Corporate Strategy
Pre-Test Questions
Course Introduction
Corporate Strategy explores the formulation and implementation of strategies that determine the overall direction and scope of an organization within the context of a constantly evolving business environment. This course examines how firms create value across multiple businesses, leverage core competencies, manage diversification, pursue mergers and acquisitions, and respond to competitive pressures at the corporate level. Students will analyze case studies, engage in strategic decision-making exercises, and develop an understanding of how corporate leaders align resources, structure, and capabilities to achieve long-term objectives and sustain competitive advantage.
Recommended Textbook
Economics of Strategy 7th Edition by David Dranove
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15 Chapters
505 Verified Questions
505 Flashcards
Source URL: https://quizplus.com/study-set/2441
Page 2
Chapter 1: The Power of Principles: A Historical Perspective
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35 Verified Questions
35 Flashcards
Source URL: https://quizplus.com/quiz/48520
Sample Questions
Q1) What is throughput?
A)The movement of inputs and outputs through a production process
B)Assets that assist in the production or distribution of goods and services
C)A condition that determines the horizontal and vertical boundaries of business firms
D)An investment in the acquisition of raw materials
E)The amount of time for a good to travel between metropolitan areas
Answer: A
Q2) Which of the following did not contribute to the dominance of the family-run small business in 1840?
A)Factories
B)Laws
C)Raw Materials
D)Management
E)All of the above
Answer: E
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3
Chapter 2: The Horizontal Boundaries of the Firm
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) Consolidation of managers often occurs due to which of the following?
A)Increased compensation for senior managers
B)Lower costs in the vertical supply chain
C)Mergers and acquisitions
D)Increased political power of senior managers
E)Social prominence of middle magaers
Answer: C
Q2) By satisfying which of the following conditions can shareholders prevent management driven acquisitions?
A)If shareholders could determine which acquisitions will lead to increased profits and which will not
B)If shareholders could direct management to undertake only those acquisitions that will increase shareholder value
C)If shareholders could provide management with the appropriate steps to conduct when performing acquisitions
D)a & b
E)None of the above
Answer: D
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Chapter 3: The Vertical Boundaries of the Firm
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) Strong contract law aids the most in which of the following?
A)Incomplete contracts
B)Complete contracts
C)Negotiated contracts
D)Dual contracts
E)None of the above
Answer: A
Q2) Which of the following is a method firms can use to counteract price fluctuations and eliminate income risk?
A)Manufacture all needed inputs internally
B)Acquire upstream firms in the vertical chain
C)Enter into futures contracts to hedge the price of raw materials
D)Eliminate competitors by under-cutting their price
E)None of the above
Answer: C
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5
Chapter 4: Integration and Its Alternatives
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32 Verified Questions
32 Flashcards
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Sample Questions
Q1) What Japanese term describes a labyrinth of firms with long-term semi-formal relationships up and down the vertical chain?
A)Kaizen
B)Keiretsu
C)Kanban
D)Karõshi
E)Mochibun kaisha
Q2) Which of the following would reduce co-ordination and hold-up problems?
A)Cost of upstream vertical supplies
B)Manager contracts
C)Required quality of finished product
D)Governance
E)None of the above
Q3) The reduction of co-ordination and hold-up problems depends on:
A)Governance arrangements
B)Manager contracts
C)Required quality of finished product
D)Cost of upstream vertical supplies
E)None of the above
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Page 6
Chapter 5: Competitors and Competition
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31 Verified Questions
31 Flashcards
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Sample Questions
Q1) The causal connection between firms is known as the:
A)Market structure formula
B)Structure,Conduct,Performance paradigm
C)Competition index
D)Herfindahl Iindex
E)Concentration,Profit connection
Q2) Which U.S.agency is responsible for preventing anticompetitive conduct?
A)Securities and Exchange Commission
B)Department of Justice
C)Office of Fair Trading
D)Competition Commission
E)Competition Authority
Q3) In what type of market structure do sellers set identical prices and are prices generally driven down to marginal costs?
A)Perfect competition
B)Monopolistic competition
C)Oligopoly
D)Monopoly
E)Diversified
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Page 7
Chapter 6: Entry and Exit
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) How can incumbents legally erect entry barriers around novel and non-obvious products or production processes?
A)Copyrights
B)Exclusive franchise agreements
C)Patents
D)None of the above
E)All of the above
Q2) When is predatory pricing a most effective entry barrier?
A)When the incumbent has incurred them and the entrant has not
B)When incumbents have long-standing relationships with suppliers and customers
C)When channels are few and hard to replicate
D)When a firm has a reputation for toughness or competes in multiple markets
E)When marginal costs are low and flooding the market causes large price reductions
Q3) What was the cause of Walmart's exit from the German market?
A)Loss of a predatory pricing lawsuit
B)High tariffs on imported goods
C)Total revenue that failed to cover sunk costs
D)German regulations against foreign owned firms
E)None of the above
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Chapter 7: The Dynamics Competing Across Time
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) What term describes a decision that has a long-term impact and is difficult to reverse?
A)Dedicated investment
B)Strategic commitment
C)Critical choice
D)Market investment
E)Firm commitment
Q2) Which of the following terms describes the situation created by a large dominant firm where smaller firms can find buyers as long as they sustain a lower price?
A)Price umbrella
B)Price leading
C)Predatory pricing
D)Premium pricing
E)Price lining
Q3) Suppose Firm #1 dominates a market for widgets priced at $100/unit with a marginal cost of $60/unit.If Firm #2 enters the market and offers comparable widgets at a 3% discount,extending a price umbrella optimal as long as Firm #1 loses no more than what portion of its market share?
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9
Chapter 8: Industry Analysis
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) Which of the following is generally thought of as a buyer in the hospital industry?
A)Pharmaceutical drug houses
B)Medical equipment companies
C)Technician
D)Patients
E)Nurse
Q2) Why are suppliers in a competitive upstream market said to have "indirect power"?
A)They can sell their services to the lowest bidder
B)They are always concentrated
C)Their customers are always locked into relationships with them
D)The price they charge never depends on supply and demand in the upstream market
E)The can sell their services to the highest bidder
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10
Chapter 9: Strategic Positioning for Competitive Advantage
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) What kind of strategy is one by which a firm exploits its benefit or cost advantage through a higher market share rather than through high price-cost margins?
A)Pricing strategy
B)Share strategy
C)Margin strategy
D)Focus strategy
E)Generic strategy
Q2) What is the perceived benefit of a product per unit consumed minus the product's monetary price?
A)Value creation
B)Competitive advantage
C)Consumer surplus
D)Maximum willingness-to-pay
E)Value chain
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Chapter 10: Information and Value Creation
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) Why is advertising an effective signal of quality in an experience good?
A)Consumers are uninformed and need advertising to provide information
B)Advertising lists the qualities of a product
C)Consumers believe firms that can afford to heavily advertise sell quality products
D)Sellers can ignore low quality issues in their advertisements
E)Consumers believe advertising more than word of mouth information
Q2) Why would a report card that measures inputs possibly lead to multitasking?
A)Sellers would raise the price of goods with low quality inputs
B)Consumers would only know the "ingredients" in a production process
C)The cost of the report card would be passed on in lower product quality
D)Sellers may invest only in reported inputs but scale back on unreported inputs
E)Firms will not disclose poor report card scores
Q3) When consumers learn about one seller at a time it is known as a :
A)Simultaneous search
B)Parallel search
C)Serial search
D)Sequential search
E)Divided search
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Chapter 11: Sustaining Competitive Advantage
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) Which of the following is not an example of a way a seller can increase switching costs?
A)Creating a product line compatible with parts that are made by other manufacturers
B)Offering coupons that tie discounts to the completion of a series of transactions
C)Offering warranties if product is not serviced at authorized dealer
D)Bundling complementary products that fit together in a product line
E)Offering "frequent customer" points that tie promotions to the completion of a series of transactions
Q2) What term best describes a resource that cannot "sell itself" to the highest bidder?
A)Isolated
B)Value-creating
C)Scarce
D)Imperfectly mobile
E)Profit maximizing
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13
Chapter 12: Performance Measurement and Incentives
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33 Flashcards
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Sample Questions
Q1) What term best refers to a wage payment made to an agent that exceeds his opportunity cost of working and discourages the agent from shirking?
A)Living wage
B)Efficiency wage
C)Minimum wage
D)Efficiency payment
E)Termination wage
Q2) Which of the following is least likely a technique firms can use to mitigate the free-rider problem?
A)Firms can reduce the repeated interactions among team members so that actions depend less on what other members may have done in the past
B)Firms can keep teams small
C)Firms can allow employees to work together for long periods
D)Firms can structure teams so that their members can monitor one another's actions
E)Firms can use future periods of interaction and let natural team dynamics of peer pressure and social isolation take place as punishment for team members who have failed to contribute in the past
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14
Chapter 13: Strategy and Structure
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34 Flashcards
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Sample Questions
Q1) Which of the following terms involves the location of decision making rights and rule making authority within a hierarchy?
A)Complex hierarchy
B)Coordination
C)Control
D)Hierarchy of authority
E)Departmentalization
Q2) What type of organizational structure is one that is comprised of a set of autonomous divisions led by a corporate headquarters office,assisted by a corporate staff that provides information about the internal and external business environment?
A)Unitary functional structure
B)Multidivisional structure
C)Matrix structure
D)Network structure
E)Individual structure
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15
Chapter 14: Environment, Power, and Culture
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33 Flashcards
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Sample Questions
Q1) Which one of the following terms describes relationships in social networks in which one actor is the critical link between individuals or entire groups?
A)Structural hole
B)Missing link
C)Social connection
D)Network connection
E)Network link
Q2) Which of the following terms best describes ability that stems from the explicit contractual decision-making and dispute-resolution rights that a firm (or some other source)grants to an individual?
A)Power
B)Authority
C)Culture
D)Influence
E)Contracts
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Chapter 15: Economics Primer
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34 Flashcards
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Sample Questions
Q1) Suppose a firm's plant produces Q units in any given year.The plant itself operates with annualized costs of $10M and other annual fixed expenses totaling $3M.In addition,the firm's variable costs depend on Q and are given by the formula 5Q²+3Q.What is the formula for the firm's Short-Run (i.e.one year)Average Costs?
Q2) Which of the following would be an example of a good with elastic demand?
A)Bread
B)Work Shoes
C)Prescription medicine
D)Luxury speedboat
E)Raincoats in winter
Q3) Suppose a firm's plant produces Q units in any given year.The plant itself operates with annualized costs of $10M and other annual fixed expenses totaling $3M.In addition,the firm's variable costs depend on Q and are given by the formula 5Q²+3Q.What is the formula for the firm's Average Fixed Costs?
Q4) Suppose a firm's plant produces Q units in any given year.The plant itself operates with annualized costs of $10M and other annual fixed expenses totaling $3M.In addition,the firm's variable costs depend on Q and are given by the formula 5Q²+3Q.What is the formula for the firm's Average Variable Costs?
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