Corporate Strategy
Textbook Exam Questions
Course Introduction
Corporate Strategy explores the formulation and implementation of strategies that guide organizations in achieving long-term success and sustainable competitive advantage. This course examines key concepts such as industry analysis, resource-based theory, corporate diversification, vertical integration, mergers and acquisitions, and strategic alliances. Students will analyze real-world case studies to understand how leading firms make decisions regarding scope, structure, and direction in complex and dynamic environments. Emphasis is placed on integrating analytical frameworks with practical decision-making skills to address challenges faced by top management teams in various industries.
Recommended Textbook
Strategic Management 4th Edition by
Frank Rothaermel
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12 Chapters
1217 Verified Questions
1217 Flashcards
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Chapter 1: What Is Strategy
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Sample Questions
Q1) Managers should create two sets of core values, one for employees and one for themselves.
A)True
B)False
Answer: False
Q2) Product-oriented vision statements are better suited than customer-oriented vision statements for helping companies to adapt to changes in the external environment.
A)True
B)False
Answer: False
Q3) When do employees fail to adopt the organizational values of a firm?
A) when the internal stakeholders of the firm are involved in designing the values
B) when the top managers in the firm are merely paying lip service to the firm's stated values
C) when the strategic leaders in the firm propagate and exhibit the same values
D) when the organizational structure, such as its strategic decision making, is aligned with its values
Answer: B
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Chapter 2: Strategic Leadership: Managing the Strategy Process
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Sample Questions
Q1) Which of the following statements is true of corporate strategy?
A) The objective of corporate-level strategy is to ensure that the sum of the values of individual business units is greater than the overall corporate value.
B) A corporate strategy must be able to create synergies across business units that are quite different.
C) Formulating a corporate strategy involves general managers answering questions relating to how to compete in order to achieve superior performance.
D) Deciding whether to adopt a differentiation or a cost-leadership strategy is part of formulating the corporate strategy.
Answer: B
Q2) An employee lacking some of the innate abilities to be a top-level manager can still become an effective strategic leader through hard work and experience. A)True
B)False Answer: True
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Chapter 3: External Analysis: Industry Structure,
Competitive Forces, and Strategic Groups
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Q1) While implementing strategic group mapping for the U.S. domestic airline industry, two strategic groups become apparent: low-cost, point-to-point airlines (Virgin Atlantic, Alaska Airlines, JetBlue, and Southwest Airlines) versus differentiated airlines using a hub-and-spoke system (American, Delta, and United). Which of the following statements is true about these two strategic groups?
A) Competitive rivalry between Virgin Atlantic and JetBlue is likely to be higher than that between American and Southwest Airlines.
B) American, United, and Delta Airlines will be affected differently by Porter's five competitive forces.
C) Alaska Airlines and Delta Airlines will be affected by the external environment in very similar ways.
D) Competitive rivalry between Virgin Atlantic and Delta Airlines is likely to be higher than that between American, Delta, and United.
Answer: A
Q2) Firms within the same industry automatically belong to the same strategic group.
A)True
B)False
Answer: False
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Chapter 4: Internal Analysis: Resources, Capabilities, and Core Competencies
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Sample Questions
Q1) Salubre Pharmaceuticals invested $3.4 billion dollars to develop a new drug for individuals with diabetes. After Salubre receives FDA approval of the drug, its marginal cost to produce the drug for market will be
A) low.
B) high.
C) moderate.
D) unpredictable.
Q2) Provide examples of the secondary activities in a firm's value chain.
Q3) Threadbare Industries is a new high-end textile company that has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Threadbare Industries to acquire using its capital?
A) a new CEO
B) software
C) a lease for a new building
D) brand name
Q4) Elaborate on the drawback of SWOT analysis with the help of an example.
Q5) Briefly describe the VRIO framework.
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Q6) Explain how the activities of a firm help in achieving a competitive advantage.
Chapter 5: Competitive Advantage, Firm Performance, and Business Models
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Q1) How does a sustainable strategy typically help a firm?
A) It helps the firm focus solely on its financial goals.
B) It reduces the need for corporate social responsibility within the firm.
C) It facilitates the firm in effectively isolating its external stakeholders.
D) It helps the firm achieve positive results along the social and ecological dimensions.
Q2) The value a consumer attaches to a product or service is captured in the A) least price a consumer is willing to pay for it.
B) consumer's maximum willingness to pay for it.
C) expenses incurred by the firm in manufacturing it.
D) difference between the price charged for it and the cost to produce it.
Q3) ________ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.
A) Economic value created
B) Break-even point
C) Consumer surplus
D) Cost of capital
Q4) What are the advantages of the balanced scorecard?
Q5) List the dimensions on which a firm can create greater economic value.
Q6) What is the relationship between producer surplus and consumer surplus?
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Chapter 6: Business Strategy: Differentiation, Cost
Leadership, and Blue Oceans
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Q1) A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the
A) differentiator is able to create a significant difference between perceived value and current market prices.
B) differentiator is able to significantly reduce the value gap.
C) source of a competitor's differential appeal is tangible rather than intangible. D) new product features added raise costs but not the perceived value in the minds of consumers.
Q2) Swan Song is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Swan Song is following a
A) product diversification strategy.
B) liquidation strategy.
C) broad differentiation strategy.
D) focused differentiation strategy.
Q3) List how economies of scale contribute to a firm.
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Chapter 7: Business Strategy: Innovation, Entrepreneurship, and Platforms
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Sample Questions
Q1) Social entrepreneurs forego the pursuit of profits to achieve social and environmental goals.
A)True
B)False
Q2) Which of the following scenarios best exemplifies a platform business?
A) Devin purchases electronic parts from a variety of vendors and assembles them into inexpensive MP3 players that he sells to consumers.
B) Myra operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy.
C) Raul operates a consulting firm in which businesses hire him to assess deficiencies in their organizational culture.
D) Gena founded a bike-based transportation company that offers environmentally-friendly rides to customers within a 25-mile radius.
Q3) Explain some of the features of the introduction stage of the industry life cycle.
Q4) Describe network effects and their potential to help or hurt a platform business.
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Chapter 8: Corporate Strategy: Vertical Integration and Diversification
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Sample Questions
Q1) What is a conglomerate? How does it benefit from a diversification strategy?
Q2) How is an equity alliance different from a joint venture?
A) An equity alliance involves ownership that facilitates transaction-specific ventures; a joint venture involves taking ownership by buying stock.
B) An equity alliance involves taking ownership in a partner; a joint venture involves two or more entities owning a firm.
C) An equity alliance involves taking ownership in a partner; a joint venture involves taking ownership by buying stock.
D) An equity alliance involves partners contributing equity to a joint venture; a joint venture involves two or more entities owning a firm.
Q3) Which of the following best illustrates site specificity?
A) equipment necessary for mining bauxite and aluminum smelting
B) bottling machinery to manufacture bottles with trademarked shapes
C) investment made in human capital to master procedures of a specific organization
D) investment made to train employees to operate computers
Q4) Discuss the application of the core competence-market matrix.
Q5) Describe the two types of vertical integration along the industry value chain.
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Chapter 9: Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions
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Q1) Why do firms make acquisitions? Provide an example of how a successful acquisition increased or protected shareholder value.
Q2) Although Disney acquired Pixar through a hostile takeover, the merger has proven extremely profitable for both entities.
A)True
B)False
Q3) What is meant by managerial hubris? In what forms does it appear?
Q4) Fabulous Jewelry Inc. is considering a takeover of its competitor, Cranberry Dream Jewelry LLC. In general, Fabulous should go ahead with the acquisition as long as Cranberry is more valuable as a continued standalone company than it would be inside Fabulous.
A)True
B)False
Q5) Define horizontal integration and provide a successful or unsuccessful example.
Q6) Which of the following statements is true of joint ventures?
A) They enable the exchange of both tacit and explicit knowledge.
B) They reduce the possibilities of trust and commitment.
C) They are characterized by single reporting lines.
D) They cannot entail long negotiations.
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Chapter 10: Global Strategy: Competing Around the World
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Q1) Bejukistan Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country
A) is a world leader in the pharmaceutical industry.
B) has nationalized the pharmaceutical industry.
C) has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry.
D) is a potential foreign market for multinational pharmaceutical companies to sell their products.
Q2) Which of the following describes a firm in the Globalization 1.0 stage?
A) Asha Inc. had a large office in New York, which was one cog in a global network.
B) Asha Inc. had a large office in New York, which functioned with other large offices in Europe and Asia.
C) Asha Inc. had a base office in New York and a replica office in Amsterdam.
D) Asha Inc. had a base office in New York and distributed some of its products overseas.
Q3) What products and industries does geographic distance affect the most?
Q4) How do firms make decisions to pursue a global strategy?
Q5) When should a firm choose exporting as a foreign entry mode?
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Page 12
Chapter 11: Organizational Design: Structure, Culture, and Control
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Sample Questions
Q1) What are the characteristics of organic organizations?
Q2) Which of the following types of groups is most susceptible to groupthink?
A) a diverse group
B) a cohesive group
C) a heterogeneous group
D) a decentralized group
Q3) Which of the following statements is true of organizational culture?
A) Changes in culture are too frequent to have any impact on strategic implementation.
B) It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.
C) It is always better to focus on output control and performance than on organizational culture.
D) According to research, more than 50 percent of firms change culture successfully.
Q4) Describe a global matrix structure. Why do firms use it?
Q5) Discuss the not-invented-here syndrome with the help of an example.
Q6) What are the key elements of organizational structure? Define each element.
Q7) Discuss how a differentiation strategy is used with a functional structure.
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Q8) Discuss how a cost-leadership strategy is used with a functional structure.
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Chapter 12: Corporate Governance and Business Ethics
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Q1) Yelena, the CEO of Andron Inc., reports to the board of directors appointed by the shareholders of Andron. Based on shareholder suggestions, the board ties Yelena's compensation to the performance of Andron. Due to this pressure, Yelena begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. The reasons why the board ties Yelena's compensation to firm performance is to overcome
A) shareholder capitalism scenario.
B) inside director-outside director conflict.
C) fiduciary responsibility oversight.
D) principal-agent problem.
Q2) One way to foster ethical behavior in employees is to
A) avoid codifying organizational culture.
B) create a control system that encourages desired values.
C) view clients as counter parties to transactions.
D) align the vision statement of the organization with its informal culture.
Q3) Describe the role of outside directors as part of a company's board of directors.
Q4) How does Nobel laureate Milton Friedman's view of the firm's social obligations tie in with shareholder capitalism?
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