BBM Degree in Business Management Strategy 5 — Questions and Answers
Question 1: A strategic business unit (SBU) is best described as:
- A temporary project team formed to execute a specific strategy
- A semi-autonomous division of a larger firm that has its own strategy and competitive environment (Correct answer)
- The executive team responsible for corporate-level decision-making
- A holding company that owns unrelated businesses
Correct answer: A semi-autonomous division of a larger firm that has its own strategy and competitive environment
An SBU is a distinct division within a large corporation that operates independently, serving specific markets and having its own strategy, competitors, and profit responsibility.
Question 2: Which pricing strategy is most consistent with a cost leadership competitive strategy?
- Premium pricing to signal high quality
- Competitive pricing at or below industry average to capture volume (Correct answer)
- Price skimming to recover R&D investment quickly
- Psychological pricing using charm prices like $9.99
Correct answer: Competitive pricing at or below industry average to capture volume
Cost leaders leverage their lower cost structures to price at or below competitors, attracting price-sensitive customers and building market share through volume.
Question 3: The concept of 'dynamic capabilities' in strategic management refers to a firm's ability to:
- Manage a large and diverse workforce across global operations
- Sense, seize, and reconfigure resources in response to rapidly changing environments (Correct answer)
- Maintain consistent financial performance across economic cycles
- Deploy flexible pricing in response to demand fluctuations
Correct answer: Sense, seize, and reconfigure resources in response to rapidly changing environments
Dynamic capabilities, associated with Teece, Pisano, and Shuen, describe higher-order capabilities that allow firms to adapt, integrate, and reconfigure internal and external competences to address fast-changing environments.
Question 4: When a firm assesses its 'PESTLE' environment, the 'L' factor refers to:
- Labor supply and workforce demographics
- Legal and regulatory factors affecting business operations (Correct answer)
- Logistics and supply chain infrastructure
- Leadership and governance structures within the firm
Correct answer: Legal and regulatory factors affecting business operations
In PESTLE analysis, 'L' stands for Legal factors, including laws, regulations, employment legislation, consumer protection, and industry-specific compliance requirements.
Question 5: A company that licenses its brand and business model to independent operators for a fee is using which growth strategy?
- Joint venture
- Franchising (Correct answer)
- Strategic alliance
- Greenfield investment
Correct answer: Franchising
Franchising allows a company (franchisor) to expand rapidly with lower capital risk by granting franchisees the right to operate under its brand and system in exchange for fees and royalties.
Question 6: In strategic management, 'scenario planning' is primarily used to:
- Create detailed financial forecasts for the next fiscal quarter
- Develop alternative views of the future to test and stress-test strategies (Correct answer)
- Plan the sequence of operational tasks for a new product launch
- Model employee performance scenarios for HR planning
Correct answer: Develop alternative views of the future to test and stress-test strategies
Scenario planning helps organizations prepare for multiple plausible futures by constructing distinct narrative scenarios and evaluating how strategies would perform under each.
Question 7: Which of the following best describes the difference between a mission statement and a vision statement?
- A mission describes the future aspirational state; a vision describes current activities
- A vision describes the future aspirational state; a mission describes current purpose and activities (Correct answer)
- Both statements describe short-term operational goals
- Mission statements are internal documents; vision statements are for external stakeholders only
Correct answer: A vision describes the future aspirational state; a mission describes current purpose and activities
A vision statement articulates where the organization aspires to be in the future, while a mission statement defines the organization's current purpose, core activities, and reason for existence.
BBM Degree in Business Management Strategy 5
A strategic business unit (SBU) is best described as: