Corporate Strategy
Exam Materials
Course Introduction
Corporate Strategy explores the frameworks, tools, and analytical approaches used by firms to achieve long-term organizational objectives and maintain competitive advantage on a broad scale. Emphasizing the interconnectedness of markets, resources, and business units, the course examines topics such as diversification, vertical integration, mergers and acquisitions, global expansion, and corporate governance. Through case studies and real-world examples, students learn to evaluate and formulate strategies that align with a company's mission, respond to dynamic environments, and drive sustainable growth across complex organizational structures.
Recommended Textbook Strategic Management and Competitive Advantage 6th Edition by Jay B. Barney
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12 Chapters
1185 Verified Questions
1185 Flashcards
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Page 2
Chapter 1: What Is Strategy and the Strategic Management Process
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Sample Questions
Q1) Applying accounting measures of competitive advantage for firms that are headquartered in different countries has become less challenging today with the globalization of business.
A)True
B)False
Answer: False
Q2) By conducting an external analysis,a firm identifies the critical threats and opportunities in the industry's competitive environment.
A)True
B)False
Answer: True
Q3) The center of Osterwalder and Pigneur's business model canvas is the A)parity point.
B)value proposition.
C)competitive advantage.
D)strategy box.
Answer: B
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Page 3
Chapter 2: Evaluating a Firms External Environment
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Sample Questions
Q1) ________ costs exist when customers make investments in order to use a firm's particular products or services.
A)First-mover-switching
B)Technological leadership-switching
C)Customer-switching
D)Process-switching
Answer: C
Q2) What is a harvest strategy?
Answer: In a harvest strategy,which is usually employed in a declining industry,the firm engages in a long,systematic withdrawal,extracting as much value as possible during the withdrawal period.This can work if there is some value to harvest.
Q3) The most promising opportunity for a firm in a declining industry is to
A)establish itself as a first mover in the post-shakeout industry.
B)become a market leader in the pre-shakeout industry.
C)become a fast follower in the pre-shakeout industry.
D)merge with another firm.
Answer: B
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Chapter 3: Evaluating a Firms Internal Capabilities
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Sample Questions
Q1) Which of the following statements regarding competitive parity and competitive advantage is accurate?
A)Some firms develop valuable,rare,and costly-to-imitate resources and capabilities in being efficient second movers,that is,in rapidly imitating and improving on the product and technological innovations of other firms.
B)Firms that benchmark their performance against the performance of successful competitors can expect to develop at least a temporary competitive advantage.
C)Firms must be first movers to gain competitive advantages.
D)Even if all a firm does is create value in the same way as its competitors,the firm can expect to earn at least a temporary competitive advantage.
Answer: A
Q2) The theoretical roots of the resource-based view can be traced to research done by
A)David Ricardo.
B)Adam Smith.
C)Oliver Williamson.
D)Joseph Schumpeter.
Answer: A
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Chapter 4: Cost Leadership
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Sample Questions
Q1) Sources of cost advantage that are unlikely to be rare include learning-curve economies,differential low-cost access to productive inputs and technological software.
A)True
B)False
Q2) As the volume of production in a firm increases,the average cost per unit decreases until some optimal volume of production is reached,after which the average costs per unit of production begin to rise because of diseconomies of scale.
A)True
B)False
Q3) If Lucy Sullivan were a Sematech manager who oversaw the finance operations in the company's functional structure,Lucy would be considered a
A)chief executive officer.
B)divisional manager.
C)chief operating officer.
D)functional manager.
Q4) Differentiate between business strategies and corporate strategies and define the nature of a cost-leadership strategy.
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6
Chapter 5: Product Differentiation
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Sample Questions
Q1) Products can be differentiated by the extent to which they are customized for particular customer applications.
A)True
B)False
Q2) In general,firms selling differentiated products face a demand curve that is A)upward sloping.
B)horizontal.
C)vertical.
D)downward sloping.
Q3) Given that the leather handbag market that Coach largely competes in can be considered a mature market,Coach should focus its product-differentiation efforts on A)exploiting a first-mover advantage as a basis of product differentiation.
B)introducing radically new technologies as a basis of product differentiation.
C)seeking a viable market niche that will enable it to survive.
D)refining products as a basis of product differentiation.
Q4) In the information technology business,interconnectivity is a relatively unimportant basis of potential product differentiation.
A)True
B)False
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Chapter 6: Flexibility and Real Options
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Sample Questions
Q1) Strategic options exist when firms have the obligation but not the ability to invest in a particular strategy.
A)True
B)False
Q2) How is the option to defer different from the option to contract?
Q3) What are stepping-stone options? What does a company do in a stepping-stone option?
Q4) What are positioning options? How are they different from scouting options?
Q5) Gambling at a casino is an example of a risky decision.
A)True
B)False
Q6) The lower the risk-free interest rate,the more valuable the option is.
A)True
B)False
Q7) An example of the option to contract is to use contract and temporary employees instead of full-time employees.
A)True
B)False
Q8) What are strategic options?
Q9) Why does present value analysis not work under conditions of uncertainty? Page 8
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Page 9
Chapter 7: Collusion
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Sample Questions
Q1) While a number of industry attributes have an effect on the level of opportunity for tacit collusion in an industry,none is more important than ________.
A)cost homogeneity
B)product homogeneity
C)the industry social structure
D)the existence of barriers to entry
Q2) General Electric's decision to focus on large electric generation turbines and Westinghouse's decision to focus on small electric generation turbines is an example of
A)differentiation
B)collaboration
C)segmentation
D)collusion
Q3) Positioning a firm's product so that it does not compete directly with the products of a colluding firm is an example of a ________ signal.
A)soft
B)tough
C)strategic
D)functional
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Page 10
Chapter 8: Vertical Integration
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Sample Questions
Q1) Outsourcing can help firms reduce costs and focus their efforts on those business functions that are central to their competitive advantage.
A)True
B)False
Q2) When companies developed their own software in the United States,they were engaging in backward vertical integration,but when they started using independent companies in India to develop these software,they were more vertically integrated.
A)True
B)False
Q3) If Digipics were to agree to spend a significant amount of money to establish a new assembly line for a large client,PicPro,that has unique needs that would make this assembly line largely useless for any other customer,the funds Digipics spent in establishing this line would be an example of
A)forward vertical integration.
B)backward vertical integration.
C)a transaction-specific investment.
D)opportunism.
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Chapter 9: Corporate Diversification
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Sample Questions
Q1) 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
Q2) Which type of economies of scope is Peach Computers experiencing between its units?
A)shared activities
B)core competencies
C)multipoint competition
D)tax advantages
Q3) Substitutes for exploiting economies of scope in diversification include
A)growing and developing independent businesses within a diversified firm and vertical integration.
B)vertical integration and strategic alliances.
C)growing and developing independent businesses within a diversified firm and strategic alliances.
D)strategic alliances and multipoint competition.
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Page 12
Chapter 10: Organizing to Implement Corporate Diversification
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Sample Questions
Q1) The transfer of intermediate products or services among divisions is usually managed through a transfer-pricing system.
A)True
B)False
Q2) Supervision of the board of directors in its monitoring role is the responsibility of
A)the CEO.
B)the chairman of the board.
C)the chief operating officer.
D)the president.
Q3) In ________ budgeting,corporate executives create a list of all capital allocation requests from divisions in a firm,rank them from "most important" to "least important" and then fund all the projects a firm can afford,given the amount of capital that is available and no project receives funding simply because it was funded in the past.
A)cost-plus
B)activity-based
C)zero-based
D)revenue-based
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Page 13
Chapter 11: Strategic Alliances
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Sample Questions
Q1) A(n)________ exists whenever two or more independent organizations cooperate in the development,manufacture,or sale of products or services.
A)vertical market
B)strategic alliance
C)initial public offering
D)market transaction
Q2) Sometimes the value of cheating in a joint venture is sufficiently large that a firm cheats even though doing so hurts the joint venture and forecloses future opportunities.
A)True
B)False
Q3) If,prior to entering the cooperative agreement with eBay,eBay's Korean partner stated that it had the technological capabilities to facilitate eBay's Korean auction business when,in fact,the Korean company did not have these capabilities,this would be an example of
A)adverse selection.
B)explicit collusion.
C)moral hazard.
D)holdup.
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Chapter 12: Mergers and Acquisitions
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Sample Questions
Q1) Identify the three potential sources of strategic relatedness between bidding and target firms that were detailed by Lubatkin in 1983 and the four general reasons why bidding firms might want to engage in merger and acquisitions as detailed by Jensen and Ruback in 1983.
Q2) Which of the following actions should bidding firm managers take to help earn superior performance in an acquisition strategy?
A)Share information with other bidders.
B)Delay the closing of the deal.
C)Avoid winning bidding wars.
D)Operate in competitive acquisition markets.
Q3) The market for corporate control is the market that is created when multiple firms actively seek to acquire one or several firms.
A)True
B)False
Q4) The value that a bidding firm brings to a target firm through an acquisition should be discounted by the cost of strategizing to implement an acquisition.
A)True
B)False
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