multiple choice

1. What is the primary purpose of strategy according to Porter?   

   A) To maximize shareholder wealth   

   B) To create a unique and valuable position in the market   

   C) To replicate competitor activities   

   D) To reduce costs to the lowest possible level   

B

2. Which of the following increases the difficulty of strategy formulation?   

    A) Hypercompetition   

   B) Increased globalization   

   C) Rapid technological change   

   D) All of the above   

   Answer: D 

3. What is required for a firm to have a competitive advantage?   

   A) Average profitability   

   B) Lower costs than all competitors   

   C) Profitability above the industry average   

   D) High product differentiation   

c

4. A sustainable competitive advantage occurs when a firm’s strategies allow it to achieve above average profitability for: 

   A) Several months   

   B) Several years   

   C) One fiscal year   

   D) Industry average   

B

5. What is a key outcome of value creation in a firm?   

   A) Declining share price   

   B) Increased profitability   

   C) Greater regulation   

   D) Low employee morale 

B

6. In the stakeholder approach, a firm exists to:   

   A) Maximize profits for owners   

   B) Balance objectives of various interest groups   

   C) Focus solely on customer satisfaction   

   D) Outsource activities to reduce costs   

B

7. Which attribute is NOT part of the resources and capabilities that lead to sustainable competitive advantage?   

   A) Valuable   

   B) Rare   

    C) Low-cost to imitate   

    D) Non substitutable   

C

8. What is the purpose of external environment analysis?   

   A) Identify early signs of industry changes   

   B) Only monitor competitor actions   

   C) React to changes only after they occur   

   D) Disregard market trends   

A

9. Which process involves developing projections based on monitored trends?   

   A) Scanning   

   B) Monitoring   

   C) Forecasting   

   D) Assessing   

C

9. Which process involves developing projections based on monitored trends?   

   A) Scanning   

   B) Monitoring   

   C) Forecasting   

   D) Assessing   

B

11. Which factor increases the threat of new entrants in an industry?   

   A) High capital requirements   

   B) Low switching costs for customers   

   C) High economies of scale   

   D) Strong government regulation   

B

12. Buyer bargaining power is higher when:   

   A) There are few large buyers and many small firms   

   B) The product is highly differentiated   

   C) Buyers have high switching costs   

   D) Buyers purchase in small quantities   

A

13. Supplier power increases when suppliers:   

    A) Have many substitutes products   

   B) Rely heavily on the focal industry for revenue   

   C) Produce a unique and essential product   

   D) Face low competition within their industry   

C

14. Which condition strengthens the threat of substitute products?   

   A) High switching costs for customers   

   B) Substitute product prices are higher   

   C) Substitute product quality matches the original   

   D) The original product is undifferentiated   

C

15. High industry rivalry is usually seen in industries with:   

   A) Numerous competitors   

   B) High industry growth   

   C) High product differentiation   

   D) Low exit barriers   

A

16. An attractive industry usually has:   

   A) High entry barriers and moderate rivalry   

   B) Low entry barriers and intense rivalry   

   C) Strong suppliers and low entry barriers   

   D) Strong buyer power and high exit barriers   

A

17. Internal analysis answers which question?   

   A) How can the firm outperform competitors?   

   B) Which new markets to enter?   

   C) How to minimize customer feedback?   

   D) What products to discontinue?   

A

18. Which strategy focuses on serving the needs of a narrow market segment?   

   A) Differentiation   

   B) Focused strategy   

   C) Cost leadership   

   D) Integrated strategy   

B

19. A cost leadership strategy focuses primarily on:   

   A) Maximizing customer satisfaction   

   B) Minimizing production costs   

   C) Entering niche markets   

   D) Differentiating product features   

B

20. The “awareness” driver of competitive actions and responses refers to:   

   A) Competitor knowledge of mutual dependence   

   B) Increased flexibility in pricing   

   C) Ability to enter new markets   

   D) Adjusting to customer demand   

A

21. Economies of scope are realized when:   

   A) Firms produce a single type of product   

   B) Production of multiple goods reduces costs   

   C) Product variety increases expenses   

   D) The firm reduces its market scope   

B

22. Vertical integration often aims to:   

   A) Avoid industry regulations   

   B) Increase production flexibility   

   C) Ensure consistency in supply chain   

   D) Enhance employee satisfaction   

C

23. Which is a disadvantage of vertical integration?   

   A) Reduces flexibility in changing demand   

   B) Ensures proprietary information security   

   C) Prevents competitor entry   

   D) Increases barriers to entry   

A

24. Related diversification includes all except:   

   A) Transferring core competencies   

   B) Entering unrelated markets   

   C) Gaining economies of scope   

   D) Blocking competitor entry   

B

25. Unrelated diversification is driven by:   

   A) Market power   

   B) Efficient internal capital allocation   

   C) Reducing product costs   

   D) Core competency transfer 

B

26. Geographic strategy aims to:   

   A) Keep production domestic   

   B) Sell goods outside local markets   

   C) Focus on a single product line   

   D) Limit international expansion   

B

27. High fixed costs contribute to:   

   A) Reduced competitive rivalry   

   B) Intense industry rivalry   

   C) Low exit barriers   

   D) Increased bargaining power   

B

28. The ability of a firm to outperform its competitors is known as:   

   A) Economies of scope   

   B) Competitive advantage   

   C) Core competency   

   D) Vertical integration   

B

A differentiation strategy aims to:   

   A) Keep prices as low as possible   

   B) Focus on one customer segment   

   C) Create a unique product or service   

   D) Minimize production time   

C

A tactical action is:   

   A) Significant and irreversible   

    B) Complex and resource heavy   

   C) Easy to implement and reverse   

    D) Always customer focused   

C

31. Which of the following best defines the essence of a strategy according to Porter? 

   A) Maximizing production output. 

   B) Creation of a unique and valuable position involving a distinct set of activities. 

   C) Offering products at the lowest price possible. 

   D) Expanding market share globally. 

B

32. Why has the importance of strategy increased in recent years? 

   A) Increase in managerial efficiency. 

   B) Decline in market competition. 

    C) Increased globalization, technological change, and hypercompetition. 

    D) Stability in the knowledgebased economy. 

C

33. A firm achieves competitive advantage when: 

   A) It has the highest number of employees. 

   B) It implements a strategy that creates superior value for customers. 

   C) It imitates the strategies of its competitors. 

   D) It has the lowest production costs in its industry. 

B

34. Which condition is essential for a sustainable competitive advantage? 

    A) Shortterm profitability gains. 

   B) Maintaining profitability above industry average for several years. 

   C) Rapidly changing strategies to meet market demands. 

   D) None of the above. 

B

35. What does the stakeholder approach emphasize? 

   A) Maximizing shareholder wealth. 

   B) Balancing objectives of various interest groups. 

   C) Focusing solely on customer satisfaction. 

   D) Ensuring only owners benefit from business decisions. 

B

36. Which attribute does NOT contribute to a resource’s capability for sustainable competitive advantage? 

       A) Valuable. 

       B) Easily substitutable. 

       C) Rare. 

       D) Costly to imitate. 

B

37. Monitoring in external environment analysis involves: 

   A) Developing forecasts. 

   B) Ongoing observations to detect changes. 

   C) Identifying early signs of change. 

   D) Assessing the impact of changes on strategy. 

B

38. In Porter's Five Forces model, which factor increases the risk of new entrants? 

   A) Economies of scale. 

   B) High capital requirements. 

   C) Lack of product differentiation. 

   D) Strong government regulation. 

C

 39. Buyers have high bargaining power when: 

   A) They purchase in small quantities. 

   B) They have high switching costs. 

   C) They can easily switch suppliers. 

   D) The product is highly differentiated. 

C

40. Suppliers have bargaining power when: 

   A) The focal industry is a major customer for the suppliers. 

   B) There are many suppliers in the industry. 

   C) They can forward integrate into the buyer's industry. 

   D) The product is easily substitutable. 

C

41. Which condition makes the threat of substitutes stronger? 

   A) Substitute products have higher prices. 

   B) Substitute products have lower quality. 

   C) Substitute products have lower switching costs for customers. 

   D) Substitute products are harder to access. 

C

42. High rivalry among firms is likely when: 

   A) Competitors are few and imbalanced. 

   B) Industry growth is rapid. 

   C) Fixed costs are low. 

   D) Exit barriers are high. 

  

D

43. An industry is considered unattractive when: 

   A) There are high entry barriers. 

   B) Suppliers and buyers hold weak positions. 

   C) The rivalry among competitors is moderate. 

   D) There are strong threats from substitute products. 

D

44. Internal analysis answers which question? 

   A) What strategies can help increase market size? 

   B) Why do some firms outperform others in the same industry? 

   C) What is the best way to manage competition? 

   D) How can firms cut operational costs? 

B

45. A cost leadership strategy primarily focuses on: 

   A) Producing at a high quality regardless of cost. 

   B) Producing goods at the lowest cost relative to competitors. 

   C) Differentiating products to capture niche markets. 

   D) Expanding customer service offerings. 

B

46. Differentiation strategies focus on: 

   A) Lowering production costs. 

   B) Creating brand loyalty and unique offerings. 

   C) Producing standard products. 

   D) Reducing employee headcount. 

B

47. The integrated strategy risks: 

   A) Offering a truly unique product. 

   B) Becoming "stuck in the middle" with neither low cost nor differentiation. 

   C) Focusing on too narrow a market. 

   D) Ignoring brand image. 

B

48. Awareness, as a driver of competitive action, means: 

   A) Firms are motivated by profit. 

   B) Competitors acknowledge their mutual interdependence. 

   C) A firm’s flexibility in resource allocation. 

   D) An increase in brand recognition. 

B

49. Which of the following best describes a tactical action? 

   A) Involves significant resources and is difficult to reverse. 

    B) A major market based strategic move. 

    C) A move to finetune an existing strategy with fewer resources. 

   D) A complete overhaul of a business strategy. 

C

50. Economies of scope occur when: 

   A) It is cheaper to produce a single product in high volume. 

    B) Producing a wider variety of goods together is more cost-effective. 

   C) Firms reduce costs by entering unrelated industries. 

   D) The cost of goods increases with higher diversity. 

B