Examples of possible exam questions with the book Contemporary Strategy Analysis - Grant

What is strategy and what is strategic management? - ExamTests 1

Exam questions

Question 1

Which term addresses what strategic decisions are about and what the intention is?

1. Strategic context

2. Strategic content

3. Strategic product

4. Strategic process

Question 2

Which statement(s) is (are) true?

1. According to McGee et al. strategic planning is the process by which the firm organizes its resources and actions in relation to an external environment in order to achieve its goals and objectives. This is conducted in a very hierarchical and formal manner.

2. According to Mintzberg and Waters (1985), some strategies may be planned, at least in their first stages, but many more just simply emerge in an organization without being consciously intended or being deliberate acts.

3. Logical incrementalism (Quinn, 1980) combines rational-resource allocation thinking with practical learning by doing; longer-term plans and targets with evolutionary, learningbased patterns of movement on the way.

4. All of the above statements are true

Question 3

By modeling the process of interactive decision making by rival firms, game theory can predict the outcome of a range of competitive situations.

1. True
2. False

Question 4

Given the plethora of external influences, understanding the external environment requires managers to:

1. Use a framework or a system that allows them to organize information and rank factors
2. Monitor their rivals closely to detect signals of change in their strategies
3. Use all existing techniques to gather and analyze information
4. Work on the matter full-time

Question 5

Richard Branson runs Virgin using norms and values like “question authority” and “staff first, then customers and shareholders.” In terms of Mintzberg’s five P’s for strategy (in Lecture 1), this reflects the view of strategy as:

1. Pattern.
2. Position.
3. Perspective.
4. Ploy

Answers

1. B

2. D

3. True

4. A

5. C

What are the goals, values and performance of the company? - ExamTests 2

Exam questions

Question 1

What is meant by customer surplus?

1. When the product is more valuable to the consumer than the price he/she pays for it

2. The amount of new customers the firm attracts by introducing a new product

3. The excess demand by customers caused by applying a differentiation strategy

4. There are many substitution possibilities available to the customers

Question 2

Maximizing enterprise value and maximizing shareholder value are linked because:

1. Enterprise value and shareholder value are the same thing
2. Shareholder value is calculated by adding debt and other non-equity financial claims to the DCF value of the firm
3. Shareholder value is calculated by subtracting debt and other non-equity financial claims from the enterprise value of the firm
4. It is obvious that they must be linked

Question 3

In formulating strategies under uncertainty, real option analysis is a valuable strategic tool because:

1. It allows firms to create value from flexibility and a wider range of growth opportunities
2. It can assist firms in using complex financial derivatives to hedge risk
3. It allows firms to make investment decisions without the need to forecast cash flows long into the future
4. It renders obsolete most conventional tools and techniques of strategy analysis.

Answers

1. A

2. C

3. A

What are the principles of industrial analysis? - ExamTests 3

Exam questions

Question 1

Which characteristics describe monopolistic or imperfect competition?

1. Some to vary few firms, high differentiation of products

2. Some to vary few firms, low differentiation of products

3. Many firms, no differentiation of products

4. Many firms, some differentiation of products

Question 2

When applying Porter’s 5 forces model for a given firm, which of the forces would be most directly influenced if that firm is threatened to engage in vertical integration?

1. Buyer power

2. Pressure from substitutes

3. Threat of new entrants

4. Intensity of rivalry

Question 3

Which statement(s) is (are) true with regard to competition?

1. Perfectly competitive markets are characterized by free entry, perfect information and commodity-like products. The consequences of such “perfect” competition is that price is the only competitive variable, that firms are essentially identical and, therefore, that there are no super-normal profits to be had.
2. Imperfections in markets provide the possibility for rents (super-normal profits) and rent-seeking activities. Imperfections could be, for example, differences in information about production possibilities, or consumer ignorance about product benefits.

1. Only statement I is true

2. Only statement II is true

3. Both statements are true

4. Both statements are false

Question 4

According to Barney (the resources-based view), entry barriers can only provide a sustainable competitive advantage under which condition(s)?

1. Resources must be homogeneously distributed across firms.
2. Resources are perfectly mobile.
3. All of the above.
4. None of the above.

Question 5

Critical success factors are those elements in the industry that are perceived to be important to:

1. shareholders.
2. competitors.
3. customers.
4. suppliers.

Answers

1. D

2. A

3. C

4. B

5. C

How is the competitor analyzed - ExamTests 4

Exam questions

Question 1

Which of the following refers to a set of firm-specific skills and processes directed towards

the attainment of competitive advantage?

1. Core competences

2. Differentiation strategy

3. Business model

4. Competitive scope

Question 2

The key insight from the “prisoners’ dilemma” game is:

1. competitive behavior can create an outcome that is inferior for all involved in a situation.
2. the principle of “honor among thieves” is inapplicable either to thieves or to business executives.
3. the inability to directly communicate always results in an inferior outcome.
4. trust can play a critical role in creating favorable outcomes in both crime and business.

Question 3

By modeling the process of interactive decision making by rival firms, game theory can predict the outcome of a range of competitive situations.

1. True
2. False

Question 4

Which of the following is not true about strategic groups?

1. Firm profits are very similar within groups, and very different across groups.
2. Groups differ in terms of how much the firms compete within the group.
3. Groups differ in terms of the amount of bargaining power they have with customers and/or suppliers.
4. Some groups might be more affected by substitute products than other groups.

Answers

1. A

2. A

3. True

4. A

What are sources of competitive advantage? - ExamTests 7

Exam questions

Question 1

Which statement is true according to the Chesbrough & Rosenbloom?

1. A cost leadership strategy would be expected to increase variable costs but to decrease both fixed costs and fixed assets associated with economies of scale.

2. A differentiation strategy would be expected to raise costs. Costs would go up because of the variable costs (such as quality and service levels) and fixed costs (such as advertising and R&D)

3. Only statement I is true

4. Only statement II is true

5. Both statements are true

6. Both statements are false

Question 2

Barney (the resources-based view) lists several criteria that are associated with a sustainable competitive advantage. How should these criteria be interpreted when analyzing the firm’s resources?

1. For each separate criterion, try to find at least one resource that fits it.
2. A weak rating on one or more criteria means that the resource could not support a sustainable competitive advantage.
3. Throw out the high and low scores on the criteria and take the middle (median) score for each resource as the most representative score.
4. Emphasize just the high scores on the strongest criteria; the weaker scores are irrelevant.

Question 3

Porter discusses three generic strategies. Which of the following is true regarding a differentiation strategy?

1. A firm selects a unique position on one or more attributes (dimensions) that are important to buyers in general.
2. A corporation is split into a number of different strategic business units (SBUs).
3. A single firm develops a broad portfolio of products targeting a number of different markets.
4. A firm identifies the needs of a specific group of buyers and tailors its strategy to serve that group to the exclusion of other groups.

Question 4

Which of the following refers to a set of firm-specific skills and processes directed towards the attainment of competitive advantage?

1. Core competences

2. Differentiation strategy

3. Business model

4. Competitive scope

Question 5

Which of the following is a support activity in Porter’s value chain model:

1. Inbound logistics

2. Human resource management

3. Operations

4. Service

Answers

1. B
2. B
3. A
4. A
5. B

How did industries develop? - ExamTests 8

Exam questions

Question 1

Regarding the inimitability of resources, path dependency refers to:

1. Not really knowing what (combinations of) assets are responsible for the existing success

2. Cumulative learning and experience over time, which is difficult to replicate over short periods.

3. The socially complex system that gives rise to the competitive advantage

4. All of the above

Question 2

During the introduction phase of the industry life cycle, competition is between different technologies and different design configurations.

1. True
2. False

Answers

1. B
2. True

How can innovations be managed? - ExamTests 9

Exam questions

Question 1

In the 1870s the QWERTY configuration was selected by the creators of the TypeWriter brand in order to slow down typists so as to reduce jamming of the keys. The Dvorak layout patented in 1932 is a more efficient layout and allows faster typing. The fact that the slower QWERTY system still dominates the market can be explained in terms of:

1. Opportunity costs

2. Switching costs

3. Sunk costs

4. Moore’s law

Question 2

Which types of organizations have relatively little need for long-term scenario analysis?

1. Those operating in hypercompetitive environments classified by high levels of ambiguity

2. Those that maintain high levels of flexibility and are able to react quickly to any changes

3. Those operating in competitive environments classified by high levels of uncertainty

4. Those unable to react quickly and effectively to changing events as they occur

Question 3

When an outcome depends greatly on the events that took place leading up to it, it is often impossible to reproduce that outcome. This is referred to as:

1. radical innovation.
2. externalities.
3. discontinuous technology.
4. path dependency.

Question 4

A musician might have more skills and resources than her rivals to create hit songs. However, if the recording studios have too much power, they get rich and the musician gets virtually nothing. According the resource-based view, what kind of problem is the musician facing?

1. Path dependence
2. Inimitability
3. Appropriability
4. Social complexity

Answers

1. B

2. D

3. D

4. C

What are external growth strategies? - ExamTests 15

Exam questions

Question 1

Which of the following is NOT one of the types of strategic alliances found amongst noncompeting firms?

1. Vertical partnership

2. Co-opetition

3. Joint ventures

4. Cross-industry agreements

Question 2

Which of the following is a motive for acquisition?

1. Getting rid of competitors from an over-saturated industry

2. Rapidly acquiring new skills

3. Gaining access to new markets

4. All of the above

Question 3

Mergers and acquisitions represent paradoxes in the sense that:

1. The stock market remains suspicious of them, despite widespread evidence of their effectiveness as tools of corporate strategy
2. Companies continue to be enthusiastic in initiating acquisitions despite empirical evidence that acquisition destroy shareholder value for acquirers
3. Both (a) and (b)
4. Neither (a) nor (b).

Question 4

The main reason that a strategic alliance are often an attractive alternative to a merger or acquisition is:

1. Alliances avoid government restrictions relating to antitrust and foreign direct investment
2. Alliances permit firms to access one another’s resources and capabilities without the costs and risks of a merger or acquisition
3. Alliances allow a firm to create growth options d. Alliances allow risk sharing in giant projects.

Answers

1. B

2. D

3. B

4. B