Strategic ManagementQ.1. to Multiple Choice Questions The origins of Business Policy & Strategic Management can be retraced a) 1930 c) 1879 b) 1911 d) 1938 BCG in BCG matrix stands for a) Boston Calmette Group c) Boston Corporate Group b) British Consulting Group d) Boston Consulting Group Ans: b Q.2. Ans: d Q.3. Which of the following is not part of the micro environment? a) Technology b) Shareholders c) Competitors d) Public Ans: a Q.4. Which of the following is not a part the Macro Environment? a) Laws & Policies b) Demographics c) Suppliers d) Social Values Ans: c Q.5. Cultural values would be part of which of the following factor in macro environment? a) Demographic b) Social c) Ecological d) Natural Ans: b Q.6. What does Dog symbolize in BCG matrix? a) Introduction b) Growth c) Maturity d) Decline Ans: d Q.7. What does Stars symbolize in BCG matrix? a) Introduction b) Growth c) Maturity d) Decline Ans: b Q.8. What does Question Mark (?) symbolize in BCG matrix? a) Remain Diversified b) Invest c) Stable d) Liquidate Ans: a 1 how long is the long term.15.10. Low cost. In strategic thinking. What does Yellow symbolize in BCG matrix? a) Invest & Expand b) Harvest & Divest c) Select & Earn d) Both a & b Ans: c Q. What does Red symbolize in BCG matrix? a) Invest & Expand b) Harvest and Earn c) Harvest & Divest d) Select & Earn Ans: c Q.13.11. Differentiation __________________ a) Corporate strategies 2 and Focus are examples b) Operational Strategies of . The GE 9 cell model is based on a) Industry attractiveness & Business Strength c) Industry Attractiveness & Relative market share b) Industry Growth rate & Business strength d) Industry Growth & Relative market share The BCG Matrix is based on a) Industry attractiveness & Business Strength c) Industry Attractiveness & Relative market share b) Industry Growth rate Business strength d) Industry Growth rate Relative market share Ans: a Q. What do Cash Cows symbolize in BCG matrix? a) Remain Diversified b) Invest c) Stable d) Liquidate Ans: c Q.What does Green symbolize in BCG matrix? a) Invest & Expand b) Select & Earn c) Harvest & Divest d) Both a & b Ans: a Q.12. & & Ans: d Q.Strategic Management Q.14. approximately? a) 1 Month to 1 year b) 2 to 3 years c) 3 to 5 years d) More than 5 years Ans: d Q.9.16. 21. Another name for GE 9 cell model is a) Three colour matrix b) Stop light matrix c) Strategic Portfolio Matrix d) Colour light matrix Ans: b Q.20.23. d) Functional Strategies The word tactic is most likely to be associated with: a) Business Strategy b) Corporate strategy c) Operational Strategy d) Functional Strategy Ans: c Q.Strategic Management c) Business Strategies Ans: c Q. you should: a) Read the mission statement b) Look at what the organization actually does c) Read the strategic plan d) Ask the CEO Ans: c Q. To find out what an organization's strategy is. In BCG Matrix.19. In GE 9 cell matrix. what is the label of the horizontal axis? a) Relative Market share b) Industry Attractiveness c) Industry Growth Rate d) Market Growth Rate Ans: b Q. In BCG matrix.17. what is the label of the horizontal axis? a) Relative Market share b) Business Strength c) Industry Growth Rate d) Market Growth Rate Ans: a Q. Which of the following statements is not true when describing a successful strategy? a) It provides some property that is unique or distinctive b) It provides the means for renewing competitive advantage c) It addresses changes in the external environment d) It guarantees long term survival Ans: a 3 .22. what is the label of the Vertical axis? a) Relative Market share b) Business Strength c) Industry Growth Rate d) Market Growth Rate Ans: c Q.18. company’s customers are part of which of the following? a) Internal environment b) Micro environment c) c) Macro environment d) external environment Ans: b Q. In company’s environment. this is an example of: a) Horizontal integration b) Forwards vertical integration c) Backwards vertical d) a and b integration Ans: c Q.26. When a firm seeks the benefits of global integration and local adaptation.29.Strategic Management Q. stakeholders can be defined as: a) An individual or group with a financial stake in the organization b) An external individual or group that is able to impose constraints on the organization c) Internal groups or individuals that is able to influence strategic direction of the organization d) An individual or group with an interest in the organization's activities and who seeks to influence them Ans: d Q. In the context of strategic management.25.28.27. In the case where an organization acquires its supplier. it is best described as which type of strategy? a) Transnational b) Global c) Multi-national d) Global-local Ans: d 4 . Cultural values would be part of which of the following factor in macro environment? a) Economic b) Natural c) Social d) Ecological Ans: c Q. Which of the following is NOT part of the micro environment? a) Competitors b) Customers c) Technology d) Publics Ans: c Q.24. strategic control Deliberate strategy. 14.34. how long is the long term. a) b) c) d) What are stages 2. 1In strategic thinking.30.31. choice of strategic direction. The strategy of TATA Motors would be: a) Functional Strategy b) Corporate Strategy c) Business Strategy d) both b and c Ans: c Q. select strategy. 3 and 4 of the outline strategy process? Generate options. A strategic manager that seeks to reach acceptable profit targets as opposed to making as much profit as possible is making decisions of which type? a) Satisfactory b) Satisfying c) Irrational d) Optimal Ans: d Q. Growth. retrenchment __________________? a) Corporate strategies c) Functional Strategies Ans: a Q. Appraisal of strengths and weaknesses.Strategic Management Q. implement strategy Strategy selection. approximately? a) 1 to 12 months b) 1 to 5 years c) More than 5 years d) less than 5 year Ans: c Q. emergent strategy. and stability are examples b) Business Strategies d) both a and c The word tactic is most likely to be associated with: a) Corporate strategy b) Business Strategy c) Operational Strategy d) both a and b 5 of .'Reputation' in the context of an organization's resources can provide competitive advantage because: a) It is difficult to copy b) It is based on word-of-mouth c) It is a threshold resource d) It is explicit Ans: a Q.36. strategy implementation. realized strategy. strategy implementation Ans: b Q.35.32.33. The _________ answers the question "What do we want to become?" whereas _________answers the question "What is our business?" a) Vision statement. recommendation.40. vision Ans: a Q. What is the recommended length of an effective mission statement? a) One page b) Less than 200 words c) One sentence of 10 to 20 d) There is no words. mission statement b) Short-term objectives.39.41. strategies d) Mission. Which one of these is NOT a __________ part of Porter's competitive forces in industry analysis? a) Potential entry of new competitors b) Bargaining power of suppliers c) Development of substitute products d) Threat of substitute products and services Ans: c Q. Developing a vision and mission.Strategic Management Ans: c Q.42. identifying an organization's external opportunities and threats.37. Ans: d Q. Which of these is not a reason why some firms do not have strategic planning? a) Laziness b) Competitive leadership c) Honest difference of opinion d) Poor reward structures Ans: b Q.38. a) strategy-formulation b) strategy-implementation c) long-range planning d) short-range planning Ans: a Q. a) Delphi forecasts b) Econometric models c) Linear regression d) Scenario forecasts 6 . and determining internal strengths and weaknesses are all __________ activities. __________ is based on the assumption that the future will be just like the past. long-term objectives c) Objectives. on-time production by curtailing idle productive facilities and workers. information systems.45. The XYZ Corp. Ans: d Q. Threats) analysis? a) Organizational strengths may not lead to competitive advantage b) SWOT gives a one-shot view of a moving target c) SWOT's focus on the external environment is too broad and integrative d) SWOT overemphasizes a single dimension of strategy Ans: c Q. is taking advantage of a ____________ system. a) Just-In-Time (JIT) b) Last In. a) Concentric diversification b) Horizontal diversification c) Conglomerate diversification d) Product development Ans: c Q. customer service. and procurement 7 . Weaknesses.44. is centering on the objective of low-cost. and firm infrastructure b) customer service. First Out (FIFO) d) Highly mechanized Ans: a Q. high quality.43. and procurement c) Human resource management. b) Need to maintain the reputation of the company. information systems. unrelated products or services for present customers. Opportunity. A marketing department that promises delivery quicker than the production department's ability to produce is an example of a lack of understanding of the a) Synergy of the business units. Which of the following is not a limitation of SWOT (Strengths. technology development.46. XYZ Corp. procurement. Which of the following lists is comprised of support activities: a) human resource management.Strategic Management Ans: c Q. technology development. First Out (LIFO) c) First In.47. d) Interrelationships among functional areas and firm strategies. __________ is adding new. c) Organizational culture and leadership. d) Top management providing a key role in collaborating with important customers. An array of firm resources includes interpersonal relations among managers in the firm. and operations Ans: a Q. d) Reputational resources. A company's ability to meet its short-term financial obligations is measured by which of the following categories? a) liquidity ratios b) profitability ratios c) activity ratios d) leverage ratios Ans: a Q. Ans:c Q. customer service. a) long-term financial b) detailed and complex c) simple and routine d) fast but comprehensive Ans: d 8 . Although firm infrastructure is quite frequently viewed only as overhead expense. c) Effective information systems contributing significantly to a firm's overall cost leadership strategy. Ans: c Q.52.Strategic Management d) human resource management. Examples include all of the following except: a) Negotiating and maintaining ongoing relations with regulatory bodies. it can become a source of competitive advantage. Such competitive advantages are based upon a) Physical uniqueness.48. d) Tangible resources. The competencies or skills that a firm employs to transform inputs into outputs are: a) Tangible resources. and its reputation with its customers and suppliers. c) Social complexity. The "balanced scorecard" supplies top managers with a _____________ view of the business. Ans: b Q.50. its culture.51. b) Marketing expertise increasing a firm's revenues and enabling it to enter new markets. marketing and sales. b) Intangible resources. c) Organizational capabilities. b) Path dependency.49. Ans: d Q. and customer. organizational. such as committing errors in assessing the market and competitive conditions.55. Ans: a Q. c) Represent their own interests. As our world increases in complexity. The CEO of Lucent Technologies made a lot of mistakes. people. this example illustrates the _________________ perspective of leadership. c) Governmental regulations.Strategic Management Q. environmental. of The "advance work" in the strategic management process is comprised a) Strategy formulation. the global environment is increasingly challenging and competitive. environmental. and information.56. b) Emphasize the importance of short-term goals. According to the text. and psychological. d) Financial.57. and customer. includes which three components a) Financial. and social. according to the text. The "triple bottom line" approach to corporate accounting. b) The flow of capital.54. Ans: b 9 . b) Strategy implementation. b) Financial. d) Strategy analysis. a) romantic b) internal mechanism c) operational d) external control Ans: a Q. c) Financial. while working to prioritize and fulfill their responsibilities. c) Strategic posturing. Ans: d Q. The key to effective globalization is a) More people speaking more languages. d) Represent the interests of the shareholders. Such errors led to performance declines. Members of an organization's board of directors should. organizational.53. d) The flow of goods. a) Direct all actions of the CEO. as well as improperly redesigning the organization into 11 business units. b) Encompass all the major rules and regulations of the corporate work force. d) Be shorter in length.60. gather to form a cooperative in order to sell their products to buyers directly. c) Encompass both the purpose of the company as well as the basis of competition. b) Are very specific. Ans: c Q. Which of the following lists is the hierarchy of organizational goals in order from least specific to most specific? a) Mission statements. d) Set organizational structure. vision statements.59. negligible b) positive. negative c) negative. c) Evoke powerful and compelling mental images. Ans: d Q. positive d) negative. c) Vision statements. Interest rate increases have a ________ impact on the residential home construction industry and a ___ effect on industries that produce consumer necessities. Vision statements a) Provide specific objectives. replacing their previous distributor. strategic objectives. such as farmers.Strategic Management Q. mission statements. An independent group of suppliers. Ans: c Q. Vision statements are used to create a higher understanding of the organization's overall direction and purpose. negligible Ans: d Q. a) positive. Which of the following would be thought of as part of a firm's general environment? a) increased trade deficit b) decreased entry barriers c) increased bargaining power of the firm's suppliers d) increased competitive intensity Ans: a Q. d) Vision statements. b) Mission statements. mission statements. An organization's mission. vision statements. should a) Be less detailed. in contrast to its vision.63. This is an example of 10 .58.62. strategic objectives. such as prescription drugs or basic grocery items.61. strategic objectives. strategic objectives. The most extreme rivalry results from a) A high level of differentiation. high fixed or storage costs.Strategic Management a) Forward integration. d) Greater awareness of the environment results in environmental legislation.64. Ans: a Q. Ans: b Q.65. d) Numerous equally balanced competitors. a) b) c) d) Ans: b b) Backward integration. As seen in Porter's Five Forces model.68. conditions under which a supplier group can be powerful include all the following except a) Lack of importance of the buyer to the supplier group. lack of differentiation.66. The buyer's profit margin is low. c) Threat of substitute products. Q. Ans: c Q. slow industry growth. c) Numerous equally balanced competitors. d) Dominance by a few suppliers. manufacturing capacity increases only in large increments. b) Increased awareness of personal health leads to lower demand. high fixed or storage costs. Which of the following is an example of the interrelationship between the competitive and general environments? a) A decline in a nation's educational standards results in a decline in the nation's productivity. Ans: d Q.67. The bargaining power of the supplier is less than that of the buyer when Volume of purchase is low. b) High differentiation by the supplier. low exit barriers. c) Readily available substitute products. These are primary activities and: a) Peripheral activities b) Support activities c) Secondary activities d) Outsourced activities Ans: b 11 . Threat of backward integration by buyers is low. The value chain is subdivided into two main headings. d) Threat of entry. slow industry growth. and greater rivalry in the alcoholic beverages industry. Cost savings from the supplier's product are minimal. b) Few competitors. c) A country's technological inferiority results in its enactment of strong trade barriers against importation. Compared to a firm that does everything in-house this is likely to incur: a) Higher transaction costs. marketing and delivery of the product or service b) Those activities that are all undertaken in-house c) Those activities that support the production. This is an example of: a) Nearshoring b) Offshoring c) Insourcing d) Outsourcing Ans: c Q. The 'operations' in a passenger airline service would be: a) The manufacture of the aircraft b) Getting passengers and baggage from A to B by means of flying in an aircraft c) The design of the price structure and yield plan d) Selling the tickets to passengers Ans: b Q. One of the strategic decisions relating to the value chain concerns vertical integration. A network of firms providing different parts of a value-chain in the production of a product or service is known as: a) Franchising b) Nearshoring c) Orchestrating d) Co-specialization Ans: d Q. higher control 12 .73. Firm A has decided to use an outside travel firm for making travel arrangements but it is based on the premises of Firm A.70. marketing and delivery of the product or service d) Directly involved in the production and delivery of the product or service Ans: a Q. In the value chain.71. lower control b) Higher transaction costs.74. primary activities are: a) Directly involved in the production. This would involve: a) Deciding whether to locate operations in the home country or in a foreign location b) Deciding whether the activity should be performed within the organization or by a different firm c) Deciding to link all activities using Enterprise Resource Planning d) Deciding whether to share certain activities across different products and markets Ans: b Q.72. A firm outsources many of its value chain activities.Strategic Management Q.69. a) b) c) d) Ans: d A joint venture can be defined as: Two firms collaborate together on a specific project One firm licenses its intellectual property to another firm Two firms merge together Two firms come together to form a third. a) b) c) d) Ans: a Which of the following outcomes is a potential benefit of outsourcing? Higher flexibility Higher control Lower transaction costs Better linkages between activities Q. When a firm promises more than it can actually deliver to win a contract. lower control Ans: a Q.Strategic Management c) Lower transaction costs. Substantial changes to the range of offerings or the markets served or both are known as: a) Differentiation b) Diversification c) Relocation d) Brand extension Ans: b Q. a) b) On average. legally separate firm Q. At corporate level.81. the highest levels of profitability are shown by: Firms focused on just one or two products Firms with a moderately diverse range of related products and businesses Firms with a very diverse range of related products and businesses Firms with a diverse range of unrelated products and businesses Economies of scale are derived from: Achieving cheaper unit costs through making larger quantities Using cheaper raw materials 13 .79. higher control d) Lower transaction costs.77.76.78.75. a) b) c) d) Ans: b Q. this is known as: a) Adverse selection b) Inverse selection c) Moral hazard d) Trust hazard Ans: a Q.80. diversification comes about when a firm is involved in two or more: a) Businesses b) Markets c) Segments d) Industries Ans: d Q. Which of the following might be sources of synergy between two business units? a) They have similar customers and use the same distribution channels b) The profits from one can be used to finance the other when its gets into trouble c) They both have a website d) They are both located in the same town Ans: a Q.87.82.Strategic Management c) Increasing the breadth of the portfolio d) Increasing the number of markets served Ans: a Q. Which of the following are NOT likely to be sources of relatedness between businesses? a) Similarities in size b) Operating in industries with similar success factors c) Similarities in production technologies d) Selling to customers with similar demographic characteristics Ans: a Q.85. Which of the following might NOT be an advantage of increasing the number of countries in which a clothing firm does business? a) Exposure to demanding customers with exotic tastes b) Increased efficiency c) Making life more difficult for competitors d) Increased access to funding Ans: b Q.Learning from trying out new and different things is termed: a) Absorptive capacity b) Exploitation c) Exploration d) Economies of scope Ans: c 14 .83.86.84. Which of the following outcomes is NOT an advantage of a completely vertically integrated business? a) Potentially greater control is achieved b) Potentially greater quality is achieved c) Lowering of risk is achieved d) Lower price of supplies is achieved Ans: c Q. Synergies allow businesses to add value to one another whereas the extent to which the corporate centre can add value to each of its businesses is called: a) Relatedness b) Size c) Competencies d) Vision Ans: a Q. c) what one would receive on U. thus experiencing less threat from substitutes than its competitors Ans: c Q. Businesses without a competitive advantage are not likely to earn more than "normal" profits in the long run. Technological innovation is to a cost-based strategy. Broadly-defined target market is to a cost leadership strategy.92. Ans: a Q. Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces? a) by increasing a firm's margins.91. d) Profit pool. it avoids the need for a low cost position b) it helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives c) supplier power is increased because suppliers will be able to charge higher prices for their inputs d) firms will enjoy high customer loyalty. Normal profits are a) profits one would expect to earn on investments that have a similar level of risk.88. d) profits earned by a corporation on a diversified portfolio of stocks.S. b) Revenue enhancer.89. Treasury securities. c) Profit outsourcing. Q. Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? a) differentiation b) overall cost leadership c) differentiation focus d) stuck-in-the-middle Ans: b Q. The total profits in an industry at all points along the industry's value chain is called the a) Profit maximizer. a) b) c) d) Ans: d A narrow market focus is to a differentiation-based strategy as a Growth market is to a differentiation-based strategy.Strategic Management Q. 15 . Growth market is to a cost-based strategy. b) profits received by corporations in the normal course of business.90. 94. Which of the following industries is least likely to follow the conventional life-cycle model? a) Software development b) Coal mining c) Insurance broking d) Hairdressing Ans: d Q.98. and the emphasis on process design is high. and the market growth rate is low in the ______ stage of the industry life cycle. Brandenburger and Nalebuff added a sixth force to Porter's Five Forces.93. Decline in the market life cycle. Costs continue to increase. Differentiation opportunities increase. Strong competitive advantage. there are numerous segments. a) b) c) d) Ans: a An 'industry recipe' can be defined as: An accepted pattern of operating and competing A tactic for anticipating a competitor's next move The hidden competences that are difficult to imitate A strategic group The most probable time to pursue a harvest strategy is in a situation of High growth.96. competition is very intense.99.97.95. In the _______ stage of the industry life cycle. Q. It is known as: a) The threat of substitutes b) The power of complementors 16 .Strategic Management Ans: d Q. a) maturity b) growth c) introduction d) decline Ans: c Q. the intensity of competition is low. a) b) c) d) Ans: b As markets mature There is increasing emphasis on efficiency. The emphasis on product design is very high. a) b) c) d) Ans: a Q. Application for patents increase. Q. Mergers and acquisitions. a) introduction b) maturity c) growth d) decline Ans: b Q. rapid technological change.Strategic Management c) Seller power d) Government regulation Ans: b Q. An industry characterized by irregular patterns of stability.100. high uncertainty and global competition can be described as: a) Hypercompetitive b) Hyperactive c) Atypical d) Co-optetive Ans: a 17 .