CBO Strategic Planning & Leadership 5 — Questions and Answers
Question 1: A scenario planning exercise is MOST useful when:
- The future environment is highly predictable
- There is significant uncertainty about multiple possible futures (Correct answer)
- The company operates in a monopoly market
- Historical data is abundant and reliable
Correct answer: There is significant uncertainty about multiple possible futures
Scenario planning helps organizations prepare for multiple plausible futures when uncertainty is high and linear forecasting is insufficient.
Question 2: Which leadership behavior is MOST associated with building psychological safety in a team?
- Publicly criticizing poor performers to set standards
- Encouraging team members to voice concerns without fear of punishment (Correct answer)
- Limiting information sharing to senior staff only
- Assigning all high-stakes decisions to one person
Correct answer: Encouraging team members to voice concerns without fear of punishment
Psychological safety, studied by Amy Edmondson, thrives when leaders actively encourage open dialogue and ensure no punishment for speaking up.
Question 3: When a business adopts a 'market development' strategy, it is:
- Introducing new products to existing markets
- Entering new markets with existing products (Correct answer)
- Developing new products for new markets
- Withdrawing from underperforming markets
Correct answer: Entering new markets with existing products
Market development (Ansoff Matrix) means expanding the reach of existing products into new geographic or demographic markets.
Question 4: A CBO identifies that the company is 'stuck in the middle' according to Porter. This means the company:
- Has successfully achieved both cost leadership and differentiation
- Has failed to achieve a clear competitive advantage in any generic strategy (Correct answer)
- Operates exclusively in mid-market segments
- Is midway through a merger
Correct answer: Has failed to achieve a clear competitive advantage in any generic strategy
Porter warned that companies that try to pursue multiple generic strategies simultaneously often end up with no clear advantage, a condition he called 'stuck in the middle.'
Question 5: Which decision-making model assumes that decision-makers have limited information, time, and cognitive capacity?
- Rational model
- Bounded rationality model (Correct answer)
- Intuitive model
- Classical economic model
Correct answer: Bounded rationality model
Herbert Simon's bounded rationality model recognizes that humans 'satisfice' (choose a good-enough option) rather than optimize due to real-world constraints.
Question 6: A strategic alliance differs from a merger primarily because in a strategic alliance:
- Both companies permanently combine their assets and ownership
- Companies collaborate on specific goals while remaining legally independent (Correct answer)
- One company acquires majority shares of another
- All employees are integrated under one HR policy
Correct answer: Companies collaborate on specific goals while remaining legally independent
A strategic alliance is a cooperative arrangement between legally separate firms, whereas a merger results in a single unified legal entity.
Question 7: Which organizational structure BEST supports a company pursuing multiple distinct business strategies across different industries?
- Functional structure
- Divisional structure (Correct answer)
- Matrix structure
- Flat structure
Correct answer: Divisional structure
A divisional structure organizes the company into semi-autonomous units, each capable of pursuing its own strategy suited to its specific market or industry.
CBO Strategic Planning & Leadership 5
A scenario planning exercise is MOST useful when: