contributor in society, all its other responsibilities fade away.
D) To survive a firm must meet its legal and ethical obligations before fulfilling the other obligations.
Q2) Differentiate between institutional change and capacity building.
Q3) _____entails transferring the ability to effectively perform tasks from one organization to another.
Q4) _____ refers to the simultaneous creation of economic value and social value for the larger community in which a business operates.
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