Chapter 10: Strategy and Strategic Management
Self-Test Questions and Answers
The most appropriate first question to ask in strategic planning is:
a. "Where do we want to be in the future?"
b. "How well are we currently doing?"
c. "How can we get where we want to be?"
d. "Why aren’t we doing better?"
Answer: a
The ability of a firm to consistently outperform its rivals is called:
a. vertical integration
b. competitive advantage
c. incrementalism
d. strategic intent
Answer: b
In a complex conglomerate such as General Electric that owns a large number of different businesses, a(n) level strategy sets strategic direction for a strategic business unit.
a. institutional
b. business
c. corporate
d. functional
Answer: c
The is a predominant value system for an organization as a whole.
a. strategy
b. mission
c. core competency
d. corporate culture
Answer: d
Cost efficiency and product quality are two examples of objectives of organizations.
a. official
b. informal
c. operating
d. institutional
Answer: b
An organization that is downsizing by laying off workers to reduce costs is implementing a strategy.
a. growth
b. cost differentiation
c. restructuring
d. vertical integration
Answer: c
When PepsiCo acquired Tropicana, a maker of orange juice, the firm’s strategy was growth by:
a. related diversification
b. concentration
c. vertical integration
d. cooperation
Answer: a
In Porter’s five forces framework, having increases industry attractiveness.
a. many rivals
b. many substitute products
c. low bargaining power of suppliers
d. few barriers to entry
Answer: c
A in the BCG Matrix would have a high market share in a low-growth market, and the correct grand or master strategy is:
a. Dog, growth
b. Cash Cow, stability
c. Question Mark, stability
d. Star, retrenchment
Answer: b
Strategic alliances that link together airlines in code sharing and joint marketing agreements are examples of how businesses can use strategies.
a. divestiture
b. growth
c. cooperation
d. backward integration
Answer: c
The two questions asked by Porter to identify competitive strategies for a business or product line are: 1—What is the market scope? 2—What is the ?
a. market share
b. source of competitive advantage
c. core competency
d. industry attractiveness
Answer: b
According to Porter’s model of competitive strategies, a firm that wants to compete with its rivals in a broad market by selling a very low-priced product would need to successfully implement a strategy.
a. retrenchment
b. differentiation
c. cost leadership
d. diversification
Answer: c
When Coke and Pepsi spend millions on ads trying to convince customers that their products are unique, they are pursuing a strategy.
a. transnational
b. concentration
c. diversification
d. differentiation
Answer: d
The role of the board of directors as an oversight body that holds top executives accountable for the success of business strategies is called:
a. strategic leadership
b. corporate governance
c. logical incrementalism
d. strategic opportunism
Answer: b
An example of a process failure in strategic planning is:
a. lack of participation
b. weak mission statement
c. bad core values
d. insufficient financial resources
Answer: a
What is the difference between corporate strategy and functional strategy?
Answer: A corporate strategy sets long-term direction for an enterprise as a whole, while functional strategies set directions for business functions such as marketing and manufacturing to support the overall corporate strategy.
What would a manager look at in a SWOT analysis?
Answer: A SWOT analysis evaluates an organization’s Strengths and Weaknesses (internal factors), along with Opportunities and Threats (external factors).
What is the difference between focus and differentiation as competitive strategies?
Answer: The focus strategy concentrates on a special market segment or niche while the differentiation strategy aims to create a unique offering that builds customer loyalty.
What is strategic leadership?
Answer: Strategic leadership is the ability to inspire and motivate individuals within an organization to engage in continual improvement and the successful implementation of strategies. Successful strategic leaders possess qualities such as making crucial trade-offs, communicating strategies clearly, and fostering a culture of learning.
Consider Kim Harris, who operates a retail store selling outdoor clothing to college students and faces competition from a larger department store. Recommendations for her strategic management challenges may include:
Consider a Differentiation Strategy to set her products apart, focusing on themes like “Made in America” or emphasizing unique materials.
Explore a Focus Strategy that targets college students through tailored services or special orders.
*Possible actions involve community engagement to build loyalty, organizing promotional events specifically for college students, or highlighting ethical sourcing in her marketing to create a unique brand identity.