Corporate Strategy
Exam Answer Key
Course Introduction
Corporate Strategy explores the frameworks and analytical tools that organizations use to define their long-term objectives and create value across multiple business units, industries, and markets. The course delves into topics such as diversification, mergers and acquisitions, global expansion, competitive advantage, core competencies, and strategic alliances. Through real-world case studies and theoretical models, students learn to identify and evaluate strategic choices, assess industry environments, and understand the role of leadership in executing corporate strategies. By the end of the course, students will be equipped to formulate and implement strategies that enhance organizational performance and sustain growth in a dynamic business landscape.
Recommended Textbook
Strategic Management An Integrated Approach 10th Edition by Charles W. L. Hill
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13 Chapters
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Chapter 1: Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) In the typical scenario planning exercise,
A) most scenarios are pessimistic.
B) most scenarios are optimistic.
C) some scenarios are optimistic and some scenarios are pessimistic.
D) only worst-case outcomes should be considered.
E) only best-case outcomes should be considered.
Answer: C
Q2) Strategic leadership is concerned with how to most effectively manage a company's strategy-making process to create competitive advantage.
A)True
B)False
Answer: True
Q3) Devil's advocacy
A) is simpler than the expert approach.
B) is an example of ivory tower planning.
C) results in unproductive conflict.
D) involves one group member being responsible for questioning the assumptions of a plan.
E) results in a final plan that is a combination of a plan and a counterplan.
Answer: D
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Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Sample Questions
Q1) Beverage makers are finding that water sales are increasing due to consumers' preferences for healthy drinks.Which part of the macroenvironment does this represent?
A) Economic forces
B) Demographic forces
C) Embryonic forces
D) Political forces
E) Social forces
Answer: E
Q2) Government deregulation of telephone service lowered the barriers to entry and lowered industry profit margins.
A)True
B)False
Answer: True
Q3) Opportunities arise when a company takes advantage of conditions in its environment to formulate and implement strategies that allow it to be more profitable.
A)True
B)False
Answer: True
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Chapter 3: Internal Analysis: Distinctive Competencies,
Advantage, and Profitability
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Sample Questions
Q1) If a company's profitability is higher than the industry average,it has a competitive advantage.
A)True
B)False
Answer: True
Q2) IBM's investment in mainframe computers is an example of a prior strategic commitment.
A)True
B)False
Answer: True
Q3) ____ can help an organization overcome inertia.
A) Power struggles
B) Capabilities
C) Prior strategic commitments
D) A crisis
E) The Icarus paradox
Answer: D
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Page 5
Chapter 4: Building Competitive Advantage Through Functional-Level Strategy
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Sample Questions
Q1) A computer manufacturer allows scientists and engineers a certain amount of company time to work on independent research projects.This company is trying to A) achieve superior innovation.
B) achieve superior quality.
C) achieve superior efficiency.
D) achieve superior customer responsiveness.
E) minimize the time to market.
Q2) Poor commercialization occurs when there is definite customer demand for a new product,but the product is not well adapted to customer needs because of factors such as poor design and poor quality.
A)True
B)False
Q3) Six Sigma encompasses the activities necessary to get inputs and components to a production facility,through the production process,and out through a distribution system to the end user.
A)True
B)False
Q4) Identify the two dimensions of quality and describe how companies can achieve them.
6
Chapter 5: Building Competitive Advantage Through Business-Level Strategy
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Sample Questions
Q1) To pursue a cost leadership strategy,strategic managers need to incorporate all the latest technology into their products.
A)True
B)False
Q2) A differentiation strategy is based on creating a product that customers perceive as being
A) about the same as other available products.
B) distinct.
C) the least costly product in the industry.
D) the most costly product in the industry.
E) somewhat faddish in nature.
Q3) Market segmentation is best described as what type of process?
A) Static
B) Regressive
C) Evolving
D) Normative
E) Revolving
Q4) Market segmentation addresses the "what" portion of a firm's business model.
A)True
B)False
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Chapter 6: Business-Level Strategy and the Industry Environment
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Sample Questions
Q1) Customers who have a practical interest in using a new technology in the future and who are willing to experiment and envision new uses for the technology are called
A) early adopters.
B) the early majority.
C) innovators.
D) laggards.
E) the late majority.
Q2) McDonald's created the first national chain of fast-food restaurants in a previously fragmented industry.This is called consolidation.
A)True
B)False
Q3) Most market demand and industry profits arise when A) early adopters leave the market.
B) innovators become regular users.
C) initial users become regular customers.
D) early and late majority users enter the market.
E) none of these choices.
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Page 8
Chapter 7: Strategy and Technology
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Sample Questions
Q1) Microsoft Word,the word-processing software,is so easy to use and has so many useful features that no other software can compete with it.Therefore,Microsoft Word can be described as a killer application.
A)True
B)False
Q2) Consumers will bear the costs of switching technologies when A) the benefits of adopting the new technology outweigh the costs of switching.
B) switching costs are substantial.
C) switching costs are reimbursed by makers of a product.
D) all of these choices.
E) none of these choices.
Q3) A possible strategy for winning a format war is for a company to make sure that,in addition to the product itself,there is an adequate supply of complements.
A)True
B)False
Q4) The layout of the keys on a computer keyboard is an example of a technical standard.
A)True
B)False
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Chapter 8: Strategy in the Global Environment
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Sample Questions
Q1) Which of the following is not a risk of exporting?
A) Tariff barriers
B) Transportation costs
C) Location diseconomies
D) Prime interest rates
E) Delegation of marketing activities to a local agent
Q2) What is meant by the term national competitive advantage,and what are the attributes of a nation that affect the global competitiveness of companies located within that nation?
Q3) Swedish strength in fabricated steel products has drawn on strengths in Sweden's specialty steel industry.This is an example of which of the following attributes that impact national competitive advantage?
A) Local demand conditions
B) Competitiveness of related and supporting industries
C) Intensity of rivalry
D) Factor endowments
E) Differences in distribution channels
Q4) List and briefly descibe each of the four basic global strategies.
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Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Sample Questions
Q1) Horizontal integration may be thought of as
A) moving into a new unrelated industry.
B) giving control to suppliers.
C) gaining control of distributors.
D) staying inside the industry in which the company currently operates.
E) combining functional units within the company.
Q2) Consider the case of a manufacturing firm that purchases subassemblies from a supplier,creates a finished product,and then sells that product to a wholesale distributor.What advantages might this firm gain from forward integration? From backward integration? What potential pitfalls of vertical integration might the firm face?
Q3) How can strategic outsourcing strengthen a company's business model and increase its profitability?
Q4) Vertical integration can be disadvantageous when
A) competitors are vertically integrated.
B) demand is stable.
C) industry technology is changing rapidly.
D) technology is changing slowly.
E) competitors are vertically integrated and industry technology changes rapidly.
Page 11
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Chapter 10: Corporate-Level Strategy: Related and Unrelated
Diversification
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Sample Questions
Q1) General organizational competencies refer to competencies
A) existing in individual business units.
B) existing in individual functional units.
C) existing in the industry in which a company operates.
D) that can be procured in the marketplace.
E) that transcend individual functions or business units.
Q2) Transferring competencies across industries involves taking a distinctive competency developed in one industry and implanting it in an existing business unit in another industry.
A)True
B)False
Q3) When a company has cash in excess of the amount needed to maintain a competitive advantage in its core business,it will most likely pursue
A) taper integration.
B) full integration.
C) diversification.
D) long-term contracts.
E) strategic alliances.
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Sample Questions
Q1) The takeover constraint
A) effectively limits the number of independent companies that a company can acquire.
B) limits the degree to which managers can pursue strategies that are at variance with stockholder interests.
C) is a theoretical construct that can be ignored in practice.
D) limits the freedom that individual companies have to maximize their long-run return on investment.
E) is imposed by corporate managers on errant business-level managers.
Q2) Members of the board of directors are supposed to be agents for A) stockholders.
B) employees.
C) executive officers.
D) customers.
E) suppliers.
Q3) A union and the general public are examples of internal stakeholders.
A)True
B)False
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Page 13
Chapter 12: Implementing Strategy in Companies That
Compete in a Single Industry
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Sample Questions
Q1) To a large degree,any organization's tasks are a function of its
A) market area.
B) labor supply.
C) supervisors.
D) strategy.
E) compensation plan.
Q2) Information technology (IT)would be least helpful to managers who are addressing issues of
A) behavior control.
B) output control.
C) integration.
D) organizational culture.
E) standardization.
Q3) Which of the following is not one of the advantages of a geographic structure?
A) Cost inefficiencies from issues of scope
B) Responsiveness to the needs of regional customers
C) Lower transportation costs
D) More coordination and control than a functional structure
E) Centralization of key activities and functions that allow leveraging skills across regions
Page 14
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Chapter 13: Implementing Strategy in Companies That
Compete Across Industries and Countries
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Sample Questions
Q1) A firm that is pursuing a globalization strategy will typically use a global-area structure.
A)True
B)False
Q2) Taj is employed at Global Tech,an organization that operates within the technology industry.He is an experienced corporate manager who assumes the responsibility for managing complex transfers between two or more divisions.Taj is in a(n)_____ role.
A) global
B) division
C) direct contact
D) iasion
E) integrating
Q3) The control issue in managing the multidivisional structure is
A) how much authority should be centralized at corporate headquarters.
B) how much authority should be decentralized to the divisions.
C) how much authority should be given to each functional unit.
D) how much authority should be centralized at corporate headquarters and decentralized to the divisions.
E) how much authority should be given to corporate division heads.
Page 15
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