Strategic Management Exam Review
Course Introduction
Strategic Management is a comprehensive course that explores the formulation, implementation, and evaluation of cross-functional decisions that enable organizations to achieve their long-term objectives. Focusing on both theoretical frameworks and practical applications, this course covers environmental analysis, business-level and corporate-level strategy development, competitive advantage, and strategic leadership. Students will engage in case studies and real-life scenarios to critically analyze the strategic initiatives of both domestic and global organizations. The course aims to equip students with analytical tools and decision-making skills to address complex business challenges and drive organizational success in dynamic markets.
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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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking?
A) No firm would face direct competition from others in the industry; hence, profit potential would be high.
B) Each firm would be catering to a different customer segment.
C) The firms would eventually have no resources to invest in product and process improvements.
D) Each firm would be in a better position to gain a competitive advantage.
Answer: C
Q2) Soil and Sod Gardening Supplies has a vision of helping every American learn how to grow their own food. Its management team recently unveiled the mission statement "A garden at every home." What is wrong with this mission statement?
A) It does not indicate how the company will accomplish its goals.
B) It does not include a stretch goal.
C) It is not inspirational and motivating for employees.
D) It is too specific.
Answer: A
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Chapter 2: Strategic Leadership: Managing the Strategy Process
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Because they are a crucial component of a firm's success, customers are considered internal stakeholders.
A)True
B)False
Answer: False
Q2) The former CEO of Sam's Club, a division with its own profit-and-loss responsibility, Rosalind Brewer, reported to Walmart's CEO, C. Douglas McMillon, who as corporate executive oversees Walmart's entire operations. Sam's Club, therefore, is a ________ of Walmart.
A) corporate partner
B) strategic business unit
C) branch office
D) house brand manufacturer
Answer: B
Q3) 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
Page 4
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Chapter 3: External Analysis: Industry Structure,
Competitive Forces, and Strategic Groups
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) What are the two key insights that form the basis of Michael Porter's seminal five forces model?
Answer: By combining theory from industrial organization economics with hundreds of detailed case studies, Michael Porter derived two key insights that form the basis of his seminal five forces model:
1. Rather than defining competition narrowly as the firm's closest competitors to explain and predict a firm's performance, competition must be viewed more broadly to not only encompass direct rivals but also a set of other forces in an industry: buyers, suppliers, potential new entry of other firms, and the threat of substitutes.
2. The profit potential of an industry is neither random nor entirely determined by industry-specific factors. Rather, it is a function of the five forces that shape competition: threat of entry, power of suppliers, power of buyers, threat of substitutes, and rivalry among existing firms.
Q2) Firms within the same industry automatically belong to the same strategic group.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Internal Analysis: Resources, Capabilities, and Core Competencies
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Which of the following statements accurately describes a firm's resource stock?
A) Resource stocks are a firm's level of resources that are common to competitors.
B) Resource stocks are a firm's future estimate of both tangible and intangible resources.
C) Resource stocks are a firm's current level of intangible resources.
D) Resource stocks are a firm's level of investments to maintain or build a resource.
Q2) Provide examples of the secondary activities in a firm's value chain.
Q3) Elaborate on the resource-based view of competitive advantage.
Q4) Gladiator Apparel is the market leader in the sportswear industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gladiator Apparel is most likely to be considered a rare resource that is contributing to its competitive advantage?
A) the company's land and buildings
B) the company's plant and machinery
C) the company's raw material supplies
D) the company's design patents
Q5) Define the value chain.
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Chapter 5: Competitive Advantage, Firm Performance, and Business Models
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Which of the following expressions accurately describes market cap?
A) It is the product of the number of outstanding shares and the share price.
B) It is the difference between the book value and the market value of a firm's assets.
C) It is the ratio of a firm's equity finance and its debt finance.
D) It is the difference between a firm's account receivables and account payables.
Q2) A watchmaking company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?
A) $150
B) $180
C) $170
D) $210
Q3) A sustainable strategy is one that produces a competitive advantage that can be maintained over time.
A)True
B)False
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Page 7
Chapter 6: Business Strategy: Differentiation, Cost
Leadership, and Blue Oceans
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Product features, customer service, and complements are all examples of important A) cost curves.
B) cost drivers.
C) value curves.
D) value drivers.
Q2) What is a value gap?
Q3) Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on
A) decreasing the existing value gap by providing luxury goods to customers.
B) maintaining a less steeper learning curve as compared to its competitors.
C) increasing the perceived value created for customers, which allows it to charge a premium price.
D) lowering its costs compared to its competitors,' while offering adequate value for its products and services.
Q4) Explain the four questions that managers must answer to initiate a strategic move that allows a firm to open a new and uncontested market space through value innovation.
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Chapter 7: Business Strategy: Innovation, Entrepreneurship, and Platforms
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply?
A) The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be non-price based.
B) The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation.
C) The electric car industry will move to the growth stage, whereas the industry for MP3 players will enter the growth stage next.
D) The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.
Q2) Which of the following is a competitive benefit experienced by the first mover firm in an industry?
A) The first mover will be able to achieve a less steep learning curve.
B) The first mover will be able to reduce the switching costs.
C) The first mover will not have to patent its products or technology.
D) The first mover will be able to reduce costs through economies of scale.
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Page 9
Chapter 8: Corporate Strategy: Vertical Integration and Diversification
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Argus Inc. is a large multinational company owned by two partners, is active in the petroleum, capital market, chemicals, steel, beverages, hospitality, airlines, education, automobiles, and consumer electronics industries. The company has multiple brands and a large product portfolio under its banner. Which of the following terms would best describe this company?
A) a flagship brand
B) a single-business firm
C) a dominant-business firm
D) a conglomerate
Q2) Discuss the benefits of taper integration.
Q3) Which of the following is an example of an external transaction cost?
A) the cost of setting up a production unit
B) the cost of searching for a contract manufacturer
C) the cost of recruiting and retaining employees
D) the cost of maintaining plant and machinery
Q4) Which of the following best illustrates physical-asset specificity?
A) a unique training program developed in an organization
B) a ship container designed to carry more than the average load of iron ore
C) a generic machine that can be used to churn different mixtures
D) a machine solely designed to give a candy its trademarked shape
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Chapter 9: Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Which of the following scenarios best illustrates horizontal integration?
A) King Autos Inc. enters into a licensing contract with a distributor in a new international market.
B) King Autos Inc. acquires a component parts manufacturer who previously supplied to King Autos' competitor.
C) King Autos Inc. sets up its own distribution channel and retail stores.
D) King Autos Inc. joins with Dimitra Motors Inc., one of its direct competitors.
Q2) A voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services is best described as a A) proprietorship.
B) cooperative.
C) strategic alliance.
D) leveraged buyout.
Q3) How do strategic alliances help firms gain access to complementary assets?
Q4) How have strategic alliances helped big pharmaceutical firms hedge against uncertainty?
Q5) How does horizontal integration help firms increase differentiation?
Page 11
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Chapter 10: Global Strategy: Competing Around the World
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Midas Touch, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Coolco, an air-conditioner manufacturer, faces intense pressure from its home market. Barker, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Midas Touch invest?
A) Coolco, because air conditioners cost more to ship than dog toys do
B) Coolco, because firms that face stiff competition at home tend to do better abroad
C) Barker, because firms that face little or no competition at home tend to do better abroad
D) Barker, because dog toys cost less to ship than air conditioners do
Q2) The cultural distance between Australia and the United States is relatively high because of the physical distance between the two nations.
A)True
B)False
Q3) How do firms make decisions to pursue a global strategy?
Q4) When should a multinational company pursue an international strategy?
Q5) What products and industries does geographic distance affect the most?
Q6) When should a firm choose exporting as a foreign entry mode?
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Chapter 11: Organizational Design: Structure, Culture, and Control
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Successful ________ requires managers to design and shape structure, culture, and control mechanisms.
A) strategy innovation
B) strategy formulation
C) strategy implementation
D) strategy diversification
Q2) A primary advantage of the matrix organizational structure is that it simplifies decision making and communication in geographically diverse organizations.
A)True
B)False
Q3) Jen works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store?
A) flat structure
B) tall structure
C) centralized structure
D) decentralize structure
Q4) Discuss the not-invented-here syndrome with the help of an example.
Page 13
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Chapter 12: Corporate Governance and Business Ethics
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) General Electric's board has only one inside director, John Flannery, GE's CEO, who also acts as chairman of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE?
A) A CEO is likely to be more responsible because he or she is setting his or her own performance targets.
B) The CEO might be able to influence the board through setting the meeting agendas.
C) The CEO possesses invaluable inside information that can help him or her chair the board effectively.
D) Any CEO will suggest board appointees who are friendly toward him or her.
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) How can a manager decide whether a decision is ethical?
Q4) Law and ethics are not synonymous. Elaborate on this statement with the help of an example.
Q5) How does a leveraged buyout affect a public company?
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