Strategic Management Quiz

Strategy is a set of related actions that managers take to increase their company’s performance.

• True

• False

Company A, B are in the retail industry, both target a niche market but company A tries to customize its offering to the needs of that niche through the addition of features and functions while company B tries to be the low-cost player in that niche, in this case, we say company A is pursuing a broad differentiation strategy, company B is pursuing a broad low cost strategy.

• True

• False

According to the Porter’s Five Forces model, as the five forces are strong, it can be regarded as a threat because it depresses profits, as the five forces are weak, it can be viewed as an opportunity because it allows established companies to earn greater profits.

• True

• False

Strategy formulation is the task of putting strategies into action, which includes designing, delivering, and supporting products; improving the efficiency and effectiveness of operations; and designing a company’s organizational structure, control systems, and culture.

• True

• False

Functional-level strategies are actions that managers take to improve the efficiency and effectiveness of one or more of value creation activities.

• True

• False

According to Michael Porter, low cost and differentiation are very different ways of competing, they require different functional strategies and different organizational arrangements. Trying to do both at the same time may not work.

• True

• False

Company A, B are in the retail industry, both target a broad market but company A concentrates on lowering its costs so that it can lower prices and still make a profit whereas company B tries to differentiate their product in some way, such as recognizing different segments and offer different product to each one, in this case, we say company A is pursuing a broad low cost strategy, company B is pursuing a broad differentiation strategy.

• True

• False

The term value chain refers to the idea that a company is a chain of functional activities that transforms inputs into outputs. The transformation process involves both primary activities and support activities.

• True

• False

The choice between decentralization and centralization depends on the type of decision and the firm’s strategy. When local adaptation is important, decentralization is typically favored. When the realization of economies of scale is an important factor, there tends to be greater decentralization.

• True

• False

In order to achieve superior customer responsiveness, it often requires companies to achieve superior efficiency, quality, and innovation.

• True

• False