CME Strategic Planning & Execution 2 — Questions and Answers
Question 1: Which strategic planning tool maps an organization's activities to identify where value is created and competitive advantage can be built?
- BCG Growth-Share Matrix
- Value Chain Analysis (Correct answer)
- Balanced Scorecard
- PEST Analysis
Correct answer: Value Chain Analysis
Value Chain Analysis, developed by Michael Porter, breaks down organizational activities into primary and support activities to identify sources of competitive advantage.
Question 2: A company sets a strategic goal to increase market share by 15% over three years. Which element of the Balanced Scorecard would this goal fall under?
- Financial Perspective
- Customer Perspective (Correct answer)
- Internal Process Perspective
- Learning & Growth Perspective
Correct answer: Customer Perspective
Market share is a customer-facing metric that reflects how well the company is acquiring and retaining customers, placing it in the Customer Perspective.
Question 3: What is the primary purpose of conducting a competitive analysis during the strategic planning process?
- To determine employee compensation benchmarks
- To identify gaps in internal capabilities
- To understand rivals' strengths, weaknesses, and strategies (Correct answer)
- To forecast macroeconomic trends
Correct answer: To understand rivals' strengths, weaknesses, and strategies
Competitive analysis helps organizations understand the landscape of rivals, enabling them to differentiate their strategy and anticipate competitive moves.
Question 4: A firm pursues a strategy of offering the lowest prices in the industry while maintaining acceptable quality. According to Porter's Generic Strategies, this is best described as:
- Differentiation Strategy
- Focus Strategy
- Cost Leadership Strategy (Correct answer)
- Blue Ocean Strategy
Correct answer: Cost Leadership Strategy
Cost Leadership Strategy involves becoming the lowest-cost producer in an industry to compete on price while still generating profit.
Question 5: During strategy execution, a manager notices that actual results consistently lag behind targets. The FIRST corrective action should be to:
- Revise the strategic targets downward
- Analyze root causes of the performance gap (Correct answer)
- Replace underperforming team leaders
- Increase the budget allocation
Correct answer: Analyze root causes of the performance gap
Diagnosing root causes is essential before taking corrective action, as the gap could stem from flawed assumptions, poor execution, or external factors.
Question 6: The concept of 'strategic alignment' in execution refers to:
- Ensuring all employees receive equal pay
- Matching departmental goals and resources with the overall organizational strategy (Correct answer)
- Aligning the company's fiscal year with market cycles
- Synchronizing IT systems across departments
Correct answer: Matching departmental goals and resources with the overall organizational strategy
Strategic alignment ensures that every department's objectives, initiatives, and resource allocations are consistent with and support the organization's overarching strategy.
Question 7: Which of the following is the BEST example of a leading indicator in a strategic performance measurement system?
- Annual revenue growth
- Employee training hours completed (Correct answer)
- Net profit margin
- Customer churn rate
Correct answer: Employee training hours completed
Employee training hours is a leading indicator because it predicts future capability improvements, whereas revenue and profit are lagging indicators of past results.
CME Strategic Planning & Execution 2
Which strategic planning tool maps an organization's activities to identify where value is created and competitive advantage can be built?