Corporate Strategy
Test Questions
Course Introduction
Corporate Strategy focuses on the formulation and implementation of strategies that determine the long-term direction, scope, and performance of organizations operating in multiple businesses or markets. This course explores key concepts such as diversification, mergers and acquisitions, strategic alliances, vertical integration, and portfolio management. It emphasizes the analysis of industry dynamics, evaluation of corporate resources and capabilities, understanding problems of governance and coordination, and the challenges of creating value across different business units. Through case studies and strategic frameworks, students learn to critically assess corporate-level decisions and design strategies that drive sustainable competitive advantage and organizational growth.
Recommended Textbook
Strategic Management Theory and Cases An Integrated Approach 12th Edition by Charles W.
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L.
Chapter 1: Strategic Leadership: Managing the
Strategy-Making Process for Competitive Advantage
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Sample Questions
Q1) A component of strategy implementation is:
A) designing the best organization structure, culture, and control systems to put a strategy into action.
B) providing the number and kind of periodic reports that must be submitted by functional-level managers.
C) defining the goals and objectives of the organizations.
D) answering the question, "What is our business?"
E) eliminating the feedback loop.
Answer: A
Q2) More people seem to fear a snake bite than a dog bite, and yet statistically one is more likely to be bitten by a dog than by a snake. This is because people tend to estimate the probability of an outcome based on how easy the outcome is to imagine. This represents which of the following cognitive biases?
A) Escalating commitment
B) Hypothesis bias
C) Availability error
D) Representativeness
E) Illusion of control
Answer: C
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Sample Questions
Q1) When shopping for clothing such as shirts and jeans, Tyrone only buys products from Eastern Clothing Company even if there are several other companies that offer similar products at lower prices. Tyrone's preference for Eastern Clothing Company demonstrates:
A) lack of demand.
B) bargaining power.
C) risk of entry.
D) brand loyalty.
E) lack of economies of scale
Answer: D
Q2) Brand loyalty can be created by:
A) minimal advertising.
B) not using patents to protect products.
C) cutting the costs for research and development.
D) emphasizing high product quality.
E) minimizing after-sales service
Answer: D
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Sample Questions
Q1) Distinctive competencies are firm-specific strengths that allow a company to differentiate its products and achieve substantially lower costs than its rivals.
A)True
B)False
Answer: True
Q2) The intellectual property of an organization is a(n):
A) tangible resource.
B) strategic commitment.
C) tangible capability.
D) barrier to change.
E) intangible resource.
Answer: E
Q3) The ability of established competitors to imitate the competitive advantage of a rival is limited by factors such as existing strategic commitments and low absorptive capacity.
A)True
B)False
Answer: True
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Chapter 4: Building Competitive Advantage Through Functional-Level Strategies
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Sample Questions
Q1) Pay for performance based on individual accomplishment of goals tends to:
A) increase per-unit costs.
B) decrease employee productivity.
C) increase employee output.
D) have little effect on employee output.
E) facilitate teamwork.
Q2) No matter how complex the task is, learning effects typically die out after a limited period of time.
A)True
B)False
Q3) Which of the following does the philosophy underlying TQM include?
A) Greater quantity results in cost decreases.
B) Better quality leads to higher market share.
C) Greater quantity increases a company's profitability.
D) Opinions of employees are irrelevant in manufacturing products.
E) Work standards should only be defined as numbers or quotas.
Q4) Strong brand loyalty leads to more sales and the ability to charge higher prices.
A)True
B)False
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Chapter 5: Business-Level Strategy
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Q1) The advantage that focused companies have over their broad market rivals is that they:
A) can sells on non-price factors, such as design or customer service.
B) can respond to demands for deep price discounts.
C) sell fewer products in bulk to outsell their rivals.
D) can initiate a price war in order to grow volume and drive its weaker rivals out of the industry.
E) can absorb cost increases that may be passed on downstream by powerful suppliers.
Q2) A low-cost position is most appropriate when:
A) the power of buyers is low and barriers to entry are high.
B) economies of scale are relatively unimportant in manufacturing products.
C) customers have very different needs and uses for the industry's products.
D) product innovation is the key competitive factor.
E) industry rivalry is high and customers are very sensitive to prices.
Q3) Market segmentation refers to the process of subdividing a market into clearly identifiable groups of customers with similar needs, desires, and demand characteristics.
A)True
B)False
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Chapter 6: Business-Level Strategy and the Industry Environment
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Sample Questions
Q1) Tom tends to be ignorant about technological advancements. He was reluctant to own a smartphone even when they were well-established and familiar in the market. However, Thomas slowly got used to the idea of a smartphone when his job demanded him to be connected to the office network all the time. Thomas is most likely to fall under which of the following categories of customers?
A) Early majority
B) Late majority
C) Laggards
D) Early adopters
E) Innovators
Q2) An industry moves from embryonic to growth stage when:
A) the sales of complementary products decline.
B) the production costs increase.
C) companies manufacture products in very small quantities.
D) ongoing technological progress makes its product easier to use.
E) mass markets for its products decline.
Q3) Development of a mass market is the stimulus for an industry to change from growth to embryonic.
A)True
B)False
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Chapter 7: Strategy and Technology
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Q1) Microsoft's near monopoly substantially reduces the risks facing the makers of complementary products and the costs of those products.
A)True
B)False
Q2) What are technical standards, why are they important, and how are they established?
Q3) Network effects arise in industries where the size of the "network" of complementary products is a primary determinant of demand for an industry's product.
A)True
B)False
Q4) Antibody Solutions is a company that specializes in cell-bank storage, and producing antibodies for bacterial and viral infections. It is not considered a high-tech company since it is not technically in the computer or software industry, which is typically considered high-tech.
A)True
B)False
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Chapter 8: Strategy in the Global Environment
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Sample Questions
Q1) In the wireless telecommunications industry, different technical standards are found in different parts of the world. A technical standard known as GSM is common in Europe, and an alternative standard, CDMA, is more common in the United States and parts of Asia. Equipment designed for GSM will not work on a CDMA network and vice versa. Which of the following pressures for local responsiveness does this represent?
A) Global environmental demands
B) Host government demands
C) Differences in distribution channels
D) Differences in customer tastes and preferences
E) Differences in infrastructure
Q2) Which of the following is disadvantage of strategic alliances?
A) They give competitors a low-cost route to new technology and markets.
B) They do not facilitate entry into a foreign market.
C) They do not allow for sharing of risks and fixed costs.
D) They mandate that the companies do not share complementary competencies and assets.
E) They cause problems when it comes to establishing technological standards for the industry.
Q3) List and briefly describe each of the four basic global strategies.
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Q1) Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.
A)True
B)False
Q2) Vertical integration can strengthen a company's differentiation business-level strategy and competitive advantage.
A)True
B)False
Q3) The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.
A)True
B)False
Q4) Antitrust authorities:
A) favor large companies.
B) reduce industry competition.
C) are concerned with the abuse of market power.
D) tend to raise prices of products for consumers.
E) enable the achievement of market power.
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Chapter 10: Corporate-Level Strategy: Related and Unrelated
Diversification
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Q1) Which of the following entry strategies should be used when speed is an important consideration?
A) Internal new venture
B) Acquisition
C) Joint venture
D) Unrelated diversification
E) Related diversification
Q2) Which of the following is not necessary for a successful acquisition?
A) A good bidding strategy
B) A clear strategic rationale for making the acquisition
C) Quick completion of the acquisition
D) Thorough pre-acquisition screening
E) Post-acquisition audit to review the process and discuss ways to improve it
Q3) A company's top managers do not need to have entrepreneurial capabilities for diversification to increase profitability.
A)True
B)False
Q4) Free cash flow refers to additional funds from a government stimulus program.
A)True
B)False
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) Which of the following is NOT an accurate statement about current levels of pay for CEOs of U.S.-based firms?
A) CEOs also earn from the stock options that they grant to managers.
B) Empire building helps CEOs increase their earnings.
C) CEO compensation is closely tied to corporate performance in most firms.
D) CEO pay is rising more rapidly than pay for other workers.
E) The level of CEO compensation is determined by the corporate Board of Directors.
Q2) In order to reduce its production costs, Delta LLC has moved its manufacturing facilities to an under-developed country where there are few labor laws. The employees at the manufacturing facilities are children and teenagers, and they receive minimal wages. Which of the following ethical issues is illustrated in this scenario?
A) On-the-job consumption
B) Opportunistic exploitation
C) Self-dealing
D) Information manipulation
E) Substandard working conditions
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Chapter 12: Implementing Strategy Through Organization
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Q1) Organization architecture is the interaction of structure, controls & incentives, people, processes, and culture within the organization.
A)True
B)False
Q2) Control systems at higher levels of management should provide the basis for lower-level managers to design their control systems.
A)True
B)False
Q3) Which of the following does delayering involve?
A) Eliminating business units
B) Rethinking business processes
C) Creating more business units
D) Flattening the organizational hierarchy
E) Broadening the span of control
Q4) One of the main differences between a product team and a team in a matrix structure is that a matrix team is more permanent than a team in a product structure.
A)True
B)False
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