Competitive Strategy
Practice Questions
Course Introduction
Competitive Strategy explores the frameworks, tools, and analytical techniques essential for understanding and developing strategies that enhance a firm's long-term competitive advantage. The course examines the dynamics of industry competition, market structures, and the core factors influencing strategic decision-making, including resources, capabilities, positioning, and rivalry. Through case studies, simulations, and discussions, students learn to assess industry attractiveness, anticipate competitive moves, and formulate effective strategies that respond to changing environments, innovation, and global pressures. By the end of the course, participants acquire practical skills to diagnose strategic issues and craft plans that drive organizational success in diverse competitive contexts.
Recommended Textbook
Strategic Management Theory and Cases An Integrated Approach 12th Edition by Charles
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Page 2
W. L.
Chapter 1: Strategic Leadership: Managing the
Strategy-Making Process for Competitive Advantage
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Sample Questions
Q1) If a company focuses on its customers and creates incentives for employee productivity, the company will likely be successful in delivering shareholder value.
A)True
B)False
Answer: True
Q2) Good strategic leaders:
A) possess a willingness to delegate and empower subordinates.
B) control all facets of decision-making.
C) make decisions without consulting others.
D) ensure uniformity of purpose through the authoritarian exercise of power.
E) are usually inconsistent in their approach.
Answer: A
Q3) The feedback loop in the model of the strategic management process indicates that the process is ongoing; it never ends.
A)True
B)False
Answer: True
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Q1) One of the defining characteristics of the mature stage of the industry life-cycle is that growth is low or zero.
A)True
B)False
Answer: True
Q2) Interest rates have an impact on the sale of automobiles, appliances, and capital equipment. This represents a macroeconomic force.
A)True
B)False
Answer: True
Q3) As an industry enters the shakeout stage:
A) rivalry among companies declines.
B) demand grows at a high rate.
C) prices of products increase.
D) excess productive capacity emerges.
E) new entrants come into the market.
Answer: D
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Sample Questions
Q1) Which of the following is true of the impact of high product quality on competitive advantage?
A) It decreases the utility of the products.
B) It lowers unit costs of the products.
C) It adversely affects employee productivity.
D) It limits the company's ability to differentiate its products.
E) It increases the need for after sales services.
Answer: B
Q2) Resources:
A) are only the tangible assets available to a company.
B) can be both tangible and intangible.
C) are harder for a company to copy than capabilities are.
D) do not include patents, copyrights, and trademarks.
E) are considered valuable only if they increase a company's costs.
Answer: B
Q3) Quality-as-excellence and quality-as-reliability are concepts that apply to goods but not services.
A)True
B)False
Answer: False
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Chapter 4: Building Competitive Advantage Through Functional-Level Strategies
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Sample Questions
Q1) Research and development (R&D) can help a company improve quality by:
A) designing products that are easy to manufacture.
B) pursuing economies of scale.
C) developing strategies on how to market products.
D) upgrading employee skill levels.
E) creating teams whose members coordinate their own activities.
Q2) With regard to customer defection, which of the following statements is incorrect?
A) Defection rates are determined by customer loyalty.
B) The longer a company holds on to a customer, the greater is the volume of customer-generated unit sales.
C) Lowering customer defection rates creates a higher cost structure.
D) The longer a company retains a customer the higher the average unit cost of each sale.
E) There is a positive relationship between the length of time that a customer stays with the company and profit per customer.
Q3) You are a consultant offering advice to a large manufacturing firm about ways to increase its distinctive competency in customer responsiveness. What suggestions would you offer? Be specific and detailed in your answer.
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Chapter 5: Business-Level Strategy
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Q1) When a company targets a certain segment or niche, and customizes its offering to the needs of that particular segment through the addition of features and functions, the company is pursuing a _____ strategy.
A) broad low-cost
B) broad differentiation
C) product substitution
D) focus low-cost
E) focus differentiation
Q2) A low-cost company is often best positioned to survive price rivalry in its industry.
A)True
B)False
Q3) A company has a competitive advantage if it can increase costs relative to rivals.
A)True
B)False
Q4) Companies with a differentiation advantage tend to charge a lower price for their products.
A)True
B)False
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Chapter 6: Business-Level Strategy and the Industry Environment
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Sample Questions
Q1) A fragmented industry is composed of a large number of small and medium-sized companies.
A)True
B)False
Q2) Early adopters are customers who purchase a new technology or product only when they are convinced that it will be around for a long time.
A)True
B)False
Q3) Fragmented industries typically have high barriers to entry.
A)True
B)False
Q4) A fragmented industry is one composed of a:
A) single large company that has the power to determine prices.
B) large companies and their subsidiaries.
C) large number of small and medium-sized firms.
D) companies that operate in different locations across the world.
E) a small number of single proprietorships.
Q5) The franchisor typically owns and funds each of its franchisees.
A)True
B)False
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Chapter 7: Strategy and Technology
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Q1) The layout of the keys on a computer keyboard is an example of a technical standard.
A)True B)False
Q2) Aggressive marketing is a key factor in jump-starting demand to get potential early adopters to bear the switching costs associated with adopting a new innovation.
A)True B)False
Q3) One important advantage of being a first mover is that it guarantees success.
A)True
B)False
Q4) Which of the following is NOT a basic strategy for a first mover?
A) Develop and market the innovation itself
B) Develop and market the innovation jointly with other companies through a strategic alliance or joint venture
C) License the innovation to others
D) Discourage development of complementary assets
E) Increase height of imitation barriers
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Chapter 8: Strategy in the Global Environment
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Q1) Which of the following is not a necessity for leveraging the competencies of global subsidiaries?
A) Incentives for local managers to share knowledge and ideas
B) Awareness among managers that competencies can develop anywhere
C) Assertion of monopoly of the corporate center over subsidiaries
D) Transfer of competencies around the company
E) Incentives that encourage employees to take necessary risks
Q2) Which of the following is disadvantage of strategic alliances?
A) They give competitors a low-cost route to new technology and markets.
B) They do not facilitate entry into a foreign market.
C) They do not allow for sharing of risks and fixed costs.
D) They mandate that the companies do not share complementary competencies and assets.
E) They cause problems when it comes to establishing technological standards for the industry.
Q3) List and briefly describe each of the four basic global strategies.
Q4) What are the potential benefits and risks of global strategic alliances? What actions can a firm take to minimize the risks and maximize the benefits?
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Q1) In a strategic alliance, one company in the agreement benefits more than the other.
A)True
B)False
Q2) Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.
A)True
B)False
Q3) Horizontal integration in an industry tends to:
A) increase the cost structure.
B) increase product differentiation.
C) undermine the company's competitive advantage.
D) increase rivalry within the industry.
E) reduce bargaining power over suppliers and buyers.
Q4) What is the relationship between a company's corporate-level strategy and its business model?
Q5) Strategic alliance is a type of long-term contract that involves one company taking over another company.
A)True
B)False
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Chapter 10: Corporate-Level Strategy: Related and Unrelated
Diversification
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Q1) An advantage of a joint venture is that it allows a company to quickly gain entry into a new industry where barriers are high.
A)True
B)False
Q2) When a firm does not pay out its free cash flow to its shareholders, the shareholders bear an opportunity cost equal to their next best use of those funds.
A)True
B)False
Q3) Which of the following entry strategies should be used when speed is an important consideration?
A) Internal new venture
B) Acquisition
C) Joint venture
D) Unrelated diversification
E) Related diversification
Q4) Internal new ventures can generally be executed far more quickly than acquisitions. A)True
B)False
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) _____ are internal stakeholders in a company.
A) Customers
B) Government regulators
C) Board members
D) Suppliers
E) Creditors
Q2) Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.
A)True
B)False
Q3) To foster ethical behavior through organizational culture, businesses should:
A) avoid explicitly articulating values that place a strong emphasis on ethical behavior.
B) draft a formal statement of the ethical priorities they will follow.
C) encourage self-dealing among managers.
D) eliminate the need for a moral compass.
E) avoid putting strong governance processes in place.
Q4) An agency relationship continues throughout the hierarchy within a company.
A)True
B)False
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Chapter 12: Implementing Strategy Through Organization
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Q1) Bradley is a new employee in the sales department at a local car dealership. In his first few months on the job, he will be learning the norms and values of the organization. This refers to organizational socialization.
A)True
B)False
Q2) Effective strategy implementation is very important for cost leaders, but it is of less importance to differentiators.
A)True
B)False
Q3) All employees participate in a project team within a _____ structure. They are known as two-boss employees.
A) functional
B) geographic
C) market
D) matrix
E) product
Q4) Flat organizational structures are less flexible and tend to resist change.
A)True
B)False
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