Strategic Management Exam

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  1. A highly capable brick and mortar electronics retailer with a loyal regional customer base (such as Fry’s) should adopt which of the following medium term strategies?
“50% off” sale every month
Niche or harvest
Invest in R&D
  1. Amazon’s strategy involves offering expanded variety but at very competitive prices. This is primarily achieved through
Economies of scope
Focus on international markets
Economies of scale
Innovative products
  1. Uber is an example of industry chaining in which of the following ways?
Economies of scale for service providers
Economies of scope for customers
Improving access and reduced search costs for customers and service providers
Lower wages for service providers and lower prices for customers
  1. Shareholder returns are primarily derived from
Growth in share value and dividend payments
dividend payments only
Growth in company profits
Growth in the share value only
  1. Strategy is defined best as:
A unique value proposition supported by sound financial decisions
A unique value proposition supported by synergies in operations
A unique value proposition supported by aggressive marketing
A unique value proposition supported by a complex supply chain
  1. The cost of attracting new customers is the highest with which of the following groups?
Early adopters
Late majority
  1. In the context of the Differentiation (Quality) vs Efficiency trade-off curve, the efficient frontier refers to:
The company that provides maximum quality for a given cost
The company that provides minimum cost
The company that provides maximum quality
The company that maximizes efficiency
  1. Nike hiring sports stars to be brand ambassadors is an example of which of the following mechanisms?
Market development
Customer segmentation
Product development
Market penetration
  1. Which of the following is an indication of strategic committment of a company in an industry
Lowering wages of the workforce
Increased technology investment
Acquiring real-estate in an urban location of demand
Increased divident payments for two years in a row
  1. A pharma company with a deep roster of capable engineers and scientists and that is the market leader is best advised to begin development of a new drug as:
A partnership with smaller competitors
License its innovation from other laboratories
An independent venture
Smaller scale effort
  1. The most valuable competency in the declining phase of an industry is:
  1. There is often limited capacity relative to demand in the early growth period of an industry because:
Capacity is very expensive in the later stages of an industry
Only few companies have products or technologies in a budding industry
Prices tend to be low in the embryonic stage
Many companies compete for early advantage in an emerging industry
  1. If the willingness to pay of a customer for an automobile is $18000, and the cost to produce that automobile is $14000, the consumer surplus is:
Less that $4000
Cannot be determined with data provided
More than $4000
  1. A short term profit maximizing strategy for a monopoly would focus on:
Giving slightly greater surplus than the competitor
Maximizing consumer surplus
Minimizing consumer surplus
Ensuring the lowest possible cost of the product
  1. Which of the following companies best exemplifies broad cost leadership?
  1. Tesla’s business model can be best described as:
Electric vehicles and services for the technology savvy drivers with advanced engineering and in-house manufacturing
Electric vehicles and services for the technology savvy drivers with an outsourced model of design and manufacturing
Electric vehicles and services for the technology averse drivers with advanced engineering and in-house manufacturing
Electric vehicles and services for the budget conscious drivers with advanced engineering and in-house manufacturing
  1. Network amplifiers are critical in establishing a standard (in a technology context) because:
Higher end customers have a greater voice
Vertical integration is no longer a feasible option for most companies
Rate of adoption is a critical factor
Ease of use is paramount for any technology
  1. Incumbents typically have a cost advantage as compared to new entrants becuase:
Incumbents typically have a technogical edge compared to new entrants
Incumbents have deeper connections to government and regulatory bodies
Incumbents have greater fixed costs but lower variable relative to new entrants typically
Incumbent market shares lead to greater economies of scale
  1. Porter’s Five forces helps with all of the following objectives except:
Evaluate the attractiveness of an industry
Decide entry or exit from an industry
Evaluate the strengths and weaknesses of a firm
Evaluate opportunities and threats
  1. In the context of the Differentiation (Quality) vs Efficiency trade-off curve, Amazon is best described as a company:
Just below and to the left of the efficient frontier
On the same frontier but a different position compared to brick and mortar competitors
A company that values quality over price every single day
That has been a value innovator
  1. Which of the following best describes a mission statement?
An objective for a company to be debt free in 5 years
A children’s clothing store aiming to make a difference in their customer’s lives
An energy company wanting to be the most sustainable company on the planet
A car company wanting to change customers’ behavior into to a more sustainable lifestyle
  1. According to the Mintzberg model of strategy development:
Most unplanned strategies lead to failures on a global scale
Most realized strategies are serendipitous and in response to evolving markets
Startups often engage in planning emergent strategies
Most realized strategies are carefully planned and executed in advance
  1. The most valuable competency in the embryonic phase of an industry is:
  1. Which of the following companies best exemplifies broad differentiation?
  1. Which of the following provides longer term competitive advantage when it comes to efficiency:
Experience effect
Economies of scale
Relentless focus on lowering labor related costs
Learning effect
  1. An equation that best describes customer valuation is:
Quality/Procuct Price
Quality/Procuct Cost
Product Cost x Quality
  1. The best possible context within which to apply Porter’s Five Forces model is for:
Market segment
Strategic group
  1. The biggest impediment to an industry’s consolidation is:
Lack of scale economies
Lack of adequate demand
Poor management
Lack of skilled resources
  1. The efficient frontier has a concave shape (i.e. a bulging shape) because:
Greater levels of efficiency come at a steep cost but only for high-end segments
It costs progressively more for every increment in quality levels
Quality is free at lower levels of quality
There is a quadratic relationship between higher quality and efficiency
  1. High-tech companies can be distinguished from low-tech companies primarily based on:
Level of fixed cost committment
Higher price premiums for high-tech firms
Extent of digital or on-line business transactions
Price to earnings ratios
  1. Subway restaurants is able lower variety related costs primarily through :
Modular design of its service
Choosing franchise partners carefully
Extensive franchising
Allowing customers to customize their sandwich
  1. Strategy formulation and execution is ultimately a service to:
Government regulators
  1. Effective marketing directly contributes to a firm’s efficiency objective by
Reducing the cost of serving the average customer
Providing insight into customer expectations
Improving the market share among higher-end customers
Increasing the willingness to pay of customers
  1. Which of the following companies best exemplifies focus differentiation?
  1. Which of the following companies best exemplifies a blue ocean strategy?
  1. A key feature of the cereal industry in recent years has been:
National as opposed to global competition
Lower prices to attract customers
Fewer store brand competitors
Product proliferation
  1. Which of the following best exemplifies a capability for a company?
Low price
Supply chain management
Financial reserves
Ideal positioning
  1. Absolute cost advantages for incumbents (over new entrants to an industry) typically derive from:
Higher levels of experience
Control of inputs
Economies of scale from market share
All of the above
  1. is a great example of a company that has consistently delivered:
Spectacular profit growth
Profits year over year
Above average return on investment
Above average share value appreciation
  1. Costco’s strategy with respect to pricing of its products and services can best be described as:
Ensuring the lowest total cost of the product within the market
Increasing consumer surplus no matter the segment or product
Reducing consumer surplus even at the expense of quality
Charging higher prices to boost marginal profits


Last Updated on March 21, 2020