ORGL 6343 Strategic Leadership Mid Term Exam-Jose Canizalez

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Jose A. Canizalez 1 ORGL 6343 Strategic Leadership Mid Term Exam Instructions: You can either print the exam and circle your correct answer, or you can highlight your answer in the exam document using Yellow highlighter. Once you are finished with the exam, please send it to me as an email attachment. Be sure to carefully read and answer each question. Chapter 1 1. Strategy is fundamentally about: a. Being better than rivals b. Success in achieving long-term goals c. Satisfying all stakeholders d. Being an excellent “corporate citizen” 2. Modern strategy applied to the business world shares with military strategy: a. Only linguistic roots b. Some authors such as Sun Tzu and his “Art of War” c. The existence of resources, conflict, and battle between players d. Decisions of significance to overall success, and major resource commitment 3. Strategy and tactics: a. Are interchangeable terms b. Relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively c. Can be seen as what top managers do and what lower level employees do, respectively d. None of the above 4. The simplest useful definition of business strategy would be: a. A sort of plan b. A conceptual construct relating to the juxtaposition of corporate richness versus the snakes and ladders of a kaleidoscopic environment

Jose A. Canizalez 2 c. How to win the corporate wars; price wars, technology races, develop killer applications d. The means by which organizations achieve their long-term objectives 5. Business strategy defines: a. The way a firm competes in a particular industry or market b. How a firm gains a competitive advantage over its rivals within a specific industry or market c. Both a and b d. Neither a nor b 6. The shift in strategy from a plan to a direction leads to: a. A downgrade its role in management b. An overt quest for flexibility and responsiveness c. A need for top managers’ training d. Less work for top managers 7. The difference between intended and realized strategy is: a. Significant because studies suggest that only 10 to 30% of intended strategy becomes realized b. Greater in unsuccessful companies c. Unimportant, because no-one ever expects the intended strategy to seriously be implemented d. Only a very small difference, in general 8. In practice, strategy making is: a. A combination of centrally-driven rational design and decentralized adaptation b. A combination of luck, organizational politics, and centrally-driven planning c. The expression of political games among top managers d. None of the above 9. The balance between designed strategy and emergent strategy depends mostly on: a. The type of organizational structure b. The stability and predictability of a firm’s environment

Jose A. Canizalez 3 c. Top managers’ personalities d. Middle managers’ autonomy 10. If a firm's strategy ensures it is consistent with both its internal and external environment, it achieves: a. Strategic fit b. Strategic adjustment c. Environment consistency d. Political and social fit Chapter 2 11. Which of the following is a framework for categorising key elements of an organization’s external environment? a. SWOT b. PEST c. The BCG matrix d. Porter’s value chain 12. The core of a firm’s business environment is determined by: a. Its relationships with customers, competitors, and suppliers b. Its relationships with key pressure groups and shareholders c. Its relationships with its major stakeholders d. Its vision and mission 13. Value is created when: a. The price that the customer is willing to pay for a product exceeds the price the customer is actually charged b. Competition ensures that no firm can make above average profit c. Surpluses are appropriated by suppliers d. The price that the customer is willing to pay for a product exceeds the firm’s cost

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Jose A. Canizalez 4 14. In Porter’s five forces framework, the term "industry attractiveness” refers to: a. the appeal of the industry to a particular firm b. overall industry profitability c. the extent to which the industry draws in new entrants d. the potential for one firm to dominate the industry 15. The idea with Porter’s 5 Forces is to: a. Quantify the 5 forces, to produce ideally a mathematical model of the industry b. Identify which forces are relatively more powerful, and to assess their impact on competition and industry profitability c. Work out how management can eliminate each of the competitive forces d. Use it to construct a plan to achieve monopoly power 16. Economies of scale are a barrier to entry because: a. New entrants do not know where they are positioned on their learning curve b. New entrants do not yet understand the scale economies so they cannot precisely determine their selling price c. New entrants face a risk of price retaliation from the incumbents which could occur immediately on a large scale d. New entrants face the cost and risk of creating large-scale capacity to start with or a severe cost disadvantage if they enter on a smaller scale 17. Firms in any industry can be said to operate in two major markets: a. The labour market and the output market b. As a buyer in the market for inputs, and as a seller in the output market c. The labour market and the input markets d. The product market divided in two or more segments (such as mid-size car and SUV market segments) 18. To forecast industry profitability consistently accurately, professional analysts have to:

Jose A. Canizalez 5 a. Look at the link between performance and industry structure, then to identify major trends and to examine the link between these trends and the forces of competition b. Look at the probability of new entries in the industry, to determine the major trends, and to forecast the probable overall industry profit c. Determine the five largest players in the industry and their relative bargaining power in regard to their buyers and customers, and to identify their strengths and weaknesses d. Develop a deep understanding of how the industry creates value now and, in the future, whether or not they use the tools described in chapter 2. 19. A market’s boundaries are defined by: a. The geographies of the markets that are supplied by the incumbents b. The type of product, which is sold, and the type of customers willing to pay for the product c. Substitutability on the demand side and on the supply side d. Substitutability on both the demand side and the supply side, combined with an element of judgment depending on context and purpose 20. The question “What does a firm need to survive competition?”: a. Can be addressed through analysis of competitors using all possible means, even at the edge of legality and ethics b. Can be addressed by studying very carefully the two largest rivals in the industry c. Requires an understanding of the current and future basis of competition specific to the industry d. Can never be answered clearly, because competitors will not divulge what they are doing Chapter 3 21. The internal environment: a. Is the structure inside an industry b. Has become less important as an explanation of firms’ profitability c. focuses on the relationship between a firm’s resources and capabilities and its business strategy d. focuses on industry attractiveness as a primary source of profit

Jose A. Canizalez 6 22. 3M is: a. A successful conglomerate comprising a group of unrelated businesses b. A group of businesses linked by their use of glue-based technologies c. A group of businesses with an outstanding ability to develop and market new Fast Moving Consumer Products d. A group of businesses with a core capability to develop and launch new products using adhesives, thin-film coatings, and other technologies 23. Brand values are a: a. Type of tangible resource b. Type of intangible resource c. Type of synergistic resource d. Type of sustainable resource 24. Jay Barney in his 1986 paper argues that a strong organizational culture: a. is rarely of strategic importance b. is often associated with poor financial performance c. often results in inflexibility and corporate rigidity d. is potentially a very valuable strategic resource 25. Threshold capabilities enable a firm to do what every firm in its industry must do. Distinctive or core competences: a. Enable it to earn higher profits or greater market share than its competitors in the same industry b. Are its unique selling point c. Are those product features that stop non-customers from buying the product d. Are captured in logos, trademarks etc. 26. Tight complex organizational routines: a. Are based on unique corporate structures

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Jose A. Canizalez 7 b. Can be copied if rivals hire the right employees c. Are hard for rivals to replicate d. Answers a and c 27. For a resource or capability to establish a competitive advantage two conditions must be present. These are: a. The resource or capability must be widely available and relevant to the key success factors in the market b. the resource or capability needs to be scarce and relevant to the key success factors in the market c. The resource or capability must be central to operations and its strategic role well understood by all employees d. The resource or capability must be central to operations and its strategic role appreciate by just a few members of the organization 28. Superior capabilities are often traced to staff skills and efforts so: a. the organization should, if possible, lock key staff in through their employment contracts b. the organization needs to pay a good market rate to attract and retain top talent c. it is important to have the right corporate culture and motivate staff d. all of the above 29. The final appraisal of the strengths and weaknesses of a firm’s resources & capabilities: a. Is a quantitative appraisal by an objective outside body b. Requires an objective appraisal of the firm’s resources and capabilities c. Requires artistic flair and creative questioning d. Requires detailed knowledge of business strategy theory, and all its intellectual roots 30. In appraising resources and capabilities we need to acknowledge the important role that industry context plays. In general it is best to define the industry context: a. very narrowly

Jose A. Canizalez 8 b. relatively broadly c. on the basis of the firm’s existing strategy d. on the basis of the firm’s likely future strategy Chapter 4 31. Competitive advantage can be defined as: a. The difference between a firm’s return on assets and its return on sales b. A firm’s ability to earn persistently higher revenue than its rivals c. A firm’s ability to earn a persistently higher profit rate than its rivals d. A firm’s ability to outwit its competitors 32. If an industry has a stable environment and firms pursue similar strategies: a. Firms with similar resources and capabilities should have similar profit rates b. Firms with similar resources and capabilities should have similar structures c. Firms without similar resources and capabilities will have left the industry d. All of the above 33. “Strategic innovation” means introducing: a. New products b. New markets c. New technologies d. All of the above, or introducing new ways of doing business 34. To successfully imitate the strategy of another firm, an organization must: a. Identify and diagnose the rival’s advantage, believe in its ability to deliver a superior return, and, finally, acquire the necessary resource and capabilities b. Identify and diagnose the rival’s advantage, and then acquire the necessary resources and capabilities c. Benchmark the rival’s activities and resources, believe in a superior return, and build the rival’s resource in-house d. Benchmark the rival’s activities and resources, identify the rival’s weaknesses, and, finally, believe in its ability to deliver a superior return

Jose A. Canizalez 9 35. To imitate the competitive advantage of another company, a firm must first: a. Understand the basis of its rival’s success b. Collect comprehensive information about its rival c. Analyse its rival’s marketing strategy d. None of the above 36. The fundamental choice for capability acquisitions is the decision to either: a. Buy them or sell them b. Develop them or maintain them c. Buy them or build them d. Buy them or copy them 37. The seven drivers of cost advantage: a. Must be equally examined in all firms b. Can be a useful framework within which to compare a firm’s cost improvements in the last few years c. Can be a useful framework within which to compare a firm’s costs with its competitors d. Can be a useful framework within which to compare a firm’s profit margins with its competitors 38. Increasing flight reliability at Singapore Airlines, alluded to in Case Insight 4.4: a. Is likely to be the outcome of several linked activities b. Is basically down to the age of the planes c. Depends on the incentives given to ground and air crew for planes to take off on time d. Answers b and c 39. A typical cost leadership strategy involves: a. A firm producing a few limited-feature standard products, or providing a very standardised service b. A medium or small firm with minimal overheads, and cheaply acquired (sometimes second- hand) assets

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Jose A. Canizalez 10 c. Answers a and b d. Being the firm with the highest market share, and, often, the best-known brand in the industry 40. Porter says that firms get stuck in the middle because: a. The mindsets of cost-minimization and differentiation are culturally opposed, and firms cannot optimize the investments needed for both at once b. As a above and firms need very different organizational processes to achieve the lowest costs or effective differentiation in the industry c. Mid-market positions are unattractive to consumers d. Many firms have had several different CEOs, each determined to pursue different strategies Chapter 5 41. Change in the industry environment faced by a firm is: a. Massive and unpredictable b. Gradual and predictable c. Could be either answer a or b, depending on the industry and the prevailing conditions d. Easier for large firms to cope with 42. The decline phase of the industry life cycle is caused by: a. The emergence of a radically better substitute product, representing a new industry b. Tired old firms running out of new ideas c. Existing firms leaving the industry to move to a more profitable one d. Excessive market saturation 43. The different stages of the industry life cycles are characterized by: a. The evolution of the industry growth rate over time b. The evolution of the competition in the industry c. The evolution of a firm’s market share d. None of the above 44. Start-up firms in a new industry are also sometimes known as:

Jose A. Canizalez 11 a. de alio entrants b. de novo entrants c. de bono entrants d. de facto entrants 45. Often, to succeed in the evolution from introduction to growth a firm: a. Needs to acquire an injection of cash from a venture capital company b. Needs to be closely associated with the dominant design which emerges c. Needs to buy a major competitor d. Needs to pull back on product innovation 46. The typical cause of the decline phase in an industry is: a. Technological substitution e.g. the horse and cart replaced by the car b. Local regional decline due to low-cost foreign competition c. Changing consumer tastes e.g. tobacco d. Any of the above 47. The key success factor for leading firms in the Growth phase is: a. Knowing what competitors are doing – even resorting to espionage b. Taking business away from rivals c. Employing a commission-oriented sales force d. Being able to scale up volume production and operations effectively and efficiently 48. Firms that create new products or services are often not the ones that successfully market them. The reason is that: a. The capabilities needed for invention are different and even conflict with those required for commercialization b. There is a connection between the stage of the industry life cycle and the age of firm c. Large companies steal their ideas. d. The innovators have shifted their strategic orientations to different products or services

Jose A. Canizalez 12 49. A firm can simultaneously pursue dual strategies: a. This goes against all the theory on strategy b. It can, so long as it maintains separate organizations to pursue each strategy c. This is impossible d. This is only possible in large multinational firms. 50. The statement that organizational capabilities are path dependent means that: a. past circumstances influenced past capabilities b. a company’s capabilities today are the result of its history c. a company needs to plan how it develops new capabilities d. Both a and c

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ORGL 6343 Strategic Leadership Mid Term Exam-Jose Canizalez

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