MBA Business Strategy 2 — Questions and Answers
Question 1: What is 'vertical integration' as a corporate strategy?
- Expanding into unrelated industries
- Expanding a company's operations into different stages of its supply chain (upstream or downstream) (Correct answer)
- Merging with a direct competitor
- Licensing technology to other companies
Correct answer: Expanding a company's operations into different stages of its supply chain (upstream or downstream)
Vertical integration involves a firm acquiring or developing operations in different stages of its supply chain — either toward raw materials (backward) or toward the customer (forward).
Question 2: What is the 'resource-based view' (RBV) of competitive advantage?
- Firms should focus on external market opportunities rather than internal resources
- Sustainable competitive advantage stems from unique internal resources and capabilities that are valuable, rare, inimitable, and non-substitutable (VRIN) (Correct answer)
- All firms in an industry have access to the same resources
- Resources are irrelevant; only market positioning matters
Correct answer: Sustainable competitive advantage stems from unique internal resources and capabilities that are valuable, rare, inimitable, and non-substitutable (VRIN)
The RBV argues that firms achieve sustainable competitive advantage through resources and capabilities that meet the VRIN criteria: Valuable, Rare, Inimitable, and Non-substitutable.
Question 3: What is 'scenario planning' in strategic management?
- Planning employee work schedules for different seasons
- Developing multiple plausible future scenarios to test strategies and improve organizational resilience (Correct answer)
- Creating detailed project timelines for each department
- Scheduling product launches based on market research
Correct answer: Developing multiple plausible future scenarios to test strategies and improve organizational resilience
Scenario planning constructs several plausible future environments and evaluates how current strategies would perform under each, helping firms prepare for uncertainty.
Question 4: What is 'blue ocean strategy'?
- A cost-cutting strategy for mature markets
- Creating uncontested new market spaces by making competition irrelevant through innovation (Correct answer)
- A strategy for entering highly competitive markets aggressively
- A pricing strategy for premium luxury products
Correct answer: Creating uncontested new market spaces by making competition irrelevant through innovation
Blue Ocean Strategy (Kim & Mauborgne) focuses on creating new demand in uncontested market space rather than competing in existing overcrowded 'red ocean' markets.
Question 5: What does 'strategic fit' refer to in corporate strategy?
- Ensuring all employees understand the company mission statement
- The alignment between a company's strategy, its internal capabilities, and the external environment (Correct answer)
- Matching job candidates to company culture
- The consistency of a brand's visual identity across markets
Correct answer: The alignment between a company's strategy, its internal capabilities, and the external environment
Strategic fit describes how well a company's strategy aligns with its internal resources and capabilities and with the opportunities and threats in its external environment.
Question 6: What is a 'joint venture' as a strategic alliance?
- A licensing agreement to use another company's intellectual property
- A new entity co-owned by two or more firms to pursue a specific strategic objective (Correct answer)
- A hostile takeover of a competitor
- A merger where two companies fully combine operations
Correct answer: A new entity co-owned by two or more firms to pursue a specific strategic objective
A joint venture creates a separate legal entity co-owned by the partner firms, allowing them to share resources, risks, and rewards for a specific business opportunity.
MBA Business Strategy 2
What is 'vertical integration' as a corporate strategy?