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Business Strategy SCS0974 Print Name:

_______________________________________

University of Toronto – School of Continuing Studies Business and Professional Studies Final Examination Time:

2.5 Hours

BUSINESS STRATEGY (SCS0974-126)

INSTRUCTIONS:

1.

The examination is an open book examination with the Crafting & Executing Strategy text, but no other materials.

2.

The examination paper consists of 21 pages divided into two sections. Please answer all Section A multiple choice questions on the answer sheet provided. Answers written in the exam booklet will not be marked. Section A consists of 60 multiple-choice questions. All questions carry equal mark of 1 for each correct answer. Please note that there will be no negative marking. (Section A: total 60 marks)

Answer Section B questions in the examination booklet(s) provided. Answers written on the exam paper will not be marked. Section B consists of 3 short answer questions of which all 3 must be answered. (Section B: total 40 marks)

3.

This examination paper must be handed in.

Page 1 of 21

Business Strategy SCS0974 Print Name:

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Multiple Choice Answer Sheet

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Business Strategy SCS0974 Print Name:

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SECTION A: Multiple Choice Questions – Answer all questions (each carry one mark) Answer all multiple choice questions on the answer sheet provided.

1. A company's strategy is a "work in progress" and evolves over time because of: A. the importance of developing a fresh strategic plan every year (which also has the benefit of keeping employees from becoming bored with executing the same strategy year after year). B. the ongoing need to imitate the new strategic moves of the industry leaders. C. the need to make regular adjustments in the company's strategic vision. D. the ongoing need of company managers to react and respond to changing market and competitive conditions. E. the frequent need to modify key elements of the company's business model. 2. Strategy is about competing differently than rivals, thus strategy success is about: A. the sources of sustained advantages and superior profitability. B. those emergent, unplanned, reactive, and adaptive strategies that are more appropriate than deliberate or intended ones that drive the realized strategy. C. matching internal resources and capabilities to the industry environment. D. keeping the firm current with the rapid pace of change in the industry. E. All of these. 3. A company's business model: A. concerns the actions and business approaches that will be used to grow the business, conduct operations, please customers, and compete successfully. B. is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit. C. concerns what combination of moves in the marketplace it plans to make to outcompete rivals. D. deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible. E. concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets. 4. Perhaps the most important benefit of a vivid, engaging, and convincing strategic vision is: A. helping gain managerial consensus on what resources must be developed to successfully achieve strategic objectives. B. uniting company personnel behind managerial efforts to get the company moving in the intended direction. C. helping justify the company's mission of making a profit. D. helping company personnel understand the logic of the company's business model. E. keeping company personnel well-informed.

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5. Which of the following is the result of a well-conceived and communicated strategic vision? A. Senior executives solidify their own view of the firm's long-term direction. B. The risk of rudderless decision-making is minimized. C. Organizational members support the changes internally that will help make the vision a reality. D. Assists the organization in preparing for the future. E. All of these.

6. The task of stitching together a strategy: A. entails addressing a series of how's: how to grow the business, how to please customers, how to outcompete rivals, how to respond to changing market conditions, and how to achieve strategic and financial objectives. B. is primarily an exercise in deciding which of several freshly emerging market opportunities to pursue. C. is mainly an exercise that should be dictated by what is comfortable to management from a risk perspective and what is acceptable in terms of capital requirements. D. requires trying to copy the strategies of industry leaders as closely as possible. E. is mainly an exercise in good planning.

7. The best test of whether potential entry is a strong or weak competitive force is: A. the strength of buyer loyalty to existing brands. B. whether the industry's driving forces make it harder or easier for new entrants to be successful. C. whether the strategies of industry members are well-matched to the industry's key success factors. D. whether there are any vacant spaces on the industry's strategic group map. E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

8. An industry contains one strategic group when all sellers: A. are subject to the same driving forces. B. are placing about the same emphasis on various distribution channels. C. use the same key success factors to differentiate their products. D. pursue essentially identical strategies and have similar market positions. E. pursue varying distribution channels and product attributes, and where their customer service attributes differentiate them in the marketplace.

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9. The real payoff of driving forces is to help managers understand: A. what strategy changes are needed to prepare for the impacts of the driving forces. B. the overall strength of the five competitive forces. C. whether the industry's strategic group map will be static or dynamic. D. what conditions exist in the economy at large. E. the extent to which rivals have more than two competitively valuable competencies or capabilities

10. The difference between a resource and a capability is: A. a resource is a productive input or competitive asset, while a capability is the capacity of the firm to perform some internal activity competently. B. a resource is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function. C. a resource is a mechanism used for carrying out some responsibility, while a capability possesses the qualities needed to do a particular thing. D. a resource is the firm's fixed assets, while a capability defines whether the firm is competent to perform some function. E. All of these.

11. The competitive power of a company's core competence or distinctive competence depends on: A. whether it helps differentiate a company's product offering from the product offerings of rival firms. B. how hard it is to copy and how easily it can be trumped by substitute resource strengths and competitive capabilities of rivals. C. whether customers are aware of the competence and view the competence positively enough to boost the company's brand-name reputation. D. whether the competence is one of the industry's key success factors. E. whether the competence is technology-based or based on superior marketing know-how.

12. A company resource weakness or competitive deficiency: A. represents a problem that needs to be turned into a strength because weaknesses prevent a firm from being a winner in the marketplace. B. causes the company to fall into a lower strategic group than it otherwise could compete in. C. prevents a company from having a distinctive competence. D. usually stems from having a missing link or links in the industry value chain. E. are shortcomings that constitute competitive liabilities.

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13. Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy? A. Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than be content with weak product differentiation B. Offer trivial improvements in quality, service, or performance features C. Overcharging for the differentiating features D. Adding so many frills and extra features that the product exceeds the needs of buyers E. Overspending on efforts to differentiate the company's product offering

14. Focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where: A. the market is composed of distinctly different buyer groups who have different needs or use the product in different ways. B. most other rival firms are using a best-cost producer strategy. C. buyers have strong bargaining power and entry barriers are low. D. most industry rivals have weakly differentiated products. E. most industry participants are also using focused low-cost or focused differentiation strategies.

15. Success with a best-cost provider strategy designed to outcompete high-end differentiators requires: A. achieving significantly lower costs in providing the upscale features B. providing significantly better product attributes in order to justify a price above what low-cost leaders are charging. C. matching the company's resources and capabilities to a low-cost provider status. D. motivating buyers to purchase upscale features that match rivals. E. All of these.

16. Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT: A. focusing relentlessly on building a competitive advantage. B. applying resources where rivals are least able to defend themselves. C. using a strategic offense to allow the company to leverage its weaknesses to strengthen operating vulnerabilities. D. employing the elements of surprise as opposed to doing what rivals expect and are prepared for. E. displaying a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

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17. Any company that seeks competitive advantage by being a first-mover must ask several hard questions prior to executing its strategy. Which question would it NOT ask? A. Does market take-off depend on the new development of complementary products? B. Is a new infrastructure required before buyer demand can surge? C. Will buyers encounter high switching costs to move? D. Are there influential competitors in a position to delay or derail the efforts? E. Did the company pour too many resources into getting ahead of the market opportunity?

18. For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company: A. must first be a proficient manufacturer. B. must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality. C. must have excess production capacity so that it has an ample in-house ability to undertake additional production activities. D. needs to have a wide product line, so it can supply parts and components for many products. E. should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

19. The reasons why a company opts to expand outside its home market include all of the following EXCEPT: A. gaining access to new customers for the company's products/services. B. spreading its business risk across a wider market base. C. achieving lower costs through economies of scale, experience, and increased purchasing power. D. exploiting its core competencies and capabilities. E. identifying resources and capabilities in the company's home market.

20. A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing plants based in the United States. A. This is a true statement. B. No, the U.S. dollar must be stronger. C. Yes, because it provides for a weakened foreign demand for U.S.-made goods. D. Yes, because it makes such plants less cost competitive with foreign plants. E. Yes, because it provides incentives of foreign companies to locate manufacturing facilities in the U.S. to make goods for U.S. consumers.

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21. Which of the following is not a generic strategy option for entering into foreign markets? A. Maintaining a national (one-country) production base and exporting goods to foreign markets. B. Establishing a subsidiary via acquisition or opt for a de nova approach. C. Franchising and licensing strategies. D. Alliances or joint ventures strategies. E. An enterprise-wide strategy to take over local competition.

22. The big problem a franchisor faces is: A. allowing franchisees to achieve scale economies. B. maintaining quality control due to a lack of commitment to consistency and standardization C. eliminating the costs and risks associated with establishing a foreign business location. D. one where foreign facilities and marketing strategies are shared with local businesses. E. being able to achieve higher product quality and better product performance than with an export strategy.

23. A multidomestic strategy represents: A. a think-local, act-local approach to international strategy. B. a sound approach when decision-making is centralized. C. a focused strategy on a global scale with decision making centralized. D. a decision-based approach whereby senior managerial positions are occupied by home-country staff. E. All of these.

24. A "think global, act global" approach to crafting a global strategy involves: A. pursuing the same basic competitive strategic theme (low cost, differentiation, best cost, and focused) in all countries where the firm does business. B. selling much the same products under the same brand names everywhere and expanding into most, if not all, nations where there is significant buyer demand. C. integrating and coordinating the company's strategic moves worldwide. D. utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide. E. All of these.

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25. What can happen when international rivals compete against one another in multiple-country markets? A. Businesses create attractive industries that would have otherwise badly deteriorated. B. It could produce a business lineup consisting of too many slow-growth, declining, low-margin, or competitively weak businesses. C. It could create a greater diversity in the types of value chain activities between each business. D. It could initiate a deterrence effect that encourages mutual restraint in taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war. E. It could increase shareholder interests by concentrating corporate resources on foreign business activities to contend for market leadership.

26. A benefit of manufacturing-related value chain matchups is: A. to segregate manufacturing methods. B. the ability to squeeze production into a smaller number of plants and significantly reduce overall production costs. C. the ability to eliminate leverage with vendors in purchasing its supplies. D. the chance to share in an increase in manufacturing costs. E. None of these.

27. One appealing aspect of unrelated diversification is that it: A. expands a firm's competitive advantage opportunities to include a wider array of businesses. B. spreads the business risk across a group of truly diverse industries. C. increases strategic fit opportunities and the potential for a 1 + 1 = 3 outcome on the bottom line. D. results in having more cash cow businesses than cash hog businesses. E. facilitates capturing the financial fits among sister businesses (as compared to a strategy of related diversification).

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28. For an unrelated diversification strategy to produce financial results above that of stand-alone entities, executives must: A. diversify into businesses that can produce consistently good earnings and returns on investment and thereby satisfy the attractiveness test. B. negotiate favorable acquisition prices (to satisfy the cost-of-entry test). C. do a superior job of corporate parenting via high-level managerial oversight and resource sharing, financial resource allocation and portfolio management, or restructuring underperforming businesses (to satisfy the better-off test). D. satisfy the attractiveness test, the cost-of-entry test, and the better-off test. E. All of these.

29. Which one of the following is NOT a procedure for evaluating the pluses and minuses of a diversified company's strategy? A. Assessing the attractiveness of the industries the company has diversified into. B. Assessing the competitive strength of each business unit to see which ones are the strongest/weakest contenders in their respective industries. C. Ranking the performance prospects of the various businesses from best to worst and determining the priorities for resource allocation. D. Checking the competitive advantage potential of cross-business strategic fits and also checking whether the firm's resources fit the needs of its present business lineup. E. Ranking all the company's former strategic moves that were designed to improve overall corporate performance.

30. Diversification merits strong consideration whenever a single-business company: A. has integrated backward and forward as far as it can. B. is faced with diminishing market opportunities and stagnating sales in its principal business. C. has ac...