Sample Exam Multiple Choice Questions

1. The starting point of the strategic management process is

a. establishing objectives and target levels of performance.
b. formulating a corporate strategy.
c. defining an organisation's purpose and mission.
d. evaluating the organisation's operating environment.
e. All of these apply.

2. A company committed to social responsibility

a. makes lower profits than a company that is not socially responsible.
b. is generally a manufacturer instead of a service company.
c. does not specify its corporate philosophy in its mission statement.
d. uses strategies that generate both high social returns and good profits.
e. pursues strategies that generate high social returns regardless of cost.

3. Which of the following is not one of Porter's five competitive forces?

a. Rivalry among established firms
b. Threat of new entrants
c. Height of exit barriers
d. Bargaining power of suppliers
e. Bargaining power of buyers

4. Which of the following is not a component of the macroenvironment?

a. Technological forces
b. Political and legal forces
c. Demographic forces
d. Sociocultural forces
e. Competitive forces

5. Members of a strategic group

a. compete directly with members of other strategic groups.
b. are affected by Porter's five competitive forces to the same degree that
members of other strategic groups are affected.
c. pursue the same basic strategy as other members of their group.
d. earn the same rate of return.
e. All of these apply.

6. A company's distinctive competencies

a. represent the unique strengths of the company.
b. refer to company strengths that competitors cannot easily match or imitate.
c. form the bedrock of a company's strategy.
d. can be based in any of the value creation functions of the company.
e. All of these apply.

7. Which of the following is not an intangible resource?

a. Plant and equipment
b. A well-known brand name
c. Technological know-how
d. Marketing know-how
 e. A favorable corporate reputation

8. Capabilities are
a. a company's physical plant and equipment.
b. a company's technological know-how.
c. a company's skills at coordinating resources and putting them to productive
use.
d. a company's reputation.
e. All of these apply.

9. A company's distinctive competency is more durable

a. when competitors are slow to respond to the competitive advantage it
creates.
b. when barriers to imitation are high.
c. when the external environment is stable.
d. when the competency is based on a capability as opposed to a tangible
resource.
e. when all of these are true.

10. A company's competitive advantage is more durable when

a. barriers to imitation are low and there are few capable competitors.
b. barriers to imitation are high and there are many capable competitors.
c. there are few capable competitors and the industry is stable.
d. the industry is stable and there are many capable competitors.
e. the industry is stable and barriers to imitation are low.

11. Economies of scale are

a. unit-cost reductions associated with learning effects.
b. unit-cost reductions associated with superior customer responsiveness.
c. realised when output is as large as possible.
d. realised when the point of maximum efficient scale is reached.
e. unit-cost reductions associated with a large-scale output.

12. A company pursuing a cost-leadership strategy

a. imposes output controls on all functions except research and development.
b. generally has a structure with a low level of differentiation and a low level
of integration.
c. should have cross-functional integration around the accounting function.
d. centralises authority.
e. None of these applies.

13. The cost leader has a __________ level of product differentiation and
__________ market segmentation.
a. low/low
b. low/high
c. high/low
d. high/high
e. All of these are possible.

14. Companies are now able to pursue cost leadership and differentiation
 simultaneously because
a. of the emergence of flexible technologies.
b. markets have become more homogeneous.
c. industries have become consolidated.
d. barriers to entry have fallen.
e. All of these apply.

15. A focused company

a. can pursue both a cost-leadership and a differentiation strategy
simultaneously.
b. cannot compete on costs with a low-cost national company.
c. serves the needs of a limited customer group.
d. has fewer means of differentiation available to it than a national
differentiator does.
e. All of these apply.

16. A company that has decided to have high product differentiation and low
market segmentation should pursue which of the following competitive
strategies?
a. Cost leadership
b. Differentiation
c. Focus
d. Growth
e. Profit

17. The most expensive competitive strategy to pursue is

a. cost leadership.
b. differentiation.
c. focus.
d. growth.
e. hypercompetition.

18. Global expansion

a. is feasible only for large companies.
b. facilitates the process of riding down the experience curve.
c. allows domestic companies in the mature stage of the industry life cycle to
maintain profits but not to increase them.
d. requires locating facilities in foreign countries.
e. All of these apply.

19. An appropriate structure for a focused company is a

a. product team structure.
b. matrix structure.
c. functional structure.
d. bureaucratic structure.
e. multidivisional structure.

20. Which of the following is not an organisational control system?

a. Output control
b. Reward systems
c. Financial control
d. Organisational culture
e. Span of control