Strategic Management Practice Exam
Course Introduction
Strategic Management is a course that explores the formulation, implementation, and evaluation of organizational strategies with a focus on achieving long-term objectives and competitive advantage. Students will learn to analyze internal and external environments, assess corporate strengths and weaknesses, and understand the dynamic nature of market competition. The course covers key topics such as strategic planning, industry analysis, resource allocation, organizational structure, and leadership. Through case studies, group projects, and practical applications, participants will develop the skills necessary to make informed strategic decisions and drive organizational success in a rapidly changing business landscape.
Recommended Textbook
Crafting and Executing Strategy Concepts and Cases 21st Edition by Thompson
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Chapter 1: What Is Strategy and Why Is It Important
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Q1) A company's strategy consists of the action plan management takes to A) stake out a unique market position and achieve superior profitability.
B) compete against rivals and establish a transitory competitive advantage.
C) concentrate on improving the existing product offering irrespective of the changing and turbulent markets.
D) develop a more appealing business model than rivals.
E) identify its strategic vision, its strategic objectives, and its strategic intent.
Answer: A
Q2) Can an organization succeed by pursuing strategies that are "proactive" and "reactive"? Explain.
Answer: A company's strategy is shaped partly by management analysis and choice and partly by the necessity of adapting and learning by doing. Depending on market factors, internal changes, and changing customer needs, a mix of both proactive and reactive strategies is important to implement to achieve a company's realized strategy. Managers must always be willing to supplement or modify the proactive strategy elements with as-needed reactions to unanticipated conditions. Inevitably, there will be occasions when market and competitive conditions take an unexpected turn that calls for some kind of strategic reaction.
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Chapter 2: Leading the Process of Crafting and Executing Strategy
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Q1) Explain why a company's strategy is really a collection of strategies. Answer: Ideally, the pieces of a company's strategy up and down the strategy hierarchy should be cohesive and mutually reinforcing, fitting together like a jigsaw puzzle. It is the responsibility of top executives to achieve this unity by clearly communicating the company's vision, objectives, and major strategy components to down-the-line managers and key personnel. Midlevel and frontline managers cannot craft unified strategic moves without first understanding the company's long-term direction and knowing the major components of the corporate and/or business strategies that their strategy-making efforts are supposed to support and enhance. Anything less than a unified collection of strategies weakens the overall strategy and is likely to impair company performance. Thus, as a general rule, strategy making must start at the top of the organization and then proceed downward from the corporate level to the business level and then from the business level to the associated functional and operating levels. Once strategies up and down the hierarchy have been created, lower-level strategies must be scrutinized for consistency with and support of higher-level strategies. Any strategy conflicts must be addressed and resolved, either by modifying the lower-level strategies with conflicting elements or by adapting the higher-level strategy to accommodate what may be more appealing strategy ideas and initiatives bubbling up from below.
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Chapter 3: Evaluating a Companys External Environment
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Q1) Which of the following is NOT one of the principal components of strategic significance in the PESTEL analysis?
A) political factors including the extent to which government intervenes in the economy
B) economic conditions that include the general economic climate and specific factors such as interest rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets that can affect consumer confidence
C) sociocultural forces including societal values, attitudes, cultural factors, and lifestyles that impact business
D) technological factors that include the pace of change and technical developments that have the potential for impacting society
E) environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business
Answer: E
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Chapter 4: Evaluating a Companys Resources and Competitive Position
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Q1) A useful way to identify a company's resources is to view them as
A) divided into two main categories, tangible and intangible.
B) productive inputs or competitive assets, except human assets and intellectual capital, which are considered capabilities or competencies.
C) physical resources, such as the company's brand, image, and reputation assets.
D) an inventory or a collection of the firm's strengths, weaknesses, opportunities, and threats.
E) intangible resources such as patents, copyrights, and technological processes.
Q2) Key "functional" strategies of a company include all of the following EXCEPT
A) R&D, technology, and product design strategies.
B) production and information technology and supply chain management strategies.
C) human resource and finance strategies.
D) sales, marketing, and distribution strategies.
E) alliance and partnerships as well as merger and acquisition growth strategies.
Q3) Explain why a weighted competitive strength assessment is important.
Q4) Why do a company's core competencies matter in crafting strategy?
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Chapter 5: The Five Generic Competitive Strategies: Which
One to Employ
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Q1) Focusing the ability can secure a competitive edge but also carries some risks that could be detrimental to the focused firm, such as
A) the likelihood that a focused company will become so cost efficient it will achieve excessive profits.
B) the potential for the preferences and needs of niche members to shift over time toward mainstream provider product attributes.
C) the potential for the niche to become so attractive it will not attract new competitors thereby providing excessive market segment profits.
D) the potential for technological advances to favor only low-cost providers.
E) the likelihood that a focused company will become so cost inefficient it will achieve excessive profits.
Q2) What type of competitive advantage does a best-cost provider strategy aim at achieving? Explain what a company has to do to achieve this advantage.
Q3) Compare and contrast cost drivers and uniqueness drivers in a company's value chain. Explain how these drivers might support a firm's generic strategy.
Q4) What are the keys to sustaining a focused low-cost strategy?
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Chapter 6: Supplementing the Chosen Competitive
Strategy: Other Important Business Strategy Choices
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Q1) What are the strategic disadvantages of a forward vertical integration strategy?
Q2) Strategic offensives should, as a general rule, be based on
A) exploiting a company's strongest competitive assets-its most valuable resources and capabilities.
B) instigating and executing the chosen strategy efficiently and effectively.
C) scoping and scaling an organization's internal and external situation.
D) molding an organization's character and identity.
E) satisfying the buyer's needs that the company seeks to meet.
Q3) An alliance becomes "strategic" as opposed to just a convenient business arrangement when it serves all of the following strategic purposes EXCEPT
A) builds, sustains, or enhances a core competence or competitive advantage.
B) blocks a competitive threat.
C) increases the bargaining power of alliance members over suppliers or buyers.
D) opens up important new market opportunities.
E) contracts out certain value chain activities that are normally performed in-house to outside vendors.
Q4) What are the strategic disadvantages of a backward vertical integration strategy?
Q5) Identify and briefly explain five types of offensive strategies.
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Chapter 7: Strategies for Competing in Foreign Markets
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Q1) What is it called when a company sells its goods in foreign markets at prices that are below the prices at which it normally sells in its home market or well below its full costs per unit?
A) dumping practices
B) price-clearing system
C) clearance sale
D) discounting practices
E) competitive advantage
Q2) Acquisition of an existing firm rather than via internal development may be the least risky and cost-efficient means of overcoming entry barriers such as A) putting its own strategy into place.
B) accelerating efforts to build a strong market presence.
C) moving directly to the task of transferring resources and personnel, integrating and redirecting activities into its own operation.
D) fast-tracking exports into a foreign market by marketing indirectly thru local rivals.
E) gaining access to local distribution networks, building supplier networks, and establishing working relationships with key government officials.
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Chapter 8: Diversification: Strategies for Managing a Group of Businesses
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Q1) To create value for shareholders via diversification, a company must
A) get into new businesses that are profitable.
B) diversify into industries that are growing rapidly.
C) spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries.
D) diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses.
E) diversify into businesses that have either key success factors or value chains that are similar to its present businesses.
Q2) Which of the following is NOT a good candidate for divestiture in a corporate restructuring effort?
A) business units that lack strategic fit with the businesses to be retained
B) weak performers
C) businesses in unattractive industries
D) businesses that are cash hogs or that lack other types of resource fit
E) businesses compatible with the company's revised diversification strategy
Q3) Under what circumstances might a diversified firm choose to divest one or more of its businesses?
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Chapter 9: Ethical Business Strategies, Social Responsibility, and
Environmental Sustainabil ITY
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Q1) The contention that since there are cross-country or cross-cultural differences in ethical standards, it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores should take precedence over a single set of ethical standards or what may be applicable in a company's home market
A) defines what is meant by ethical relativism.
B) defines what is meant by ethical universalism.
C) is the foundation of a social contract.
D) is the basis for the theory of ethical variation.
E) is the guiding principle for religious and moral standards across countries and cultures.
Q2) Studies done on the correlation of between good corporate behavior and good financial performance have generally found
A) no correlation.
B) a small positive correlation.
C) a small negative correlation.
D) a large positive correlation.
E) a large negative correlation.
Q3) What are the strengths and weaknesses of the thesis that ethical standards are (or should be) universal?
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Chapter 10: Building an Organization Capable of Good Strategy Execution
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Q1) Which of the following is NOT a reason why companies might use outsourcing to improve performance of strategy-critical activities?
A) improving a company's chances for outclassing rivals in the performance of strategy-critical activities and turning a core competence into a distinctive competence
B) promoting quick establishment of a total quality culture
C) speeding internal decision making and shortening the time it takes to respond to changing market conditions
D) capitalizing on the partnerships with outsiders to enhance its arsenal of capabilities and thus contribute to better strategy execution
E) helping decrease internal bureaucracies and flatten the organizational structure
Q2) In choosing between a centralized and a decentralized organizational structure, which of the two is more likely to further the cause of good strategy execution? Why?
Q3) Who has strategy execution responsibility and who is ultimately responsible for making sure that the task of implementing and executing the strategy goes well?
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Chapter 11: Managing Internal Operations: Actions That Promote
Good Strategy Execution
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Q1) Which of the following exemplifies one of the most widely used methods of gauging how well a company is executing its strategy?
A) Merrill & Company has a disconnected organizational arrangement whereby pieces of an activity are performed in different functional departments.
B) Oceania identifies agents of change who are convinced about sticking to the old ways of doing things.
C) Honwell narrates success stories of rival brands to convince its personnel about traditional wisdom.
D) Fizz-Cola judges the efficiency of internal operations by benchmarking them against best-in-industry performers.
E) Motorola develops the data to measure how poorly rival brands perform against the best-practice standards across industry.
Q2) How does TQM differ from business process reengineering? Explain the value of striving for continuous improvement in processes and activities.
Q3) Identify types of support systems that a company can install to support the execution of its strategy. How important are these systems to the strategy implementation process?
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Chapter 12: Corporate Culture and Leadership: Keys to Good Strategy Execution
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Q1) Unhealthy company cultures typically have such characteristics as
A) tight budget controls, overly strict enforcement of long-standing policies and procedures, and high ethical standards.
B) a preference for conservative strategies, an aversion to incentive compensation, and excessive emphasis on profitability.
C) a politicized internal environment, hostility to change and an aversion to looking outside the company for best practices, new managerial approaches, and innovative ideas.
D) overemphasis on employee empowerment, a complacent approach to building competencies and capabilities, no coherent business philosophy, and excessively bureaucratic policies and procedures.
E) an emphasis on innovation, a strong preference for hiring managers from outside the company, and few core values and traditions.
Q2) A company's corporate culture is grounded in and shaped by its core values and ethical standards and drives a shared commitment to achieve the firm's strategic and financial objectives. True or false? Justify your answer.
Q3) What are the five traits of unhealthy cultures?
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