MEM Strategic Management 3 — Questions and Answers
Question 1: In a multi-business engineering corporation, a Strategic Business Unit (SBU) is best defined as:
- A geographic regional office with its own P&L
- A distinct business with its own competitors, customers, and strategy (Correct answer)
- The corporate R&D department responsible for innovation
- A temporary project team assembled for a major contract
Correct answer: A distinct business with its own competitors, customers, and strategy
An SBU is a semi-autonomous unit that operates in a defined market segment, competes against identifiable rivals, and develops its own business-level strategy.
Question 2: The 'resource-based view' of the firm argues that competitive advantage stems primarily from:
- Favorable industry structure and low competitive rivalry
- Unique, valuable, and hard-to-imitate internal resources and capabilities (Correct answer)
- Efficient government lobbying and regulatory positioning
- Aggressive market share growth through price competition
Correct answer: Unique, valuable, and hard-to-imitate internal resources and capabilities
The resource-based view holds that sustained advantage comes from internal resources that are valuable, rare, inimitable, and well-organized.
Question 3: An engineering firm pursuing a 'focus differentiation' strategy would typically target:
- The broadest possible customer base to maximize volume
- A narrow market segment where specialized expertise commands a premium (Correct answer)
- Cost-sensitive buyers who prioritize lowest price
- Commodity markets where products are undifferentiated
Correct answer: A narrow market segment where specialized expertise commands a premium
Focus differentiation concentrates on a niche segment and serves it with superior, specialized offerings that justify premium pricing.
Question 4: Which tool is most useful for mapping the strategic positions of competitors in an industry?
- Strategic group map (Correct answer)
- Monte Carlo simulation
- Critical path method
- Ishikawa diagram
Correct answer: Strategic group map
Strategic group maps plot competitors along key dimensions (e.g., price vs. product breadth) to reveal clusters of firms pursuing similar strategies.
Question 5: When assessing whether to enter a new international market, an engineering firm using a PESTEL analysis would examine:
- Internal capability gaps relative to global competitors
- Political, economic, social, technological, environmental, and legal macro-factors (Correct answer)
- Customer lifetime value and segment profitability models
- Supply chain lead times and inventory carrying costs
Correct answer: Political, economic, social, technological, environmental, and legal macro-factors
PESTEL analysis systematically scans the macro-environmental forces that shape opportunities and threats in a target market.
Question 6: A technology company that invests heavily in R&D to build proprietary platforms that lock in developers is executing which type of strategy?
- Cost leadership
- Ecosystem strategy (Correct answer)
- Operational efficiency strategy
- Market penetration pricing
Correct answer: Ecosystem strategy
Ecosystem strategies build platforms and standards that attract complementary actors, creating network effects that reinforce the firm's central position.
Question 7: In the context of organizational design supporting strategy, a 'matrix structure' is most appropriate when:
- The firm has a single product line and stable environment
- The firm must simultaneously balance functional expertise and project or geographic needs (Correct answer)
- Senior leadership wants strict hierarchical command and control
- The company is in startup mode with fewer than 50 employees
Correct answer: The firm must simultaneously balance functional expertise and project or geographic needs
Matrix structures allow dual reporting relationships that balance specialized functional depth with cross-functional project or market coordination.
MEM Strategic Management 3
In a multi-business engineering corporation, a Strategic Business Unit (SBU) is best defined as: