FINALTERM EXAMINATION
Spring 2010
MGT603- Strategic Management
Question No: 1 ( Marks: 1 ) - Please choose one
Which of the following is often considered the first step in strategic planning?
► Devising a mission statement
► Developing a vision statement
► Setting annual objectives
► Formulating set of strategies
Question No: 2 ( Marks: 1 ) - Please choose one
External opportunities and threats that can significantly benefit or harm an organization may include all of the following except:
► Demographics
► Competitive trends
► Technological changes
► Research and development
Ref: External opportunities and external threats refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization in the future.
Question No: 3 ( Marks: 1 ) - Please choose one
What will happen to the Pakistani exports in overseas markets when there is a strong value of rupee?
► Pakistani exports will be less expensive
► Pakistani exports will be more expensive
► Pakistani exports will be more attractive
► Pakistani exports will be desirable
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following can be considered as barriers to entering a market or industry?
► The lack of economies of scale and experience and low levels of brand loyalty
► The presence of large number of rivals already in the industry
► Relatively large capital requirements and industry have economies of scale
► The absence of tariffs, trade restrictions, and/or government-mandated regulations
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following are signs of strength in a company's competitive position?
► A debt-to-asset ratio below 0.50 and a positive net cash flow
► A website with extensive information about the company and its product line
► R&D and advertising expenditures greater than $10 million annually
► A strongly differentiated product and a strong or rising market share
Question No: 6 ( Marks: 1 ) - Please choose one
Distribution includes which of the following?
► Customer analysis
► Warehousing
► Advertising
► Test marketing
Question No: 7 ( Marks: 1 ) - Please choose one
The IFE matrix summarizes and evaluates which factors in the functional areas of a business?
► Opportunities and threats
► Strengths and weaknesses
► Strengths and threats
► Opportunities and weaknesses
Ref: A summary step in conducting an internal strategic-management audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas.
Question No: 8 ( Marks: 1 ) - Please choose one
The Web sites that sell products directly to the consumers are the examples of which type of strategy?
► Backward integration
► Product development
► Forward integration
► Horizontal integration
Question No: 9 ( Marks: 1 ) - Please choose one
Which of the following is a drawback or limitation of Horizontal Integration?
► Synergies may be more imaginary than real
► It can increase suppliers' and buyers' bargaining power
► Economies of scale are likely to be decreased
► Both the first & third options are correct
Question No: 10 ( Marks: 1 ) - Please choose one
A Cost Leadership Strategy is especially effective in all of the following situations EXCEPT:
► When the market is composed of many price-sensitive buyers
► When product differentiation can be easily achieved
► When buyers do not care much about differences from brand to brand
► When there are a large number of buyers with significant bargaining power
Ref: When Few ways of achieving product differentiation.(Page no.86)
Question No: 11 ( Marks: 1 ) - Please choose one
If market shares of competitors are declining whereas total industry sales are increasing, which strategy do you think may be the right one to pursue?
► Divestiture
► Market Penetration
► Market Development
► Retrenchment
Ref: Guidelines for Market Penetration
Four guidelines when market penetration may be an especially effective strategy are:
Current markets not saturated
Usage rate of present customers can be increased significantly
Market shares of competitors declining while total industry sales increasing
Increased economies of scale provide major competitive advantages
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the followings involves the substantial modification of existing products or the creation of new but related products that can be marketed to current customers through established channels?
► Innovation
► Differentiation
► Product development
► Market development
Ref: Product development is a strategy that seeks increased sales by improving or modifying present products or services.
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following stages of “Strategy Formulation Framework” involves development of Internal-Factor Evaluation Matrix?
► Input stage
► Output stage
► Matching stage
► Decision stage
Ref: Stage 1 of the formulation framework consists of the EFE Matrix, the IFE Matrix, and the Competitive Profile Matrix. Called the Input Stage, Stage 1 summarizes the basic input information needed to formulate strategies.
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following stages in “Strategy Formulation Framework” focuses on generating feasible alternative strategies?
► Input
► Output
► Decision
► Matching
Ref: Stage 2, called the Matching Stage, focuses upon generating feasible alternative strategies by aligning key external and internal factors. Stage 2 techniques include the Threats-Opportunities Weaknesses-Strengths (TOWS) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and the Grand Strategy Matrix
Question No: 15 ( Marks: 1 ) - Please choose one
If there is a shift in consumers’ taste in a society away from the firm’s products along with weak brand name, which of the following strategy would you recommend for the above mentioned firm?
► SO
► WO
► SW
► WT
Question No: 16 ( Marks: 1 ) \ - Please choose one
Firm located in defensive quadrant of a SPACE matrix is recommended to follow all of the following strategies EXCEPT:
► Retrenchment
► Forward integration
► Divestiture
► Liquidation
Question No: 17 ( Marks: 1 ) - Please choose one
What type of strategies would you recommend when a firm’s SPACE Matrix directional vector has the coordinates (+2, +3)?
► Aggressive
► Conservative
► Competitive
► Defensive
Question No: 18 ( Marks: 1 ) - Please choose one
A & C Corporation currently possesses a low share of its available market. Moreover, this company's portfolio reveals that it has extremely low market growth. A & C Corporation is most likely to be classed as which one of the following?
► Dog
► Question mark
► Star
► Cash cow
Ref: Dogs More charitably called pets, units with low market share in a mature, slow-growing industry.(see the table at page no.103)
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following is a deliberate plan of action, guidelines, methods, procedures to guide decisions and achieve rational outcome?
► Annual objectives
► Strategies
► Policies
► Goals
Question No: 20 ( Marks: 1 ) - Please choose one
The organizations, where resource allocation is not based on strategic-management approach to decision making, which approach is used for resource allocation?
► Financial budget
► Relative importance of departments
► On political or personal factors
► Relative cost of each resources
Ref: Resource allocation is a major management activity that allows for strategy execution. In organizations that do not use a strategic-management approach to decision making, resource allocation is often based on political or personal factors.
Question No: 21 ( Marks: 1 ) - Please choose one
A state of opposition between persons or ideas which are occasionally characterized by physical violence may be known as:
► Conflict
► Compromise
► Diffusion
► Avoidance
Ref: Conflict is a state of opposition, disagreement or incompatibility between two or more people or groups of people, which is sometimes characterized by physical violence. Military conflict between states may constitute war.
Question No: 22 ( Marks: 1 ) - Please choose one
Why do changes in company strategy often require changes in the way an organization is structured?
► Because structure depicts how goals will be established
► Because structure dictates how authorities will be delegated
► Because structure dictates how resources will be obtained
► Because structure dictates how financial resources are spent
Ref: Changes in strategy often require changes in structure because new positions may be created, deleted, or merged. Organizational structure dictates how resources are allocated and how objectives are established in a firm.(Page no.56)
Question No: 23 ( Marks: 1 ) - Please choose one
Of the following, which one is FALSE regarding a functional organizational structure?
► The tasks, people, and technologies necessary to do the work of the business are grouped together
► Functional structures predominate in firms with single or narrow product lines
► Marketing, operations, and finance would be considered groups found within this type of structure
► Functional structure is designed to achieve flexibility and better communication
Ref: Functional structure is sometimes characterized by low employee morale, line/staff conflicts, poor delegation of authority, and inadequate planning for products and markets.(Page no.118)
Question No: 24 vuzs ( Marks: 1 ) - Please choose one
Which of these is not one of the tests used to determine whether a performance-pay plan will benefit an organization?
► Do employees understand the plan?
► Is the plan improving communications?
► Does the plan pay out when it should?
► Does the plan reduce management layers?
Question No: 25 ( Marks: 1 ) - Please choose one
All of the following are the managerial issues for managing natural environment EXCEPT:
► Global warming- depletion of rain forests
► Employee understanding about environment
► Developing biodegradable products and packages
► Waste management to clean air and water
Ref: The natural environment comprises all living and non-living things that occur naturally on Earth. In its[purest sense, it is thus an environment that is not the result of human activity or intervention. The natural environment may be contrasted to "the built environment."
Question No: 26 ( Marks: 1 ) - Please choose one
The methods which are used to match managers with strategies to be implemented include all of the following EXCEPT:
► Transferring managers
► Job enlargement
► Managers’ retention
► Job enrichment
Question No: 27 ( Marks: 1 ) - Please choose one
Which one of the following is an example of product decisions?
► Brand name
► Volume discounts
► Distribution channels
► Order processing
Ref: Product Decisions
The term "product" refers to tangible, physical products as well as services. Here are some examples of the product decisions to be made:
• Brand name
• Functionality
• Styling
• Quality
• Safety
• Packaging
Question No: 28 vuzs ( Marks: 1 ) - Please choose one
Which variable would be considered as a part of pricing decisions?
► Warranty
► Bundling
► Safety
► Functionality
Price Decisions
Some examples of pricing decisions to be made include:
• Pricing strategy (skim, penetration, etc.)
• Suggested retail price
• Volume discounts and wholesale pricing
• Cash and early payment discounts
• Seasonal pricing
• Bundling
• Price flexibility
• Price discrimination
Question No: 29 ( Marks: 1 ) - Please choose one
Which one of the following is an example of place decisions?
► Safety and packaging
► Personal selling
► Public relations & publicity
► Order processing
Distribution (Place) Decisions
Distribution is about getting the products to the customer. Some examples of distribution decisions
include:
• Distribution channels
• Market coverage (inclusive, selective, or exclusive distribution)
• Specific channel members
• Inventory management
• Warehousing
• Distribution centers
• Order processing
• Transportation
• Reverse logistics
Question No: 30 vuZs ( Marks: 1 ) - Please choose one
All of the following are the examples of promotion decision EXCEPT:
► Personal selling
► Volume discounts
► Public relations
► Advertising
Ref: Marketing communication decisions include:
• Promotional strategy (push, pull, etc.)
• Advertising
• Personal selling & sales force
• Sales promotions
• Public relations & publicity
• Marketing communications budget
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following is NOT a decision that may require finance/accounting policies?
► To extend the time of accounts receivable
► To determine an appropriate dividend payout ratio
► To use lifo, fifo or a market-value accounting approach
► To determine the amount of product diversification
Some examples of decisions that may require finance/accounting policies are:
1. To raise the amount of capital by issuing shares or obtaining a debt from external parties.
2. To enhance the inventory turn over level
3. To make or buy fixed assets.
4. To extend the time of accounts receivable.
5. To establish a certain percentage discount on accounts within a specified period of time.
6. To determine the amount of cash that should be kept on hand
7. To determine an appropriate dividend payout ratio.
8. To use LIFO, FIFO
Question No: 32 ( Marks: 1 ) - Please choose one
At least how many R & D approaches are used for the implementation of strategy?
► Two
► Three
► Four
► Five
Ref: There are at least three major R&D approaches for implementing strategies.
1. First firm to market new technological products
2. Be an innovative imitator of successful products
3. Low-cost producer of similar but less expensive products
.
Question No: 33 ( Marks: 1 ) - Please choose one
While evaluating a strategy, corrective actions are almost always needed except:
► When external and internal factors have not significantly changed
► When the firm is not progressing satisfactorily toward objectives
► When the firm has not achieved the stated organizational goals
► When there are differences between desired results and achieved results
Question No: 34 ( Marks: 1 ) - Please choose one
Which one of the following statements best describes the activity ‘marketing and sales’ of Porter’s supply chain model?
► Machining, packaging, assembly, equipment maintenance & testing
► Activities linked with getting buyers to purchase the product
► Activities that maintain and enhance the product's value
► Receiving, storing, inventory control & transportation planning
Ref: Marketing and Sales. The activities associated with getting buyers to purchase the product, including: channel selection, advertising, promotion, selling, pricing, retail management, etc.
Question No: 35 ( Marks: 1 ) - Please choose one
Outbound logistics includes which one of the following?
► Receiving, storing, inventory control, transportation planning
► Machining, packaging, assembly, equipment maintenance, testing
► Activities required to get the finished product at the customers
► Activities that maintain and enhance the product's value
Ref: Outbound Logistics. The activities required to get the finished product at the customers: warehousing, order fulfillment, transportation, distribution management.
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following is NOT a key financial ratio?
► Earnings per share
► Production growth
► Asset growth
► Profit margin
Question No: 37 ( Marks: 1 ) - Please choose one
Which of the following statement is TRUE about ‘Controls’ which are used in strategy evaluation stage?
► They are strategy-oriented
► They are action-oriented
► They are control-oriented
► They are information-oriented
Ref: Controls need to be action-oriented rather than information-oriented.(Page no.154)
Question No: 38 ( Marks: 1 ) - Please choose one
In BCG matrix, the size of circle corresponding to a division represents what?
► Relative market share of that division
► Financial strength of that division
► Revenue generated by that division
► Relative market growth of that division
Ref: Practical Use of the Boston Matrix
For each product or service the 'area' of the circle represents the value of its sales.vuzs (Page No.104)
Question No: 39 ( Marks: 1 ) - Please choose one
If the capital and human resources of a firm are necessary to manage expanded operations and it also has excess production capacity, which would be an effective strategy for the firm to pursue?
► Market Penetration
► Market Development
► Divestiture
► Retrenchment
Guidelines for Market Development
1-Six guidelines when market development may be an especially effective strategy are:
2-New channels of distribution that are reliable, inexpensive, and good quality
3-Firm is very successful at what it does
4-Untapped or unsaturated markets 5-Capital and human resources necessary to manage expanded operations
6-Excess production capacity
7-Basic industry rapidly becoming global
Question No: 40 ( Marks: 1 ) - Please choose one
If the firm is very successful at what it does, unsaturated markets are available and the new inexpensive channels of distribution are also available, then which of the following strategies a company should follow?
► Market Penetration
► Market Development
► Product Development
► Retrenchment
Guidelines for Market Penetration
Four guidelines when market penetration may be an especially effective strategy are:
Current markets not saturated Usage rate of present customers can be increased significantly
Market shares of competitors declining while total industry sales increasing
Increased economies of scale provide major competitive advantages
Question No: 41 vuzs ( Marks: 1 ) - Please choose one
Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats?
► SO
► WO
► SW
► WT
Ref: WT Strategies
Every firm has a desire to overcome its weakness and reducing threats. This type of strategy helpful when weaknesses are removed to overcome external threats.
Question No: 42 ( Marks: 1 ) - Please choose one
Which of these is TRUE about strategy implementation?
► It refers to positioning forces before the action
► It focuses on effectiveness
► It is primarily an operational process
► It is primarily an intellectual process
Strategy formulation is positioning forces before the action.
Strategy implementation is managing forces during the action.
Strategy formulation focuses on effectiveness.
Strategy implementation focuses on efficiency.
Strategy formulation is primarily an intellectual process.
Strategy implementation is primarily an operational process.
Strategy formulation requires good intuitive and analytical skills.
Strategy implementation requires special motivation and leadership skills.
Strategy formulation requires coordination among a few individuals.
Strategy implementation requires coordination among many persons.
Question No: 43 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about Strategy formulation?
► It manages forces during the action
► It requires good intuitive and analytical skills
► It is primarily an operational process
► It requires special motivation and leadership skills
Question No: 44 ( Marks: 1 ) - Please choose one
Identify a situation in which a divisional structure by geographic area is considered to be most appropriate.
► Organizations have similar branch facilities located in widely dispersed areas
► An organization offers only a limited number of products or services
► Strict control and attention to product lines are needed
► An organization has many skilled managers
Question No: 45 ( Marks: 1 ) - Please choose one
All of the following are included in Rumelt's criteria for evaluating strategies EXCEPT:
► Consonance
► Advantage
► Consistency
► Clarity
Four Criteria (Richard Rummelt):
• Consistency
• Consonance
• Feasibility
• Advantage
Question No: 46 ( Marks: 1 ) - Please choose one
Identify which of the following are mostly based on a firm's external assessment according to Richard Rumelt.
► Consonance and consistency
► Advantage and feasibility
► Consonance and advantage
► Consistency and feasibility
Consonance Need for strategies to examine sets of trendsAdvantage Creation or maintenance of competitive advantage
Question No: 47 ( Marks: 1 ) - Please choose one
Identify a factor which determines the final design of a firm’s strategy-evaluation and control system.
► Opportunities
► External characteristics
► Organization’s characteristics
► Competition’s characteristics
Ref: The unique characteristics of an organization, including its size, management style, purpose, problems, and strengths, can determine a strategy-evaluation and control system's final design.(Page No.154)
Question No: 48 ( Marks: 1 ) - Please choose one
Which of the following is defined as having alternative plans that can be put into effect if certain key events do not occur as expected?
► Corporate agility
► Scenario planning
► Forecasting
► Contingency planning
Question No: 49 ( Marks: 3 )
One of the approaches to implement change says: “People are basically compliant and will generally do what they are told or can be made to do and change is based on the exercise of authority and the imposition of sanctions.” Identify that approach and explain.
Question No: 50 ( Marks: 3 )
Auditors who perform audit can be divided into three groups? Identify and define each of them.
Question No: 51 ( Marks: 5 )
An organization can be structured in many ways. What is the most complex form of organizational structure? Discuss its characteristics?
Question No: 52 ( Marks: 5 )
Positioning is actually the way that a product is introduced to its market audience. What are the five steps required for effective product positioning?
Question No: 53 ( Marks: 5 )
The goal of value chain activities is to offer the customer a level of value that exceeds the cost of the activities which results in a profit margin. You are required to discuss some of the primary value chain activities.
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