Business Strategy Test Answers

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Which framework determines the competitive intensity of a market?
The Porter Five Forces analysis
The Five Porter analysis
Porter Competition analysis
The Fox Five Force analysis


What micro-economic analysis would you use to analyze economics, social factors, and government regulations?
PET analysis
PEST or STEEP analysis
Securities analysis
SWOT analysis


What is disruptive innovation?
Innovation that focuses on creating new markets or adding value to existing technologies in order to displace older technologies
Innovation that focuses on taking competitive actions to ensure domination in the market
Innovation that causes customers to think differently about a market
Innovation that causes markets to collapse


A competitive advantage suggests what?
A company is selling a unique product
A company is able to compete
A company is able to sell stock
A company is outperforming its competitors


Which of the following is a benefit of Horizontal Integration?
Both Economies of scale and Economies of scope
Economies of Scope
Economies of Scale


What is horizontal integration?
Forming strategic alliances with companies that provide complementary products
A strategy where companies acquire or create products that are alike or complementary to one another
A style of growth and management control in which you integrate companies in your supply chian
Working with competitors to provide a standard process or product for the market


What are profit margins?
It is a ratio of profitability, calculated by net income divided by sales
It is a ratio of profitability, calculated by sales divided by net income
It is a ratio of profitability, calculated by sales divided by revenue
It is a ratio of profitability, calculated by revenue divided by sales


If you are a company in a cyclical industry what is a good business strategy for you?
Close shop completly during bad times, and reopen when good times approach
Deal with the volatility by implementating cuts to compensations, reducing employee work hours, or laying off workers during bad times. Paying bonuses, ensuring enough inventory, and hiring in mass during good times.
Since costs are fixed, lower your workforce until you find the best formula for profit. Keep adjusting and improving this formula throughout the year.
Work with trade unions to ensure all work is approved beforehand and there is little risk of strike


Why must change be a strategic function of business?
Change in business is a constant disruption that can devastate the stability of a company
Strategy is change and doesn't need further planning
Change is a strategy in itself
Change is natural and doesn't require a strategy


Oil companies' business models are examples of what?
Horizontal Integration
Supply Chains
Vertical Integration
Economies of Scale


What trait should an information-driven company have at its core?
A solid, unshakable core
An inflexible centralized core
An enterprising and motivated core
A flexible, decentralized structure


OPEC is an example of what?
Monopoly
Cartel
Oligopoly


What is recombinant innovation?
The process of constantly innovating and creating new products
Revamping previously failed innovations
Working with competitors to produce innovative products
Take ideas from one context and apply it to another context


What is a hostile takeover?
When a company "offers" to buy a smaller company with the threat of putting them out of business or making it very difficult for them to remain competive
When a company invests in a holding company who owns one of its competitors and attempts to force it to close
To acquire a company through the company's shareholders rather than the company's management
When employees attempt to take over a companies management by threatening strike or refusing to work for several periods driving the company to either give in to management change wnated by the employees or face possible bankruptcy.


According to the Growth-share matrix, a high market growth rate and market share means you are:
A dog
A Star
A cash cow
A question mark


True of False? A Cost Leadership strategy places an emphasis on lower selling prices rather than lower costs.
False
True


How can companies avoid falling prey to "The Icarus Paradox"?
Low Pricing Strategy
Research and Development
Dominating the Competition
Marketing


Which is NOT a stage in the shifting basis of competition?
Functionality
Convenience
None of these
Reliability


What is an example of a company that uses horizontal integration?
Disney who creates movies, televison shows, toys, and theme parks for kids
Apple who create their own computers and sells them in their own stores
Shell oil who explores and drills its own oil
EA Games, which develop and publish their own video games


When can dynamic management provide a much better platform for solving problems?
In an idle situation when business is slow
In a situation when business is stable and well-managed
In a situation where business is failing and near insolvency
In a chaotic situation that has expanded beyond the boundaries of typical business function


Why might you use discovery-driven planning?
It helps build your brand
It provides a well defined set of actions to take when entering a new market
It is the best way to become dominant in the market
It gives you time to learn, explore, and probe emerging markets


As a business owner if you notice a large amount of market segmentation occurring you should...
Leave that market
Have products in each market segmentation to see which technology excels
Focus on finding a niche in the market
Put all your eggs in one basket


How can you benefit from forming a LLC?
You have limited liability like a corporation, but you do not pay corporate taxes.
You can create a holding company with several franchises and smaller companies underneath it without paying double taxes
You can license patents out to businesses tax free
You can receive protections as a non-profit com


Which of the following would probably NOT be considered wrongful termination of an employee?
Firing an employee due to his or her age
Firing an employee for whistleblowing on a contract that is using government funds
Firing an employee because he or she reported an illegal activity taking place in the workplace
Firing an employee who commits or threatens physical violence


What is a tariff?
A tax on imports or exports
Fees you charge customers to transport goods
Fees businesses charge other businesses for utlizing their product or service
The amount of income you receive after taxes


Which one of the following business structures is NOT a limited liability option?
LLLP (Limited Liability Limited Partnership)
Limited Liability Company (LLC)
LLP (Limited Liabity Partnership)
These are all examples of limited liabity business structures


What does the notion of a “learning organization” suggest?
Companies must learn how to be successful
Companies must learn by trial and error
Companies must be successful at collecting and analyzing data to remain successful
Companies must contribute to education-based charities to remain successful


How could market segmentation benefit you from a business strategy standpoint?
It allows you to differentiate your product
It allows for maintaining the norms of a single industry
None of these
It allows for more competition


What did companies replace their expansive multi-division portfolios with?
Larger portfolios
Corporations
Subsidiaries
Markets


What does CAPM stand for?
Capital Asset Pricing Model
Capital Assets Price Management
Company Asset Pricing Model
Capital Assurance Population Model


What is one valid criticism of why it is NOT advised to rely on SWOT analysis?
SWOT is a brainstorming framework, not an analytical tool
Opportunities can end up being threats
All of these
The list is not based on any theory and is vague


Democratic Leadership style is also known as_____?
Autocratic Leadership
Participative Leadership
Laissez Faire Leadership


Which of the following statements is true about blue ocean markets?
Are not about technology innovations, but about linking current technology creatively to solve customer needs.
Blue ocean markets tend to redefine the problem customers have and create products and services to solve it.
Incumbents often create blue oceans—usually within their core business.
All of these


What does the term "cash cow" mean in business?
A business venture that generates a steady return profits with little maintenance or investment needed
A business venture that eats up cash due to high maintenance and investment cost
A company that generates little revenue, but has the potential to generate a lot
A company in a market that has plenty of money to invest or acquire other smaller companies


What trait exists for both high market share and low market share companies?
Neither have a competitive advantage
They are both in bankruptcy
They can both be very profitable
Both of them are small


What is predatory pricing?
Selling at a higher price for discriminatory reasons
Selling a product at a very high price in order to take advantage of a situation
Selling at a competive price based on the industry standard
Selling a product at a very low or unsustainable price in order to drive competitors out of business


When Facebook purchased Instagram, it employed what type of strategy?
Acquisition
Price Skimming
Growth Strategy
Product Differentiation


What is a Cyclical Industry?
A type of industry that tends to have high and low periods during speciific times
An industry in which its costs are fixed throughout the year due to low volatility.
An industry that changes over time, either through their own processes of evolution or by outside forces.
An industry where companies often invest in other competitors or complementary companies in order to profit throughout the entire product life cycle


In consideration of marketing, what is customer churn, or attrition rate?
The amount of money customers generate
The proportion of customers who leave the firm during a certain time period
The interval that customers return to the business
The speed at which customers enter the business


Which is NOT one of Porter's Five Forces?
Monopolization
Threat of New Entrants
Barganing Power of suppliers
Threat of Substiute products or services


What is the advantage of a sole-proprietorship?
No corporate tax
Full ownership
Little to no paperwork needed to start
All of these


What is a legal monopoly?
It is a monopoly that is protected by law from competition usually through government means where a company has been granted exclusive rights to offer a particlar service in a specific region
When a single holding company owns all companies in one industry.
An agreement between two dominant companies in which they agree to allow one company to prosper in one product area and another to prosper elsewhere
An agreement between two companies in which one company agrees to create inferiror goods at a low price point, and another agrees to create high quality products at a high price point to prevent competition costs between the two companies


What does "markup" mean in retail businesses?
It is your total revenue on a product
It is your total profit on a product
It is your profit margin when taking into account customer acquisition costs
The difference between how much a good or service costs to provide vs its actual selling price.


What is an "angel investor"?
None of these
An investor that provides a startup with a seed investment, oftentimes also acting as advisers and confidants.
A benevolent investor who forgives debt when a startup fails
An investor that comes in to save a failing company from default


What does LLC stand for?
Limited Liberal Corporation
Limited Liability Company
Licensed Limited Corporation
Limited License Corporation


What is an example of a disruptive technology?
All of these
iPod
Desktop PC
Ford Model T


What encompasses the lifetime value of a customer?
The value of a customer as a person
The value of the customer and all that they own
The customer's net virality effect
The customer's total spending power
The prediction of the net profit estimated for the entire future relationship with a customer


What is the major difference between operational management and strategic management?
They are both the same and completely interchangeable
Operational management focuses on internal issues, while strategic management focuses on external issues
Operational management focuses on financial issues, while strategic management focuses on regulatory issues
Operational management focuses on external issues, while strategic management focuses on internal issues


Within the Porter Five Forces Analysis, what is defined as the ability of customers or suppliers to coerce the firm?
Sales power
Corporate power
Political power
Bargaining power


A firm that decides the price of a good or service is a __________?
Price Maker
Profit Maximizer
Price Discriminator


What is customer acquisition cost?
The cost a customer pays to acquire a certain product or service
It is the cost to keep existing customers
It is the total cost of all activities related to marketing
The cost associated with converting a potential customer into an actual customer


How can a firm achieve a low cost operation?
Economies of Scale
Lower prices
Price Differentiation
Market Differentiation


What is a disavantage for a sole-propietorship?
Risk of Liability
Inflexible
Double taxation
Difficult to market


Why is customer acquisition cost important?
It can give you an idea of how much you need to spend in order to keep your current customers
It can disuade customers from purchasing your goods or products
It is only important if you have little to no customers
It can play a major role in calculating the value of a new customer and calculating your return on investment (ROI).


What is an example of a company that could be considered to be in a cyclical industry?
An airline company that notices customers tend to fly more during months with holidays
A high end furniture store that notices that during bad economic times it has less customers purchasing items
All of these
A company that makes winter coats and finds it demand decreases greatly during the summer and other hot periods


What does the T stand for in the PEST analysis?
Technological
Test
Team
Threat


What is the primary focus of business strategy?
Business strategy focuses on generating profits
Business strategy focuses on implementing cross-functional decisions involving resources and performance
Business strategy focuses on making money
Business strategy focuses on making products


What are two internal environmental factors that must be considered when developing a sound marketing strategy?
Performance mix and marketing advantage
Marketing mix and performance analysis
Strategic mix and performance matrix
Marketing dominance and portfolio strategy


What is the benefit of a broad portfolio of assets?
It decreases the amount of products to sell
It reduces specific risk
It increases risk
It reduces competition


What does IPO stand for?
Initial Public Opportunities
Identical Public Operations
Internal Public Opportunities
Initial Public Offering


What organizational failure can cripple a business strategy?
Strategic positioning
Highly educated executives
Highly motivated employees
Lack of organization-wide flexibility


True or False? A SWOT analysis can be used for a person, place, or product.
True
False


What is an example of a company that uses vertical integration?
An oil company that drills, refines, and sells its own oil at gas stations it owns
All of these
A grocery store that grows, processes them, packages, and sells its own crops.
A video game company that creates, publishes, markets, and sells its own games


What does SWOT stand for?
Strategy, Weaknesses, Opportunities, Targets
Strengths, Weaknesses, Opportunities, Threats
Strength, Weaknesses, Open Markets, Threats
Strengths, Weaknesses, Opportunities, Targets


Why are profit margins important?
It measures how much of every dollar in sales a company keeps; thus giving you an idea of how profitable you can be based on your expected sales.
It is often a good indicator of how well you are doing in your industry
It can be useful when comparing similar companies to one another
All of these


Define a Differentiation Strategy
Charging high prices for a product
A company that has a competitive advantage related to its products or services that make itself unique when compared to products or services of other traditional companies.
Constantly reinforcing to consumers the reasons why you are superior compared to your competitors
Be the leader in an industry by keeping your costs down


Which of these is illegal?
All of these
Competitors getting together to set fix price for their products
Competitors agreeing in advance on who will submit a winning bid on a contract to effectively raise the purchase price for the buyer
Competitors agreeing to allocate their market into geographical regions in which they have exclusive rights to


What is a venture capital (VC) company?
A company that speciliazes in providing investments to startups that usually have high a growth potential, but also higher risk than normal risk
A company that primarily invests in mutual funds and large cap stocks
Companies that specialize in conducting IPOs
Companies that specialize in selling and dismantling smaller companies


What performance management tool do companies use to measure and retain their competitive advantage?
Competitive Metrics
Competitive Framework
Advantage Matrix
Balanced Scorecard


Within SWOT analysis, what is an example of a threat?
Competition
Earnings
Business
Partnerships


What is a good way to avoid discrimination lawsuits?
Have a documented hiring process
Avoiding any topics during the interview process related to age, disability, familial status, race, or sexual orientation.
All of these
Running background checks on all potential hires, not just a select few


What are some of the possible disadvantages on relying on business cases when making strategic moves in business?
Representative Bias
Reporting Bias
Simplifications
All of these


What is a strength of McDonald's business strategy?
food menu
Low differentiation
negative publicity
Brand Recognition


What does the S stand for in the SWAT analysis?
Start
Strengths
Strong
Study


In discovery-driven planning, general managers should:
Develop the tools and frameworks for understanding technology's role in strategic competition
Manage the creative process
All of these
Ensure those that are directly involved in the creative process are using the right tools


In what scenario is your company ready for an IPO?
You have multiple revenue streams
Your business revenue is predictable and easy to see for investors
All of these
You have high growth potential


A demand curve is more price elastic when a price____________ ?
Increases
Decreases


Which of the following is a strategy used to gain a competitive advantage?
Cost leadership
(all of these)
Operational effectiveness
Differentiation
Innovation


What is a strategic alliance?
When two competitors work together to fix prices
When a larger companies acquires smaller company
A cooperative strategy in which two or more companies combine some of their resources and specialities for the purpose of creating a competive advantage
When two competitors agree to divide market regions


What are the two main objectives of marketing?
Maximize production and minimize sales
Increase in waste and decrease in efficiency
Increase sales and obtain a durable competitive advantage


What is an important factor when determining a company's value?
Their sales revenue
Their profit margins
All of these
Their assets


What is an example of a legal monopoly?
Utility companies
A company that purchases all of its competitors
A company that owns all the possible patents related to a specific technology therefore no other company can legally enter into that market without violating their patent
A company that defeats all its competitors due to superior product and price, and is able to charge whatever it wants since it is the only one in business


When does a Monopoly exist?
when there is economic competition
A specific person or enterprise is the only supplier of a particular commodity
there are viable substitute goods


SWOT analysis is one of the earliest business strategy frameworks. What does it stand for?
Streams, Weaknesses, Obligations, and Treaties.
Strengths, Weaknesses, Opportunities, and Threats.
Streaks, Weaknesses, Oddities, and Threats.
Streams, Weaknesses, Obligations, and Threats.


What is "The Icarus Paradox"?
Businesses who who spend money to grow, but end up growing too fast and expend all the resources
Businesses that bring about their own downfall through their own successes


In which situation would a joint venture make the most sense?
A telecommunications company who wishes to expand its network coverage and a competitor who owns several cell phone towers
A very competive industry in which one competitor wants to try something new and brings in another competitor to make the process is smoother
A successful company that specializes in high end cat food with little market share and a successful company that specializes in low grade cat food with plenty of market share
A traditional software company that wants to expand into retail and a marketing company who specializes in retail sales


What company is an example of a brandnomer?
Band-Aid
McDonalds
Xerox
Best Buy


What ratio is used as an indicator of the size of a leading firm in relation to its industry?
Sharpe Ratio
Quick ratio
Market ratio
Concentration ratio
Sample ratio


How many of porter's five forces refer to competition?
Three
Two
Four
One


What market dominance trend is common in most industries?
An increasing trend
A dominant trend
A steady trend
A declining trend


A firm employing a differentiation strategy is focusing on what?
Large market share
Small market share
Customer loyalty
Customer differentiation


What is a time-series cross-sectional model that accounts for variation such as seasonality in the hospitality industry?
Pooled Regression
Wide regression
Regression analysis
Company regression


What is another name for dynamic management?
Strategic management
Corporate strategy
Creative management
Non-strategic management


Which is not a value chain function?
Product Design
Distribution
Innovation
Research


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