CMC Business Strategy Development 3 — Questions and Answers
Question 1: A management consultant is advising a client on corporate-level strategy. Which of the following is a corporate-level strategic decision?
- Selecting a pricing model for a product line
- Deciding which industries or markets to compete in (Correct answer)
- Designing a customer service process
- Setting quarterly sales targets for a region
Correct answer: Deciding which industries or markets to compete in
Corporate-level strategy determines the scope of the firm, including which industries and markets it should enter, exit, or maintain presence in.
Question 2: The concept of 'dynamic capabilities' in strategic management refers to a firm's ability to:
- Maintain cost efficiency in stable markets
- Sense, seize, and reconfigure resources as the environment changes (Correct answer)
- Execute standard operating procedures consistently
- Build high-barrier-to-entry proprietary technology
Correct answer: Sense, seize, and reconfigure resources as the environment changes
Dynamic capabilities, as defined by Teece, Pisano, and Shuen, enable firms to adapt by integrating, building, and reconfiguring internal and external competencies.
Question 3: Which growth strategy involves a company entering new markets with new products simultaneously?
- Market penetration
- Market development
- Product development
- Diversification (Correct answer)
Correct answer: Diversification
Diversification in the Ansoff Matrix involves launching new products into new markets, carrying the highest risk of all four growth strategies.
Question 4: A firm's 'sustainable competitive advantage' is best described as:
- The ability to outperform rivals in a single quarter
- A cost or differentiation advantage that competitors cannot easily replicate (Correct answer)
- Patents that expire within five years
- Temporary price leadership in a commodity market
Correct answer: A cost or differentiation advantage that competitors cannot easily replicate
A sustainable competitive advantage is durable because it is based on resources or capabilities that are valuable, rare, inimitable, and non-substitutable (VRIN).
Question 5: In strategic planning, a 'stretch goal' is best characterized as:
- A target set just above last year's results
- An ambitious goal that requires significant capability building to achieve (Correct answer)
- A goal adjusted downward when conditions deteriorate
- A goal aligned with industry average performance
Correct answer: An ambitious goal that requires significant capability building to achieve
Stretch goals are deliberately ambitious objectives that push organizations beyond their current capabilities, fostering innovation and transformation.
Question 6: Which of the following best describes a 'market development' strategy in Ansoff's framework?
- Selling existing products to new customer segments or geographies (Correct answer)
- Creating new products for existing customers
- Acquiring a competitor in the same industry
- Reducing product lines to focus on core offerings
Correct answer: Selling existing products to new customer segments or geographies
Market development involves taking existing products and expanding into new markets, whether geographic regions or new customer segments.
Question 7: When evaluating strategic options, the SAF criteria stands for:
- Speed, Accuracy, Feasibility
- Suitability, Acceptability, Feasibility (Correct answer)
- Scalability, Alignment, Fit
- Sustainability, Adaptability, Flexibility
Correct answer: Suitability, Acceptability, Feasibility
The SAF criteria—Suitability, Acceptability, and Feasibility—provide a structured way to evaluate whether a strategy is appropriate, viable, and acceptable to stakeholders.
CMC Business Strategy Development 3
A management consultant is advising a client on corporate-level strategy.
Which of the following is a corporate-level strategic decision?