Multiple Choice Questions

Q.1. The origins of Business Policy & Strategic Management can be retraced to
a) 1930 b) 1911
c) 1879 d) 1938
Ans: b

Q.2. BCG in BCG matrix stands for

a) Boston Calmette Group b) British Consulting Group
c) Boston Corporate Group d) Boston Consulting Group
Ans: d

Q.3. Which of the following is not part of the micro environment?

a) Technology b) Shareholders
c) Competitors d) Public
Ans: a

Q.4. Which of the following is not a part the Macro Environment?

a) Laws & Policies b) Demographics
c) Suppliers d) Social Values
Ans: c

Q.5. Cultural values would be part of which of the following factor in macro environment?
a) Demographic b) Social
c) Ecological d) Natural
Ans: b

Q.6. What does Dog symbolize in BCG matrix?

a) Introduction b) Growth
c) Maturity d) Decline
Ans: d

Q.7. What does Stars symbolize in BCG matrix?

a) Introduction b) Growth
c) Maturity d) Decline
Ans: b

Q.8. What does Question Mark (?) symbolize in BCG matrix?

a) Remain Diversified b) Invest
c) Stable d) Liquidate
Ans: a

Q.9. What do Cash Cows symbolize in BCG matrix?

a) Remain Diversified b) Invest
c) Stable d) Liquidate
Ans: c

Q.10. What does Green symbolize in BCG matrix?

a) Invest & Expand b) Select & Earn
c) Harvest & Divest d) Both a & b
Ans: a

Q.11. What does Yellow symbolize in BCG matrix?

a) Invest & Expand b) Harvest & Divest
c) Select & Earn d) Both a & b
Ans: c

Q.12. What does Red symbolize in BCG matrix?

a) Invest & Expand b) Harvest and Earn
c) Harvest & Divest d) Select & Earn
Ans: c
Q.13. The GE 9 cell model is based on
a) Industry attractiveness & b) Industry Growth rate &
Business Strength Business strength
c) Industry Attractiveness & d) Industry Growth & Relative
Relative market share market share
Ans: a

Q.14. The BCG Matrix is based on

a) Industry attractiveness & b) Industry Growth rate &
Business Strength Business strength
c) Industry Attractiveness & d) Industry Growth rate &
Relative market share Relative market share
Ans: d

Q.15. In strategic thinking, how long is the long term, approximately?

a) 1 Month to 1 year b) 2 to 3 years
c) 3 to 5 years d) More than 5 years
Ans: d

Q.16. Low cost, Differentiation and Focus are examples of __________________

a) Corporate strategies b) Operational Strategies
c) Business Strategies d) Functional Strategies
Ans: c
Q.17. The word tactic is most likely to be associated with:
a) Business Strategy b) Corporate strategy
c) Operational Strategy d) Functional Strategy
Ans: c

Q.18. In BCG matrix, what is the label of the horizontal axis?

a) Relative Market share b) Business Strength
c) Industry Growth Rate d) Market Growth Rate
Ans: a

Q.19. In BCG Matrix, what is the label of the Vertical axis?

a) Relative Market share b) Business Strength
c) Industry Growth Rate d) Market Growth Rate
Ans: c

Q.20. In GE 9 cell matrix, what is the label of the horizontal axis?

a) Relative Market share b) Industry Attractiveness
c) Industry Growth Rate d) Market Growth Rate
Ans: b

Q.21. Another name for GE 9 cell model is

a) Three colour matrix b) Stop light matrix
c) Strategic Portfolio Matrix d) Colour light matrix
Ans: b

Q.22. To find out what an organization's strategy is, you should:

a) Read the mission statement b) Look at what the
organization actually does
c) Read the strategic plan d) Ask the CEO
Ans: c

Q.23. Which of the following statements is not true when describing a successful strategy?
a) It provides some property that is unique or distinctive
b) It provides the means for renewing competitive advantage
c) It addresses changes in the external environment
d) It guarantees long term survival
Ans: a
Q.24. In the context of strategic management, stakeholders can be defined as:
a) An individual or group with a financial stake in the organization
b) An external individual or group that is able to impose constraints on the organization
c) Internal groups or individuals that is able to influence strategic direction of the organization
d) An individual or group with an interest in the organization's activities and who seeks to influence them
Ans: d

Q.25. Which of the following is NOT part of the micro environment?

a) Competitors b) Customers
c) Technology d) Publics
Ans: c

Q.26. In company’s environment, company’s customers are part of which of the following?
a) Internal environment b) Micro environment
c) c) Macro environment d) external environment
Ans: b

Q.27. Cultural values would be part of which of the following factor in macro environment?
a) Economic b) Natural
c) Social d) Ecological
Ans: c

Q.28. In the case where an organization acquires its supplier, this is an example of:
a) Horizontal integration b) Forwards vertical integration
c) Backwards vertical integration d) a and b
Ans: c

Q.29. When a firm seeks the benefits of global integration and local adaptation, it is best described as which type
of strategy?
a) Transnational b) Global
c) Multi-national d) Global-local
Ans: d

Q.30. 14.'Reputation' in the context of an organization's resources can provide competitive advantage because:
a) It is difficult to copy b) It is based on word-of-mouth
c) It is a threshold resource d) It is explicit
Ans: a

Q.31. A strategic manager that seeks to reach acceptable profit targets as opposed to making as much profit as
possible is making decisions of which type?
a) Satisfactory b) Satisfying
c) Irrational d) Optimal
Ans: d

Q.32. 1In strategic thinking, how long is the long term, approximately?
a) 1 to 12 months b) 1 to 5 years
c) More than 5 years d) less than 5 year
Ans: c

Q.33. What are stages 2, 3 and 4 of the outline strategy process?

a) Generate options; select strategy; implement strategy
b) Strategy selection; strategy implementation; strategic control
c) Deliberate strategy; emergent strategy; realized strategy.
d) Appraisal of strengths and weaknesses; choice of strategic direction; strategy implementation
Ans: b

Q.34. The strategy of TATA Motors would be:

 a) Functional Strategy b) Corporate Strategy
c) Business Strategy d) both b and c
Ans: c

Q.35. Growth, retrenchment and stability are examples of __________________?

a) Corporate strategies b) Business Strategies
c) Functional Strategies d) both a and c
Ans: a

Q.36. The word tactic is most likely to be associated with:

a) Corporate strategy b) Business Strategy
c) Operational Strategy d) both a and b
Ans: c

Q.37. Which of these is not a reason why some firms do not have strategic planning?
a) Laziness b) Competitive leadership
c) Honest difference of opinion d) Poor reward structures
Ans: b

Q.38. Developing a vision and mission, identifying an organization's external opportunities and threats, and
determining internal strengths and weaknesses are all __________ activities.
a) strategy-formulation b) strategy-implementation
c) long-range planning d) short-range planning
Ans: a

Q.39. The _________ answers the question "What do we want to become?" whereas _________answers the
question "What is our business?"
a) Vision statement; mission statement
b) Short-term objectives; long-term objectives
c) Objectives; strategies
d) Mission; vision
Ans: a

Q.40. What is the recommended length of an effective mission statement?

a) One page b) Less than 200 words
c) One sentence of 10 to 20 d) There is no recommendation.
words.
Ans: d

Q.41. Which one of these is NOT a __________ part of Porter's competitive forces in industry analysis?
a) Potential entry of new competitors
b) Bargaining power of suppliers
c) Development of substitute products
d) Threat of substitute products and services
Ans: c

Q.42. __________ is based on the assumption that the future will be just like the past.
a) Delphi forecasts b) Econometric models
c) Linear regression d) Scenario forecasts
Ans: c

Q.43. __________ is adding new, unrelated products or services for present customers.
a) Concentric diversification b) Horizontal diversification
c) Conglomerate diversification d) Product development
Ans: c

Q.44. Which of the following is not a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis?
a) Organizational strengths may not lead to competitive advantage
 b) SWOT gives a one-shot view of a moving target
c) SWOT's focus on the external environment is too broad and integrative
d) SWOT overemphasizes a single dimension of strategy
Ans: c

Q.45. A marketing department that promises delivery quicker than the production department's ability to produce is
an example of a lack of understanding of the
a) Synergy of the business units.
b) Need to maintain the reputation of the company.
c) Organizational culture and leadership.
d) Interrelationships among functional areas and firm strategies.
Ans: d

Q.46. XYZ Corp. is centering on the objective of low-cost, high quality, on-time production by curtailing idle
productive facilities and workers. The XYZ Corp. is taking advantage of a ____________ system.
a) Just-In-Time (JIT) b) Last In, First Out (LIFO)
c) First In, First Out (FIFO) d) Highly mechanized
Ans: a

Q.47. Which of the following lists is comprised of support activities:

a) human resource management, information systems, procurement, and firm infrastructure
b) customer service, information systems, technology development, and procurement
c) Human resource management, technology development, customer service, and procurement
d) human resource management, customer service, marketing and sales, and operations
Ans: a

Q.48. Although firm infrastructure is quite frequently viewed only as overhead expense, it can become a source of
competitive advantage. Examples include all of the following except:
a) Negotiating and maintaining ongoing relations with regulatory bodies.
b) Marketing expertise increasing a firm's revenues and enabling it to enter new markets.
c) Effective information systems contributing significantly to a firm's overall cost leadership strategy.
d) Top management providing a key role in collaborating with important customers.
Ans: b

Q.49. The competencies or skills that a firm employs to transform inputs into outputs are:
a) Tangible resources. b) Intangible resources.
c) Organizational capabilities. d) Reputational resources.
Ans: c

Q.50. An array of firm resources includes interpersonal relations among managers in the firm, its culture, and its
reputation with its customers and suppliers. Such competitive advantages are based upon
a) Physical uniqueness. b) Path dependency.
c) Social complexity. d) Tangible resources.
Ans:c

Q.51. A company's ability to meet its short-term financial obligations is measured by which of the following
categories?
a) liquidity ratios b) profitability ratios
c) activity ratios d) leverage ratios
Ans: a

Q.52. The "balanced scorecard" supplies top managers with a _____________ view of the business.
a) long-term financial b) detailed and complex
c) simple and routine d) fast but comprehensive
Ans: d

Q.53. The CEO of Lucent Technologies made a lot of mistakes, such as committing errors in assessing the market
and competitive conditions, as well as improperly redesigning the organization into 11 business units. Such
 errors led to performance declines. According to the text, this example illustrates the _________________
perspective of leadership.
a) romantic b) internal mechanism
c) operational d) external control
Ans: a

Q.54. The "advance work" in the strategic management process is comprised of

a) Strategy formulation. b) Strategy implementation.
c) Strategic posturing. d) Strategy analysis.
Ans: a

Q.55. Members of an organization's board of directors should, while working to prioritize and fulfill their
responsibilities,
a) Direct all actions of the CEO.
b) Emphasize the importance of short-term goals.
c) Represent their own interests.
d) Represent the interests of the shareholders.
Ans: d

Q.56. The "triple bottom line" approach to corporate accounting, according to the text, includes which three
components
a) Financial, organizational, and psychological.
b) Financial, environmental, and customer.
c) Financial, organizational, and customer.
d) Financial, environmental, and social.
Ans: d

Q.57. As our world increases in complexity, the global environment is increasingly challenging and competitive.
The key to effective globalization is
a) More people speaking more languages.
b) The flow of capital, people, and information.
c) Governmental regulations.
d) The flow of goods.
Ans: b

Q.58. Which of the following lists is the hierarchy of organizational goals in order from least specific to most
specific?
a) Mission statements, strategic objectives, vision statements.
b) Mission statements, vision statements, strategic objectives.
c) Vision statements, strategic objectives, mission statements.
d) Vision statements, mission statements, strategic objectives.
Ans: d

Q.59. An organization's mission, in contrast to its vision, should

a) Be less detailed.
b) Encompass all the major rules and regulations of the corporate work force.
c) Encompass both the purpose of the company as well as the basis of competition.
d) Be shorter in length.
Ans: c

Q.60. Vision statements are used to create a higher understanding of the organization's overall direction and
purpose. Vision statements
a) Provide specific objectives.
b) Are very specific.
c) Evoke powerful and compelling mental images.
d) Set organizational structure.
Ans: c

Q.61. Which of the following would be thought of as part of a firm's general environment?
a) increased trade deficit
 b) decreased entry barriers
c) increased bargaining power of the firm's suppliers
d) increased competitive intensity
Ans: a

Q.62. Interest rate increases have a ________ impact on the residential home construction industry and a ___
effect on industries that produce consumer necessities, such as prescription drugs or basic grocery items.
a) positive; negligible b) positive; negative
c) negative; positive d) negative; negligible
Ans: d

Q.63. An independent group of suppliers, such as farmers, gather to form a cooperative in order to sell their
products to buyers directly, replacing their previous distributor. This is an example of
a) Forward integration. b) Backward integration.
c) Threat of substitute products. d) Threat of entry.
Ans: a

Q.64. The bargaining power of the supplier is less than that of the buyer when
a) Volume of purchase is low.
b) The buyer's profit margin is low.
c) Cost savings from the supplier's product are minimal.
d) Threat of backward integration by buyers is low.
Ans: b

Q.65. As seen in Porter's Five Forces model, conditions under which a supplier group can be powerful include all
the following except
a) Lack of importance of the buyer to the supplier group.
b) High differentiation by the supplier.
c) Readily available substitute products.
d) Dominance by a few suppliers.
Ans: c
Q.66. The most extreme rivalry results from
a) A high level of differentiation.
b) Few competitors, slow industry growth, lack of differentiation, high fixed or storage costs.
c) Numerous equally balanced competitors, manufacturing capacity increases only in large increments, low
exit barriers.
d) Numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
Ans: d
Q.67. Which of the following is an example of the interrelationship between the competitive and general
environments?
a) A decline in a nation's educational standards results in a decline in the nation's productivity.
b) Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic
beverages industry.
c) A country's technological inferiority results in its enactment of strong trade barriers against importation.
d) Greater awareness of the environment results in environmental legislation.
Ans: b
Q.68. The value chain is subdivided into two main headings. These are primary activities and:
a) Peripheral activities b) Support activities
c) Secondary activities d) Outsourced activities
Ans: b

Q.69. In the value chain, primary activities are:

a) Directly involved in the production, marketing and delivery of the product or service
b) Those activities that are all undertaken in-house
c) Those activities that support the production, marketing and delivery of the product or service
d) Directly involved in the production and delivery of the product or service
Ans: a

Q.70. The 'operations' in a passenger airline service would be:

a) The manufacture of the aircraft
 b) Getting passengers and baggage from A to B by means of flying in an aircraft
c) The design of the price structure and yield plan
d) Selling the tickets to passengers
Ans: b

Q.71. One of the strategic decisions relating to the value chain concerns vertical integration. This would involve:
a) Deciding whether to locate operations in the home country or in a foreign location
b) Deciding whether the activity should be performed within the organization or by a different firm
c) Deciding to link all activities using Enterprise Resource Planning
d) Deciding whether to share certain activities across different products and markets
Ans: b

Q.72. Firm A has decided to use an outside travel firm for making travel arrangements but it is based on the
premises of Firm A. This is an example of:
a) Nearshoring b) Offshoring
c) Insourcing d) Outsourcing
Ans: c

Q.73. A network of firms providing different parts of a value-chain in the production of a product or service is known
as:
a) Franchising b) Nearshoring
c) Orchestrating d) Co-specialization
Ans: d

Q.74. A firm outsources many of its value chain activities. Compared to a firm that does everything in-house this is
likely to incur:
a) Higher transaction costs, lower control
b) Higher transaction costs, higher control
c) Lower transaction costs, higher control
d) Lower transaction costs, lower control
Ans: a

Q.75. When a firm promises more than it can actually deliver to win a contract, this is known as:
a) Adverse selection b) Inverse selection
c) Moral hazard d) Trust hazard
Ans: a
Q.76. Which of the following outcomes is a potential benefit of outsourcing?
a) Higher flexibility
b) Higher control
c) Lower transaction costs
d) Better linkages between activities
Ans: a
Q.77. A joint venture can be defined as:
a) Two firms collaborate together on a specific project
b) One firm licenses its intellectual property to another firm
c) Two firms merge together
d) Two firms come together to form a third, legally separate firm
Ans: d
Q.78. Substantial changes to the range of offerings or the markets served or both are known as:
a) Differentiation b) Diversification
c) Relocation d) Brand extension
Ans: b
Q.79. At corporate level, diversification comes about when a firm is involved in two or more:
a) Businesses b) Markets
c) Segments d) Industries
Ans: d

Q.80. On average, the highest levels of profitability are shown by:

a) Firms focused on just one or two products
 b) Firms with a moderately diverse range of related products and businesses
c) Firms with a very diverse range of related products and businesses
d) Firms with a diverse range of unrelated products and businesses
Ans: b
Q.81. Economies of scale are derived from:
a) Achieving cheaper unit costs through making larger quantities
b) Using cheaper raw materials
c) Increasing the breadth of the portfolio
d) Increasing the number of markets served
Ans: a
Q.82. Which of the following outcomes is NOT an advantage of a completely vertically integrated business?
a) Potentially greater control is achieved
b) Potentially greater quality is achieved
c) Lowering of risk is achieved
d) Lower price of supplies is achieved
Ans: c
Q.83. Which of the following might be sources of synergy between two business units?
a) They have similar customers and use the same distribution channels
b) The profits from one can be used to finance the other when its gets into trouble
c) They both have a website
d) They are both located in the same town
Ans: a
Q.84. Which of the following might NOT be an advantage of increasing the number of countries in which a clothing
firm does business?
a) Exposure to demanding customers with exotic tastes
b) Increased efficiency
c) Making life more difficult for competitors
d) Increased access to funding
Ans: b
Q.85. Which of the following are NOT likely to be sources of relatedness between businesses?
a) Similarities in size
b) Operating in industries with similar success factors
c) Similarities in production technologies
d) Selling to customers with similar demographic characteristics
Ans: a
Q.86. Synergies allow businesses to add value to one another whereas the extent to which the corporate centre
can add value to each of its businesses is called:
a) Relatedness b) Size
c) Competencies d) Vision
Ans: a
Q.87. Learning from trying out new and different things is termed:
a) Absorptive capacity b) Exploitation
c) Exploration d) Economies of scope
Ans: c
Q.88. Businesses without a competitive advantage are not likely to earn more than "normal" profits in the long run.
Normal profits are
a) profits one would expect to earn on investments that have a similar level of risk.
b) profits received by corporations in the normal course of business.
c) what one would receive on U.S. Treasury securities.
d) profits earned by a corporation on a diversified portfolio of stocks.
Ans: a

Q.89. Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics)
and support value chain activities that include expertise in process engineering (technology development)
characterize what generic strategy?
a) differentiation b) overall cost leadership
c) differentiation focus d) stuck-in-the-middle
Ans: b
Q.90. Which of the following is false regarding how a differentiation strategy can help a firm to improve its
competitive position vis à vis Porter's five forces?
 a) by increasing a firm's margins, it avoids the need for a low cost position
b) it helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable
alternatives
c) supplier power is increased because suppliers will be able to charge higher prices for their inputs
d) firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors
Ans: c
Q.91. A narrow market focus is to a differentiation-based strategy as a
a) Growth market is to a differentiation-based strategy.
b) Growth market is to a cost-based strategy.
c) Technological innovation is to a cost-based strategy.
d) Broadly-defined target market is to a cost leadership strategy.
Ans: d
Q.92. The total profits in an industry at all points along the industry's value chain is called the
a) Profit maximizer. b) Revenue enhancer.
c) Profit outsourcing. d) Profit pool.
Ans: d
Q.93. The emphasis on product design is very high, the intensity of competition is low, and the market growth rate
is low in the ______ stage of the industry life cycle.
a) maturity b) growth
c) introduction d) decline
Ans: c
Q.94. In the _______ stage of the industry life cycle, there are numerous segments, competition is very intense,
and the emphasis on process design is high.
a) introduction b) maturity
c) growth d) decline
Ans: b
Q.95. As markets mature
a) There is increasing emphasis on efficiency.
b) Costs continue to increase.
c) Application for patents increase.
d) Differentiation opportunities increase.
Ans: a
Q.96. The most probable time to pursue a harvest strategy is in a situation of
a) High growth.
b) Decline in the market life cycle.
c) Strong competitive advantage.
d) Mergers and acquisitions.
Ans: b
Q.97. An 'industry recipe' can be defined as:
a) An accepted pattern of operating and competing
b) A tactic for anticipating a competitor's next move
c) The hidden competences that are difficult to imitate
d) A strategic group
Ans: a
Q.98. Which of the following industries is least likely to follow the conventional life-cycle model?
a) Software development b) Coal mining
c) Insurance broking d) Hairdressing
Ans: d
Q.99. Brandenburger and Nalebuff added a sixth force to Porter's Five Forces. It is known as:
a) The threat of substitutes b) The power of complementors
c) Seller power d) Government regulation
Ans: b

Q.100. An industry characterized by irregular patterns of stability, rapid technological change, high uncertainty and
global competition can be described as:
a) Hypercompetitive b) Hyperactive
c) Atypical d) Co-optetive
Ans: a