Strategic Management Exam Preparation Guide
Course Introduction
Strategic Management explores the formulation and implementation of major goals and initiatives taken by an organization's top management on behalf of owners. This course examines the frameworks and tools used to analyze internal and external environments, assess strategic options, and develop action plans that foster competitive advantage and sustainability. Emphasizing both theoretical foundations and practical applications, students will examine real-world cases and engage in experiential exercises to understand how organizations navigate complex markets, drive innovation, and manage change to achieve long-term objectives.
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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81 Verified Questions
81 Flashcards
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Sample Questions
Q1) Which of the following statements is true about strategic leadership?
A) It is the primary responsibility of the functional managers of an organization.
B) It does not take into account the task of maximizing shareholder value.
C) It is involved with making decisions regarding how to create a competitive advantage.
D) It is a concept that does not apply to multidivisional companies with several business units.
E) It is essentially about supervising workers at a manufacturing unit of an organization.
Answer: C
Q2) The great virtue of scenario planning is that managers must think outside of the box to anticipate what they might do in different situations.
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) Growing demand tends to reduce rivalry because all companies can sell more without taking market share away from each other.
A)True
B)False
Answer: True
Q2) When buyers are in a weak bargaining position, companies in the industry must lower their prices to increase profits.
A)True
B)False
Answer: False
Q3) Common exit barriers include:
A) minimal investment in assets like specific machines.
B) emotional attachments to an industry.
C) low fixed costs associated with leaving an industry.
D) the lack of bankruptcy regulations.
E) economic independence of a company
Answer: B
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Chapter 3: Internal Analysis: Resources and Competitive Advantage
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Sample Questions
Q1) A resource is inimitable if competitors are able to copy it easily.
A)True
B)False
Answer: False
Q2) The concept of efficiency as a building block of competitive advantage applies to:
A) all products produced by a firm.
B) products consumers believe to be high-quality; not low-quality.
C) only those products of a firm popular among a large customer base.
D) custom-made products only.
E) only those products that have been redesigned.
Answer: A
Q3) The primary activities of the value chain include the design, creation, and delivery of the product, the product's marketing, and its support and after-sales service.
A)True
B)False
Answer: True
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5
Chapter 4: Building Competitive Advantage Through Functional-Level Strategies
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Sample Questions
Q1) Self-managing work teams:
A) increase per-unit costs of manufactured items.
B) perform all workplace tasks except the making of hiring decisions.
C) increase the cycle time of manufacturing items.
D) require team members to learn only one task and specialize in that alone.
E) tend to increase productivity and product quality.
Q2) Cool Looks, Inc. is a local fashion design company that actively solicits comments from its customers about the quality of its clothing and the kind of merchandise they want it to supply. Which of the following mechanisms for focusing on the customer is Cool Looks utilizing?
A) Managing materials
B) Improving response time
C) Demonstrating leadership
D) Shaping employee attitudes
E) Knowing customer needs
Q3) 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
Page 6
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Chapter 5: Business-Level Strategy
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Q1) One of the great advantages of successful value innovation is that it can catch rivals off guard and make it difficult for them to catch up.
A)True
B)False
Q2) When a company recognizes that the needs of one market segment is not the same as another and accordingly customizes its product offerings, it is said to be pursuing:
A) stuck-in-the-middle strategy.
B) rapid-growth strategy.
C) differentiation strategy.
D) focus strategy.
E) low-cost strategy.
Q3) List the features that need to be included in functional strategies to improve differentiation.
Q4) Actions taken at the functional level should support the business-level strategy, as should the organizational arrangements of the enterprise.
A)True
B)False
Q5) Define the generic business-level strategies companies pursue.
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Chapter 6: Business-Level Strategy and the Industry Environment
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Q1) The late majority customers are typically reached through specialized distribution channels, and products are often sold by word of mouth.
A)True
B)False
Q2) Most embryonic industries arise from:
A) a technological breakthrough.
B) product proliferation.
C) lack of high entry barriers.
D) chaining.
E) franchising.
Q3) 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.
Q4) Laggards are the customers who are the first ones to try and adopt a new technology.
A)True B)False
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Chapter 7: Strategy and Technology
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Q1) 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
Q2) What are technical standards, why are they important, and how are they established?
Q3) The various strategies that companies should adopt to win format wars revolve around:
A) getting the federal government to intercede.
B) making network effects work in their favor and against their competitors.
C) avoiding aggressive marketing and advertising strategies.
D) curbing the supply of complementary products.
E) charging high license fees.
Q4) A razor-and-blade strategy refers to lowering a company's cost structure.
A)True
B)False
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Chapter 8: Strategy in the Global Environment
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Sample Questions
Q1) Nutrimax, a sports foods manufacturer, has recently expanded its operations to different countries. The company has realized that customers in different countries have different tastes and preferences. So, the company customizes its products based on the country where it's selling. In this scenario, Nutrimax is most likely to be using _____ strategy.
A) global standardization
B) localization
C) Achilles heel
D) centralization
E) transnational
Q2) When a company grows its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except:
A) spreading fixed costs over its global sales volume.
B) utilizing its production facilities more intensely.
C) increased bargaining power with its suppliers.
D) learning effects associated with higher volume.
E) adopting high cost structures.
Q3) List and briefly describe each of the four basic global strategies.
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10
Chapter 9: Corporate-Level Strategy: Horizontal Integration,
Vertical Integration, and Strategic Outsourcing
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Sample Questions
Q1) The final part of the strategy formulation process is:
A) choosing business-level strategies.
B) choosing functional-level strategies.
C) choosing corporate-level strategies.
D) choosing functional-level goals.
E) choosing business-level goals.
Q2) Companies that outsource most or all of their value creation activities are often referred to as virtual corporations.
A)True
B)False
Q3) In 1999, two pharmaceutical companies that held an equal market share decided to pool their operations to create a new firm that was known by a different name. This is an example of a(n):
A) merger.
B) acquisition.
C) procurement.
D) take over.
E) dissolution.
Q4) What is the relationship between a company's corporate-level strategy and its business model?
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Chapter 10: Corporate-Level Strategy: Related and
Unrelated Diversification
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Q1) Diversification may dissipate value if it is wrongly based on:
A) realizing economies of scope.
B) rescuing core business.
C) transferring competencies.
D) acquisitions and restructuring.
E) leveraging existing competencies.
Q2) A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.
A)True
B)False
Q3) The coordination required to realize value from a diversification strategy based on transferring, sharing, or leveraging competencies is a major source of bureaucratic costs.
A)True
B)False
Q4) A company's top managers do not need to have entrepreneurial capabilities for diversification to increase profitability.
A)True
B)False
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Chapter 11: Corporate Performance, Governance, and Business Ethics
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Sample Questions
Q1) Which of the following statements is true about takeover constraint?
A) It encourages managers to put their own interests above those of stockholders.
B) It usually occurs when the management has maximized the wealth of the stockholders.
C) It often gives senior managers more independence when it comes to granting stock options.
D) It has ceased to exist in companies since the late 1990s.
E) It is the governance mechanism of last resort invoked only when the others have failed.
Q2) A stock option is a right to buy:
A) shares of the company's stock at the stock's current price.
B) shares of the company's stock at half the stock's current price.
C) shares of the company's stock at a predetermined price at some point in the future.
D) bonds issued by the company.
E) stock in an underperforming company.
Q3) Explain the principles of agency theory, including the issues it addresses. What are some effective ways to deal with agency problems, as implied or stated by agency theory?
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Chapter 12: Implementing Strategy Through Organization
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Sample Questions
Q1) To reduce costs, companies pursuing a cost leadership strategy prefer to use _____ to closely monitor and evaluate functional performance.
A) output controls
B) personal controls
C) behavioral controls
D) cultural controls
E) input controls
Q2) Which of the following does delayering involve?
A) Eliminating business units
B) Rethinking business processes
C) Creating more business units
D) Flattening the organizational hierarchy
E) Broadening the span of control
Q3) An important purpose of control systems is to motivate employees to work toward increasing efficiency, quality, innovation, and responsiveness to customers.
A)True
B)False
Q4) Identify and discuss the three building blocks of organizational structure.
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