Question 1 For both individuals and businesses, successful strategies
Question 1 For both individuals and businesses, successful strategies are characterized by: a. Meticulous planning b. Clear goals, deep understanding the competitive environment, careful resource appraisal, and effective implementation c. The possession of superior abilities and resources which are then deployed to build competitive advantage d. Unrelenting commitment to ambitious goals . 0.5 points Question 2 If a firm adjusts its strategy to ensure it is consistent with its external environment, it benefits from a: a. Location within an attractive industry b. A license to operate c. Strategic leadership d. Strategic fit e. None of these . 0.5 points Question 3 The primary distinction between corporate strategy and business strategy is: a. Corporate strategy is the responsibility of the CEO, business strategy is formulated by the heads of business units b. Corporate strategy is concerned with where the firm competes; business strategy with how it competes c. Corporate strategy is concerned with the long-term performance of the firm; business strategy with resource deployment. d. Corporate strategy is concerned with establishing competitive advantage; business strategy with strategy implementation in individual businesses . 0.5 points Question 4 The primary purpose of strategy is: a. Achieving success b. Being better than rivals c. Satisfying all stakeholders d. Being an excellent corporate citizen . 0.5 points Question 5 Every business enterprise has a distinct purpose, however, common to all businesses is the goal of: a. Creating value b. Maximizing dividend payments to shareholders over the long term. c. Making customers satisfied and happy d. Satisfying as many stakeholders as possible . 0.5 points Question 6 The book that is considered as the first treatise on strategy is: a. Sun Tzu’s Art of War b. Carl Von Clausewitz’s Vom Kriege (On war) c. Niccolo Machiavelli’s Dell’arte della Guerra (The art of war) d. The Koran . 0.5 points Question 7 There are two main concepts of profit: a. Accounting profit and the economic profit b. Return on capital and return on sales c. Economic rent and the economic profit d. The normal return to capital and the abnormal return of capital . 0.5 points Question 8 In appraising a firm’s profit performance: a. Return on invested capital is a better indicator than return on sales b. Narrow measures of profit (such as after-tax net income) are better indicators than broad-based measures (such as EBITDAearnings before interest, tax, depreciation and amortization). c. Return on sales is a better indicator than return on invested capital d. Net margin is a better indicator than operating margin . 0.5 points Question 9 The profits earned by firms in an industry, are determined by: a. The extent to which the industry is protected by barriers to entry b. How much customers value the products supplied by the industry c. The value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers and their buyers d. The overall state of the economy and the intensity of competition within the industry . 0.5 points Question 10 The basic premise of industry analysis is that: a. The basic forces of technology and consumer demand are the fundamental forces that shape industry structure b. Firm strategies and their interactions are the key determinants of the industry environment c. Perfect competition and monopoly are theoretical models, in practice most industries are oligopolies d. The level of profitability within an industry is determined by the systematic influence of the industry structure which determines the intensity of competition in the industry . 0.5 points Question 11 If an industry earns a return on capital in excess of its cost of capital: a. It is likely to attract the attention of potential entrants; unless the industry is protected by high barriers to entry, the return on capital will fall b. Workers will push for higher pay and benefits causing the level of profitability to fall c. The high profits earned will encourage over-investment by firms causing the return on capital to fall. d. It will soon attracts the attention of competition authorities . 0.5 points Question 12 Economies of scale are a barrier to entry because: a. New entrants do not know where they are positioned on their learning curve b. New entrants face the cost and risk of creating large-scale capacity to start with or a severe cost disadvantage if they enter on a smaller scale c. New entrants face a risk of retaliation from the incumbents which could occur immediately on a large scale and start a price war as a deterrent of their entry d. New entrants do not know the economies they can generate in the future and therefore cannot precisely determine their selling price . 0.5 points Question 13 The bargaining power of buyers depends on: a. The size of buyers relative to that of sellers b. The buyer’s price sensitivity c. Buyer’s price sensitivity and the bargaining power of buyers relative to that of sellers d. The ability of buyers to backward integrate . 0.5 points Question 14 The bargaining power of suppliers is likely to be high: a. When the customer’s industry is relatively fragmented b. All of the above c. When suppliers are supplying differentiated products d. When the suppliers’ industry is concentrated . 0.5 points Question 15 Changing the industry structure is: a. Not really within the power of a single firm b. An endeavor that firms are undertaking on a permanent basis with great success c. A risky strategic move that may backfire, because of retaliation from the industry’s incumbents d. Sometimes possible even by small firms, if the mix of drivers for change and existing structure make it susceptible to change . 0.5 points Question 16 A market’s boundaries are defined by: a. Substitutability on the demand side and substitutability on the supply side b. The geographies of the markets that are supplied by the incumbents c. The type of product which is sold, and the type of customers willing to pay for the product d. Substitutability on both the demand side and the supply side, combined with an element of judgment depending on context and purpose . 0.5 points Question 17 One useful way to analyse the drivers of a firm’s relative profitability is: a. To disaggregate return on capital employed into component ratios that point to the main underlying drivers of profitability b. To conduct a survey of managers to ask what they think are the reasons why their firm is profitable c. To undertake a benchmarking study to compare a firm’s profitability with that of its rivals d. To disaggregate assets into component parts that point to the main drivers of profitability . 0.5 points Question 18 Which characteristics differentiate industries such as, on the one hand, aircraft manufacturers and commercial satellites, and, on the other hand, e-service and fast food industries? a. The capital requirements are very high for the first category and relatively low for the second category b. The first category is highly sophisticated and requires top notch technical skills, whereas the second category relies upon marketing competencies c. The second category of industries has very few players whereas the first category of industries is very fragmented, with thousands of players d. The intensity of competition is lower in the first category of industries than in the second category . 0.5 points Question 19 Porter’s five forces model of competition is too simple as originally conceived because it overlooks phenomena such as: a. The different levels of industry analysis that the five forces model can be applied to b. Competitors’ strategies may shape the industry structure, rather than structure shaping competition c. The relationships of substitution between products or services within one segment of the market d. The complexity and stability of the competitive world where rivals’ strategies affect each other . 0.5 points Question 20 The difference between substitute and complementary products may be summarized as follows: a. Complements increase the average pr
ice of any of them, whereas substitutes do the opposite b. Substitutes reduce the value of a product, whereas complements increase value c. Complements cannot be used together, whereas substitutes can d. Complements reduce the value of a product, whereas substitutes increase value . 0.5 points Question 21 In a market where Firm A and Firm B are leading suppliers, if Firm A initiates a price cut, the likelihood that Firm B responds with an identical price cut will be greater: a. If Firm B’s medium term goal is to maximize profit b. If Firm B’s medium term goal is to maximize market share c. If the market is growing d. If Firm B is a private rather than a public (listed) company . 0.5 points Question 22 The main use of industry segmentation analysis is: a. Formulate better marketing strategies b. Identify the most attractive segments for a firm to locate within c. Predict the likely evolution of market structure d. Understand better the needs of different customer groups . 0.5 points Question 23 A firm will choose to compete across multiple segments rather than specialize in a single segment if: a. Barriers to mobility are high b. It is a family owned firm c. There are large differences in income among consumers d. If the same resources and capabilities can be shared across different segments . 0.5 points Question 24 There are two primary sources of profit (or economic rent ): a. Market power and competitive advantage b. Competitive advantage and disequibrium rents c. Market power and superior resources d. Cost advantage and differentiation advantage. . 0.5 points Question 25 Strategy needs to take account of both the requirements of the firm’s external environment and the firm’s own resources and capabilities. Resources and capabilities rather than requirements of the external environment offer a stronger basis for strategy formulation when a. The external environment is in a state of flux b. The firm is engaged in the exploitation of natural resources such as petroleum or metal c. When the firm is supplying producer goods rather than consumer goods d. When the firm is a multinational corporation . 0.5 points Question 26 A major reason for the high valuation ratios (ratio of stock market value to balance sheet net asset value) for some companies is: a. Stock market irrationality which results in some companies becoming overvalued b. The undervaluation of intangible resources on companies’ balance sheets c. The rise of intellectual property valuation as a result of recent patent litigation d. Stock market doubts over the valuation of financial assets by companies and their auditors . 0.5 points Question 27 Core competences possess several attributes: a. They provide a basis for building new technological processes and offer a valuable product or service to a firm’s customers b. They provide a basis for entering new markets and make a disproportionate contribution to the customer value c. Core capabilities are found primarily in Japanese companies such as Honda, Canon, and Sony d. Core capabilities are found primarily in Japanese companies such as Honda, Canon, and Sony . 0.5 points Question 28 The choice between mechanistic and organic organizational forms depends mainly upon: a. The level of competitive rivalry b. The activities being undertaken and the stability of the external environment c. The preferences of top managers d. The technologies employed in the industry . 0.5 points Question 29 The different stages of the industry life cycles are defined primarily on the basis of: a. None of the above b. The characteristics of competition within the industry c. The pace of innovation within the industry d. The rate of growth of industry sales . 0.5 points Question 30 Large corporations with matrix structures where control is shared among different organizational dimensions have experienced: a. Benefits from superior coordination b. Lower levels of politicization s compared with functional and divisional structures c. The need to put primary emphasis upon their regional and country-based organizational units d. Excessive headquarters cost and complexity . 0.5 points Question 31 Competitive advantage can be defined as: a. A firm’s ability to grow faster than its competitors b. A firm’s potential to earn a rate of profit that is persistently higher than its rivals c. A firm’s ability to establish market leadership d. A firm’s potential for launching innovative new products . 0.5 points Question 32 Causal ambiguity allows a firm’s competitive advantage to be sustained because potential rivals are: a. Unable to identify the sources of the advantaged firm’s superior performance b. Unable to acquire the resources needed to compete against the advantaged firm c. All the above d. Deterred from directly competing with the advantaged firm . 0.5 points Question 33 According to Porter, cost leadership and differentiation are: a. Distinct generic strategies b. Strategies that can be pursued simultaneously c. Two names for the same fundamental strategy d. What leads a firm to be stuck in the middle . 0.5 points Question 34 In retailing, the cost advantages of large retail chains (such as Wal-Mart in the US, Tesco in Britain, Metro in Germany, and Carrefour in France) is primarily the result of: a. Lower costs of bought-in products as a result of superior bargaining power b. Using superior bargaining power to pay lower wage rates. c. Scale economies in operating large individual retail units d. Higher capacity utilization in retailing and distribution . 0.5 points Question 35 Which of the following product categories offers the greatest potential for differentiation? a. Cement and wheat b. Clothes and restaurants c. Sulfur and ethylene d. Jet fuel for airline jets . 0.5 points Question 36 What is the difference between differentiation and segmentation? a. Differentiation deals with the how a firm chooses to compete, while segmentation describes where in the entire market a firm chooses to compete b. Segmentation is the head of the marketing department’s responsibility, whereas the CEO is in charge of differentiation c. Differentiation is a firm’s strategic choice, whereas segmentation is given by its environment d. There is no difference between the two . 0.5 points Question 37 The resource-based view of firm focuses on: a. A theory of the firm based upon the work of David Ricardo and Joseph Schumpeter b. The importance of environmental sustainability for firm strategy c. The notion that resources and capabilities are the principal basis for firm strategy and the primary source of profitability d. The view that the foundation for organizational capability is the resources of the firm . 0.5 points Question 38 An organizational routine is: a. A new capability after it has been institutionalized within an organization b. A lower-level, operational capability (as opposed to a dynamic capability) c. A stable, repeatable, pattern of coordinated activity among organizational members d. The resource needed to create a new capability . 0.5 points Question 39 The main reason why a firm’s distinctive capabilities reflect the conditions that the firm faced during the early years of its development is because: a. Most managers adhere to the old adage: If it ain’t broke, don’t fix it b. Exploitation tends to dominate exploration c. New skills are difficult to acquire because of the propensity of senior organizational members to hire and promote junior employees who resemble them. d. Capabilities that develop early become embedded in a firm’s organizational culture . 0.5 points Question 40 The ability of firms such as BASF, Exxon, and General Electric to be industry leaders for over a century indicates: a. Size is the key predictor of resource superiority b. The power of economies of scale to drive performance c. A firm’s age is an indicator for capabilities developed through learning d. Their capacity for adaptation to changes in their environment