Strategic Management
Exam Materials
Course Introduction
Strategic Management is a comprehensive course that explores the formulation, implementation, and evaluation of cross-functional decisions that enable an organization to achieve its long-term objectives. Students learn about the concepts and tools used by managers to analyze competitive environments, assess internal capabilities, and develop strategies for sustainable competitive advantage. The course covers key topics such as industry and competitor analysis, corporate and business-level strategy, strategic leadership, and the impact of globalization and innovation on strategic choices. Through case studies and real-world examples, students develop critical thinking and analytical skills necessary for strategic decision-making in dynamic and complex organizational settings.
Recommended Textbook
Strategic Management Theory and Cases An Integrated Approach 12th Edition by Charles
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Page 2
W. L.
Chapter 1: Strategic Leadership: Managing the
Strategy-Making Process for Competitive Advantage
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Sample Questions
Q1) Identify the levels of strategic managers and discuss their role in the strategic management process.
Answer: The three levels of strategic managers are corporate, business, and functional. Corporate-level managers include the CEO, other senior executives, the board of directors, and corporate staff. The role of corporate-level managers is to oversee the development of strategies for the whole organization, including which businesses it should be in and how resources should be allocated among these businesses. Business-level managers oversee business units-a self-contained division of a company with its own functions that are performed within the unit. The role of business-level managers is to translate the general statements of direction and intent that come from corporate-level managers into concrete strategies for individual businesses. Functional-level managers are responsible for the specific business functions or operations that constitute a company or one of its divisions. These managers are generally responsible for one organizational activity. Their strategic role is to develop functional strategies in their area that help fulfill the strategic objectives set by businessand corporate-level managers.
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Sample Questions
Q1) The bottled water industry created new competitors for Coca-Cola, but it did not change the basic industry boundaries.
A)True
B)False
Answer: False
Q2) Philip Morris capitalized on the growing health consciousness trend when it acquired Miller Brewing Company, and then redefined competition in the beer industry with its introduction of low-calorie beer (Miller Lite). This health trend represents a _____force.
A) social
B) political
C) legal
D) technological
E) demographic
Answer: A
Q3) The risk of entry by potential competitors is a function of the height of the barriers to entry.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Sample Questions
Q1) Innovation refers to the act of:
A) seeking patent protection for new products.
B) creating new products and processes.
C) measuring time taken for a service to be provided.
D) measuring the output produced by an employee.
E) identifying and satisfying the needs of a customer.
Answer: B
Q2) Absorptive capacity refers to the ability of an enterprise to identify, value, assimilate, and use new knowledge.
A)True
B)False
Answer: True
Q3) The price a company charges for a good or service is typically more than the utility placed on that good or service by the customer.
A)True
B)False
Answer: False
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Chapter 4: Building Competitive Advantage Through Functional-Level Strategies
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Sample Questions
Q1) The "sigma" in the Six Sigma name refers to the Greek letter meaning standard deviation from the mean.
A)True
B)False
Q2) All else being equal, if a company moves down the experience curve faster than its rivals, it should realize a lower cost structure.
A)True
B)False
Q3) Unlike traditional manufacturing, flexible manufacturing:
A) decreases efficiency.
B) lowers unit costs.
C) limits an organization's ability to customize products.
D) allows the production of only standardized products.
E) limits an organization's ability to offer greater product variety.
Q4) A vital source of information about the causes of poor quality is the firm's own employees.
A)True
B)False
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Chapter 5: Business-Level Strategy
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Q1) A segmentation strategy requires that a company:
A) standardize its products.
B) offer its products at low costs.
C) customize its products.
D) produce one basic offering.
E) attain high economies of scale by achieving a high volume of sales.
Q2) When a company already has a low-cost structure, it has to give up a lot of differentiation in its product offering to get additional cost reductions.
A)True
B)False
Q3) A market segment consists of a group of:
A) similar products.
B) customers who have similar needs.
C) products that are considered obsolete.
D) diverse products produced by the same manufacturer.
E) customers who have diverse needs.
Q4) A company has a competitive advantage if it can increase costs relative to rivals.
A)True
B)False
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Chapter 6: Business-Level Strategy and the Industry Environment
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Q1) Competitive intensity in a declining industry is greatest when:
A) the industry is declining slowly instead of rapidly.
B) the product is easy to differentiate.
C) exit barriers are high.
D) entry barriers are high.
E) technology is stable.
Q2) In the embryonic stage of the industry life cycle, a company's investment needs and production costs are low.
A)True
B)False
Q3) Which of the following factors that affect market growth rates refers to the degree to which a new product is perceived as difficult to understand and use?
A) Complexity
B) Relative advantage
C) Compatibility
D) Trialability
E) Observability
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Chapter 7: Strategy and Technology
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Q1) Microsoft Word, the word-processing software, was so easy to use and had so many useful features, that no other software could compete with it. Therefore, at the time of its introduction, Microsoft Word could be described as a killer application.
A)True
B)False
Q2) Venus Corp. a high-technology, gadget-making company has introduced a gaming console with attractive features. Even though the console is priced modestly and has better features than the existing ones, it has failed as many customers are apprehensive about buying it. In order to create demand, Venus Corp. should:
A) price the console extremely high.
B) create its own set of technical standards.
C) ensure that there are adequate complementary products.
D) use minimalistic and subtle advertising and marketing strategies.
E) avoid licensing the format to other companies.
Q3) It is important for a company to make sure that, in addition to the product itself, there is an adequate supply of complements to win a format war.
A)True
B)False
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Chapter 8: Strategy in the Global Environment
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Q1) Which of the following statements is true about transnational strategy?
A) It gives little emphasis to cost reduction and achieving scale economies.
B) It makes little sense when the pressures for local responsiveness are intense.
C) It is an easy one to pursue because it places minimal demands on the company.
D) It fosters a flow of competencies between different subsidiaries in the company's global network of operations.
E) It is adopted by companies that produce standardized goods that do not require product differentiation.
Q2) Factor endowments, the cost and quality of factors of production, are a prime determinant of the competitive advantage that certain countries have in certain industries.
A)True
B)False
Q3) An international strategy may not be viable in the long term, but companies that can pursue it need to shift toward a global standardization strategy to survive.
A)True
B)False
Q4) 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) In a strategic alliance, one company in the agreement benefits more than the other. A)True
B)False
Q2) Long-term contracts:
A) are preferable to short-term contracts when there is a minimal need for cooperation.
B) are preferable to vertical integration when it is not feasible to exchange hostages. C) generally result in lower prices than competitive bidding.
D) achieve exactly the same outcomes as vertical integration, but they incur higher bureaucratic costs.
E) are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.
Q3) Managers use corporate-level strategy to identify which industries a company should compete in to maximize long-run profitability.
A)True
B)False
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Chapter 10: Corporate-Level Strategy: Related and Unrelated
Diversification
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Q1) The three main types of diversification strategies are:
A) acquisitions, joint ventures, and divestments.
B) acquisitions, mergers, and buy outs.
C) acquisitions, internal new ventures, and joint ventures.
D) related acquisitions, unrelated acquisitions, and mergers.
E) joint ventures, strategic alliances, and long-term contracts.
Q2) What is perhaps the most important reason why acquisitions fail?
A) The expense of the acquisition
B) The timing of the acquisition
C) Management's unwillingness to make the necessary effort to make the acquisition work effectively
D) Incompetence on the part of workers in the acquired firm
E) Difficulties in coordinating manufacturing activities
Q3) When a firm does not pay out its free cash flow to its shareholders, the shareholders bear an opportunity cost equal to their next best use of those funds.
A)True
B)False
Q4) What are the two general types of diversification and when would one be preferred over the other?
Page 12
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) Alpha LLC is a large paint manufacturing company. Despite government regulations, the company has been illegally disposing of its chemical wastes in a lake, which is an important habitat for several fish and birds. Which of the following ethical concerns is illustrated in this scenario?
A) On-the-job consumption
B) Opportunistic exploitation
C) Environmental degradation
D) Self-dealing
E) Substandard working conditions
Q2) Stockholders receive a return on their investment in a company's stock from dividend payments and capital appreciation.
A)True
B)False
Q3) Explain the principles of agency theory, including the issues it addresses. What are some effective ways to deal with agency problems, as implied or stated by agency theory?
Q4) All stakeholders have an exchange relationship with the company.
A)True
B)False
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Chapter 12: Implementing Strategy Through Organization
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Q1) Control systems can help managers evaluate how efficiently a company is producing goods and providing services.
A)True
B)False
Q2) When companies become too tall and the chain of command too long, strategic managers tend to lose control over the hierarchy and, subsequently, their strategies.
A)True
B)False
Q3) Effective organizational design can allow a company to obtain a competitive advantage, but it has no impact on profitability.
A)True
B)False
Q4) In a multidivisional structure, corporate managers can compare the performance of one division to another in terms of its cost structure or the profit it generates.
A)True
B)False
Q5) Identify and discuss the three building blocks of organizational structure.
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