Strategic Management

1.What are the three levels of strategy?. Global, National, Local. Corporate, Business Unit, Functional. Strategic, Tactical, Operational. Internal, External, Environmental.

The PESTEL analysis framework is used to understand the: Internal resources of a firm. Macro environment. Five competitive forces. Structure of the value chain.

According to the SCP (Structure-Conduct-Performance) paradigm, what is the primary driver of a firm's performance?. Firm conduct. Managerial talent. Industry structure. Government regulations.

A firm that defines its industry too narrowly might fail to see the threat of: New entrants. Substitute products. Powerful suppliers. Intense rivalry.

The primary purpose of strategic management is to achieve: Maximum market share. Sustainable Competitive Advantage (SCA). Total quality management. Global expansion.

According to Porter's Five Forces, the bargaining power of customers is HIGH when: There are few substitutes available. Buyer switching costs are high. Buyers are concentrated and purchase large volumes. The product is highly differentiated.

A 'strategic group' is defined as: A group of firms across different industries following similar strategies. The top management team of a single firm. A group of firms in the same industry following the same or similar strategies. All the suppliers and distributors for a single firm.

In Porter's generic strategies, a firm that seeks to be unique in its industry along some dimension that customers value is pursuing a: Cost leadership strategy. Differentiation strategy. Focus strategy. Integration strategy.

The 'Blue Ocean' strategy metaphor suggests that firms should: Compete fiercely in existing markets. Create new, uncontested market spaces. Focus on deep-sea exploration industries. Acquire all competitors to reduce rivalry.

According to the resource-based view (RBV), competitive advantage stems primarily from: The external industry structure. Unique and inimitable internal resources. The bargaining power of suppliers. The threat of new entrants.

Barney's VRIN framework states that a resource must be Valuable, Rare, and: Visible and Integral. Imperfectly Imitable and Non-substitutable. International and Negotiable. Integrated and Normative.

The concept that a firm is a "bundle of resources" is central to which strategic perspective?. Industrial Organization (IO). Porter's Five Forces. Resource-Based View (RBV). PESTEL Analysis.

Which of the following is an example of an 'isolating mechanism'?. A price war with competitors. A patent that is difficult to invent around. A high threat of new entrants. A homogenous product market.

The Value Chain is a concept that describes: The cost of raw materials. The sequence of activities that create value for customers. The chain of command in an organization. The flow of capital from investors.

The Knowledge-Based View (KBV) posits that sustainable competitive advantage comes from the effective management of: Financial transactions. Knowledge. Physical assets. Government relations.

According to Nonaka and Takeuchi, the knowledge conversion process where tacit knowledge is transformed into explicit knowledge is called: Socialization. Externalization. Internalization. Combination.

'Dynamic Capabilities' refer to a firm's ability to: Maintain stable and unchanging routines. Integrate, build, and reconfigure resources to address changing environments. Focus solely on its core historical strengths. Outspend competitors on research and development.

The three processes of dynamic capabilities, according to Teece, are: Plan, Do, Check. Sense, Seize, Transform. Input, Process, Output. Analyze, Formulate, Implement.

A key difference between 'resources' and 'capabilities' is that: Resources are not tradable, while capabilities are. Resources are tangible, while capabilities are intangible. Resources can be traded, while capabilities are firm-specific and hard to transfer. Capabilities are always more valuable than resources.

The classical strategist who famously stated that "structure follows strategy" was: Igor Ansoff. Michael Porter. Alfred Chandler. Edith Penrose.

Igor Ansoff identified three levels of action. Which of the following is the 'strategic' level?. The maximization of efficiency in production processes. The direct production processes. The top executive's concern with the organization’s relation with its environment. The day-to-day supervision of employees.

Edith Penrose's work significantly influenced which modern strategy perspective?. Industrial Organization (IO). The Resource-Based View (RBV). PESTEL Analysis. The Five Forces Model.

Michael Porter's view of strategy emphasizes that firm profitability is primarily dependent on: The firm's unique internal resources. The structure of the industry. The firm's dynamic capabilities. The knowledge of its managers.

The 'strategy as practice' approach focuses on: The economic models of firm behavior. What managers actually do when they strategize. The financial performance metrics of firms. The industry-level analysis of competition.

A 'wicked problem' is characterized by all of the following EXCEPT: It is easy to describe and define. It has many interrelated causes. Actions to solve it often create new problems. There are no clear criteria for evaluating solutions.

The Boston Consulting Group (BCG) Matrix is primarily used for making decisions at which level of strategy?. Functional-level. Business-level. Corporate-level. Global-level.

In a hypercompetitive market: Sources of competitive advantage are long-lasting. There is only one dominant player. Sources of competitive advantage change quickly. Firms cooperate to avoid rivalry.

The threat of new entrants is HIGH when: Entry barriers are high and exit barriers are low. Capital requirements are substantial. Brand loyalty is strong. Entry barriers are low and the industry is attractive.

The 'core competencies' of a firm, as defined by Hamel and Prahalad, are: The same as its physical assets. Assemblies of resources and capabilities that provide a competitive edge. Easily imitated by competitors. Primarily focused on short-term financial gains.

The concept of 'economic rent' refers to a firm earning: Average industry returns. Below-average returns on capital. Above-average returns on capital invested. Returns solely from government subsidies.

According to Coase and Williamson, why do firms (hierarchies) exist?. Because they are always more efficient than markets. To minimize transaction costs. To maximize government control. Because markets do not exist for most goods.

The 'focus' generic strategy has two variants: Cost Leadership and Differentiation. Cost Focus and Differentiation Focus. Integration and Diversification. Global and Local.

In the context of Blue Ocean Strategy, the 'ERRC Grid' stands for: Eliminate, Reduce, Raise, Create. Evaluate, Research, Review, Change. Execute, Report, Recommend, Communicate. Economy, Revenue, Risk, Cost.

Which of the following is an example of a 'proprietary resource'?. A company's culture. Technical expertise of its engineers. A patent for a specific technology. Good relationships with suppliers.

The 'sustainability' of a competitive advantage is threatened by all of the following EXCEPT: The opacity (transparency) of the resource. The durability of the capability. The presence of strong isolating mechanisms. The ease of replicating the resource by rivals.

The process where an apprentice learns from a master craftsperson is an example of which form of knowledge conversion?. Combination. Internalization. Externalization. Socialization.

The central argument of the Industrial Organization (IO) approach is that strategy should be: Internally focused on resources. Externally focused on the industry environment. Based on managerial intuition. Centered on ethical considerations.

A market structure with a limited number of large players acting in predictable ways is called a(n): Monopoly. Oligopoly. Homogenous Market. Hypercompetitive Market.

The 'mobility barriers' concept is most closely related to: Entry barriers for an entire industry. Barriers that protect specific strategic groups within an industry. The threat of substitute products. The bargaining power of suppliers.

Serendipity in strategy refers to: Meticulous long-term planning. Finding valuable solutions to problems while looking for something else. The systematic analysis of competitors. The implementation of Porter's Five Forces.

According to Nag, Hambrick, and Chen (2007), strategic management involves initiatives taken by: Functional managers on behalf of employees. Government regulators on behalf of the public. General managers on behalf of owners. Customers on behalf of the market.

A key tension created by strategy, as discussed in the limits of strategy, is: Between past and present. Between efficiency and innovation. Between customers and products. Between local and national.

In the value chain, 'primary activities' include: Human resource management. Inbound logistics and operations. Firm infrastructure. Procurement.

The 'transparency problem' that can diminish competitive advantage refers to the: Difficulty of hiding financial results from shareholders. Ease with which competitors can observe and imitate a firm's resources. Legal requirement for public companies to disclose information. Lack of clear vision from top management.

The concept that a firm's unique capacity to learn and diversify is an isolating mechanism aligns most closely with the ideas of: Michael Porter. Edith Penrose. Igor Ansoff. Alfred Chandler.

The degree to which an asset can be redeployed to alternative uses without loss of value is its: Transaction Frequency. Durability. Asset Specificity. Opacity.

Michael Porter argued that firms flourish best in geographical agglomerations known as: Innovation Nations. Clusters. Strategic Groups. High Velocity Environments.

Horizontal integration occurs when a firm: Moves into its supplier's activities. Acquires or merges with a firm in the same industry. Moves into its customer's activities. Outsources its non-core functions.

Making small, continuous improvements to an existing offering is known as: Radical Innovation. Disruptive Innovation. Incremental Innovation. Service Innovation.

The 'ERRC Grid' (Eliminate, Reduce, Raise, Create) is a tool associated with: Porter's Five Forces. The Business Model Canvas. Blue Ocean Strategy. PESTEL Analysis.

According to Mintzberg, in a High Velocity Environment, innovative strategy is: A detailed, long-term plan. A continuous process of being alert. The responsibility of top management only. Based on deliberate planning.

Tim Brown defines _________ as innovation powered by a deep understanding of what people want and need in their lives. Co-creation. Design Thinking. Improvisation. Serendipity.

A legally distinct entity owned by multiple parent firms, created to share the cost and profit of a specific project, is a: Strategic Alliance. Joint Venture. Public-Private Partnership. Functional Alliance.

The concept of 'Open Innovation' was pioneered by: Michael Porter and Alfred Chandler. Erich von Hippel and Henry Chesbrough. Edith Penrose and Joseph Schumpeter. Igor Ansoff and Henry Mintzberg.

The 'Freemium' model is an example of a: Strategic Alliance. Business Model Pattern. Type of Innovation Platform. Form of Open Strategy.

Osterwalder and Pigneur (2010) define a business model as: The financial plan for a start-up. The rationale of how an organization creates, delivers, and captures value. The organizational structure of a firm. The marketing strategy for a new product.

A type of functional alliance where two or more firms share marketing expertise or services is a: Production Alliance. Marketing Alliance. R&D Alliance. Public-Private Partnership (PPP).

The concept of 'Open Strategy' is characterized by being: Secretive and exclusive. Inclusive and transparent. Centralized and hierarchical. Informal and unstructured.

A 'High Velocity Environment' (HVE) is characterized by: Slow, predictable change. Rapid, discontinuous, and simultaneous change. High barriers to entry. Stable customer demand.

What is the definition of innovation in a business context?. The invention of new technologies. The development and introduction of new products, services, processes, or business models. The process of reducing production costs. The rebranding of existing products.

In the context of innovation, 'lock-in' refers to: The initial investment required for R&D. When customers are unable to switch to a competitor's product. When organizations become too locked into past routines. The patent protection of a new invention.

According to Transaction Cost Economics (TCE), the two primary models for organizing economic activity are: Alliances and Joint Ventures. Markets and Hierarchies. Innovation and Imitation. Making and Buying.

An alliance that involves collaboration in only a single functional area, such as marketing, is a: Comprehensive Alliance. Functional Alliance. Production Alliance. Investment Alliance.

Which innovation type involves making the same product in a different way?. Product Innovation. Process Innovation. Service Innovation. Business Model Innovation.

The practice of a firm both making and buying the same good is known as: Dual Sourcing. Vertical Integration. Concurrent Sourcing. Horizontal Integration.

Alliances that involve the creation of a separate, new organizational entity are called: Non-equity Alliances. Equity Alliances. Implicit Alliances. Functional Alliances.

'Social Innovation' is defined as new ideas that: Maximize shareholder profit. Are only developed by non-profit organizations. Simultaneously meet social needs and create new social relationships. Focus solely on technological advancement.

Kamoche and Cunha (2001) define organizational improvisation as: Strict adherence to a predetermined plan. The conception of action as it unfolds, drawing on available resources. The outsourcing of creative tasks. A formal process of trial and error.

An organization that is capable of simultaneously exploiting existing markets and exploring new ones is called a(n): Innovative Organization. Dual-purpose Organization. Ambidextrous Organization. Integrated Organization.

The term 'bounded rationality' acknowledges that: Humans are perfectly rational decision-makers. Decision-makers never have perfect knowledge. All contracts are perfectly enforceable. Markets are always efficient.

Which of the following is NOT a type of uncertainty identified in TCE?. Volume Uncertainty. Technological Uncertainty. Behavioral Uncertainty. Market Uncertainty.

Which of the following is an advantage of vertical integration?. Reduced control over coordination. Enhanced information transfer across activities. Increased flexibility to switch suppliers. Lower fixed costs.

Quasi-stable arrangements between two or more independent firms are referred to as: Vertical Integration. Inter-firm Cooperation (IFC). Horizontal Integration. Outsourcing.

A strategic alliance defined as a 'purposive linkage between organizations' was formulated by: Gulati (1995). Barney (1986). Porter (1980). Williamson (1975).

All of the following are reasons for strategic collaboration EXCEPT: Reducing Risk. Gaining Knowledge. Increasing Bureaucracy. Achieving Synergy.

Moving into activities previously undertaken by suppliers is known as: Forward Integration. Backward Integration. Horizontal Integration. Concurrent Sourcing.

The 'Innovator's Dilemma' describes the situation where: Companies lack the capital to fund new research. A company's past successes and capabilities become obstacles to adapting to change. Innovation is too risky and should be avoided. Customers are resistant to new technologies.

A Public-Private Partnership (PPP) is a special type of alliance between: Two competing firms. A firm and its suppliers. One or more private firms and a government organization. A large firm and a start-up.

Which of the following is a key feature of a strategic alliance?. The parties lose their autonomy. It is always based on an equity investment. It involves reciprocal relations between organizations. It requires government approval.

Joseph Schumpeter is best known for coining the term: Bounded Rationality. Transaction Cost Economics. Creative Destruction. Dynamic Capabilities.

According to Cusumano and Gawer, a successful firm that establishes a base for other applications to be developed is creating a(n): Value Chain. Innovation Platform. Business Model. Strategic Alliance.

According to Chesbrough and Appleyard, which open innovation strategy involves a firm selling a product or service related to the use of open-source content?. Deployment. Hybridization. Complements. Self-service.

The 'make or buy' decision is fundamentally concerned with: Corporate social responsibility. The organizational boundary. Employee satisfaction. Global expansion.

From an Industrial Organization (IO) perspective, the main reason for cooperation between firms (other than collusion) is: To reduce transaction costs. To share resources and knowledge. To implicitly agree not to engage in fierce price competition. To create national innovation systems.

Barney identified two distinct mechanisms for creating value through collaboration: Resource Picking and Capability Building. Sensing and Seizing. Exploration and Exploitation. Making and Buying.

According to Richardson (1972), cooperative arrangements are best suited for activities that are: Similar and Complementary. Dissimilar and Non-complementary. Dissimilar yet Complementary. Similar but Non-complementary.

Van Marrewijk identified four strategies for acculturation in M&A. Which strategy involves one culture absorbing the other?. Integration. Assimilation. Separation. Deculturation.

A major challenge in post-merger integration is: Writing the initial contract. Cultural integration. Defining the industry. Conducting a PESTEL analysis.

In an alliance, governance that is not always covered by law but is upheld by mutual interest is based on: Explicit Contracts. Implicit Contracts. Equity Agreements. Government Regulations.

The assumption in TCE that parties to a contract may act in a self-interested way that breaches the spirit of the agreement is known as: Bounded Rationality. Opportunism. Feasible Foresight. Asset Specificity.