Corporate Strategy
Textbook Exam Questions
Course Introduction
Corporate Strategy explores the overarching strategic decisions that guide organizations in achieving long-term growth and competitive advantage. The course examines frameworks and tools for analyzing industry dynamics, formulating corporate objectives, and managing portfolios of businesses. Topics include diversification, mergers and acquisitions, strategic alliances, global expansion, and corporate governance. Through case studies and real-world examples, students learn to evaluate strategic options and develop coherent strategies that align with organizational vision and market opportunities. The course prepares students to think critically about resource allocation and strategic positioning in complex and dynamic business environments.
Recommended Textbook
Strategic Management 4th Edition by
Frank Rothaermel
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12 Chapters
1217 Verified Questions
1217 Flashcards
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Page 2
Chapter 1: What Is Strategy
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Sample Questions
Q1) 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
Q2) While creating its AFI strategy framework, Valdez Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?
A) business strategy
B) corporate strategy
C) global strategy
D) ethical strategy
Answer: B
Q3) The first step to gain and sustain a competitive advantage is to
A) define a firm's vision, mission, and values.
B) understand the strategies of the competitors.
C) put the guiding policies of a firm into practice.
D) develop functional and business-level strategies.
Answer: A
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3
Chapter 2: Strategic Leadership: Managing the Strategy Process
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Sample Questions
Q1) After carefully assessing the market potential for solar-powered mobile devices, the top-level executives of Futuretronics Inc. decided that the company would be launching a line of solar-powered tablets within the next two years. This would mean that the tablet division would need to immediately begin research and development efforts. Which of the following strategies in the planned emergence model does this best illustrate?
A) intended strategy
B) emergent strategy
C) unrealized strategy
D) tactical strategy
Answer: A
Q2) A firm's resource-allocation process (RAP) has very little effect on its realized strategy.
A)True
B)False
Answer: False
Q3) Define strategic leadership.
Answer: Strategic leadership pertains to executives' use of power and influence to direct the activities of others when pursuing an organization's goals.
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Chapter 3: External Analysis: Industry Structure,
Competitive Forces, and Strategic Groups
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Sample Questions
Q1) Because competitors in oligopolistic industries are so interdependent, it is especially important for managers in those firms to monitor and respond to changes their competitors make.
A)True
B)False
Answer: True
Q2) A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C).
A) strategic position
B) industry effects
C) advantage of the marketplace
D) industry analysis
Answer: A
Q3) Economies of scale are cost advantages that accrue for firms with
A) high fixed costs.
B) low employee turnover.
C) larger output.
D) high capital risks.
Answer: C
Page 5
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Chapter 4: Internal Analysis: Resources, Capabilities, and Core Competencies
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Sample Questions
Q1) Juanita, a manager at a multinational organization, is trying to carefully scan and link the firm's internal environment to its external environment. The insights from this analysis will allow her to effectively leverage the company's internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats. In this scenario, which of the following managerial tools is Juanita employing?
A) Blake Mouton managerial grid
B) Ansoff's matrix
C) BCG analysis
D) SWOT analysis
Q2) A firm will fail to create a sustained competitive advantage when the
A) fit between its internal strengths and the external environment is static.
B) source of its competitive advantage is causally ambiguous.
C) source of its competitive advantage is socially complex.
D) resource bundles exhibit heterogeneity and immobility.
Q3) Describe the core competencies of any three successful companies in today's business environment.
Q4) Describe causal ambiguity and provide an example of how it can act as a barrier against imitation of a firm's valuable resources.
Page 6
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Chapter 5: Competitive Advantage, Firm Performance, and Business Models
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Sample Questions
Q1) A high percentage of R&D/Revenue ratio indicates a(n)
A) strong focus on innovation to improve current products and services.
B) inefficiency in the management to focus on new products.
C) strong focus on marketing and sales to promote products and services.
D) negligent investment toward research and development.
Q2) A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the A) consumer surplus.
B) total return to shareholders.
C) customer lifetime value.
D) economic value created.
Q3) What is risk capital?
Q4) What pricing options does a firm have when the difference between V, the consumer's willingness to pay, and C, the cost to produce the good or service, is large?
Q5) What are the three financial ratios that constitute return on revenue, and what do they tell us?
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Q6) What are opportunity costs in general? What are the opportunity costs for entrepreneurs?
Chapter 6: Business Strategy: Differentiation, Cost
Leadership, and Blue Oceans
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Sample Questions
Q1) When Simple Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as?
A) minimum efficient scale
B) diseconomies of scale
C) experience curve effect
D) learning-curve effect
Q2) Which of the following is a firm effect that has an impact on the competitive advantage of a firm?
A) the exit barriers within the industry in which the firm operates
B) the number of companies operating in the industry in which the firm operates
C) the intensity of rivalry among existing companies in the firm's chosen industry
D) the value and the cost position of the firm relative to its competitors
Q3) Why are differentiation and cost-leadership strategies called generic strategies?
Q4) What are the two different generic business strategies available to firms?
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Chapter 7: Business Strategy: Innovation, Entrepreneurship, and Platforms
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Sample Questions
Q1) As a start-up company, DigiWrist entered the low end of the highly competitive smartwatch industry with its low-cost smartwatches. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartwatches in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?
A) radical innovation
B) incremental innovation
C) architectural innovation
D) disruptive innovation
Q2) Which of the following is an example of social entrepreneurship? The committee approved the new formula for an all-purpose cleaner because it
A) cleaned better than other cleaners and used easy-to-obtain ingredients.
B) cleaned better than other cleaners and did not cost more to produce.
C) cleaned as well as other cleaners and could be produced more efficiently.
D) cleaned as well as other cleaners and used organic ingredients.
Q3) 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) Decisions relating to the range of products and services a firm will offer determine the firm's
A) level of diversification.
B) geographic scope.
C) vertical integration.
D) absorptive capacity.
Q2) Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate?
A) diseconomies of scale
B) principal-agent problem
C) experience-curve effects
D) information asymmetries
Q3) A conglomerate receives less than 70 percent of its revenues from any single business and features a number of strategic business units that have little to no relationship with each other.
A)True
B)False
Q4) Discuss the various general diversification strategies available to a firm.
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Chapter 9: Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions
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Sample Questions
Q1) Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?
A) HP and DreamWorks each strengthened their separate markets without impinging on each other's markets.
B) Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone.
C) HP was able to enter a new market, and DreamWorks was able to strengthen its old market.
D) DreamWorks was able to enter a new market, and HP was able to strengthen its old market.
Q2) Although Disney acquired Pixar through a hostile takeover, the merger has proven extremely profitable for both entities.
A)True
B)False
Q3) What are the necessary conditions for selecting a partner for successful alliance formation?
Q4) How can strategists decide between borrowing and buying the resource in question?
Q5) How does horizontal integration help firms increase differentiation?
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Chapter 10: Global Strategy: Competing Around the World
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Sample Questions
Q1) Which of the following is a feature of the Globalization 2.0 stage?
A) Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks.
B) Only sales and distribution operations took place overseas, while all the important business functions were located in the home country.
C) Two-way knowledge flowed between the local subsidiaries and their U.S. headquarters.
D) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
Q2) Explain how the distance between two countries increases with geographic distance and economic distance.
Q3) MacAdam Enterprises sells the same sparkplugs in more than 30 countries. MacAdam is an example that helps to support the globalization hypothesis.
A)True
B)False
Q4) What are the implications of continued economic development across the globe for multinational enterprises (MNEs)? Explain using China as an example.
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Chapter 11: Organizational Design: Structure, Culture, and Control
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Sample Questions
Q1) What are multidivisional structures? How are they implemented?
Q2) Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by
A) introducing results-only-work-environments to tap intrinsic motivations.
B) refining the budgeting process to encourage more department collaboration.
C) updating standard operating procedures to allow more process flexibility.
D) using output controls only when the goal is to ensure a predictable outcome.
Q3) A firm that successfully balances exploitation of current opportunities and exploration of future possibilities is considered ambidextrous.
A)True
B)False
Q4) W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has
A) a formalized structure.
B) a decentralized structure.
C) organizational inertia.
D) a top-down management style.
Page 13
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Chapter 12: Corporate Governance and Business Ethics
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Sample Questions
Q1) How does a leveraged buyout affect a public company?
Q2) One of the most challenging aspects of principal-agent problems is that firms have almost no defenses against them.
A)True
B)False
Q3) Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company?
A) Based on a tip-off by a Goldman Sachs employee, the Galleon Group sold its holdings in Goldman Sachs' stocks prior to the announcement of missed earnings estimates.
B) GE knew that it could create a profitable venture out of producing green products, so it rolled out the Ecomagination strategy.
C) Mark Hurd, CEO of HP, was unaware of the sexual harassment allegations, and the board's demand for him to resign caught him by surprise.
D) Goldman Sachs followed through with the Abacus deal despite knowing its shortcomings.
Q4) Discuss the agency problem of adverse selection.
Q5) How can a manager decide whether a decision is ethical?
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