Strategic Management Exam Solutions
Course Introduction
Strategic Management explores the processes and tools through which organizations analyze their internal and external environments, develop strategic objectives, and implement policies to achieve long-term success and maintain competitive advantage. The course covers topics such as vision and mission development, environmental scanning, competitive analysis, formulation and execution of strategy, and evaluation and control mechanisms. Throughout the course, students apply theoretical frameworks and analytical models to real-world business cases, enabling them to critically assess various strategic scenarios and recommend effective solutions for organizational growth and sustainability.
Recommended Textbook
Strategic Management Concepts and Cases 1st Edition by Jeffrey H. Dyer
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14 Chapters
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Page 2
Chapter 1: What Is Business Strategy
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Sample Questions
Q1) The employees of Flamingo Inc.,a greeting card company,focus on providing unmatched customer satisfaction.Unlike its competitors,the employees of Flamingo take the time to listen to the needs of individual customers and design custom-made cards upon request.The customers of Flamingo state that the company provides a large variety of affordable products to choose from.The company has won many awards for providing complete customer satisfaction.In this scenario,which of the following does Flamingo Inc.provide to its customers?
A) Backward integration
B) Switching costs
C) Complementary products
D) Unique value
Answer: D
Q2) What does the term cost advantage mean?
Answer: It is an advantage that a firm has over its competitors in the activities associated with producing a product or service,thereby allowing it to produce the same product at lower cost.
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Chapter 2: Analysis of the External Environment: Opportunities and Threats
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Q1) The household appliance industry has few major manufacturers like Nebula Corp.,Cook Well Inc.,and Mercury Corp.and a few smaller manufacturers.There is not much competition in this industry because the smaller companies cannot afford to compete aggressively with the large firms which do not engage in price wars.This scenario best illustrates a _____.
A) quinary industry
B) fragmented industry
C) quaternary industry
D) concentrated industry
Answer: D
Q2) Which of the following statements is true about concentrated industries?
A) These industries have few competitors and rivalry is less intense.
B) Smaller competitors usually respond aggressively to actions taken by large firms.
C) Few large competitors are aware of each other's presence and therefore more likely to create conflict.
D) If firms are approximately the same size, they tend to be able to respond, or retaliate, strongly to moves by rival firms.
Answer: A
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Chapter 3: Internal Analysis: Strengths, Weaknesses, and Competitive Advantage
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Q1) Michelle,the CEO of Nariko Jets,an airlines company,stated that she owes the credit of her professional success to the time spent as a volunteer at a homeless shelter and her passion for artwork.She said that she learned to never stop dreaming from her work as a volunteer.Nariko Jets,according to Michelle,was the result of her combined efforts at life lessons that she learnt at the homeless shelter and her paintings which provided her the inspiration to help create passenger and jet airlines that would make travel easier and comfortable.Her competitors have always envied her success.Which of the following factors of inimitability is best reflected in this scenario?
A) First-mover advantage
B) Positive network externalities
C) Causal ambiguity
D) Tacit knowledge
Answer: C
Q2) Which of the following is true of a tangible resource?
A) It is an economically valuable asset such as brands and patents.
B) It has a physical presence such as land, machinery, and cash.
C) It includes employee and management skills and talents.
D) It includes organizational assets like knowledge and reputation.
Answer: B
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Chapter 4: Cost Advantage
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Sample Questions
Q1) Li,the president of Lavender Inc.,believes that when employees are trained,they should work on one particular task till they know how to perform it perfectly.Thus,the employees are usually encouraged to repeatedly perform their designated tasks.Li claims that the more an employee engages in a particular task,the more skilled he or she will become at it.Which of the following statements strengthens Li's belief?
A) Employees will feel a sense of job dissatisfaction and will lose their overall enthusiasm for their jobs.
B) The work of employees will speed up while compromising their attention to detail.
C) This method of training requires a lot of time, effort, patience, and finances.
D) Employees will find better ways at completing the same task.
Q2) When do economies of scope come into existence?
Q3) Explain why a learning curve is more complex than a scale curve.
Q4) Information that is not public and that is viewed as the property of the holder is called _____.
Q5) Explain proprietary knowledge and its important sources.
Q6) Define learning curve,experience curve,and scale curve.Compare them with each other.
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Page 6
Chapter 5: Differentiation Advantage
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Q1) Frieda,the manager of a retail store,believes that a customer,Jake,is in the selection making stage.Nina,the sales person,believes that Jake is at the stage where he requires help in using the product.Which of the following statements strengthens Frieda's argument?
A) Jake is unaware of his need for a product.
B) Jake had placed an order for the product earlier and was in the store to pick it up.
C) Jake is comparing the product features offered by two brands.
D) Jake had purchased the product and is looking for a manual.
Q2) Mention the general environmental factors that can affect the profit potential of a firm.Briefly explain the factors of technological change and social/cultural forces.
Q3) In terms of product differentiation,convenience refers to:
A) how long a product functions optimally.
B) how unique a product is when compared to others.
C) how efficient a product is in meeting consumers' primary needs.
D) how easy it is for customers to purchase a product.
Q4) _____ is grouping customers based on similar needs.
Q5) Briefly discuss the questions that a company must ask in order to figure how to deliver the unique value of a product.
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Chapter 6: Corporate Strategy
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Sample Questions
Q1) Pisces Corp.is an apparel manufacturing company.It purchased a few of its raw material suppliers and set up their factories close to the clothing stores so that the company does not have to invest on transportation charges.This is an example of
A) downward diversification
B) forward integration
C) backward integration
D) horizontal diversification
Q2) Mention the factors that lead to destroying value through diversification.Explain any three of them.
Q3) Elegant Meals Inc.,a company that owns a chain of restaurants,sells dinnerware to its customers who fancy them.Since their restaurants are known for their interior designs,they also sell home décor products.By selling these products,Elegant Meals Inc.caters to a(n)_____.
A) entertainment market
B) capital market
C) adjacent market
D) global market
Q4) What is a greenfield entry? When should a company use it?
Q5) How does diversification help exploit existing customer-facing resources?
Page 8
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Chapter 7: Vertical Integration and Outsourcing
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Q1) Yellow Express LLC is a company in the computer hardware industry that solely manufactures microchips.Yellow Express LLC is _____.
A) diagonally integrated
B) vertically integrated
C) horizontally diversified
D) vertically specialized
Q2) Coral Corp.is a company that initially used to manufacture handbags.It has now set up a store in which it sells its own products rather than supplying them to different stores.This initiation by Coral Corp.best illustrates _____.
A) forward integration
B) backward integration
C) horizontal diversification
D) market penetration
Q3) What are some of the advantages of outsourcing?
Q4) What is the main difference between a company that is vertically integrated and a company that is vertically specialized?
Q5) Briefly state the difference between outsourcing and insourcing.
Q6) What are the dangers of vertical integration?
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Chapter 8: Strategic Alliances
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Q1) Teal Inc.,forms a strategic alliance with White Corp.In their contract,they specify how governance issues,operating issues,and termination issues would be resolved.Which of the following is likely to be covered under the clause that deals with governance issues?
A) What performance is expected by Teal and White from each other
B) How intellectual property will be shared by Teal and White
C) Under which circumstances Teal or White can exit the alliance
D) How profits will be split between Teal and White
Q2) Companies have three choices-make,buy,or ally-when it comes to conducting any particular activity that needs to be done to offer a product or service to a customer.Explain the three choices and the process involved in each.
Q3) With respect to categories of issues,_____ issues deal with how decisions will be made,how profits will be split,and how disputes will be resolved.
Q4) What are the four kinds of inputs and activities that might qualify as strategic inputs,which merit forming an alliance relationship? Explain the four inputs with suitable examples.
Q5) What are the ways in which strategic partners can build trust in alliance relationships?
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Page 10
Chapter 9: International Strategy
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Q1) The Purple Lace Inc.,a home furnishing company,emphasizes standardization over local culture and needs of the specific market.It maintains consistency of operations across the different countries that the firm operates in.Which of the following is being exemplified in this scenario?
A) A multidomestic strategy
B) A global strategy
C) An arbitrage strategy
D) A customization strategy
Q2) A healthcare company deals with significant management challenges.The production units are based in various geographic locations,which results in cultural and linguistic barriers.Operations require relying on a local firm to adapt the products to meet the needs of the local market.In this case,the company is likely to be engaging in
A) Exporting
B) Importing
C) Offshoring
D) Alliances
Q3) Explain the ways to manage variation and successfully pursue a multidomestic strategy.
Q4) Explain the four different modes of international market entry.
Page 11
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Chapter 10: Innovative Strategies That Change the Nature of Competition
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Sample Questions
Q1) The Table Mat,an online review site,provides information about restaurants,the products they offer,details on home delivery,take away,and so on.Restaurants are charged by The Table Mat for advertising to millions of product users.Which of the following is being exemplified in this case?
A) A blue ocean strategy
B) A cross-sell strategy
C) A third-party pay strategy
D) A bundling strategy
Q2) Which of the following statements is true of a bundling strategy?
A) It works particularly well when a company offers a broad array of products.
B) It works best in markets where freebies are likely to be very expensive.
C) It typically uses price skimming as a strategy to increase profits.
D) It encourages sales by providing products at a discount.
Q3) Explain the four stages of the product life cycle.
Q4) What are low-end disruptive innovations? Explain with an example.
Q5) Groups of people who share similar needs and thus are likely to desire the same features in a product are called _____.
Q6) What is a business model? Briefly explain the revenue model.
Q7) Creating new demand in an uncontested market space is called the _____.
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Chapter 11: Competitive Strategy
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Sample Questions
Q1) Zara,a research analyst,is studying the business decisions of some restaurant owners.During the data analysis stage,she employs a strategic canvas.Which of the following is likely to be her primary reason to employ this tool?
A) To understand the pricing strategy used for different dishes within each restaurant
B) To study the differences in the ways the restaurants compete with each other
C) To identify the combined target audience of strategic groups as a whole
D) To observe the similarities in the employees' views of their respective organizations
Q2) Which of the following statements is true about the Nash equilibrium?
A) It is the solution concept used in games that are played forever.
B) It reduces the possibility of compromise.
C) It is the solution concept used to predict the outcome of competitive interaction.
D) It is a set of moves in a game that simultaneously minimize each firm's payoff.
Q3) Briefly describe competition under monopoly.
Q4) In game theory,a set of actions that are always played no matter what a rival chooses to do is referred to as the _____.
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Chapter 12: Implementing Strategy
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Sample Questions
Q1) Mark Dinewell Inc.,a well-established restaurant chain has vice presidents for different geographic regions and functional managers for each of those regions.Which of the following organizational elements is exemplified in this case?
A) Strategy
B) Structure
C) Style
D) Skill
Q2) Walker and Harris are senior research fellows at a global non-profit organization.They are working on a project that studies the growth trend of a multinational corporation,Garcia Inc.When Walker and Harris decide to consolidate their study findings,Walker is of the opinion that Garcia is in the 'change process' phase,while Harris believes that the company is in the 'refreeze' phase.Which of the following statements,if true,would strengthen Harris' belief?
A) Garcia Inc. publicly admits that the current situation is not working.
B) Garcia Inc. formalizes and institutionalizes its new growth strategies.
C) Garcia Inc. adopts a trial and error method to decide on the best growth strategy.
D) Garcia Inc. decides to adapt to its environment and learn new growth-inducing behaviors.
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Page 14
Chapter 13: Corporate Governance and Ethics
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Q1) Zygaton Corp.is a firm that offers its customers financial services.Which of the following members of its board of directors should ideally bring vast knowledge and a new perspective in order to ensure that the firm's strategy will serve the financial interests of the shareholders?
A) Javier, an employee
B) Maria, an outside director
C) Cataleya, a senior executive
D) Esposito, a senior manager
Q2) A _____ is a formal declaration of a company's core values,business objectives,and ethical aspirations.
Q3) Chang,the founder of a multinational corporation,believes that his business should mainly focus on the benefit of those people who own its stock.In this scenario,he most likely follows _____,a model of business management.
A) stakeholder model
B) shareholder primacy
C) customer value
D) stakeholder value
Q4) Briefly describe agency problems.How can they destroy value in an organization?
Q5) Who is a stakeholder of a business organization?
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Chapter 14: Strategy and Society
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Q1) Which of the following statements is true of the fundamental social responsibilities of a business?
A) In order to survive, a firm must primarily focus on fulfilling its ethical responsibility over other responsibilities.
B) In order to thrive and grow, a firm must prioritize its philanthropic responsibility above all other responsibilities.
C) Firms must fill their ethical responsibilities only in limited and specific ways that conform to the legal statutes in that country.
D) Philanthropic responsibility of a firm only appears as an obligation if the firm is viewed as an active member and contributing citizen of the community in which it operates.
Q2) Which of the following describes those living in conditions of extreme poverty around the world,usually defined as less than $2 per day?
A) Line of sight
B) Value net
C) Backward integration
D) Base of the pyramid
Q3) Differentiate between a social bricoleur and a social engineer.
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