Strategic Management Quiz

edX Module Course

1. Pick the pair of words/phrases that best complete the following sentence: “A firm’s
new product potentially disrupts a market leader’s position when the new product moves
from being a _______ product to a(n) _______ product.”
● Transient; Sustaining
● Specialty; Equivalent
● Niche; Good Enough
● Targeted; Superior

2. In the NVT-Honda scenario, it appears that Honda had both a higher WTP and lower
price than NVT, leading to Honda’s relative success. In one year, however, NVT was able
to stem its market share losses. How did it do so?
● By lowering its price such that it was losing money on each sale
● By improving its design and thereby increasing WTP
● By lowering its price where consumers were indifferent between Honda and NVT
● By lowering Honda’s WTP through negative advertising

3. As to its competitors in the airline industry, it would be most accurate to say that
Southwest Airlines retained competitive advantage by:
● Engaging in strategic convergence
● Beating its competitors to a common target position on the productivity frontier
● Effectively repositioning
● Creating a mutually reinforcing system

4. When thinking about how drivers of strategy evolve and picturing this evolution as a
pyramid, which of the following lists the drivers in the correct order from top to bottom?
● Values: Activities : Strategies: Culture
● Culture : Strategies : Activities : Brand
● Brand: Policies : Activities : Representations
● Values : Strategies : Activities : Culture

5. Pick the answer that best completes the following sentence: “The essence of strategy
is making choices and engaging in trade-offs between ________.”
● Profitability and Customer Service
● Innovation and Replication
● Differentiation and Cost
● Risk and Reality
6. In the context of strategic planning, the concept of finding a “higher peak” refers to:
● Aiming for a specific percentage increase in sales in the next period
● Finding incremental changes that allow a firm to go to higher levels of performance along
its current trajectory
● Finding a new set of activities that aims at a different, higher trajectory for firm
performance
● Generating so many spreadsheets and other materials in the course of analysis that,
when stacked up, they resemble a “peak”

7. You are part of a working group that has completed the first step of generating new
ideas for strategic possibilities and exploring them in depth. The group has been working
for some time, and your boss is looking to determine if it is ready to move on to the
second step in the possibility-based approach to making strategic choices. To which of
the following questions should it answer “yes” before doing so?
● Have we approached our planning with the mindset of “what might we do,” as opposed
to “what should we do”?
● Should we proceed even without a possibility that is intriguing enough to make us
question the status quo?
● Do we have a possibility that everyone agrees is the correct course?
● Have we eliminated the possibilities that represent relatively radical shifts and make the
group uncomfortable?

8. You work for Firm A and are tasked with computing your competitive advantage for a
product as compared to the competitive product offered by Firm B. The equation you
would use is:
● Competitive Advantage = (WTP-Cost)Firm B – (WTP-Cost)Firm A
● Competitive Advantage = (WTP-Cost)Firm A – (WTP-Cost)Firm B
● Competitive Advantage = (Cost-WTP)Firm A – (WTP-Cost)Firm B
● Competitive Advantage = (WTP-Price)Firm A – (WTP-Price)Firm B

9. You are part of a working group that is tasked with generating new ideas for strategic
possibilities. Your boss thinks each of the following is a good way to start, but knows
you have recently studied the “possibility-based approach to making strategic choices”
and asks you to comment on each of her proposals as part of the first step in that
process. Which would you tell her is likely to be detrimental?
● Having people work on ideas themselves before convening or sharing as a group
● Allowing proposed possibilities to be discussed without initially considering potential
obstacles, even if several members of the group feel the obstacles are obvious and
significant
● Having the group aim to generate 8-10 new possibilities to then explore in depth
● Including people who will actually be implementing the strategy
10. Which of the following insights should we draw from Procter & Gamble's (P&G’s)
experience setting a price point for its new Olay product?
● Firms lack options for market-based research if, unlike Olay, they don’t have a lot of
internal resources
● Doing research “in the field” is extremely valuable
● Vigorous and informed internal debate can obviate the need for market-based
experiments
● It turned out analysis and experimentation were unnecessary because they just
confirmed the basic economic tenet that lower prices increase demand

11. “Operational effectiveness” in a firm is necessary but not sufficient because:

● It has not led to quality improvements and cost reduction in the automobile industry
● There are not many resources for a firm to utilise when it is trying to improve operational
effectiveness
● It is generally not enough to provide an absolute performance improvement
● It is generally not enough to provide a relative competitive advantage

12. If your team has done a good job in Steps 1-3 in the possibility-based approach to
making strategic choices, the final step – actually choosing the strategy – should be
anticlimactic.
● True
● False

13. Which of the following is NOT an important consideration when thinking about
“customer power” in an industry analysis?
● Price sensitivity
● Ability to forward integrate
● Psychological switching costs
● Technological switching costs

14. A reason that it is generally difficult to achieve competitive advantage through one
activity, or a “silver bullet,” is that:
● Changes in the environment can make that activity less important
● All options are correct
● Relatively few competitive advantage activities can be protected through intellectual
property laws
● Competitors may not be motivated by profit maximisation
15. Which of the following statements is illustrated by Liz Claiborne’s experience after it
introduced reordering in response to environmental changes?
● Strong competitive advantages are highly insulated from shifts in market conditions
● The importance of being responsive in cyclical industries such as fashion
● The importance of understanding interdependencies in a firm’s activity systems
● In a well-developed activity system, incremental changes are relatively easy to make

16. Which of the following is NOT one of the levels of a “strategy audit”?
● Firm Positioning
● Industry Background
● Political environment
● Firm Activities, Capabilities, and Resources

17. The process of subjecting possibilities to a “burden of proof” can also be understood
as a process of:
● Fact-checking
● Reverse-engineering
● Experimentation
● Data analysis

18. Which of the following is NOT one of the “barriers to reaction” that can affect
incumbent firms when faced with a new competitor?
● Motivation
● Distraction
● Perception
● Knowledge

19. Which of the following is a useful framework or tool when thinking about strategy?
● Internal fit/external fit/dynamic fit analysis
● Mapping activity systems
● Value appropriation
● Strategy evolution
● All of the above options are correct

20. Assume that Industry X consistently returns average profits that are much higher
than the average profits in Industry Y. Is it generally safe to assume that lower-tier firms
in Industry X are more profitable than even the top firms in industry Y?
● No, because the “positioning effect” has a bigger impact on profitability than either the
“industry effect” or the “corporate effect”
● No, because industry is generally irrelevant to the profitability of individual firms
● Yes, because profit margins among different firms in an industry are grouped closely
together
● Yes, because the “industry effect” has a bigger impact on profitability than either the
“positioning effect” or the “corporate effect”