Strategic Management Mcqs (OFU) 1

Strategy and the Organization.

To find out what an organization's strategy is, you should:

a) Read the mission statement

b) Look at what the organization actually does
c) Read the strategic plan
d) Ask the CEO
Question 2

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
Question 3

In the context of strategic management resources can be defined as:

a) The knowledge and skills within the organization

b) Something that an organization owns or controls that cannot be copied
c) Something that an organization owns, controls or has access to on a semi-
permanent basis
d) The physical assets of the organization
Question 4

In the context of strategic management, 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 are 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
Question 5

In the case where an organization acquires its supplier, this is an example of:

a) Horizontal integration
b) Forwards vertical integration
c) Backwards vertical integration
d) Downstream vertical integration
Question 6

When a firm seeks the benefits of global integration and local adaptation, it is best described
as which type of strategy?

a) Transnational
b) Global
c) Multi-national
d) Global-local
Question 7

Knowledge which is difficult to define and codify is known as:

a) Explicit
b) Tangible
c) Tacit
d) Random
Question 8

Competitive advantage based on the creation of opportunities using internal resources is

characterized by which approach/view?

a) The positioning approach

b) The outside-in approach
c) The resource-based view
 d) The knowledge-management approach
Question 9

'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
Question 10

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) Satisficing
c) Irrational
d) Optimal
Answers.1B,2D,3C,4D,5C,6A.7C.8C.9A.10B

What is Strategic Management?

A strategic decision can be distinguished from other types of decisions by three factors, these
are magnitude, time-scale and:

a) Commitment
b) Riskiness
c) Impact
d) Longevity
Question 2

'Logical incrementalism' can be described as:

 a) Careful design and planning
b) Emergent
c) Cautious resource allocation
d) Top management rational analysis
Question 3

An organization in which strategy development is characterized by internal political

negotiation and self-interest is operating in which strategy-making mode?

a) The transactive mode

b) The muddling through mode
c) The command mode
d) The emotional mode
Question 4

'Influence' is defined as the ability to ____________ someone to something they would not
otherwise have done.

a) Intimidate
b) Force
c) Order
d) Persuade
Question 5

McDonalds is deciding whether to expand into manufacturing kitchen equipment in China.

At what level is this decision likely to be made?

a) Business
b) Corporate
c) Functional
d) International
Question 6

The authors believe there are three tests that can be applied to judge whether a strategy is
'good'. These are:
 a) Fit, distinctiveness, sustainability
b) Fit, internal resources, external environment
c) Distinctiveness, internal resources, fit
d) Sustainability, distinctiveness, external environment
Question 7

Diversification into many unrelated areas is an example of:

a) Risk management
b) Good management
c) Uncertainty reduction
d) Sustainability
Question 8

According to Porter, dealing with the paradox of premature commitment versus not enough
commitment involves some kind of:

a) Trade-off
b) Lock-in
c) Lock-out
d) Diversification
Question 9

Corporate governance is concerned with:

a) Executive remuneration, disclosure of information, auditing and accounting

procedures, and organizations' management structures
b) Elections to the board of directors
c) Relationships with national governments
d) Corporate-level strategy
Question 10

The principal-agent problem is concerned with:

a) Procurement
 b) Appropriation of shareholders' investment by a firm's managers
c) How to control a firm's distributors and dealers
d) Corporate social responsibility

1.A

2.B

3.B

4.D

5.B

6.A

7.D

8.A

9.A

10.B

Understanding the Influence of the Environment.

Question 1

In terms of the PESTLE analysis, the liberalizing of international trade and tariff regimes
could go in which section or sections?

a) Political
b) Legal
c) Political and economic and legal
d) Political and environmental
Question 2

An 'industry recipe' can be defined as:

a) An accepted pattern of operating and competing

b) A tactic for anticipating a competitor's next move
 c) The hidden competences that are difficult to imitate
d) A strategic group
Question 3

Typically, profits are highest in which stage of the industry life-cycle?

a) Introduction
b) Growth
c) Maturity
d) Decline
Question 4

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
Question 5

Brandenburger and Nalebuff added a sixth force to Porter's Five Forces. It is known as:

a) The threat of substitutes

b) The power of complementors
c) Seller power
d) Government regulation
Question 6

The Six Forces framework is based on the principle of:

a) Resource-based view
b) Conduct - structure - performance
c) Econometrics
d) Structure - conduct - performance
Question 7

In the Six Forces, the 'threat of new entrants' relates to:

a) Barriers to entry
b) Substitutes
c) Switching costs
d) Buyer power
Question 8

An industry characterized by irregular patterns of stability, rapid technological change, high

uncertainty and global competition can be described as:

a) Hypercompetitive
b) Hyperactive
c) Atypical
d) Co-optetive
Question 9

A situation in which the joint moves of two firms can determine how much money each firm
can make or lose can be explained using the story of:

a) The Trojan Horse

b) The Icarus Paradox
c) The Prisoner's Dilemma
d) The Icarus Dilemma
Question 10

In the context of environmental analysis, 'munificence' means:

a) The extent to which resources are freely available to support firms in an

industry and enable them to grow
b) The extent to which it is diverse
c) The extent to which it is stable or turbulent
d) The extent to which the industry follows the conventional life-cycle stages
 Answers.1C. 2A. 3C. 4D. 5B. 6D. 7A. 8A. 9C. 10A.

Distinctiveness (1): Competitive Stance

Question 1

A 'market driven' firm will typically:

a) Develop new products and then find someone to sell them to

b) Define the target market and produce products that will satisfy those customers'
needs
c) Operate in a product-oriented fashion
d) Suffer from market-myopia
Question 2

Segmentation is a way of:

a) Subdividing markets
b) Subdividing industries
c) Differentiating products
d) Subdividing organizations into departments
Question 3

A B2C market is:

a) Business to commercial
b) Business to consumer
c) Business to contract
d) Business to corporate
Question 4

Segmentation is a compromise between two ideals: mass marketing and:

a) Customization
b) Uniformity
c) Innovation
d) Convergence of tastes
Question 5

Porter's generic strategies are:

a) Low price, differentiation, focus

b) Cost leadership, differentiation, cost focus, focus differentiation
c) Price leadership, differentiation, focus
d) Low cost, differentiation, focus differentiation
Question 6

According to Porter, if an organization does not follow either a cost leadership strategy or a
differentiation strategy they are:

a) Hybrid
b) Stuck in the middle
c) Typical
d) No frills
Question 7

According to Bowman's generic strategies model a high price, low-perceived value strategy
is only feasible in:

a) An oligopoly
b) A monopoly
c) A concentrated industry
d) A fragmented industry
Question 8

Treacy and Wiersema identify 3 ways a firm may get competitive advantage. These are:

a) Low cost, customer intimacy, product leadership

b) Operational excellence, customer intimacy, product leadership
c) Operational excellence, reputation, product leadership
d) Low costs, reputation, product leadership
Question 9
 In Porter's Generic Strategies model, a focus strategy involves:

a) Selling a limited range of products

b) Selling to a narrow customer segment
c) Selling to one region only
d) Selling simple products that are cheap to produce
Question 10

H&M, the clothes retailer is for most of its products following which generic strategy?

a) Focused differentiation
b) Hybrid
c) Cost Focus
d) No Frills
ANSWERS. B,A,B,A,B,B,B,B,B,B

Distinctiveness (2): Scope, Scale, and Diversity

Question 1

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
Question 2

At corporate level, diversification comes about when a firm is involved in two or more:

a) Businesses
b) Markets
c) Segments
d) Industries
Question 3

On average, the highest levels of profitability are shown by:

a) Firms focused on just one or two products

b) Firms with a moderately diverse range of related products and businesses
c) Firms with a very diverse range of related products and businesses
d) Firms with a diverse range of unrelated products and businesses
Question 4

Economies of scale are derived from:

a) Achieving cheaper unit costs through making larger quantities

b) Using cheaper raw materials
c) Increasing the breadth of the portfolio
d) Increasing the number of markets served
Question 5

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
Question 6

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
Question 7
 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
Question 8

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
Question 9

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
Question 10

Learning from trying out new and different things is termed:

a) Absorptive capacity
b) Exploitation
c) Exploration
d) Economies of scope
ANSWERS,B,D,B,A,C,A,B,A,A,C
 Distinctiveness (3): The Value Chain.

The value chain is subdivided into two main headings. These are primary activities and:

a) Peripheral activities
b) Support activities
c) Secondary activities
d) Outsourced activities
Question 2

In the value chain, primary activities are:

a) Directly involved in the production, marketing and delivery of the product or

service
b) Those activities that are all undertaken in-house
c) Those activities that support the production, marketing and delivery of the
product or service
d) Directly involved in the production and delivery of the product or service
Question 3

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
Question 4

One of the strategic decisions relating to the value chain concerns vertical integration. 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
Question 5

Firm A has decided to use an outside travel firm for making travel arrangements but it is
based on the premises of Firm A. This is an example of:

a) Nearshoring
b) Offshoring
c) Insourcing
d) Outsourcing
Question 6

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
Question 7

A firm outsources many of its value chain activities. Compared to a firm that does everything
in-house this is likely to incur:

a) Higher transaction costs, lower control

b) Higher transaction costs, higher control
c) Lower transaction costs, higher control
d) Lower transaction costs, lower control
Question 8

When a firm promises more than it can actually deliver to win a contract, this is known as:

a) Adverse selection
b) Inverse selection
 c) Moral hazard
d) Trust hazard
Question 9

Which of the following outcomes is a potential benefit of outsourcing?

a) Higher flexibility
b) Higher control
c) Lower transaction costs
d) Better linkages between activities
Question 10

A joint venture can be defined as:

a) Two firms collaborate together on a specific project

b) One firm licenses its intellectual property to another firm
c) Two firms merge together
d) Two firms come together to form a third, legally separate firm
ANSWERS. B,A,B,B,C,C,D,A,A,D

The Resource-based View of the Firm

Question 1

Knowledge that exists in an organization but is difficult to write down and codify is known
as:

a) Explicit knowledge
b) Tacit knowledge
c) Virtual knowledge
d) Ambiguous knowledge
Question 2

Tacit knowledge is seen as important feature of competitive advantage in which approach to

strategy?
 a) Resource-based view of the firm
b) Competitive positioning approach
c) Industrial organization
d) Evolutionary approach
Question 3

The Resource-based view of the firm could also be described as:

a) The outside-in approach

b) The inside-out approach
c) The outsider approach
d) The insider approach
Question 4

Firms that are able to build relational capital are more able to:

a) Increase turnover
b) Appoint friends and relatives to senior management positions
c) Decide on an appropriate range of products
d) Transfer knowledge to their alliance partners
Question 5

An organization has competitive advantage in the markets in which it competes but its
culture is rather inwards looking and complacent. In this situation it is unlikely that
competitive advantage will be:

a) Copied
b) Eroded
c) Sustainable
d) Threshold
Question 6

The VIRUS acronym in relation to strategic resources stands for:

a) Valuable, Intimate, Rare, Un-Substitutable

 b) Valuable, Inimitable, Robust, Un-Substitutable
c) Variable, Inimitable, Robust, Un-Substitutable
d) Value, Inimitable, Rare, Un-Substitutable
Question 7

If a resource is 'inimitable' a competitor finds it:

a) Easy to copy
b) Easy to acquire
c) Easy to copy and easy to acquire
d) Difficult to copy
Question 8

The things that an organization does with its strategic assets are known as:
a) Strategic activities
b) Competences
c) Threshold activities
d) Threshold competences
Question 9

Which type of asset is rarely strategic?

a) Brand name
b) Financial assets
c) Reputation
d) Land and property
Question 10

Which type of assets can be considered as the most heterogeneous?

a) Human
b) Financial
c) Physical
d) Intangible
Answers. B/A/B/D/C/D/D/B/B/A