Management Strategy Expected Questions

1. Please choose an incorrect description of core competencies.

A. Core competencies are a company's unique strengths
B. Core competencies differentiate a company’s products and services from those of competitors.
C. Core competencies persist over time.
D. Core competencies expressed through structures, processes, routines.
Answer: C

2. Please choose an incorrect sentence regarding the resource-based view of competitive advantage.
A. Each company possesses a unique combination of resources and capabilities.
B. Resources are not easily transferred to other companies.
C. The goal of resource-based view is to create a strategic fit with the firm’s environment.
D. Intangible resources do not have physical attributes and are invisible.
Answer: C

3. Please choose an incorrect sentence about performance measuring.?

A. Corporate performance can only be measured with qualitative data such as accounting profitability
B Three frameworks include accounting profitability, shareholder value creation, and economic value creation.
C. Accounting profitability analyzes performance by comparing it with other competitors within the same
industry or with the industry average.
D. The limitation of shareholder value creation is that macroeconomic factors affect the stock price.
Answer: A

4. Please choose an incorrect sentence regarding economic value creation

A. Consumer surplus refers to the difference between the amount a consumer is willing to pay, and the actual
price.
B. Consumer surplus represents the profit of a company.
C. The value of a product perceived by consumers can change based on factors such as weather.
D. Producer surplus is the difference between the price paid and the cost of production
Answer: B

5. Diseconomies of scale occur when __________.

A. Firms spread fixed costs over more units
B. Firms become too big and lose flexibility
C. Firms use specialized equipment efficiently
D. Firms achieve minimum efficient scale
Answer: B

6. Please choose an incorrect sentence regarding differentiation and cost leadership strategy
A. The cost leadership strategy focuses on attracting customers who are willing to pay a price premium
B. Companies can generate lower costs through improvements in technology and production processes.
C. As companies accumulate experience, production time decreases, which can also lead to lower costs.
D. Differentiation strategies focus on adding value through unique features.
Answer: A

7. Please choose an incorrect sentence describing vision, mission and values.

A. Vision captures an organization’s aspiration.
B. An effective vision is expressed as a statement.
C. Mission is what an organization actually does.
D. The relationship between vision statement and firm performance is strongest when the vision is product-
oriented.
Answer: D
8. Please choose an incorrect sentence describing a good strategy.
A. Competitive advantage is always absolute and never relative.
B. A firm can achieve a competitive advantage by offering superior value.
C. Competitive advantage can be measured by comparing a firm to its industry average.
D. Sustainable competitive advantage lasts over a prolonged period.
Answer: A

9. Please choose an incorrect sentence describing the strategy process across levels.
A. Corporate strategy determines industry, markets and geography.
B. Organizations are required to determine cost leadership, differentiation or value innovation strategies at
functional level.
C. Business strategy concerns how to compete in the industry.
D. Corporate strategy concerns where to compete.
Answer: B

10. Which of the following helps firms keep costs low in a cost leadership strategy?
A. Premium pricing
B. Economies of scale and learning-curve effects
C. Customized marketing
D. Brand exclusivity
Answer: B

11. Please choose an incorrect sentence describing scenario planning.

A. Scenario planning considers different potential future scenarios.
B. It involves deriving strategic responses to both optimistic and pessimistic futures.
C. Black swan events can be completely predicted with scenario planning.
D. It encourages input from different levels and functions within the organization.
Answer: C

12. Please choose an incorrect sentence explaining three approaches to organizational strategy
A. Top-Down Approach may not adapt well to change.
B. The considerations for Scenario Planning include black swan events.
C. Strategy as planned emergence relies on data as well as personal experience.
D. Scenario Planning is a data-driven strategy process.
Answer: D

13. Which is NOT one of the three drivers that increase perceived value in a differentiation strategy?
A. Product features
B. Raw material costs
C. Customer service
D. Complements
Answer: B

14. Please choose an incorrect sentence ecological factor in strategy.

A. Ecological factors include issues like climate change and sustainability.
B. The relationship between firms and the environment is always adversarial.
C. Ecological factors can create business opportunities.
D. Firms can improve competitive advantage by focusing on sustainability
Answer: B
15. Which of the following best describes a strategic trade-off?
A. Choosing between short-term and long-term profits
B. Choosing between cost or value position
C. Choosing between entering or exiting a market
D. Choosing between global or local markets
Answer: B

16. Please choose an incorrect sentence about general environment.

A. Strategic leaders can fully control the macroeconomic environment.
B. The general environment includes factors like inflation and interest rates.
C. Strategic leaders have little control over the general environment.
D. Companies must adapt to changes in the general environment
Answer: A

17. Which of the following increases the threat of entry in an industry?

A. High capital requirements
B. Strong brand loyalty among incumbents
C. Low customer switching costs
D. Presence of restrictive government policies
Answer: C

18. Please choose an incorrect sentence about strategic decision making.

A. Strategic decision making can be limited due to our cognitive limitations.
B. Even artificial intelligence can augment that information at our fingertips.
C. Cognitive biases include illusion of control and group think.
D. Human decision making is always optimal.
Answer: D

19. Please choose an incorrect sentence about strategic leadership.

A. Strategic leadership focuses solely on decision-making power.
B. Strategic leadership involves directing organizational activities toward goals.
C. Upper echelons theory suggests that outcomes reflect top management values.
D. Leadership actions are influenced by personal experiences
Answer: A

20. Please choose an incorrect sentence about the vision statement.

A. Vision captures an organization’s aspiration.
B. Vision is usually expressed as a one-time goal or target.
C. Vision should be forward-looking and inspiring.
D. Vision provides meaning for employees in pursuit of the organization’s ultimate goals.
Answer: B

21. The _________________ defines a business in terms of providing solutions to customer needs.
A. Product-oriented vision statement
B. Customer-oriented vision statement
C. Mission statement
D. Value innovation
Answer: B
22. The mission describes what an organization actually does.
A. True
B. False
Answer: A

23. Which of the following is NOT an element of strategic leadership as defined in the lecture?
A. Directing the activities of others
B. Enabling competitive advantage
C. Pursuing government regulation
D. Using power and influence
Answer: C

24. Strategic dissonance occurs when a company experiences a strategic inflection point.
A. True
B. False
Answer: A

25. The ___________________ describes what we do every day to reach our future goals.
A. Vision
B. Strategy
C. Mission
D. Value chain
Answer: C

26. Please choose an incorrect statement about the Top-Down Strategic Planning approach.
A. It may not adapt well to change.
B. It uses performance monitoring and five-year plans.
C. It flows bottom-up from employees to executives.
D. It relies heavily on prices, costs, and market demand.
Answer: C

27. The _______________ explains how a firm allocates resources based on predetermined policies.
A. Strategic initiative process
B. Resource Allocation Process (RAP)
C. Scenario planning
D. Top-down strategy formulation
Answer: B

28. Which of the following is a characteristic of customer-oriented vision statements?

A. Focus on improving existing products
B. Help companies adapt to changing environments
C. Define business in terms of services provided
D. Force managers to take a more myopic view
Answer: B

29. Autonomous actions and serendipity are examples of strategic initiatives that bubble up from within a
firm.
A. True
B. False
Answer: A
30. Please choose an incorrect sentence about Porter’s Five Forces Model.
A. The model helps leaders understand profit potential of industries.
B. Profit potential is a function of five competitive forces.
C. The model assumes competition comes only from direct rivals.
D. Strategic leaders can use the model to gain and sustain competitive advantage.
Answer: C

31. The risk that potential competitors will enter an industry is called the ______________.
A. Power of Buyers
B. Threat of Entry
C. Threat of Substitutes
D. Rivalry Among Competitors
Answer: B

32. The power of buyers is high when products are standardized or undifferentiated commodities.
A. True
B. False
Answer: A

33. Please choose an incorrect condition under which the power of suppliers is high.
A. The supplier industry is fragmented.
B. Suppliers do not depend heavily on the industry for revenues.
C. There are no readily available substitutes for the supplier’s offerings.
D. Incumbent firms face significant switching costs when changing suppliers.
Answer: A

34. The ________________ meet the same basic customer need in a different way and are available from
outside the given industry.
A. Threat of Entry
B. Rival Firms
C. Threat of Substitutes
D. Switching Costs
Answer: C

35. Threat of substitutes lowers industry profit potential.

A. True
B. False
Answer: A

36. Please choose an incorrect sentence about rivalry among competitors.

A. Competitive intensity can range from genteel to cut-throat.
B. Rivalry increases when competitors are of roughly equal size.
C. Rivalry is higher when industry growth is strong and accelerating.
D. Rivalry is influenced by other forces in the Five Forces model.
Answer: C
37. The power of suppliers is high when ________________.
A. there are many suppliers offering similar goods
B. buyers face low switching costs
C. suppliers do not depend heavily on the industry for revenue
D. suppliers are more fragmented than the industry they sell to
Answer: C

38. Industry effects describe the _______________ of the industry.

A. personal interpretations of leaders
B. strategic actions of individual firms
C. economic structure
D. brand positioning strategy
Answer: C

39. Firm effects are more important than industry effects in determining firm performance.
A. True
B. False
Answer: A

40. Please choose an incorrect sentence about core competencies.

A. Core competencies are unique strengths embedded deep within a firm.
B. They allow the firm to differentiate from rivals.
C. They can result in lower costs or higher customer value.
D. Core competencies are visible and tangible resources like cash or machinery.
Answer: D

41. The resource-based view assumes that resources are ______________ and ______________.
A. heterogeneous; immobile
A. Tangible; replicable
B. Homogeneous; mobile
C. Heterogeneous; immobile
D. Valuable; easy to acquire
Answer: C

42. Resources that have no physical attributes and are invisible are called ________________.
A. Tangible resources
B. Intangible resources
C. Core competencies
D. Dynamic resources
Answer: B

43. When a core competency no longer fits the external environment and becomes a liability, it is called
________________.
A. Strategic drift
B. Dynamic capability failure
C. Core rigidity
D. Value erosion
Answer: C
44. The ______________ includes all internal activities a firm engages in to transform inputs into outputs.
A. Organizational infrastructure
B. Capability system
C. Core competency network
D. Firm value chain
Answer: D

45. What is the key principle behind Blue Ocean Strategy?

A. Combining differentiation and cost-leadership to create untapped market space
B. Competing in existing industries with a stronger price advantage
C. Avoiding innovation to reduce costs
D. Focusing only on legacy customers in red ocean markets
Answer: A

46. Which of the following is NOT a part of the four actions framework used to achieve value innovation?
A. Eliminate
B. Reduce
C. Reuse
D. Reuse
Answer: D

47. Blue oceans represent which of the following?

A. Mature markets with slow growth
B. Spaces with high competitive rivalry
C. Untapped market space and opportunities for profitable growth
D. Niche markets within red oceans
Answer: C

48. What does the Strategy Canvas visually compare?

A. A firm’s annual revenue vs. total assets
B. A company’s performance relative to competitors across industry factors
C. Leadership hierarchy in innovative firms
D. Changes in industrial revolutions over time
Answer: B

49. Which of the following is true about value innovation?

A. It always leads to being stuck in the middle.
B. It emphasizes customer loyalty through increased advertising.
C. It simultaneously pursues differentiation and low cost.
D. It requires abandoning all traditional competitive advantages.
Answer: C

50. What is the main focus of a business-level strategy?

A. Managing international expansion
B. Achieving competitive advantage in a single product market
C. Setting long-term corporate vision
D. Defining firm-level accounting policies
Answer: B