Chegg – Strategic Management Practice Exam Answers

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Q1. What is the term for the process of formulation and implementation of a set of guidelines, decisions and plan of action about the future Dos and Don’ts of the organization that helps them gain advantage over its fellow competitors?

  • Strategic Formulation Process
  • Strategic Implementation Process
  • Strategic Planning Process
  • Strategic Management Process

Q2. Company S Inc. dealing in electrical wires allied with Company V Inc. which deals in solar products. The outcome of this alliance resulted in a company called SV Inc. in which S has 40% rights and V has 60% interests. Via this alliance both the company wants to develop a sustainable product.

Identify the type of strategic alliance present in the above case study:

  • Non-equity
  • Equity
  • Complementary
  • Joint venture

Q3. Company A Inc, majorly dealing in oil and petrochemicals diversify its portfolio and brought 100 % interest in another firm named Y Inc. who deals in the textiles business. The acquisition was planned to keep in view the appropriate and effective strategies related to it. But after precise evaluation, Company A found that after acquisition they have high chances to face issues to remain solvent. To address this issue, the financial managers suggested taking junk bonds and complete the acquisition.

Identify the problem faced by Company A Inc. in achieving acquisition success.

  • Inadequate evaluation of target
  • Integration difficulties
  • Large or extraordinary debt
  • Too much diversification

Q4. Mr. X and Mr. Y, managers of company A Ltd. and B ltd. respectively formed a joint venture to protect their industry from more competition. They say that joint ventures are one of the common ways to prevent competition and earn above average returns.

The managers specify that they are blocking one of the forces of Model T. Identify which forces are being blocked by them.

  • Product Substitutes
  • New Entrants
  • Suppliers
  • Competitors

Q5. Person X and Person Y are interested in the growth of the A Ltd. They forecast that the company will be making high-level profits and above average returns in the industry that would benefit both Person X and Person Y. X is more interested in the revenue and profits, while Y is more interested in the working environment and skill development. Identify the group to which Y belongs.

  • Product Market Stakeholders
  • Capital Market Stakeholders
  • Equity Stakeholders
  • Organizational Stakeholders

Q6. Which of the following would not help a business to gain a competitive advantage among the customers of the market?

  • Deciding what customers need to satisfy.
  • Managing customer relationships effectively
  • The dimensions of reach and richness
  • Targeting on serving the whole market

Q7. Bakery XYZ located in the West has been established since 1960. It has been following the same recipes since its establishment and was quite popular among its consumers. It functioned with rigidity and did not prefer to experiment with its cookies and other items.

Individual A opened a new bakery and soon became quite popular among the customers. Bakery XYZ started losing its customers to Mr. A who kept experimenting with the items his bakery offered.

What could possibly be a reason which gave Mr. A, a competitive advantage over Bakery XYZ?

  • Economies of Scale
  • Switching Costs
  • Cost Disadvantages
  • Product Differentiation

Q8. National Ltd. aims to increase its worth and, in this regard, it has opted for a diversification strategy. State which of the following are not a part of the internal environment incentives for the diversification of the firm.

  • Uncertain future cash flows
  • Antitrust regulation and tax laws
  • Firm risk reduction
  • Low-performance

Q9. It is said that a business firm that shares several business links has well-connected diversification. State which of the following indicate a negligible or low level of diversification.

  • Related constrained
  • Dominant business
  • Unrelated
  • Related linked

Q10. A firm gains a competitive edge only when its competitors are not able to replicate the outcomes of the firm’s strategy and they do not have enough resources to compete with the firm. Thus, firms use tools to recognize their core competencies. These tools consist of certain specific criteria of sustainable competitive advantage to identify which capability will become a core competency.

An individual X founded a new company and copied the business model of a well-established company ABC. He made sure to imitate all of its strategies. However, X was not able to sustain itself in the market as he did not make sufficient profits. According to you, which of the following could be a criterion that has given company ABC a competitive advantage that individual X could not incorporate in his business model?

  • Effective Promotion Capabilities
  • Non-substitutable Capabilities
  • Customer Service Capabilities
  • Empowering Capabilities

Q11. A Ltd. has recently announced that it would be acquiring Z Ltd. the next month. Point out what could have been one of the possible reasons for the acquisition out of the following?

  • Succumb to entry barriers
  • Reduced Diversification
  • Increased Market Power
  • Decreased Diversification

Q12. Mr. A sets up a huge womens’ wear store in the center of the market. Mr. A is very confident of his store’s size and location and does not care to add any sort of extra add-on to the look or the stock of the shop. He is very boring and upright and tries to sell very ordinary clothes.

After a financial year, the market survey revealed Mr. B the most profitable seller in the women’s clothing line. Mr. A had not earned even half the profits as Mr. B. Mr. B had an average-sized shop full of trending stock and was a creative personality. Mr. B knew all about Mr. A but Mr. A was not even aware of the existence of Mr. B’s store and assumed himself to be the only seller dealing in the line.

What can be one of the reasons for Mr. A’s low profitability?

  • A smartly balanced competitor
  • Poor market
  • Slow Industry Growth
  • High Fixed Costs

Q13. Group X and Group Y are different stakeholders of PQR Ltd. Both the groups fail to manage the firm effectively.
The system of management that they were using failed. So, a new system was brought into observation, which is dreaded by both the groups for their own reasons. For e.g., Group Y faces the fear of losing employment.
Identify the new system that is about to be adopted

  • Market for Corporate Control
  • Balance of Power
  • Board of Directors
  • Managerial Compensation

Q14. Mr. A owns a small grocery shop. He was doing well until a Walmart business opened in the nearby market. He rapidly started to lose his customers and was on the edge of bankruptcy. He decided to not lose hope and do something to attract his customers.

Identify which of the following activities can be undertaken by Mr. A to attract his customers?

  • Degrade the Walmart business by faking news about its product.
  • Relocating his shop
  • Offer some personalized and add-on services to the customers.
  • Offer similar products as the Walmart business.

Q15. Individual A has been hired by a company, the position upon which he needs to work involves planning, formulation, and motivating employees regarding the company’s growth in the next three to five years.

Identify the role of which Individual A is assigned in terms of strategic key leadership actions.

  • Determining strategic direction
  • Putting emphasis on ethical practices
  • Maintain an effective organizational culture
  • Management of firm’s resource portfolio

Q16. Identify which one of the following is not a service quality dimension?

  • Durability
  • Consistency
  • Completeness
  • Accuracy

Q17. Analyze the statement and;

“Research and development require the cooperation of employees in terms of relationship across country boundaries to develop a new product”

Identify the concept which is said to be a critical asset that emphasizes internal and external relationships that helps in creating values for stakeholders as well as task accomplishments.

  • External managerial labor market
  • Social capital
  • Internal managerial labor market
  • Human capital

Q18. Company A Inc. and B Inc. were in the same business of telecom industry. Company A Inc. was amazed to see B’s higher sales. The reason for B’s higher sales was his ability to provide better cellular reception to its users. A huge amount of money was invested by company B in Research and development, and as a result, he was able to develop a technology that boosted cellular signal strength and attracted a lot of new users/consumers.

To this Company, A Inc. wanted to buy 100% interest in Company B Inc. Identify by which of the following way Company A Inc. wanted to generate innovation.

  • Internal innovation
  • Innovation through Cooperative strategies
  • Novel innovation
  • Innovation through acquisition

Q19. Mr. X wants to start a start-up but is unsure about which industry he should enter into. His friend suggested analyzing the general environment of the business first. He started with the demographic segment of the environment. Under Demographic Segment, the analysis of which of the following would not help in creating new opportunities or imposing new threats in the business world?

  • Socio-cultural Segment
  • Income Distribution
  • Geographic Distribution
  • Ethnic-mix

Q20. T Ltd. is a company operating in the FMCG sector. With the increasing competition in the FMCG business in recent years, T Ltd. now aims to earn higher profits without much escalation in the prices of its products.

Which would be the most suitable business-level strategy that should be adopted by T Ltd. for earning higher profit margins in comparison to its rivals at the same prices?

  • Focused Cost leadership Strategy
  • Differentiation Strategy
  • Cost Leadership Strategy
  • Focused Differentiation Strategy

Q21. Person M is the manager of J Ltd. He used the resources of the company to build strategic competitiveness. The firm was doing better than the rivals and earning more than average returns. After 4 months K Ltd., a rival of J Ltd. followed a similar strategy and gained an aggressive advantage over J Ltd.

Identify the lack of which feature led to the failure of the strategy.

  • Rare Capability
  • Non-Substitutable Capability
  • Costly to imitate
  • Value Creating Capability

Q22. ABC Ltd. is an e-commerce company that seeks to expand by entering into media entertainment like its rivals but unlike its rivals, it lacks the required core competencies. The CEO of the company advises its managers to come up with a way to expand. PQR Ltd. a media entertainment company was hired to perform the necessary functions.

Identify which of these is NOT an advantage of using the concept stated in the above lines:

  • Internal technological development
  • Strengthen Core Competency
  • Improved focus on core activities
  • Reduction in Costs

Q23. MGB is a fast-food chain that operates in multiple countries. The culture of the countries is very different from one another, therefore, the managers of each country plan strategies accordingly keeping the broad strategies of the company in mind. They all form different core competencies and capabilities that help them thrive in their respective countries.
Identify the type of international strategies being used here:

  • Business Level Strategy
  • Transnational Strategy
  • Multidomestic Strategy
  • Global Strategy

Q24. Group T and Group Z are different stakeholders of MNO Ltd. Group T controls the activities of Group Z and wants them to create strategies that fulfill the interests of Group T. Group T made some changes for improving their performance.

Identify which of these changes will not improve the performance of Group T.

  • Establishing systems to evaluate the group’s performance
  • Strengthening the internal system of management and accounting
  • Increasing the people’s diversity in the group.
  • Appointing the CEO as a common member of both groups.

Q25. A Ltd. has its headquarters in W, Country C with its branches in many countries, and each of these branches is operated by the managers independently. The structure helps the managers to accommodate the needs of the local customers which helps them get an advantage over the local competitors by better customer satisfaction.

Identify the advantages of this kind of organizational structure:

  • Incentivization and Accountability
  • Increased Productivity due to functional specialization
  • Knowledge sharing among professional functions
  • Frequent informal conversations between owner-manager-employee

Q26. XYZ Ltd. is a firm whose managers adopted a strategy that will majorly focus on creating products that are unique from that of their competitors and the departments of the firm are working hard towards following this strategy.

Identify which of the following is NOT a characteristic of such strategy:

  • Heavy investment on R&D
  • Few formal rules and procedures
  • Highly specialized job functions
  • Powers are decentralized for all functions except R&D and Marketing

Q27. An individual B started a manufacturing firm BKC. After 2 years in business, he started losing his customers. Even after inspecting and valuating, he could not find any faults in the functioning of the management of his firm. He realized that there was something on the part of his customers which he never tried to know. What strategy under the Value Chain Analysis should be adopted by B?

  • Financial Support
  • Customer Survey
  • Logistic Management
  • Work Scheduling

Q28. M Ltd. is a pharmaceutical company that used to be the largest of its kind in the city of NY. It plans to find the cure for COVID-19, but there’s a specific drug called Drug X which the company is unable to access. One of the rivals of the company does have access to that Drug, but that company, G Ltd. is unable to find the cure because it lacks the necessary funds and personnel for R&D. To solve this problem, M Ltd proposes G Ltd. to collaborate for this purpose so both of them will be better off with using each other’s resources and will act as complement to each other.
Which of the following discourages the firm to form alliances?

  • Strategic Advantage
  • Dissolution of ownership control
  • Sharing brand goodwill
  • Utilizing the each other’s resources

Q29. Shop C is an average-sized general store dealing in all kinds and varieties of groceries, bakery, and dairy items. Owing to its nature and size, the store is based on a simple organizational structure. Point out which of the following is a characteristic feature of such an organizational setting:

  • Sharing of knowledge within different functional specializations
  • Presence of a CEO
  • Owner-centralised decision making
  • Grouping of people with similar tasks into various divisions

Q30. “The managers at the top level go off the beat and prefer their self-interest over the interest of other stakeholders.”

Choose the option which rightly suits this behavior from below-

  • Directors Opportunism
  • Board’s Interest
  • Managerial Interest
  • Managerial Opportunism
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