Certified Management Accountant Strategic Management 5

Question 1

Which of the following best illustrates a 'related diversification' strategy?

Accepted Answer

An airline acquiring a hotel chain to offer travel packages

Answer

Related diversification involves moving into businesses that share strategic fit — resources, technologies, or customer bases — such as an airline and hotel chain serving the same travel customers.

Question 2

The primary purpose of scenario planning in strategic management is to:

Accepted Answer

Prepare organizations for multiple plausible future environments by developing flexible strategies

Answer

Scenario planning develops several distinct plausible futures and prepares strategic responses to each, building organizational flexibility rather than predicting a single outcome.

Question 3

A firm with a 'defender' strategic orientation, as described by Miles and Snow, is most likely to:

Accepted Answer

Protect a stable, narrow market domain through operational efficiency

Answer

Miles and Snow's Defender organizations focus on maintaining a secure position in a narrow market by achieving high efficiency, often avoiding innovation in favor of stability.

Question 4

Which of the following is the BEST measure of whether a company's strategy is creating shareholder value?

Accepted Answer

Economic Value Added (EVA) consistently positive over time

Answer

Economic Value Added (EVA) measures whether returns exceed the cost of capital, directly indicating whether strategy creates or destroys shareholder value.

Question 5

In the context of strategic management, 'dynamic capabilities' refer to:

Accepted Answer

The capacity to integrate, build, and reconfigure internal competencies in response to environmental changes

Answer

Dynamic capabilities, developed by Teece, Pisano, and Shuen, describe higher-order abilities to sense opportunities, seize them, and transform organizational assets as environments evolve.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Strategic Management 5