StraMa Assessment Exam part 1

1. Above-average returns are

- higher profits than the firm earned the previous year
- profits in excess of what an investor expects to earn from a historical pattern of performance of
the firm
- returns in excess of what an investor expects to earn from other investments with a similar level
of risk
- higher profits than the industry averaged over the last 10 years

2. A strategy which pertains to a narrow target market and source of competitive advantage is
uniqueness pertains to:
- Differentiation
- Cost leadership
- Focused differentiation
- Focused low cost

3. A strategy which pertains to a narrow target market and source of competitive advantage is cost
pertains to
- Cost leadership
- Differentiation
- Focused differentiation
- Focused low cost

4. An acquisition where the target firm did not solicit the bid of the acquiring firm
- Merger
- Takeover
- Acquisition
- none of the above

5. A transaction where one firm buys another firm with the intent of more effectively using a core
competence by making the acquired firm a subsidiary within its portfolio of businesses
- Merger
- Takeover
- Status Quo
- Acquisition
6. Refers to the extent to which competitors recognize the degree of their mutual interdependence that
results from market commonality and resource similarity
- none of the above
- ability
- awareness
- motivation

7. Type of diversification which Between 70% and 95% of revenues from a single business unit.
- related constrained
- single business
- related linked
- dominant business

8. A type of cooperative strategy wherein partnership where the two partners do not own equal shares
- joint venture
- all of the above
- non-equity strategic alliance
- equity strategic alliance

(KAT: EQUITY STRATEGIC ALLIANCE ; definition: 2 or more firms own different percentages…)

9. Which strategy should an organization use when its products are currently in the declining stage of
the product cycle?
- Related diversification
- Backward integration
- Retrenchment
- Diverstiture

10. A corporate-level international strategy which strategy and operating decisions are decentralized to
strategic business units (SBU) in each country
- transnational strategy
- global strategy
- none of the above
- multi-domestic strategy

11. A motivation for international expansion which refers to expanding size or scope of markets helps to
achieve economies of scale in manufacturing as well as marketing, R & D or distribution
- economies of scale of learning
- return on investment
- location advantages
- increase market share
12. AN organizational structure which department heads report to Chief Executive Officer who integrates
decisions and actions from a company-wide point of view.
- m-form
- simple structure
- divisional structure
- functional structure

13. When the products being purchased are standard or undifferentiated, it results in ______ bargain
power of consumers.
- negative
- lower
- marginalized
- higher

14. A firms strengths that cannot be easily matched or imitated by competitors are called
- distinctive competencies
- interrelated properties
- internal audits
- external audits

15. The determination of business whom to serve is _____?

- Consumer
- Segmentation
- Affiliation
- Reach

16. The technological segment of environmental analysis includes

- places where a firm’s technology will allow that firm to dominate a given market
- the need for new technology in order for a firm to gain a competitive advantage
- the determination of when machinery will need to be replaced in a given firm
- institutions and activities involved with creating new knowledge and translating that knowledge
into new outputs.

17. Because of threats and risks in the global environment, some firms choose to take a more cautious
approach by
- focusing on global niche markets
- acquiring already established firms in foreign markets
 - avoiding global markets altogether
- expanding only to developed countries

18. Criteria of sustainable advantages are as follows except:

- Rare
- Valuable
- Imitable
- Non-substitutable

19. Gap’s opening of its first five stores in China is an example of which type of strategy?
- Forward integration
- Horizontal integration
- Market development
- Backward integration

20. Which of the following statements is/are true?

- Customer needs are related to a product’s benefits and features
- Customer needs are neither right nor wrong, good nor bad
- all of the above.
- Customer needs represent desires in terms of features and performance capabilities

21. what strategy should be implemented when there is LOW operational relatedness to business a LOW
corporate relatedness?
- none of the above
- unrelated diversification
- related constrained diversification
- related linked diversification

(KAT: UNRELATED DIVERSIFICATION refer sa table ng corporate level strat)

22. What category of ratios measures how effective a firm can maintain to economic position in the
growth of the economy and industry?
- Leverage
- Growth
- Liquidity
- Profitability
23. A part of the BALANCED SCORECARD FRAMEWORK which pertains to asset utilization improvements
and changes in turnover rates.
- Customer
- Learning and growth
- Financial
- Internal Business Processes

24. This refers to selectively divesting or closing non-core businesses

- layoff
- downscoping
- LBO
- Downsizing

25. An organizational structure in which Owner/Manager makes all major decisions directly and monitors
all activities
- m-form
- simple structure
- divisional
- functional structure

26. With the passage of time strategy evaluation is becoming

- less important.
- very convenient.
- increasingly difficult.
- an unnecessary activity.

27. A Corporate-Level International Strategy which is difficult to achieve because of simultaneous

requirements for strong central and coordination to achieve efficiency and local flexibility and
decentralization to achieve local market responsiveness.
- global strategy
- multi-domestic strategy
- transnational strategy
- none of the above

28. According to the five forces model, an attractive industry would have all of the following
characteristics EXCEPT
- moderate degree of rivalry among competitors
- low barriers to entry
- few good product substitutes
 - suppliers and buyers with little bargaining power

29. _______ is a relationship among stakeholders that is used to determine and control the strategic
direction and performance of organizations
- Corporate governance
- Shared value
- Corporate citizenship
- Corporate social responsibility

30. which of the following DOES NOT describe competitive dynamics?

- A firm’s strategic conduct is dynamic in nature
- The set of competitive actions and responses it takes while engaged in competitive rivalry
- Competitive responses lead to additional actions from the firm that acted originally
- Actions and responses shape the competitive positions of each firm’s business level strategy

31. Who typically develops a firm’s mission statement?

- CEO, CFO, COO
- Only the CEO
- Only the top management
- CEO and the top management

32. Which among the following is NOT a type of business level strategic alliance?
- Complementary alliances
- Competition reduction alliances
- Diversification alliances
- Uncertainty reduction alliances

33. What strategy should be implemented when there is HIGH sharing and high corporate relatedness?
- Related linked diversification
- None of the above
- Unrelated diversification
- Related constrained diversification

34. Collecting and evaluating information on competitors is essential for successful ____
- Strategy formulation
- Strategy implementation
- Internal analysis
- Strategy evaluation

35. This is a governance mechanism which is designed to control managerial opportunism

 - Market for corporate control
- Board of directors
- Multidivisional organizational structure
- Executive compensation

36. According to Porter, what is usually the most powerful of the five competitive forces?
- Bargaining power of suppliers
- Rivalry among competing firms
- Potential entry of new competitors
- Bargaining power of consumers
- Potential development of substitute products

37. Which strategy seeks to increase market share for present products to services in present markets
through greater marketing efforts?
- Forward integration
- Backward integration
- Market penetration
- Market development

38. This occurs when the desires or goals of the principal and agent conflict and it is difficult or expensive
for the principal to verify that the agent has behaved appropriately
- Stockholder theory
- Stakeholder problem
- Agency problem
- Agency theory

39. This occurs when firms compete against each other in several product or geographic markets
- Multimarket competition
- Competitive rivalry
- Competitive behavior
- Competitors

40. Resources refer to the following except

- Firm
- Brand name
- People
- Assets

41. An organization’s present strategies, objectives, vision, and mission, coupled with the external and
internal audit information, provide a basis for
- Evaluating structural strategies, but not generating those strategies
- Generating feasible alternative strategies, but not evaluating those strategies
- Evaluating feasible alternative strategies, but not generating those strategies
 - Generating structural strategies, but not evaluating those strategies

42. What aims to balance long-term with short term concerns, financial with nonfinancial concerns and
internal with external concerns?
- Benchmarking
- None of the above
- Contingency planning
- The balanced Scorecard approach

43. this refer to the level of diversification which <70% of revenues from dominant business and only
limited links exist.
- Single business
- Related constrained
- Dominant business
- Related linked (mixed)

44. A competitive advantage

- can be identified only if it has been unsuccessfully challenged by competiors
- can be permanent if the firm has successfully implemented the strategic management process
- exists when competing firms are unable to find investors
- entails reducing investor’s risk to near zero

45. Strategy analysis and choice largely involves making_____ decisions based on _____ information.
-subjective; objective
-subjective; short-term
-long term; short term
-short term; long term

(KAT: SUBJECTIVE OBJECTIVE)

46. Which of the following is a corrective action a company might take to correct unfavorable variances?

- allocating resources differently

- divesting a division

revising objectives

all of the above

46. which of the following is NOT one of the four perspectives from which the Balanced Scorecard allows
firms to eveluate strateies?
- learning and growth
- customer knowledge
- social responsibility
- financial performance
47. A strategy which pertains to a broad target market and source of competitive advantage is cost
pertains to:

(KAT: COST LEADERSHIP STRATEGY)

48. Success today

- guarantees success tomorrow.
- provides significant assurance of success tomorrow.
- none of the above
- is no guarantee of success tomorrow.

49. ______ is a condition affecting managerial decision which is regarding the interrelated causes shaping
a firm’s environments and perceptions of the environments.
- Uncertainty
- Complexity
- Value
- Conflicts