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Multiple Choice Questions

Strategic Management (Brunel University)

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Multiple Choice Questions

Chapter 1 - Introduction Strategy

Which of the following are typically seen as being associated with strategic decisions?
A.
The organisation's long-term direction
B.
The detailed planning of a department's work over the next month
C.
The values and expectations of powerful actors in the organisation
D.
The scope of the organisation's activities

Which strategy is about how to compete successfully in particular markets?

A.
Business-level strategy
B.
Corporate-level strategy
C.
Alliance-based strategy
D.
Operational-level strategy

A group of managers is considering pricing strategy and differentiation. At which level of strategy are
the managers most likely to be working?
A.
Corporate level
B.
Operational level
C.
Business level
D.
Mission and vision

An organisation's general expression of its overall purpose is known as its:

A.
objective
B.
vision
C.
goal
D.
mission

Which of the following terms correctly complete the definition: Operational strategies are about how
the component parts of an organisation deliver strategies in terms of _____ _____ and _____.
A.
people
B.
alliances
C.
mission
D.

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resources
E.
Processes

Strategy involves:
A.
senior managers and board members
B.
managers at all levels
C.
senior and middle managers
D.
senior management

What are the three main branches of strategy research that make up the study of strategy?
A.
Strategy content
B.
Strategic context
C.
Strategy lenses
D.
Strategy processes

In the Exploring Strategy Model, what heading is used to cover environment, capability, goals
and culture?
A.
Strategic applicability
B.
Strategic choices
C.
Strategy in action
D.
Strategic position

A design view of strategy refers to:

A.
the pulling together of ideas that develop from different parts of the organisation.
B.
the pulling together of the different decisions made throughout an organisation, so as to develop a
coherent overall strategy.
C.
the systematic, rational way in which strategy is always developed in an organisation.
D.
the deliberate positioning of the organisation through a rational, analytic, structured and directive
process.

The experience lens suggests that strategies develop:

A.
through the shared assumptions in the organisation, often thought of as the organisational culture.
B.
through the shared assumptions across similar types of organisations within an industry (or
organisational field).
C.
through the individual experience of a few top managers or strategic planners.

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D.
All of the above.

The variety lens suggests that new strategies take shape in organisations:
A.
because new ideas are tried out in the market and either succeed or do not.
B.
because the new ideas that develop from within it are selected by formal evaluation through strategic
planning systems.
C.
because there are sufficient people who find them attractive.
D.
All of the above

Chapter 2 – The Environment

What is the key outcome from PESTEL analysis?
A.
Five Forces
B.
Identification of the drivers for change
C.
Critical success factors
D.
Possible scenarios

When using PESTEL it is easy to get overwhelmed by a multitude of details. Instead, it is important to
step back and identify the:
A.
key drivers for change
B.
relevant Five Forces that exist
C.
complex links between each of the factors
D.
market segments

Which three of the following are the most useful ways in which a group of managers could use
scenario planning?
A.
To consider plausible alternative futures
B.
To ensure that the managers always select the only scenario that will work in practice
C.
To develop contingency plans for each scenario
D.
To increase the managers' understanding and perception of forces in the business environment

It is always useful to ensure that the three scenarios are 'optimistic', 'middling' and 'pessimistic'.
A.
False
B.
True

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The five forces that affect the level of competition in an industry are:
A.
the threat of entry; the power of buyers; the power of suppliers; the threat of substitutes; and
government action.
B.
the threat of buyers; the power of entry; the power of substitutes; the threat of suppliers; and the
threat of recession.
C.
the threat of recession; the power of buyers; the power of suppliers; the threat of management failure;
and competitive rivalry.
D.
the threat of entrants; the power of buyers; the power of suppliers; the threat of substitutes; and
competitive rivalry.

In which of the following situations is buyer power likely to be high?

A.
Where switching costs are low
B.
Where ultimate consumer power is weak
C.
Where the buyer can threaten to compete
D.
Where a few large customers account for the majority of sales

Forward vertical integration occurs when suppliers are able to cut out buyers who act as
intermediaries.
A.
True
B.
False

When identifying strategic groups, which two headings can the relevant characteristics most usefully
be grouped under?
A.
Resource commitment
B.
Competitiveness
C.
Scope of activities
D.
PESTEL factors

A strategy canvas is a simple but useful way of comparing competitors' positions in a market and
potential in different segments.
What are the two key benefits of a strategy canvas?
A.
It emphasises the importance of technical quality.
B.
It demonstrates that focusing on market segments means losing the overall picture.
C.
It emphasises the importance of seeing value through the customers' eyes.
D.
It emphasises the need to be clear about relative strengths.

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Chapter 3 – Strategic Capabilities

Which of the following accurately categorises the machines an organisation uses?

A.
Tangible, financial resources
B.
Intangible, financial resources
C.
Tangible, intellectual capital
D.
Tangible, physical resources

What term is used for an organisation's abilities to renew and recreate its strategic capabilities to meet
the needs of a changing environment?
A.
Competent substitution
B.
Core competence
C.
Renewability
D.
Dynamic capabilities

Core competences are the skills and abilities by which resources are deployed through
an organisation's activities and processes such as to:
A.
survive using approaches and techniques that others cannot imitate or obtain.
B.
survive.
C.
achieve competitive advantage in ways that others cannot imitate or obtain.
D.
achieve competitive advantage.

A competitor finds it difficult to identify the basis for an organisation's competitive advantage. What
term is used for this situation?
A.
Interdependent causality
B.
Causal dependency
C.
Causal ambiguity
D.
Ambiguous intercausality

Which of the following statements correctly relate to explicit and tacit knowledge?
A.
A systems manual is an example of explicit knowledge.
B.
Tacit knowledge is easier to imitate.
C.
Explicit knowledge is easier to communicate.
D.
Tacit knowledge is personal, context-specific and therefore hard to communicate.

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The sharing of knowledge and experience in organisations is an essentially social and cultural
process.
A.
False
B.
True

Which of the following statements correctly relate to value chains?

A.
Technology development is a primary activity.
B.
Marketing and sales is a support activity.
C.
Procurement is a support activity that occurs in many parts of the organisation.
D.
Operations are primary activities that transform inputs into the final product or service.

The purpose of a SWOT analysis is to analyse:

A.
the strategic capability of an organisation.
B.
external and internal environments.
C.
the business environment and the strategic capability of an organisation relative to its competitors.
D.
the business environment in which an organisation operates.

Best-in-class benchmarking seeks to assess organisational performance against:

A.
the competitor who is 'best in class' wherever that may be.
B.
the nearest geographical competitor.
C.
the nearest principal competitor.
D.
the competitor who is the best in the industry.

Chapter 4 - Strategic Purpose

Which of the following answers the question: 'Where does the organisation aspire to be in the future?'
A.
Mission statement
B.
Core values
C.
Vision statement
D.
Objectives

Which two statements accurately describe relationships that exist in a large company?
A.
The board is an agent for investment managers.
B.

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Investment managers are ultimately agents for the ultimate beneficiaries.

C.
Investment managers are agents for the board.
D.
The board is an agent for managers.

Which are the two most common types of governance structure?

A.
The non-executive board model
B.
The
manager– agent model
C.
The shareholder model
D.
The stakeholder model

Which of the following statements accurately relates to the stakeholder model of governance?
A.
Shareholders have a legitimate primacy in relation to the wealth generated by organisations.
B.
Boards attempt to consider the wishes of all stakeholders.
C.
All board members are insiders (typically managers of the company).
D.
Firms generally have a single-tier structure.

Which of the following are claimed to be advantages of the shareholder model of governance?
A.
Investors get higher returns than they would under the stakeholder model.
B.
There is a reduced risk for shareholders.
C.
Major investors are more likely to view their investments as being long term.
D.
There is a greater chance of entrepreneurship.

Which of the following is not a corporate social responsibility stance?

A.
Enlightened self-interest
B.
Free enterprise
C.
Laissez-faire
D.
Shaper of society
E.
Forum for stakeholder interaction

Which stance on corporate social responsibility would focus on social and market change, and give
individuals in the organisation responsibility for social responsibility issues?
A.
Enlightened self-interest
B.
Forum for stakeholder interaction

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C.
Laissez-faire
D.
Shaper of society

What name is given to the process of divulging information to outside bodies when a person believes
that their organisation is failing in its corporate socialresponsibility?
A.
Showing enlightened self-interest
B.
Social auditing
C.
Legitimising
D.
Whistle-blowing

An indicator of the power held by external stakeholders is:

A.
the organisational perception of the status of an external party.
B.
the personal relationship with a key decision maker.
C.
mutual resource dependency.
D.
their negotiating skills.

Power is:
A.
the ability of individuals or groups to persuade, induce or coerce others into following certain courses
of action.
B.
the ability of individuals or groups to persuade others into following certain courses of action.
C.
the ability of groups to persuade, induce or coerce others into following certain courses of action.
D.
the ability of individuals to persuade, induce or coerce others into following certain courses of action.

Which of the following is not one of the four broad categories of external stakeholders?
A.
Environmental
B.
Technological
C.
Economic
D.
Socio-political

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Chapter 5 – Culture and Strategy

In many businesses there are periods of relative continuity during which strategy changes
incrementally. What are the three main reasons for this?
A.
By maintaining continuity during a period of environmental change, managers can ensure growth.
B.
Managers are experimenting around a theme.
C.
Managers are unwilling to change a strategy that has been successful.
D.
The environment is changing gradually.

Identify two reasons for the development of core rigidities that make it difficult for organisations to
change.
A.
Relationships are crucial to the change process.
B.
Organisational practices are developed over time. These practices may become embedded in
organisational routines that are difficult to change.
C.
The methods that have delivered past success can become taken for granted.
D.
Performance effects lag the development of core techniques.

Which of the following accurately relate to transformational change?

A.
It is usually the result of a downturn in performance.
B.
It often occurs too early to result in an improvement in market position or jobs.
C.
It does not take place frequently.
D.
It generally occurs in response to changes suggested by existing middle management.

Which of the following are reasons why the history of the organisation is important for strategists?
A.
It helps detect and avoid strategic drift.
B.
It avoids misattributing the reasons for success.
C.
It focuses the manager purely on the relevant organisation.
D.
It avoids the recency bias.

What term is used for a situation where early events and decisions establish policy paths that have
lasting effects on subsequent events and decisions?
A.
Historicisation
B.
Strategic drift
C.
Cyclical strategy
D.

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Path dependency
Which of the following is not a way of carrying out an historical strategic analysis?
A.
Rigidity analysis
B.
Historical narratives
C.
Cyclical influences
D.
Chronological analysis
E.
Key event and decision analysis ('anchor points')

Which approach to historical analysis would be most suitable for a manager wanting to assess
an organisation's attitudes to markets, customers and change?
A.
Cyclical influences
B.
Anchor points
C.
Key events and decisions ('anchor points')
D.
Historical narratives

Which of the following is not one of the four layers of organisational culture?
A.
Values
B.
Beliefs
C.
Paradigm
D.
History

Which of the following best describes the cultural web?

A.
A representation of the politics in an organisation
B.
A representation of the power in an organisation
C.
A representation of the taken-for-granted assumptions, or paradigm, of an organisation and its
competitors
D.
A representation of the taken-for-granted assumptions, or paradigm, of an organisation and the
physical manifestations of the organisation culture

Which three of the following questions are most likely to be useful when analysing the cultural web of
an organisation?
A.
Who are the heroes and villains?
B.
How is power distributed?
C.
How has the organisation been affected by strategic drift?
D.
Is emphasis on reward or punishment?

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Which two of the following explain why the 'taken-for-granted' nature is centrally important in relation
to strategy and the management of strategy?
A.
Because this inevitably means that the culture gives an inaccurate picture of the organisation
B.
Because the culture does not apply directly to managers
C.
Because organisations can be 'captured' by their culture and find it difficult to change their strategy
outside that culture
D.
Because it is difficult to observe, identify and control, culture is difficult to manage

Organisational culture has largely been created by previous management actions and decisions, so
can relatively easily be changed in the future.
A.
False
B.
True

'That approach was tried last year and failed.' Which two of the following apply to this statement?
A.
It is an example of a routine or ritual.
B.
It is an example of a rigid control system.
C.
It is an example of something that is taken for granted.
D.
This statement could only be made in a flat organisational structure.

When describing organisational culture some writers use phrases such as 'the way things are
around here'.
In relation to this comment, which of the following is the most useful task of strategists?
A.
To build a future based solely on the existing culture
B.
To investigate the taken-for-granted aspects of the culture
C.
To make changes in control systems so that the culture changes
D.
To make structural change so that the culture changes

Chapter 6 – Business Strategy

What is the key benefit of identifying the organisation's SBUs?

A.
It helps the development of business-level strategies.
B.
It makes financial control easier.
C.
It prevents a focus solely on market-based criteria.
D.
It decreases the complexity of the organisation's structures.

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Which of the following are generally used when identifying SBUs?

A.
Market-based criteria
B.
Structurally-based criteria
C.
Capabilities-based criteria
D.
Finance-based criteria

What is meant by focused differentiation?

A.
Providing a high perceived value service or product to a selected market segment that justifies a
substantial price premium
B.
Simultaneously seeking to achieve differentiation and a price lower than that of competitors
C.
Concentrating on a particular feature of a product or service to achieve differentiation
D.
Concentrating on differentiation as the primary means of achieving competitive advantage

A differentiation strategy is defined as:

A.
the provision of products or services that offer benefits different from those of competitors and that are
widely valued by buyers.
B.
the innovation of products or services greater than the competition.
C.
higher quality products or services than those of competitors.
D.
the provision of different products or services that draw upon competences or resources which
competitors do not have.

How might an organisation sustain and win a price war?

A.
By cross-subsidising one business from another
B.
By having 'deeper pockets' to fund short- to medium-term losses
C.
By having a lower cost structure
D.
All of the above

Which of the following are key principles for successful competition in hypercompetitive conditions?
A.
Misleading the competition
B.
Maintaining constant strategies
C.
Developing new bases of success
D.
Making a series of small moves (rather than big moves)
This is the correct answer.
E.
Being unpredictable

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Which one of the following best explains the aim of collaboration?

A.
To achieve advantage
B.
To avoid competition
C.
Neither to achieve advantage nor to avoid competition
D.
To achieve advantage or avoid competition

Which of the following could be major benefits for a seller that collaborates with a major customer in a
technological industry such as aerospace or carmanufacturing?
A.
It may enable joint research and development
B.
Increased seller power
C.
It increases the buyer's power
D.
It enables the customer to increase barriers to entry

Many governments have promoted, or required, collaboration between buyers of pharmaceuticals and
centralised government drug-specifying agencies. What is the outcome of these moves?
A.
Greater sensitivity to end-user requirements
B.
Increased selling power
C.
Increased buyer power
D.
Greater barriers to entry

What are the two key assumptions in understanding competitive dynamics in terms of game theory?
A.
Competitors may opt to follow game rules of their own choosing.
B.
Competitors are in an interdependent relationship.
C.
Competitors approach business as though it was a game, so do not always behave rationally.
D.
Competitors will behave rationally in trying to win their own benefit.

Based on the two basic assumptions of game theory, which two principles guide the development of
successful competitive strategies?
A.
'Think forwards and reason backwards'
B.
'Analyse forwards and think backwards'
C.
'Get in the mind of the competitors'
D.
'Assume that your competitor cannot get in your mind'

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Consider the example of a company that is always battling on the basis of price, but realises that with
its cost structure it cannot hope to compete effectively. What, according to game theory, should it do?
A.
Change the rules
B.
Avoid all collaboration
C.
Continue with current strategies, knowing that the competition will act irrationally
D.
Continue with its current strategies

Chapter 7 – Corporate Strategy and Diversification

What are the two constraints most likely to face organisations seeking greater market penetration?
A.
The risk of downsizing
B.
The need to consolidate market share
C.
Legal constraints
D.
Retaliation from competitors

In what three ways may market development take place?

A.
By focusing on new users
This is the correct answer.
B.
By focusing on efficiency of production
C.
By focusing on new geographies
D.
By focusing on economies of scale

What term is used for corporate development beyond current products and markets, but within the
capabilities or the value network of the organisation?
A.
Backward integration
B.
Related diversification
C.
Vertical integration
D.
Divergent diversification

Which two of the following are most likely to be sources of conglomerate value creation?
A.
Exploiting dominant logics rather than concrete operational relationships
B.
Divestment
C.
Entering markets of high risk
D.
Entering countries with underdeveloped markets

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What is meant by diversifying through vertical or horizontal integration?

A.
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.
B.
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.
C.
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.
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.

A film company and a music recording company may choose to combine, believing that the result will
be more effective than the sum of the two component parts. What term is used for the benefits?
A.
Synergy
B.
Diversification
C.
Integration
D.
Consolidation

Diversification may create efficiency gains by applying the organisation's existing resources or
capabilities to new markets, products or services. These gains are known as economies of scale.
A.
False
B.
True

What does conventional finance theory say about the spreading of risk for shareholders when a
company diversifies?
A.
There is significant benefit, provided the diversification leads to synergy.
B.
There is little benefit to shareholders as they have already spread their risk by holding a range of
shares.
C.
There is significant benefit, provided the diversification leads to an increase in corporate parenting
capabilities.
D.
There are always significant benefits from the reductions in risk.

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Which of the following definitions explains what is meant by the corporate parent?
A.
The central head office of the organisation
B.
The founder of the business
C.
The owner or major shareholder of the corporation
D.
The levels of management above that of business units

Which three of the following are the key criteria that should be considered in relation to a multi-
business portfolio?
A.
Potential problems
B.
Attractiveness
C.
Balance
D.
Fit
E.
Synergy

A particular business unit operates in a low-growth, mature market, in which it has a large market
share. What term is used in the BCG matrix for this business?
A.
Ballast
B.
Cash cow
C.
Star
D.
Harvest/divest

Chapter 8 - International Strategy

Which three of the following are categories of cost drivers of internationalisation?

A.
Scale economies
B.
Similar customer needs
C.
Country-specific differences
D.
Favourable logistics

Interdependence between country operations increases the pressure for global coordination.
A.
False
B.
True

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Some brands, such as Coca-Cola, are able to successfully market in very similar ways around the
world. What is this called?
A.
Global customisation
B.
Scope economies
C.
Transferable marketing
D.
Favourable logistics

Porter's Diamond has been used by governments aiming to increase the competitive advantage of
their local industries. Which of the following are examples of this?
A.
Governments have encouraged competition rather than protect home-based industries.
B.
Governments have encouraged the growth of clusters of related industries.
C.
Governments have raised tariff barriers to protect local industries.
D.
Governments have encouraged the growth of industries previously unrepresented in the local
economy.

Internationalisation is increasingly not about exploiting existing capabilities in new national markets.
A.
False
B.
True

What name is given to the purchase of components and services from the most appropriate suppliers
around the world regardless of location?
A.
International compartmentalisation
B.
Multidomestic marketing
C.
Global sourcing
D.
The
global–local
dilemma

The global– local

dilemma in international strategy means:
A.
the issues related to globalisation and the alleged disadvantaging of developing countries.
B.
how many local people to employ in foreign subsidiaries.
C.
whether to centralise strategic decisions in head office or to devolve decision making to subsidiaries.
D.
the extent to which products and services may be standardised across national boundaries or need to
be adapted to meet the requirements of specific national markets.

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Which international strategy has a dispersed configuration and low levels of coordination of
international activities?
A.
Transnational
B.
Global
C.
Multidomestic
D.
Export

What do the four elements of Gehemawat's CAGE represent?

A.
Cultural distance, administrative and political distance, geographical distance and environmental
distance
B.
Cultural distance, administrative and political distance, geographical distance and economic
C.
Country distance, administrative and political distance, geographical distance and environmental
distance
D.
Country distance, administrative and political distance, gross distance and economic distance

Which three of the following are the key factors to consider when assessing international retaliation?
A.
The reactiveness of the defender
B.
Five Forces analysis
C.
The clout that a defender can muster
D.
The attractiveness of the market to the new entrant
E.
PESTEL factors

What term is used for an approach where firms initially use entry modes that allow them to maximise
knowledge acquisition while minimising the exposure of their assets?
A.
Multidomestic expansion
B.
International competitor elimination
C.
Foreign direct investment
D.
Staged international expansion

Chapter 9 – Innovation and Entrepreneurship

The view that innovation involves technologists creating new knowledge, which then forms the basis
for new products for the rest of the organisation to produce andmarket, is known as market push.
A.
True
B.
False

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Which of the following statements correctly describe product or process innovation?

A.
Small new entrants typically have the greatest opportunity in the mature stage of an industry.
B.
Industries typically favour product innovation.
C.
Product innovation typically precedes process innovation.
This is the correct answer.
D.
New developed industries typically favour product innovation.

What term is used for the process by which innovations spread among users, varying in pace
and extent?
A.
The tipping point
B.
Incremental innovation
C.
Radical innovation
D.
Diffusion

Wherever possible, companies should aim to be first-movers.

A.
False
B.
True

Which of the following are likely to be late-mover advantages?

A.
Pre-emption of scarce resources
B.
Gaining experience curve benefits
C.
Learning
D.
Free-riding

Which of the following are the contextual factors that managers should consider when deciding
whether to move first or not?
A.
The speed of change in the market
B.
The shape of the experience curve
C.
The organisation's capacity for profit capture
D.
The availability of complementary assets

Which of the following is most likely to be a key issue during the start-up stage?
A.
Releasing capital as a reward
B.
Changing to intrapreneurship
C.
Sources of capital
D.
Changing from the role of entrepreneur to manager

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What name is given to people who set up a succession of enterprises, investing the capital raised on
exit from an earlier venture into new growing ventures?
A.
Serial entrepreneurs
B.
Serial venturists
C.
Venture capitalists
D.
Intrapreneurs

Which of the following are included in the IBM ?ecosystem'?

A.
Franchisees
B.
Competitors
C.
Makers of complementary products
D.
Suppliers

Which three of the following are key issues that a social entrepreneur must consider at start-up?
A.
The development of ecosystems
B.
Business model
C.
Social mission
D.
Organisational form

Many social enterprises take on cooperative forms. What are the two main disadvantages of
this form?
A.
Cooperatives can be slow to take hard decisions.
This is the correct answer.
B.
It is difficult to keep financial records.
C.
It increases the number of levels in the hierarchy.
D.
It may be difficult to decide which stakeholders to include or exclude.

Kanter considers that there are benefits to business of involvement with social enterprise. Which of
the following are among the specific benefits that Kanter identifies?
A.
Gaining first-entrant advantages in foreign markets
B.
Developing new technologies and services
C.
Attractive publicity
D.
A feel-good factor
E.
Accessing new pools of potential employees

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Chapter 10 – Mergers, Acquisitions and Alliances

Common problems in making acquisitions work relate to:

A.
lack of cultural fit.
B.
failure to add value, inability to integrate the new company, lack of organisational learning and poor
cultural fit.
C.
the two companies having different core competences.
D.
failure to add value and inability to integrate the new company.

Which three of the following are most likely to be motives for acquisitions and mergers?
A.
To increase capabilities
B.
To create consolidation opportunities
C.
To use existing capabilities more successfully
D.
To increase speed of entry into a rapidly changing market

What term is used for M&A integration in which it is implied that both the acquired firm and the
acquiring firm learn the best qualities from the other?
A.
Preservation
B.
Symbiosis
C.
Holding
D.
Absorption

The Royal Bank of Scotland's consortium competed with Barclays Bank to acquire the Dutch bank
ABN AMRO: the Royal Bank of Scotland won, but the excessive price of'70bn (~$98bn) soon drove
the victor into financial collapse and government ownership. What term is used for this situation?
A.
Winner's curse
B.
Hubris
C.
Acquisition
D.
Excessibility

In the context of strategic alliances, what is meant by the term 'collaborative advantage'?
A.
The benefits of being part of a network of alliances of which an organisation is a member
B.
The aim of two or more organisations in sharing resources and activities to pursue a strategy
C.
The benefit of creating a new entity that is owned separately by the partners involved
D.
The result of managing alliances better than competitors

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Which of the following is not a stage that occurs when two organisations form and eventually dissolve
an alliance?
A.
Courtship
B.
Negotiation
C.
Storming
D.
Maintenance
E.
Start-up
F.
Termination

Networks differ from joint ventures in that networks:

A.
are arrangements whereby two or more organisations work in collaboration without creating a new
formal entity, but where there is mutual advantage in doing so.
B.
are based on personal relationships.
C.
are arrangements whereby two or more organisations work in collaboration with the creation of a new
formal entity.
D.
are limited to e-commerce businesses.

Chapter 11 – Evaluating Strategies

Analysis suggests that a company could find a strategy that gains market share for advantage, and
that exploits its superior resources and competences. The organisational culture suggests that it
should stick to what it knows best. What strategy would you suggest?
A.
Diversification
B.
Retrenchment
C.
Market penetration
D.
Market development

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?
A.
Retrenchment
B.
Market development
C.
Diversification
D.
Market penetration

If managers use their judgement when applying the techniques, the criteria of suitability, acceptability
and feasibility will identify the best strategy.
A.
True
B.
False

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What is most often the limitation when assessing return using

cost– benefit
analysis?
A.
Difficulty in quantification
B.
Clear identification of the key stakeholders
C.
Difficulties in establishing the timescales to be applied
D.
Identifying objectives of the strategy

Profitability analyses for assessing the acceptability of a strategy include:

A.
return on capital employed (ROCE); ratio analysis; and funds flow analysis.
B.
return on capital employed (ROCE); payback period; and discounted cashflow (DCF).
C.
payback period; discounted cashflow; and decision trees.
D.
ranking; decision trees; and scenarios.

'Acceptability' assessment concerns:

A.
the strategic fit of the strategy to the future trends and changes in the environment.
B.
the resources and competences required to implement the strategy.
C.
the expected performance outcomes, such as risk, return and stakeholder reactions, if a strategy is
implemented.
D.
the stakeholder reaction to a strategy.

Chapter 12 – Strategy Development

Which of the following best describes a 'deliberate' strategy?
A.
A strategic direction that emerges from a stream of decisions
B.
A strategy that is the product of competitive pressure
C.
An expression of desired strategic direction, intentionally formulated or planned by managers
D.
An expression of desired strategic direction deliberately formulated or planned by managers that is
realised in the fullness of time

The purposes of strategic planning systems are:

A.
to assist in the communication, coordination and control of strategy.
B.
to provide a structured means of analysing and thinking about complex strategic problems and
expanding the planning horizons of strategists.
C.
to develop ownership of the strategy.
D.
All of the above.

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Which of the following is not one of the four main dangers with formal planning that
Mintzberg identifies?
A.
Dampening of innovation
B.
Detachment from reality
C.
Not providing a sense of security and logic
D.
Confusing strategy with a plan
E.
Over-complex planning process

Which four of the following are the central tenets of organisational learning?
A.
Experimentation is the norm.
B.
Employees should be appointed on the basis of their previous educational success.
C.
Organisations are pluralistic.
D.
Managers facilitate rather than direct.
E.
Information flows and relationships between people are lateral as well as vertical.

The resource allocation process (RAP) explanation of strategy development says:

A.
that strategy develops as the outcome of the taken-for-granted assumptions and behaviours in
organisations.
B.
that strategy develops as the outcome of resource allocation routines in organisations.
C.
that strategy develops as the outcome of processes of bargaining a negotiation among powerful
internal or external interest groups (or stakeholders).
D.
that strategy develops as the outcome of logical incrementalism
dash–
the deliberate development of strategy by experimentation and learning from partial commitments.

What is the cultural explanation of strategy development?

A.
Strategy development must not be based on the taken-for-granted assumptions and behaviours in
organisations.
B.
Strategy development occurs as the outcome of the taken-for-granted assumptions and behaviours in
organisations.
C.
According to Hofstede's theories, strategies that work in one culture cannot be transferred to another
culture.
D.
A major task of strategy development is to alter the taken-for-granted assumptions and behaviours in
organisations.

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What term is used for an organisation capable of continual regeneration from a variety of knowledge,
experience and skills of individuals within a culture that encourages mutual questioning and challenge
around a shared purpose or vision?
A.
Strategic organisation
B.
Learning organisation
C.
Pluralistic organisation
D.
Emergent organisation

A 'learning organisation' requires:

A.
a stable hierarchy.
B.
a shared vision and culture that is challenging and questioning.
C.
a questioning culture.
D.
knowledge management systems

Strategies most often develop in organisations:

A.
as the outcome of cultural and political processes in the organisation.
B.
through formal strategic planning processes.
C.
through multiple processes that vary according to the type of organisation and the context of that
organisation.
D.
through a process of learning by doing, often known as 'logical incremental'.

Middle managers are likely to see strategy development in terms of intended, rational, analytical
planned processes, whereas SEOs see strategy development more as a result of cultural and political
processes.
A.
False
B.
True

Organisations in complex situations are most likely to succeed if they use:

A.
strategies that have been successful in the past.
B.
different processes for different purposes.
C.
top-down strategic planning.
D.
different processes for different purposes and different strategy development roles at different
organisational levels.

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Chapter 13 – Organising for Success

What term is used for the structures, processes and relationships through which an
organisation operates?
A.
The organisational design
B.
The organisation's culture
C.
The organisation's configuration
D.
The organisational paradigm

The speed of change and increased levels of uncertainty in the business environment have increased.
What is the most important result from this for organisations?
A.
They must become learning organisations.
B.
They must develop into international organisations.
C.
Their structures must become more rigid and stronger.
D.
They must have flexible designs and be skilled at reorganising.

Transnational corporations are required to simultaneously achieve local responsiveness and global
coordination. For this to work, global managers need to:
A.
cross national and functional boundaries while also being sensitive to local needs.
B.
ensure global innovation and learning.
C.
spot talent and foster innovation.
D.
All of the above.

Functional structures are based on:

A.
business units.
B.
geographic divisions.
C.
the primary activities of an organisation such as production, finance and marketing.
D.
product divisions

A 'holding company' structure can be defined as:

A.
one that is holding control over product or market divisions.
B.
one that is an investment company consisting of shareholdings in separate businesses.
C.
one that is managed by a group of managers who are shareholders.
D.
one that is holding control based on portfolio management principles.

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Balanced scorecards are a means of control through:

A.
qualitative measures.
B.
performance targets.
C.
portfolio management.
D.
quantitative measures.

Market systems as control processes typically involve:

A.
a system for the allocation of resources.
B.
outsourcing of activities.
C.
using real market forces in the allocation of resources.
D.
a formalised system of contracting for resources.

Cultural systems of control are aiming at:

A.
standardisation of outputs.
B.
standardisation of norms/behaviours.
C.
standardisation of skills and behaviours.
D.
standardisation of processes.

Adopting a 'financial control' approach from the corporate centre involves:

A.
retaining financial control and strategic planning principles.
B.
complete devolution of both financial and strategic issues.
C.
complete devolution of strategic issues but retention of major financial controls.
D.
providing financial devolution but retaining strategic planning principles.

The 'strategic control' approach is characterised by:

A.
agreement between the centre and divisions within central guidelines.
B.
complete devolution of strategic and financial controls.
C.
the retention of strategic and financial controls in a top-down approach.
D.
complete devolution of strategic controls but retention of financial controls.

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Which three of the following are typical dilemmas in organising for success?
A.
Holding the ring (tight–loose) versus holistic solutions
B.
Vertical accountability versus horizontal integration
C.
Empowering versus best practice
D.
Centralising and decentralising
E.
Hierarchies versus networks

A company is dominated by principles of hierarchy and vertical accountability, and is highly

antagonistic to radical innovation. Which approach would be most suitable if management wanted to
develop a new venture?
A.
Subdivide the organisation, setting up a new division
B.
Reorganise the whole organisation around the new venture
C.
Change the company culture

A dilemma for managers in the interconnectedness of configurations is which element drives the
others. The aim is to ensure that strategic elements drive structural elements.
A.
False
B.
True

Chapter 14 – Leading Strategic Change

There are different styles of managing strategic change. Which of the following are the potential
benefits of 'direction' as a change style?
A.
Clarity and speed
B.
Increasing ownership of a decision or process
C.
Maintaining control over the change process while also involving people in it
D.
Overcoming lack of information or misinformation

The style of leading change associated with ?persuasion' (or 'education') is best described as:
A.
Personal authority is used to set direction and the means of change
B.
A strategic leader retains coordination and authority but delegates elements of the change process
C.
Gaining support for change by generating understanding and commitment
D.
Involvement in setting the strategy agenda and resolving strategic issues by groups

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Which of the following is not one of Balogun and Hope Hailey's important contextual features that
need to be taken into account when designing change programmes?
A.
Capability
B.
Readiness
C.
Capacity
D.
Technology
E.
Power

What type of change leadership involves 'incremental realignment'?

A.
Reconstruction
B.
Adaptation
C.
Revolution
D.
Evolution

Which of the following descriptions correctly apply to revolutionary change?

A.
It involves major strategic change.
B.
It occurs incrementally.
C.
It is rapid.
D.
It is likely to involve cultural change.

What type of change involves incremental transformation?

A.
Adaptation
B.
Evolution
C.
Revolution
D.
Reconstruction

Political processes in managing change may involve:

A.
senior managers.
B.
employees.
C.
all stakeholders.
D.
the Board of Directors.

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Strategic change levers may be symbolic in nature. Which of the following do you think is the most
powerful symbol?
A.
Behaviour of managers
B.
Changes to systems such as reward, information and control systems
C.
Use of stories such as newsletters
D.
Physical changes in the work environment, such as relocations or changes to office space

Which of the following is least likely to be used as a mechanism for managing change from a
political perspective?
A.
Using symbols, rituals and language to legitimise change
B.
Building alliances and networks
C.
Associating with powerful stakeholder groups
D.
Looking for windows of opportunity
E.
Acquiring resources

Which of the following is least likely to be an important element in a turnaround strategy?

A.
Crisis stabilisation
B.
Focusing on long-term cost cutting
C.
Gaining stakeholder support
D.
Financial restructuring
E.
Clarifying the target market(s)

Chapter 15 – The Practice of Strategy

Porter's view is that the CEO has a key role as a strategic leader, setting a disciplined approach to
what fits and does not fit the overall strategy. Which of the following are dangers of this approach?
A.
Non-executive directors gain a greater say in strategic planning.
B.
CEOs can become over-confident and launch strategic initiatives of ever-increasing ambition.
C.
The CEO 'owns' the strategy and is responsible for its success.
D.
Failures are blamed on the CEO rather than being investigated.

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Which of the following is claimed to be the main benefit of using the top management team to carry
out strategic planning activities?
A.
Top management teams are often made up of diverse individuals.
B.
They are often appointed by the CEO, so act independently.
C.
They bring additional experience and insight to the CEO.
D.
They can develop a cohesive and consistent approach to decision making.

Which of the following are good reasons why a strategic planner is often recruited from within
the organisation?
A.
Participating in strategy provides promising managers with an overview of the organisation as a
whole.
B.
They bring intuitive understanding, networks and credibility to the planning process.
C.
Participating in strategy provides promising managers with exposure to senior management.
D.
It introduces new ideas and perspectives on the organisation.

Which three of the following may increase the influence of middle managers on strategy making?
A.
When they have access to an organisation's 'strategic conversation'
B.
When they have access to organisational networks
C.
When they are deeply involved in operations
D.
When they have key organisational positions

Which of the following is not one of the four roles that consultants may play in strategy development
in organisations?
A.
Providing support for top management's views on the organisation's strategic issues
B.
Transferring knowledge
C.
Promoting strategic decisions
D.
Analysing, prioritising and generating options
E.
Implementing strategic change

What is the key finding of the McKinsey & Co. research on who should be included in
strategy making?
A.
Only the most senior managers should be involved.
B.
The people involved should be kept the same to ensure consistency.
C.
The people involved should vary according to the nature of the issue.
D.
Managers at many levels should always be involved.

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What term is used for the process of winning the attention and support of top management and other
important stakeholders for strategic issues?
A.
Behavioural economics
B.
Issue packaging
C.
Strategic workshops
D.
Strategic issue selling

Senior managers should plan a strategy workshop with an open mind about what they hope to
achieve.
A.
False
B.
True

A company decides to assess whether operating from a single large site is essential to profitability. It
studies the possible outcomes of operating from a varying number of sites of different sizes. What
activity is it engaging in?
A.
Hypothesis testing
B.
Hypothetical prescription
C.
Hypothetical strategisation
D.
Strategisation

Which of the following criteria should a project team meet when making a business case for a new
product in a large organisation?
A.
Is it focused on strategic needs?
B.
Does it contain detailed procedures and policies?
C.
Does it plan actions for the whole organisation?
D.
Is it supported by key data?
E.
Does it demonstrate solutions and actions?
F.
Does it provide clear progress measures?

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