Strategic Decision Making
Midterm Exam
Course Introduction
Strategic Decision Making explores the principles, frameworks, and analytical tools used by leaders and managers to make effective decisions in complex and dynamic business environments. The course covers topics such as problem identification, risk assessment, scenario planning, game theory, and the psychological aspects of decision-making. Through real-world case studies and simulations, students learn to evaluate alternatives, anticipate consequences, and align decisions with organizational goals and long-term strategies. By the end of the course, participants develop a structured approach to decision making that enhances both individual and organizational performance.
Recommended Textbook
Strategic Management Theory and Cases An Integrated Approach 12th Edition by Charles
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W. L.
Chapter 1: Strategic Leadership: Managing the
Strategy-Making Process for Competitive Advantage
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Sample Questions
Q1) Evidence suggests that the best way to maximize the long-run return to shareholders is to focus on:
A) increasing prices.
B) research & development goals.
C) satisfying customer needs and making sure employees are treated fairly.
D) compensating managers well.
E) maximizing employee overtime.
Answer: C
Q2) Daryl works for Delta Corp. He is involved in all of the important decision-making processes of the company and is also responsible for the overall performance of the company. In the context of strategic management, Daryl is most likely to be a _____.
A) line manager
B) functional manager
C) general manager
D) production supervisor
E) project manager
Answer: C
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Page 3
Chapter 2: External Analysis: The Identification of Opportunities and Threats
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Sample Questions
Q1) Members of a strategic group:
A) compete only with members of other strategic groups.
B) are affected by Porter's five competitive forces in the same way and to the same degree as the members of other strategic groups.
C) follow a business model that is similar to that pursued by other companies in the group.
D) face no threat of product substitutes from other members.
E) move easily between groups without barriers.
Answer: C
Q2) The extent of rivalry among established companies is lowest when:
A) the industry's product is a commodity.
B) demand is growing rapidly.
C) exit barriers are substantial.
D) the industry is entering a decline stage.
E) the fixed costs are high.
Answer: B
Q3) Intense rivalry lowers prices and raises costs.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Sample Questions
Q1) A company's profitability depends on the value customers place on the company's products and a company's ability to reduce its production costs.
A)True
B)False
Answer: True
Q2) Innovation refers to the act of:
A) seeking patent protection for new products.
B) creating new products and processes.
C) measuring time taken for a service to be provided.
D) measuring the output produced by an employee.
E) identifying and satisfying the needs of a customer.
Answer: B
Q3) When a company has differentiated products, they have less pricing options.
A)True
B)False
Answer: False
Q4) Employee productivity is a common measure of efficiency. A)True
B)False Answer: True
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Chapter 4: Building Competitive Advantage Through Functional-Level Strategies
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Sample Questions
Q1) Customer defection rates are:
A) not directly related to unit cost.
B) an indication of a company's ability to satisfy its customers.
C) irrelevant as they are unlikely to impact advertising and marketing costs.
D) unlikely to affect sales volumes.
E) not affected by cost of products.
Q2) The Mountain Ski Lodge spent $100,000 marketing and advertising its new ski trails and on-site spa. The money used for marketing and advertising can be referred to as:
A) variable costs.
B) fixed costs.
C) ratio costs.
D) diseconomies of scale.
E) economies of scale.
Q3) Although important, unfortunately, innovation plays a minor role in achieving competitive advantage.
A)True
B)False
Q4) Discuss why superior efficiency is important and the many ways that different parts of the organization can help achieve it.
Page 6
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Chapter 5: Business-Level Strategy
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Sample Questions
Q1) Yankee Candle Company offers customers candles that burn for 50-60 hours, much longer than most department store candle brands. Therefore, customers are willing to pay a higher price for these candles. Which of the following strategies is Yankee Candle Company following?
A) Cost leadership
B) Rapid growth
C) Market segmentation
D) Differentiation
E) Stuck in the middle
Q2) In commodity markets, competitive advantage goes to the company that has the lowest costs.
A)True
B)False
Q3) The efficiency frontier is not static; it is continually being pushed outwards by the efforts of managers to improve their firm's performance through innovation.
A)True
B)False
Q4) List the features that need to be included in functional strategies to improve differentiation.
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Chapter 6: Business-Level Strategy and the Industry Environment
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Q1) The challenge in a fragmented industry is to figure out the best set of strategies to overcome a fragmented market so that the competitive advantages associated with pursuing one of the different business models can be realized.
A)True
B)False
Q2) A technology upgrading strategy is utilized by incumbent companies in a mature industry to deter entry by investing in costly upgrades that potential entrants would have trouble matching.
A)True
B)False
Q3) A harvest strategy requires the company to halt all new investments in capital equipment, advertising, research and development, and other activities that require cash flow.
A)True B)False
Q4) Market development strategy involves finding new market segments for a company's products.
A)True
B)False
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Chapter 7: Strategy and Technology
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Sample Questions
Q1) Venus Corp. a high-technology, gadget-making company has introduced a gaming console with attractive features. Even though the console is priced modestly and has better features than the existing ones, it has failed as many customers are apprehensive about buying it. In order to create demand, Venus Corp. should:
A) price the console extremely high.
B) create its own set of technical standards.
C) ensure that there are adequate complementary products.
D) use minimalistic and subtle advertising and marketing strategies.
E) avoid licensing the format to other companies.
Q2) When two or more companies are competing with each other to get their technology adopted as a standard in an industry, and when network effects and positive feedback loops are important, the company that wins the format war will be the one whose strategy best exploits positive feedback loops.
A)True
B)False
Q3) An example of an important complementary asset is a state-of-the-art manufacturing facility.
A)True
B)False
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Chapter 8: Strategy in the Global Environment
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Sample Questions
Q1) One advantage of a joint venture is that a company may benefit from a local partner's knowledge of the many dimensions of a host country.
A)True
B)False
Q2) Which of the following factors increases pressures for cost reductions?
A) Meaningful differentiation between products
B) Reduced international competition
C) Competitors that are based in high-cost locations
D) High switching costs
E) Persistent excess capacity
Q3) Which of the following is not a factor of production?
A) Land
B) Labor
C) Raw materials
D) Competitive forces
E) Managerial sophistication
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?
Q5) List and briefly describe 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) Credible commitments refer to:
A) believable promises that support the development of a long-term relationship between companies.
B) the merging of two companies that have an equal market share.
C) to obtaining of goods, services or works from an external source.
D) the acquisition of one company by another company.
E) the outsourcing of after-sale services to a different company.
Q2) In which of the following is a firm most likely to lose direct control over value creation activities?
A) Merger
B) Acquisition
C) Vertical integration
D) Strategic alliance
E) Outsourcing
Q3) To build trust in a cooperative relationship, both firms can:
A) rely on competitive bidding.
B) make mutual investments in specialized assets.
C) write short-term contracts that must be renewed frequently.
D) increase their vertical integration.
E) use outsourcing of noncore activities.
Page 11
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Chapter 10: Corporate-Level Strategy: Related and Unrelated Diversification
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Sample Questions
Q1) When McDonald's introduced the McCafe, it began offering a new product that was not available in traditional McDonald's stores. The introduction of the McCafe is an example of which of the following?
A) Transferring competencies
B) Diversification
C) Commonality
D) Economies of scope
E) Bureaucratic costs
Q2) One way a diversified company can increase its profitability is by acquiring inefficient or poorly managed companies and then restructuring them to improve their performance.
A)True
B)False
Q3) 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
Q4) Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification. To view
Chapter 11: Corporate Performance, Governance, and Business Ethics
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Q1) Attaining future profit growth may require investments that reduce the current rate of profitability.
A)True
B)False
Q2) Arnold is a CEO at Gamma LLC. He has control over the corporate funds of the company. Arnold has often used funds from the company to pay for his travel and hotel expenses. The funds could otherwise have increased stockholder returns. Which of the following concepts is illustrated in this scenario?
A) Corporate governance
B) On-the-job consumption
C) Greenmail
D) Information asymmetry
E) Information manipulation
Q3) Which of the following statements is true about the Board of Directors?
A) The Board members are directly elected by the employees of the company.
B) The Board has no legal authority to hire, fire, and compensate the CEO.
C) Some of the Board members hold positions on the boards of several companies.
D) The Board has no power to nominate people for positions in management.
E) Divisional and functional managers usually form the Board.
Page 13
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Chapter 12: Implementing Strategy Through Organization
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Sample Questions
Q1) In any organization, for-profit or not-for-profit, span of control refers to the:
A) number of managers at the highest levels in the organization.
B) CEO and his or her management team.
C) number of subordinates who report directly to one manager.
D) number of supervisors in a specific segment of a manufacturing activity.
E) number of members elected or appointed to be the board of directors.
Q2) Span of control refers to the number of subordinates who report directly to one supervisor.
A)True
B)False
Q3) The purpose of a(n) _____ is to provide managers with incentives for motivating employees as well as feedback on how the company performs.
A) control system
B) adaptive culture
C) organizational design
D) span of control
E) hierarchy of authority
Q4) Identify and discuss the three building blocks of organizational structure.
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