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Strategic Management

Q.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

Strategic Management
Q.9.

What do Cash Cows symbolize in BCG matrix?


a) Remain Diversified
b) Invest
c) Stable
d) Liquidate

Ans: c
Q.10.What does Green symbolize in BCG matrix?
a) Invest & Expand
b) Select & Earn
c) Harvest & Divest
d) Both a & b
Ans: a
Q.11.

What does Yellow symbolize in BCG matrix?


a) Invest & Expand
b) Harvest & Divest
c) Select & Earn
d) Both a & b

Ans: c
Q.12.

What does Red symbolize in BCG matrix?


a) Invest & Expand
b) Harvest and Earn
c) Harvest & Divest
d) Select & Earn

Ans: c
Q.13.

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.14.

&
&

Ans: d
Q.15.

In strategic thinking, how long is the long term, 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.16.
Low
cost,
Differentiation
__________________
a) Corporate strategies
2

and

Focus

are

examples

b) Operational Strategies

of

Strategic Management
c) Business Strategies
Ans: c
Q.17.

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.18.

In BCG matrix, 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.19.

In BCG Matrix, 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.20.

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.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.22.

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

Ans: c
Q.23.
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

Strategic Management

Q.24.
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 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.25.

Which of the following is NOT part of the micro environment?


a) Competitors
b) Customers
c) Technology
d) Publics

Ans: c
Q.26.
In companys environment, companys customers are part of which of the
following?
a) Internal environment
b) Micro environment
c) c) Macro environment
d) external environment
Ans: b
Q.27.
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.28.
In the case where an organization acquires its supplier, this is an
example of:
a) Horizontal integration
b) Forwards
vertical
integration
c) Backwards
vertical
d) a and b
integration
Ans: c
Q.29.
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
Ans: d
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Strategic Management

Q.30.
14.'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.31.
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.32.

1In strategic thinking, how long is the long term, approximately?


a) 1 to 12 months
b) 1 to 5 years
c) More than 5 years
d) less than 5 year

Ans: c
Q.33.
a)
b)
c)
d)

What are stages 2, 3 and 4 of the outline strategy process?


Generate options; select strategy; implement strategy
Strategy selection; strategy implementation; strategic control
Deliberate strategy; emergent strategy; realized strategy.
Appraisal of strengths and weaknesses; choice of strategic direction;
strategy implementation

Ans: b
Q.34.

The strategy of TATA Motors would be:


a) Functional Strategy
b) Corporate Strategy
c) Business Strategy
d) both b and c

Ans: c
Q.35.
Growth,
retrenchment
__________________?
a) Corporate strategies
c) Functional Strategies
Ans: a
Q.36.

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

Strategic Management
Ans: c

Q.37.
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.
Developing a vision and mission, identifying an organization's external
opportunities and threats, and determining internal strengths and weaknesses
are all __________ activities.
a) strategy-formulation
b) strategy-implementation
c) long-range planning
d) short-range planning
Ans: a
Q.39.
The _________ answers the question "What do we want to become?"
whereas _________answers the question "What is our business?"
a) Vision statement; mission statement
b) Short-term objectives; long-term objectives
c) Objectives; strategies
d) Mission; vision
Ans: a
Q.40.

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.
recommendation.

Ans: d
Q.41.
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.42.
__________ is based on the assumption that the future will be just like
the past.
a) Delphi forecasts
b) Econometric models
c) Linear regression
d) Scenario forecasts
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Strategic Management
Ans: c

Q.43.
__________ is adding new, unrelated products or services for present
customers.
a) Concentric diversification
b) Horizontal diversification
c) Conglomerate diversification
d) Product development
Ans: c
Q.44.
Which of the following is not a limitation of SWOT (Strengths,
Weaknesses, Opportunity, 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.45.
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.
b) Need to maintain the reputation of the company.
c) Organizational culture and leadership.
d) Interrelationships among functional areas and firm strategies.
Ans: d
Q.46.
XYZ Corp. is centering on the objective of low-cost, high quality, on-time
production by curtailing idle productive facilities and workers. The XYZ Corp. is
taking advantage of a ____________ system.
a) Just-In-Time (JIT)
b) Last In, First Out (LIFO)
c) First In, First Out (FIFO)
d) Highly mechanized
Ans: a
Q.47.
Which of the following lists is comprised of support activities:
a) human resource management, information systems, procurement, and firm
infrastructure
b) customer service, information systems, technology development, and
procurement
c) Human resource management, technology development, customer service,
and procurement

Strategic Management
d) human resource management, customer service, marketing and sales, and
operations
Ans: a
Q.48.
Although firm infrastructure is quite frequently viewed only as overhead
expense, it can become a source of competitive advantage. Examples include
all of the following except:
a) Negotiating and maintaining ongoing relations with regulatory bodies.
b) Marketing expertise increasing a firm's revenues and enabling it to enter new
markets.
c) Effective information systems contributing significantly to a firm's overall cost
leadership strategy.
d) Top management providing a key role in collaborating with important
customers.
Ans: b
Q.49.
The competencies or skills that a firm employs to transform inputs into
outputs are:
a) Tangible resources.
b) Intangible resources.
c) Organizational capabilities.
d) Reputational resources.
Ans: c
Q.50.
An array of firm resources includes interpersonal relations among
managers in the firm, its culture, and its reputation with its customers and
suppliers. Such competitive advantages are based upon
a) Physical uniqueness.
b) Path dependency.
c) Social complexity.
d) Tangible resources.
Ans:c
Q.51.
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.52.
The "balanced scorecard" supplies top managers with a _____________
view of the business.
a) long-term financial
b) detailed and complex
c) simple and routine
d) fast but comprehensive
Ans: d

Strategic Management

Q.53.
The CEO of Lucent Technologies made a lot of mistakes, such as
committing errors in assessing the market and competitive conditions, as well as
improperly redesigning the organization into 11 business units. Such errors led
to performance declines. According to the text, this example illustrates the
_________________ perspective of leadership.
a) romantic
b) internal mechanism
c) operational
d) external control
Ans: a
Q.54.
of

The "advance work" in the strategic management process is comprised


a) Strategy formulation.
c) Strategic posturing.

b) Strategy implementation.
d) Strategy analysis.

Ans: a
Q.55.
Members of an organization's board of directors should, while working to
prioritize and fulfill their responsibilities,
a) Direct all actions of the CEO.
b) Emphasize the importance of short-term goals.
c) Represent their own interests.
d) Represent the interests of the shareholders.
Ans: d
Q.56.
The "triple bottom line" approach to corporate accounting, according to
the text, includes which three components
a) Financial, organizational, and psychological.
b) Financial, environmental, and customer.
c) Financial, organizational, and customer.
d) Financial, environmental, and social.
Ans: d
Q.57.
As our world increases in complexity, the global environment is
increasingly challenging and competitive. The key to effective globalization is
a) More people speaking more languages.
b) The flow of capital, people, and information.
c) Governmental regulations.
d) The flow of goods.
Ans: b

Strategic Management
Q.58.
Which of the following lists is the hierarchy of organizational goals in
order from least specific to most specific?
a) Mission statements, strategic objectives, vision statements.
b) Mission statements, vision statements, strategic objectives.
c) Vision statements, strategic objectives, mission statements.
d) Vision statements, mission statements, strategic objectives.
Ans: d
Q.59.
An organization's mission, in contrast to its vision, should
a) Be less detailed.
b) Encompass all the major rules and regulations of the corporate work force.
c) Encompass both the purpose of the company as well as the basis of
competition.
d) Be shorter in length.
Ans: c
Q.60.
Vision statements are used to create a higher understanding of the
organization's overall direction and purpose. Vision statements
a) Provide specific objectives.
b) Are very specific.
c) Evoke powerful and compelling mental images.
d) Set organizational structure.
Ans: c
Q.61.
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.62.
Interest rate increases have a ________ impact on the residential home
construction industry and a ___ effect on industries that produce consumer
necessities, such as prescription drugs or basic grocery items.
a) positive; negligible
b) positive; negative
c) negative; positive
d) negative; negligible
Ans: d
Q.63.
An independent group of suppliers, such as farmers, gather to form a
cooperative in order to sell their products to buyers directly, replacing their
previous distributor. This is an example of

10

Strategic Management
a) Forward integration.
c) Threat of substitute products.
Ans: a
Q.64.
a)
b)
c)
d)
Ans: b

b) Backward integration.
d) Threat of entry.

The bargaining power of the supplier is less than that of the buyer when
Volume of purchase is low.
The buyer's profit margin is low.
Cost savings from the supplier's product are minimal.
Threat of backward integration by buyers is low.

Q.65.
As seen in Porter's Five Forces model, 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.
b) High differentiation by the supplier.
c) Readily available substitute products.
d) Dominance by a few suppliers.
Ans: c
Q.66.
The most extreme rivalry results from
a) A high level of differentiation.
b) Few competitors, slow industry growth, lack of differentiation, high fixed or
storage costs.
c) Numerous equally balanced competitors, manufacturing capacity increases
only in large increments, low exit barriers.
d) Numerous equally balanced competitors, slow industry growth, high fixed or
storage costs.
Ans: d
Q.67.
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.
b) Increased awareness of personal health leads to lower demand, and greater
rivalry in the alcoholic beverages industry.
c) A country's technological inferiority results in its enactment of strong trade
barriers against importation.
d) Greater awareness of the environment results in environmental legislation.
Ans: b
Q.68.
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
Ans: b

11

Strategic Management
Q.69.
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
Ans: a
Q.70.
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.71.
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
Ans: b
Q.72.
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
Ans: c
Q.73.
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.74.
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
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Strategic Management
c) Lower transaction costs, higher control
d) Lower transaction costs, lower control
Ans: a
Q.75.
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
Ans: a
Q.76.
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.77.
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, legally separate firm

Q.78.
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.79.
At corporate level, diversification comes about when a firm is involved in
two or more:
a) Businesses
b) Markets
c) Segments
d) Industries
Ans: d
Q.80.
a)
b)
c)
d)
Ans: b
Q.81.
a)
b)

On average, 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
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Strategic Management
c) Increasing the breadth of the portfolio
d) Increasing the number of markets served
Ans: a
Q.82.
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.83.
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.84.
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.85.
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.86.
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.87.Learning from trying out new and different things is termed:
a) Absorptive capacity
b) Exploitation
c) Exploration
d) Economies of scope
Ans: c
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Strategic Management
Q.88.
Businesses without a competitive advantage are not likely to earn more
than "normal" profits in the long run. Normal profits are
a) profits one would expect to earn on investments that have a similar level of
risk.
b) profits received by corporations in the normal course of business.
c) what one would receive on U.S. Treasury securities.
d) profits earned by a corporation on a diversified portfolio of stocks.
Ans: a
Q.89.
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.90.
Which of the following is false regarding how a differentiation strategy
can help a firm to improve its competitive position vis vis Porter's five forces?
a) by increasing a firm's margins, 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, thus experiencing less threat from
substitutes than its competitors
Ans: c
Q.91.
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.
Growth market is to a cost-based strategy.
Technological innovation is to a cost-based strategy.
Broadly-defined target market is to a cost leadership strategy.

Q.92.
The total profits in an industry at all points along the industry's value
chain is called the
a) Profit maximizer.
b) Revenue enhancer.
c) Profit outsourcing.
d) Profit pool.
15

Strategic Management
Ans: d
Q.93.
The emphasis on product design is very high, the intensity of competition
is low, and the market growth rate is low in the ______ stage of the industry life
cycle.
a) maturity
b) growth
c) introduction
d) decline
Ans: c
Q.94.
In the _______ stage of the industry life cycle, there are numerous
segments, competition is very intense, and the emphasis on process design is
high.
a) introduction
b) maturity
c) growth
d) decline
Ans: b
Q.95.
a)
b)
c)
d)
Ans: a
Q.96.
a)
b)
c)
d)
Ans: b

As markets mature
There is increasing emphasis on efficiency.
Costs continue to increase.
Application for patents increase.
Differentiation opportunities increase.

Q.97.
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.
Decline in the market life cycle.
Strong competitive advantage.
Mergers and acquisitions.

Q.98.
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.99.
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
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Strategic Management
c) Seller power

d) Government regulation

Ans: b
Q.100.
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
Ans: a

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