Strategic Management Exam Solutions
Course Introduction
Strategic Management is a comprehensive course that explores the formulation and implementation of organizational strategies to achieve long-term objectives and sustain competitive advantage. The course examines key concepts such as industry analysis, internal resource evaluation, strategy formulation, and execution within dynamic business environments. Through case studies, simulations, and critical analysis, students learn to assess external opportunities and threats, align organizational resources, and make informed strategic decisions. The course also addresses contemporary challenges such as globalization, innovation, ethical considerations, and corporate social responsibility in strategic management.
Recommended Textbook
Economics of Strategy 7th Edition by David Dranove
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15 Chapters
505 Verified Questions
505 Flashcards
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Page 2
Chapter 1: The Power of Principles: A Historical Perspective
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) The movement of inputs and outputs through a production process is known as which of the following?
A)Coordination
B)Input-output
C)Integration
D)Throughput
E)Systemology
Answer: D
Q2) Which of the following would likely lower antitrust scrutiny?
A)Predatory pricing tactics
B)Utilizing mergers and acquisitions over alliances and joint ventures
C)Utilizing alliances and joint ventures over mergers and acquisitions
D)Incomplete contracting
E)Complete contracting
Answer: C
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Chapter 2: The Horizontal Boundaries of the Firm
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) If a firm enjoys lower costs due to a complex labor-intensive process,which of the following statements would then be true?
A)Cutbacks in volume will always raise unit costs
B)The firm is unconcerned with labor turnover
C)An example of this process could be the practice of anti-trust law
D)The firm's average cost rises due to moving down the learning curve
E)The process is likely a repetitive manufacturing process such as two-piece aluminum can manufacturing
Answer: C
Q2) What is the minimum efficient scale (MES)of production?
A)The point on an average cost curve where the cost per unit begins to decline more rapidly
B)The minimum point on a U-shaped average cost curve
C)The minimum level of production at a plant for it to be considered profitable
D)The level of production for a small sized plant
E)The threshold at which capacity is constraining for a firm's production
Answer: B
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Chapter 3: The Vertical Boundaries of the Firm
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) Strong contract law aids the most in which of the following?
A)Incomplete contracts
B)Complete contracts
C)Negotiated contracts
D)Dual contracts
E)None of the above
Answer: A
Q2) What is a reason that companies might want to "buy" instead of "make" talent from the market when looking to acquire employees with a particular skill set?
A)External training methods are better than internal ones
B)Companies are always willing to pay more for external employees
C)External training is more advanced (up-to-date)than internal
D)Scale economies can result in fixed education costs while in house education methods may be more expensive
E)Externally trained employees are more likely to become better business leaders
Answer: D
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Chapter 4: Integration and Its Alternatives
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32 Verified Questions
32 Flashcards
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Sample Questions
Q1) Which of the following causes finished goods prices not to maximize the joint profits of a manufacturer and its supplier?
A)Inefficient asset specificity
B)Lack of coordinated scope economies
C)Incomplete contracting
D)Double marginalization
E)None of the above
Q2) What concept describes the situation where the owner of an asset grants another party the right to use that asset,but the owner retains all controlling rights that are not explicitly stipulated in the contract?
A)Asset specificity
B)Non-contract rights of ownership
C)Control rights agreement
D)Residual rights of control
E)Coordination
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Chapter 5: Competitors and Competition
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31 Verified Questions
31 Flashcards
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Sample Questions
Q1) What term describes the differentiation of a product when it is unambiguously better or worse than competing products?
A)Horizontal differentiation
B)Vertical differentiation
C)Idiosyncratic differentiation
D)Spatial differentiation
E)Non-price differentiation
Q2) What term describes existing firms in a monopolistically competitive market?
A)Anchors
B)Primaries
C)Base
D)Incumbents
E)Pioneers
Q3) Which U.S.agency is responsible for preventing anticompetitive conduct?
A)Securities and Exchange Commission
B)Department of Justice
C)Office of Fair Trading
D)Competition Commission
E)Competition Authority
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Page 7
Chapter 6: Entry and Exit
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) When is predatory pricing a most effective entry barrier?
A)When the incumbent has incurred them and the entrant has not
B)When incumbents have long-standing relationships with suppliers and customers
C)When channels are few and hard to replicate
D)When a firm has a reputation for toughness or competes in multiple markets
E)When marginal costs are low and flooding the market causes large price reductions
Q2) What term describes when a firm sells a combination of goods and services together,but not individually?
A)Packaging
B)Combining
C)Bundling
D)Mixing
E)Assembling
Q3) What type of firm is one that is already operating in a particular market?
A)Market leader
B)Entrant
C)Incumbent
D)Market follower
E)Monopolist
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Page 8
Chapter 7: The Dynamics Competing Across Time
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) What term refers to situations in which firms can sustain prices in excess of those that would arise in a non-cooperative single-shot price or quantity-setting game?
A)Dedicated pricing
B)Strategic pricing
C)Marginal pricing
D)Cost-plus pricing
E)Cooperative pricing
Q2) What type of pricing involves a firm quoting a single delivered price for all buyers with the firm absorbing any freight charges itself?
A)Uniform delivered pricing
B)Uniform FOB pricing
C)Uniform customer pricing
D)Uniform favored pricing
E)Uniform competitive pricing
Q3) Suppose Firm #1 dominates a market for widgets priced at $100/unit with a marginal cost of $60/unit.If Firm #2 enters the market and offers comparable widgets at a 3% discount,extending a price umbrella optimal as long as Firm #1 loses no more than what portion of its market share?
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9
Chapter 8: Industry Analysis
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35 Verified Questions
35 Flashcards
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Sample
Questions
Q1) Which of the following factors requires the least consideration when assessing supplier power relative to the downstream industry it sells to?
A)Competitiveness of the output market
B)Purchase volume of downstream firms
C)Availability of substitute inputs
D)Threat of forward integration by suppliers
E)Ability of suppliers to price discriminate
Q2) Substitutes erode profits because of which of the following factor?
A)Substitutes compete for similar inputs driving up production costs
B)Substitutes divide demand and drive up internal rivalry
C)Firms producing substitutes use similar worker skills dividing the labor pool
D)Manufacturers of substitutes enter markets later and have lower sunk costs
E)None of the above
Q3) Which of the following is generally thought of as a supplier in the hospital industry?
A)Medicaid
B)Admitting physicians
C)Hospital-based physician
D)Patients
E)Medicare
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Page 10
Chapter 9: Strategic Positioning for Competitive Advantage
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) Which of the following is a concept developed by Michael Porter that describes,in broad terms,how it positions itself to compete in the market it serves?
A)Value chain
B)Generic strategy
C)Benefit leadership
D)Cost Leadership
E)Focus
Q2) What term best describes a targeting strategy in which the firm offers a variety or related products to a particular class of customers?
A)Broad-coverage strategy
B)Focus Strategy
C)Geographic specialization
D)Product specialization
E)Customer specialization
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Chapter 10: Information and Value Creation
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) Location can provide which of the following?
A)Vertical differentiation
B)Horizontal differentiation
C)Isolation
D)Customer switching costs
E)Availability of substitutes
Q2) What term best describes a firm informing customers about a product's benefits?
A)Advertising
B)Certification
C)Disclosure
D)Notice
E)Broadcasting
Q3) Which of the following best describes the consumer's shopping problem?
A)Having enough money to purchase all necessary goods and services
B)Finding the seller that offers the highest value of B - P
C)Determining the quality of products
D)Locating sellers that provide the required products
E)Selecting between brand products and non-brand products.
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12
Chapter 11: Sustaining Competitive Advantage
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) What term best characterizes the battle between firms to innovate first?
A)Market for new ideas
B)New product competition
C)R&D race
D)Innovation competition
E)Patent race
Q2) Which of the following terms best describes a place in which a firm can sell its ideas for full value?
A)Market for ideas
B)Community of ideas
C)Innovation market
D)Patent market
E)Idea environment
Q3) What term best refers to fundamental changes that lead to major shifts of competitive positions in a market?
A)Jump
B)Shock
C)Alteration
D)Bolt
E)Shift
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Chapter 12: Performance Measurement and Incentives
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) What type of performance measurement based process was used to determine Jack Welch's successor,Jeffrey Immelt,as CEO of GE?
A)Ratings compression
B)Merit ratings system
C)360-degree peer review system
D)Promotion tournament
E)Management-by-objective system
Q2) What term best refers to a wage payment made to an agent that exceeds his opportunity cost of working and discourages the agent from shirking?
A)Living wage
B)Efficiency wage
C)Minimum wage
D)Efficiency payment
E)Termination wage
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14
Chapter 13: Strategy and Structure
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34 Flashcards
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Sample Questions
Q1) Aligning individual and group tasks with those of the firm and aligning incentives so that individuals and groups will consistently work in the same direction is known as:
A)Coordination
B)Agency control
C)Accountability
D)Dimensional alignment
E)Unitary functional alignment
Q2) What type of organizational structure is one in which work groups may be organized by function,geography,or customer base,but where relationships between work groups are governed more by often-changing implicit and explicit requirements of common tasks than by the formal lines of authority that characterize other structures?
A)Unitary functional structure
B)Multidivisional structure
C)Matrix structure
D)Network structure
E)Individual structure
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15
Chapter 14: Environment, Power, and Culture
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) Which of the following is true about culture?
A)Culture increases agency costs
B)Culture reduces bargaining costs
C)Culture reduces transactions costs
D)Culture increases economic costs
E)culture has no effect on costs
Q2) Which of the following statements is least true regarding the accumulation of power?
A)The accumulation of power is helpful when there are high agency costs in coordinating among managers and lower-level workers
B)The accumulation of power is helpful when the firm's environment is relatively stable
C)The accumulation of power is harmful when there are high agency costs in coordinating among levels of upper management
D)The accumulation of power is harmful when the firm's environment is relatively unstable
E)The major purpose of corporate governance is not to reign in the accumulation of power by CEOs
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Chapter 15: Economics Primer
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) What is a Nash equilibrium?
A)A state where each player is doing the best it can,given the strategies of all other players
B)A state where the sum of all payoffs is maximized
C)A state where the players always have achieved their best possible result
D)A state at which the MR=MC for a firm
E)A state where each player always must play a dominant strategy
Q2) Suppose a firm's plant produces Q units in any given year.The plant itself operates with annualized costs of $10M and other annual fixed expenses totaling $3M.In addition,the firm's variable costs depend on Q and are given by the formula 5Q²+3Q.What is the formula for the firm's Short-Run (i.e.one year)Average Costs?
Q3) What is a sunk cost?
A)A cost that can be avoided if certain choices are made
B)A cost that always varies with the output of a factory
C)The average cost of operating a plant
D)The "lower envelope" of short-run average cost functions
E)A cost incurred no matter what the decision is and cannot be avoided
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Page 17