STRATEGIC MANAGEMENT

731(2022S1STM731B)
Started on Sunday, 22 May 2022, 9:43 AM
State Finished
Completed on Sunday, 22 May 2022, 9:44 AM
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Question 1
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A differentiation strategy can be effective in controlling the power of substitutes in an industry because
_________.

Select one:
a. a differentiating firm can always lower prices.

b. customers develop brand loyalty.

c. customers have low switching costs.

d. substitute products are lower quality.

The correct answer is: customers develop brand loyalty.

Question 2
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Empowerment can be direct benefit of strategic management. Why?

Select one:
a. All of the options
b. Managers don’t have to do all the work and are free to focus their attention on managing the
organisation.
c. It ensures that the process is being managed and controlled in a disciplined way.
d. Employees are made part of the process of strategic management and are more committed to
implement the strategies and take ownership of them.

The correct answer is: Employees are made part of the process of strategic management and are more
committed to implement the strategies and take ownership of them.
Question 3
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When identifying a diversified company's present corporate strategy, which of the following would NOT be
something to look for?

Select one:
a. The company's approach to allocating investment capital and resources across its present businesses

b. Actions over the past few years to substitute global strategies for multi-country strategies in one or
more business units

c. Recent management actions to strengthen the company's positions in existing businesses

d. Recent moves to build positions in new industries

The correct answer is: Actions over the past few years to substitute global strategies for multi-country
strategies in one or more business units

Question 4
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What term is used for corporate development beyond current products and markets, but within the capabilities
or the value network of the organisation?

Select one:
a. Vertical integration
b. Related diversification

c. Divergent diversification
d. Backward integration

The correct answer is: Related diversification

Question 5
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Business-level strategies detail commitments and actions taken to provide value to customers and gain
competitive advantage by exploiting core competencies in _____.

Select one:
a. the selection of industries in which the firm will compete.

b. specific product markets.

c. primary value chain activities.
 d. particular geographic locations.

The correct answer is: specific product markets.

Question 6
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Selling a division or part of the organisation to raise capital for further acquisitions or investments is also
referred to as:

Select one:
a. Liquidation
b. Bankruptcy
c. Turnaround
d. Divestiture

The correct answer is: Divestiture

Question 7
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Business-level strategies are concerned specifically with _________.

Select one:
a. selecting the industries in which the firm will compete.

b. how functional areas will be organized within the firm.

c. creating differences between the firm's position and its rivals.
d. how a business with multiple physical locations will operate one of those locations.

The correct answer is: creating differences between the firm's position and its rivals.

Question 8
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The highest amount a firm can charge for its products is most directly affected by __________.

Select one:
a. the cost of substitute products.
 b. expected retaliation from competitors.
c. variable costs of production.
d. customers' high switching costs.

The correct answer is: the cost of substitute products.

Question 9
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Which of the following is/are an appropriate source of information for undertaking analysis of the external
environment?

Select one:
a. Company webpages
b. Trade press; company webpages and company webpages

c. Trade press
d. Business press

The correct answer is: Trade press; company webpages and company webpages

Question 10
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Company whose strategies are based on idea of delivering superior brand value to its targeted segment is
classified as_____________.

Select one:
a. profit centered company
b. competitor centered company
c. market centered company
d. customer centered company

The correct answer is: customer centered company

Question 11
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Process of comparing own products or services to leading firm’s practices to improve performance and quality
 Process of comparing own products or services to leading firm’s practices to improve performance and quality
is called ______________.

Select one:
a. customer value analysis

b. strategic analysis
c. benchmarking
d. corporate image analysis

The correct answer is: benchmarking

Question 12
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According to the five factors model, an attractive industry would have all of the following characteristics
EXCEPT:

Select one:
a. Low barriers to entry.
b. Suppliers with low bargaining power.
c. A moderate degree of rivalry among competitors.
d. Few good product substitutes.

The correct answer is: Low barriers to entry.

Question 13
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Considering competitive positions, firm who wants to hold market share in its industry without rocking boat is
classified as _____________.

Select one:
a. market challenger
b. market leader
c. market follower
d. market niche

The correct answer is: market follower

Question 14
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A differentiation strategy provides products that customers perceive as having ______.

Select one:
a. features of little value relative to the value provided by the low-cost leader's product.
b. acceptable features.
c. features for which the customer will pay a low price.
d. features that are non-standardized for which they are willing to pay a premium.

The correct answer is: features that are non-standardized for which they are willing to pay a premium.

Question 15
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In external environmental scanning, interest rates, cycle of recessions and inflation are classified as
_________________.

Select one:
a. geographic influences
b. government influences
c. technological advancement
d. economic influences

The correct answer is: economic influences

Question 16
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All of the following are forces that create high rivalry within an industry EXCEPT ________.

Select one:
a. high fixed costs.
b. numerous or equally balanced competitors.
c. fast industry growth.

d. high storage costs.

The correct answer is: fast industry growth.

Question 17
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A decision based on strategic analysis and choice is known as:

Select one:
a. Qualitative decisions

b. Exact science
c. Gut-feeling
d. Quantitative decisions

The correct answer is: Quantitative decisions

Question 18
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When a product's unique attributes provide value to customers, the firm is implementing __________.

Select one:
a. an integrated cost leadership/differentiation strategy.
b. a single-product strategy.
c. a cost leadership strategy.
d. a differentiation strategy.

The correct answer is: a differentiation strategy.

Question 19
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When implementing a focus strategy, the firm seeks ______________.

Select one:
a. to offer products with unique features for which customers will pay a premium.
b. to be the lowest cost producer in an industry.
c. to avoid being stuck in the middle.
d. to serve the specialized needs of a market segment.

The correct answer is: to serve the specialized needs of a market segment.
Question 20
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Assuming a company elects to use the Internet as its exclusive channel for accessing buyers, then which of the
following is not one of the strategic issues that it will need to address?

Select one:
a. How to deliver unique value to buyers
b. Whether to pursue a competitive advantage based on low-costs, differentiation or more value for the
money
c. How to draw traffic to its Web site and then convert page views into revenues
d. Whether to employ a forward integration strategy

The correct answer is: Whether to employ a forward integration strategy

Question 21
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The effectiveness of any of the generic business-level strategies is contingent upon ___________.

Select one:
a. the firm's competitive scope and its competitive advantage.
b. the trends in the general consumer base and the robustness of the global and industry economy.
c. customer needs and competitors' strategies.
d. the match between the opportunities and threats in its external market and the strengths and
weaknesses of its internal environment.

The correct answer is: the match between the opportunities and threats in its external market and the
strengths and weaknesses of its internal environment.

Question 22
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The typical risks of a differentiation strategy do NOT include which of the following?

Select one:
a. Suppliers of raw materials erode the firm's profit margin with price increases.
b. Counterfeit goods are widely available and acceptable to customers.
 c. Customers' experience with other products may narrow customers' perception of the value of a product's
differentiated features.
d. Customers may find the price differential between the low-cost product and the differentiated product
too large.

The correct answer is: Suppliers of raw materials erode the firm's profit margin with price increases.

Question 23
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A focused low-cost strategy seeks to achieve competitive advantage by ________.

Select one:
a. serving buyers in the target market niche at a lower cost and lower price than rivals
b. outmatching competitors in offering niche members an absolute rock-bottom price
c. delivering more value for the money than other competitors
d. performing the primary value chain activities at a lower cost per unit than can the industry's low-cost
leaders

The correct answer is: outmatching competitors in offering niche members an absolute rock-bottom price

Question 24
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The two biggest drawbacks or disadvantages of unrelated diversification are _______.

Select one:
a. The difficulties of competently managing many different businesses and being without the added source
of competitive advantage that cross-business strategic fit provides
b. Insufficient cash flows to finance so many different lines of business and a lack of uniformity among the
strategies of the businesses it has diversified into
c. Volatile sales and profits and making the mistake of diversifying into too many cash cow businesses
d. Underemphasizing the importance of resource fit and the strong likelihood of diversifying into
businesses that top management does not know all that much about

The correct answer is: The difficulties of competently managing many different businesses and being without
the added source of competitive advantage that cross-business strategic fit provides

Question 25
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 Flag question

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an
industry because __________.

Select one:
a. customers will seek out the lowest cost product.
b. customers are loyal to brands that are differentiated in meaningful ways.
c. the differentiation strategy benefits from rivalry.
d. customers of non-differentiated products are sensitive to price increases.

The correct answer is: customers are loyal to brands that are differentiated in meaningful ways.

Question 26
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When the costs of supplies increase in an industry, the low-cost leader ___________.

Select one:
a. will lose customers as a result of price increases.
b. may be the only firm able to pay the higher prices and continue to earn average or above- average
returns.
c. may continue competing with rivals on the basis of product features.
d. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins.

The correct answer is: may be the only firm able to pay the higher prices and continue to earn average or
above- average returns.

Question 27
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What is meant by diversifying through vertical or horizontal integration?

Select one:
a. Vertical integration is where a firm diversifies into activities that are competitive with or complementary
to its current activities. Horizontal integration is either backward or forward integration into adjacent
activities in the value network.

b. Vertical integration describes either backward or forward integration into adjacent activities in the value
network. Horizontal integration is development into activities that are complementary to present activities.
c. Vertical integration is where a firm diversifies activities that are inputs into the company's current
business. Horizontal integration refers to diversification into activities that are concerned with the
company's outputs.
d. Vertical integration is concerned with ensuring that all the activities of the organisation are well
 d. Vertical integration is concerned with ensuring that all the activities of the organisation are well
coordinated. Horizontal integration is concerned with coordination of activities with buyers and suppliers.

The correct answer is: Vertical integration describes either backward or forward integration into adjacent
activities in the value network. Horizontal integration is development into activities that are complementary to
present activities.

Question 28
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The environmental segments that comprise the general environment typically will NOT include _________.

Select one:
a. demographic factors.
b. substitute products or services.
c. sociocultural factors.
d. technological factors.

The correct answer is: substitute products or services.

Question 29
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Suppliers are powerful when ___________.

Select one:
a. satisfactory substitutes are available.
b. they are in a highly fragmented industry.
c. they offer a credible threat of forward integration.
d. they sell a commodity product.

The correct answer is: they offer a credible threat of forward integration.

Question 30
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A company pursuing a differentiation or focused differentiation strategy would ___________.

Select one:
 Select one:
a. make investments in easy-to-use manufacturing technologies.
b. have strong capabilities in basic research.
c. have highly efficient systems linking suppliers' products with the firm's production processes.
d. use economies of scale.

The correct answer is: have strong capabilities in basic research.

Question 31
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The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to ____________.

Select one:
a. communicate the attractive features of a budget-priced product offering that fits niche members'
expectations
b. out-advertise rivals and make frequent use of discount coupons
c. tout the company's lower prices
d. tout the lack of frills and extras

The correct answer is: communicate the attractive features of a budget-priced product offering that fits niche
members' expectations

Question 32
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Multimarket competition occurs when firms _____________.

Select one:
a. simultaneously enter into an attack strategy.
b. compete against each other in several geographic or product markets.
c. have a high level of awareness of their competitors' strategic intent.
d. sell different products to the same customer.

The correct answer is: compete against each other in several geographic or product markets.

Question 33
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 Switching costs refer to the _____________.

Select one:
a. one-time costs customers incur when buying from a different supplier.
b. cost of changing the firm's strategic group.
c. cost to a producer to exchange equipment in a facility when new technologies emerge.
d. one-time costs suppliers incur when selling to a different customer.

The correct answer is: one-time costs customers incur when buying from a different supplier.

Question 34
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A focused low-cost strategy can lead to attractive competitive advantage when ________.

Select one:
a. Buyers are looking for a budget-priced product
b. Buyers are price sensitive and are attracted to brands with low switching costs
c. Buyers are looking for the best value at the best price
d. A firm can lower costs significantly by limiting its customer base to a well-defined buyer segment; its two
options for achieving a low-cost advantage are (1) out-managing rivals in controlling the factors that drive
costs and (2) reconfiguring its value chain in ways that deliver a cost edge over rivals

The correct answer is: A firm can lower costs significantly by limiting its customer base to a well-defined buyer
segment; its two options for achieving a low-cost advantage are (1) out-managing rivals in controlling the
factors that drive costs and (2) reconfiguring its value chain in ways that deliver a cost edge over rivals

Question 35
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Competitive rivalry has the most effect on the firm's _______ strategies than the firm's other strategies.

Select one:
a. acquisition
b. international
c. corporate-level
d. business-level

The correct answer is: business-level

Question 36
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New entrants to an industry are more likely when (i.e., entry barriers are low when...)

Select one:
a. product differentiation in the industry is low.
b. economies of scale in the industry are high.
c. capital requirements in the industry are high.
d. it is difficult to gain access to distribution channels.

The correct answer is: product differentiation in the industry is low.

Question 37
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SWOT analysis:

Select one:
a. Gives the organisation direction and focuses the employees and managers on what, how and why they
are in business.
b. All of the options

c. Analyses the company profile and the macro and market environment for possible strengths and
weaknesses as well as opportunities and threats.
d. Analyses the external and internal environments to identify managers and employee’s responsibilities.

The correct answer is: Analyses the company profile and the macro and market environment for possible
strengths and weaknesses as well as opportunities and threats.

Question 38
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The South African Reserve Bank mainly has which type of influence on organisations?

Select one:
a. Socio-cultural
b. Economic
c. Legal
d. Political
 The correct answer is: Economic

Question 39
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A firm successfully implementing a differentiation strategy would expect _______.

Select one:
a. customers to perceive the product as standard.
b. to charge premium prices.
c. to automatically have high levels of power over suppliers.
d. customers to be sensitive to price increases.

The correct answer is: to charge premium prices.

Question 40
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Firms that achieve competitive parity can expect to ____________.

Select one:
a. earn average returns.
b. earn below-average returns.
c. initially earn above-average returns, declining to average returns.
d. earn above-average returns.

The correct answer is: earn average returns.

Question 41
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All of these, except__________, are part of Porter’s competitive forces in industry analysis.

Select one:
a. development of substitute products
b. potential entry of new competitors
c. bargaining power of union
 d. bargaining power of suppliers

The correct answer is: bargaining power of union

Question 42
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A cost leadership strategy targets the industry's _______ customers.

Select one:
a. most typical
b. poorest
c. least educated

d. most frugal

The correct answer is: most typical

Question 43
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Gaining control over suppliers and distributors in a particular industry is referred to as:

Select one:
a. Strategic alliances
b. Conglomeration
c. Integration
d. Diversification

The correct answer is: Integration

Question 44
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When an organisation buys a high-performing organisation in another industry, it is pursuing a strategy of:

Select one:
a. Horizontal integration
b. Conglomerate diversification
 b. Conglomerate diversification
c. Concentric diversification
d. Differentiation

The correct answer is: Conglomerate diversification

Question 45
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The risks of a cost leadership strategy include ___________.

Select one:
a. customers deciding the product isn't worth what the firm must charge for it.
b. production and distribution processes becoming obsolete
c. the ability of competing firms to provide similar features in a product.
d. becoming "stuck in the middle."

The correct answer is: production and distribution processes becoming obsolete

Question 46
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An effort or deliberate action implemented by an organisation to compete with rivals is known as:

Select one:
a. Successful management
b. Strategy
c. Competitive advantage
d. Laep-frog effect

The correct answer is: Strategy

Question 47
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Anyone that is directly or indirectly influenced by the acts of the organisation is known as:

Select one:
a. A stakeholder
 a. A stakeholder
b. A customer
c. A shareholder
d. An employee

The correct answer is: A stakeholder

Question 48
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The basic premise of unrelated diversification is that ____________.

Select one:
a. Any company that can be acquired on good financial terms and that has satisfactory growth and
earnings potential represents a good acquisition and a good business opportunity
b. The best companies to acquire are those that offer the greatest economies of scope rather than the
greatest economies of scale
c. The best way to build shareholder value is to acquire businesses with strong cross-business financial fit
d. The least risky way to diversify is to seek out businesses that are leaders in their respective industry

The correct answer is: Any company that can be acquired on good financial terms and that has satisfactory
growth and earnings potential represents a good acquisition and a good business opportunity

Question 49
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In external environmental scanning, tax legislations, social security legislations and tax provisions are classified
as ________________ .

Select one:
a. government influences
b. geographic influences
c. economic influences
d. technological advancement

The correct answer is: government influences

Question 50
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 Flag question

Analysis suggests that a company's existing markets are saturated. The company wants to exploit its strategic
capabilities in new arenas and satisfy its stakeholders by making rapid growth. What strategy would you
suggest?

Select one:
a. Market penetration
b. Diversification
c. Market development

d. Retrenchment

The correct answer is: Diversification

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