BBM Degree in Business Management Strategy 2 — Questions and Answers
Question 1: Which strategic framework analyzes a company's competitive position using five forces including supplier power and threat of substitutes?
- BCG Matrix
- Porter's Five Forces (Correct answer)
- Ansoff Matrix
- VRIO Framework
Correct answer: Porter's Five Forces
Porter's Five Forces model evaluates industry attractiveness through five competitive pressures: rivalry, buyer power, supplier power, threat of new entrants, and threat of substitutes.
Question 2: A company decides to acquire a supplier to reduce input costs and secure supply. This is an example of:
- Horizontal integration
- Diversification
- Backward vertical integration (Correct answer)
- Market penetration
Correct answer: Backward vertical integration
Backward vertical integration occurs when a company acquires or merges with a supplier that operates earlier in the supply chain.
Question 3: In the context of corporate strategy, a 'cash cow' in the BCG Matrix is characterized by:
- High market growth and high relative market share
- Low market growth and high relative market share (Correct answer)
- High market growth and low relative market share
- Low market growth and low relative market share
Correct answer: Low market growth and high relative market share
Cash cows operate in slow-growth markets but hold dominant market share, generating steady cash flow with minimal investment required.
Question 4: Which of the following best describes a 'blue ocean strategy'?
- Competing aggressively in established markets by undercutting rivals on price
- Creating uncontested market space by making competition irrelevant (Correct answer)
- Focusing exclusively on the most profitable customer segments
- Adopting a follower strategy to reduce R&D costs
Correct answer: Creating uncontested market space by making competition irrelevant
Blue ocean strategy, developed by Kim and Mauborgne, focuses on creating new demand in uncontested markets rather than competing in existing saturated ones.
Question 5: A firm's core competency is BEST described as:
- Any activity the firm performs better than its immediate competitors
- A unique bundle of skills and technologies that creates value and is difficult to imitate (Correct answer)
- The firm's largest revenue-generating product line
- A patent or trade secret held by the company
Correct answer: A unique bundle of skills and technologies that creates value and is difficult to imitate
Core competencies, per Prahalad and Hamel, are deeply embedded capabilities that provide competitive advantage, are hard to replicate, and can be applied across multiple markets.
Question 6: Strategic alliances differ from mergers and acquisitions primarily because:
- They always involve equity ownership transfers between firms
- They are short-term agreements with no formal contracts
- Partner firms retain their independence while cooperating on specific objectives (Correct answer)
- They require government regulatory approval in all cases
Correct answer: Partner firms retain their independence while cooperating on specific objectives
Strategic alliances are cooperative arrangements where firms collaborate on shared goals while maintaining their separate legal identities and ownership structures.
Question 7: The concept of 'strategic fit' refers to:
- Ensuring employees' skills align with their job descriptions
- The alignment between a company's strategy and its external environment and internal resources (Correct answer)
- Matching a firm's advertising budget to industry benchmarks
- Selecting a business strategy based solely on competitor actions
Correct answer: The alignment between a company's strategy and its external environment and internal resources
Strategic fit measures how well a company's strategy matches its internal capabilities and the opportunities and threats present in its external environment.
BBM Degree in Business Management Strategy 2
Which strategic framework analyzes a company's competitive position using five forces including supplier power and threat of substitutes?