BBM Degree in Business Management Strategy 3 — Questions and Answers
Question 1: Which growth strategy involves a company selling existing products to new geographic markets?
- Product development
- Market penetration
- Market development (Correct answer)
- Conglomerate diversification
Correct answer: Market development
Market development, per the Ansoff Matrix, involves taking current products into new markets, such as entering international markets or new customer segments.
Question 2: A company pursuing a differentiation strategy primarily seeks to:
- Produce goods at the lowest possible cost in the industry
- Offer unique products or services for which customers will pay a premium (Correct answer)
- Focus on a narrow segment with low-cost offerings
- Imitate successful competitors' products quickly
Correct answer: Offer unique products or services for which customers will pay a premium
Differentiation strategy, per Porter's Generic Strategies, involves creating a product perceived as unique industry-wide, allowing the firm to charge premium prices.
Question 3: Stakeholder analysis in strategic management is primarily used to:
- Calculate shareholder return on equity
- Identify and prioritize groups who affect or are affected by the firm's strategy (Correct answer)
- Determine the optimal capital structure for the firm
- Analyze competitors' stakeholder relationships
Correct answer: Identify and prioritize groups who affect or are affected by the firm's strategy
Stakeholder analysis maps all parties with interests in the company and assesses their influence and expectations to inform strategic decisions.
Question 4: In a SWOT analysis, an 'opportunity' is best defined as:
- An internal capability that gives the firm an advantage
- A favorable external condition that could enhance firm performance (Correct answer)
- A potential risk from competitor actions
- A gap in the firm's current product portfolio
Correct answer: A favorable external condition that could enhance firm performance
Opportunities in SWOT analysis are positive external environmental factors—such as market trends or regulatory changes—that the firm can leverage to its advantage.
Question 5: The resource-based view (RBV) of strategy suggests competitive advantage stems from:
- Industry positioning and market structure
- Unique internal resources and capabilities that are valuable, rare, inimitable, and non-substitutable (Correct answer)
- Effective cost reduction through economies of scale
- Building the largest distribution network in the industry
Correct answer: Unique internal resources and capabilities that are valuable, rare, inimitable, and non-substitutable
The RBV, associated with Barney, argues that sustained competitive advantage comes from internal resources meeting the VRIO criteria.
Question 6: Which of the following describes a 'first-mover advantage'?
- Being the first firm to reduce prices in a price war
- Gaining competitive benefits by entering a market before rivals (Correct answer)
- Moving first in negotiations to set anchor prices
- Launching a product in the domestic market before going international
Correct answer: Gaining competitive benefits by entering a market before rivals
First-mover advantage refers to the competitive edge a company gains by being the first to enter a new market or adopt a new technology, often securing brand loyalty and market share.
Question 7: Corporate-level strategy is primarily concerned with:
- How individual business units compete in their respective markets
- Which markets and industries a company should compete in overall (Correct answer)
- Day-to-day operational efficiency across departments
- Managing human resources across functional areas
Correct answer: Which markets and industries a company should compete in overall
Corporate-level strategy addresses the portfolio of businesses a firm should operate in and how to allocate resources across them, sitting above business-unit strategy.
BBM Degree in Business Management Strategy 3
Which growth strategy involves a company selling existing products to new geographic markets?