MEM Strategic Management 5 â Questions and Answers
Question 1: The 'innovator's dilemma,' as described by Clayton Christensen, explains why established firms often fail to adopt disruptive technologies because:
- They lack the engineering talent to develop new technologies
- Serving existing profitable customers prevents investment in lower-margin disruptive innovations (Correct answer)
- Government regulations block adoption of unproven technologies
- Disruptive innovations are always inferior to existing products in every dimension
Correct answer: Serving existing profitable customers prevents investment in lower-margin disruptive innovations
Incumbents rationally focus on their best customers, ignoring initially inferior disruptive technologies that eventually overtake the market.
Question 2: When an engineering company evaluates a potential acquisition using a 'synergy analysis,' it is primarily assessing:
- The target company's historical audit records and tax compliance
- Whether the combined entity will create more value than the two firms operating independently (Correct answer)
- The geopolitical risk of operating in the target's home market
- The target's employee satisfaction scores and retention rates
Correct answer: Whether the combined entity will create more value than the two firms operating independently
Synergy analysis quantifies the additional valueâcost savings, revenue growth, capability gainsâcreated by combining two organizations.
Question 3: In strategic management, 'co-opetition' refers to a situation where firms:
- Simultaneously cooperate and compete with one another (Correct answer)
- Form regulatory lobbying coalitions against new market entrants
- Coordinate employee compensation to reduce talent competition
- Agree to geographic market division to avoid direct rivalry
Correct answer: Simultaneously cooperate and compete with one another
Co-opetition, coined by Brandenburger and Nalebuff, describes firms that cooperate to grow the overall pie (e.g., setting standards) while competing for their individual share.
Question 4: Which of the following is an example of a 'real option' in engineering strategy?
- A fixed-price contract with a government client
- Phased investment in a new manufacturing plant that can be scaled up if demand grows (Correct answer)
- An interest rate swap used to hedge debt obligations
- A perpetual license fee for using a third-party software platform
Correct answer: Phased investment in a new manufacturing plant that can be scaled up if demand grows
Real options give firms the rightâbut not the obligationâto make future investments, analogous to financial options, allowing staged commitment under uncertainty.
Question 5: A 'turnaround strategy' for a struggling engineering division would most likely begin with:
- Launching a new product line to diversify revenue
- Stabilizing cash flow by cutting costs and divesting non-core assets (Correct answer)
- Acquiring a competitor to gain market share rapidly
- Expanding into international markets to find new customers
Correct answer: Stabilizing cash flow by cutting costs and divesting non-core assets
Turnaround strategies first stabilize the firm by stopping cash hemorrhage before pursuing growth, since survival is the prerequisite for any longer-term strategic move.
Question 6: In the context of MEM, 'technology roadmapping' serves as a strategic tool by:
- Scheduling individual engineer tasks and sprint backlogs
- Aligning technology development timelines with market needs and business strategy (Correct answer)
- Documenting software version release histories for compliance
- Tracking patent expiration dates for competitor technologies
Correct answer: Aligning technology development timelines with market needs and business strategy
Technology roadmaps visually connect market drivers, product requirements, and technology development milestones to coordinate R&D investment with strategic objectives.
Question 7: The concept of 'strategic fit' in acquisitions means that the target company:
- Has a stock price below book value, indicating undervaluation
- Complements the acquirer's strategy, capabilities, or market position in a meaningful way (Correct answer)
- Is headquartered in the same geographic region as the acquirer
- Operates in an industry with higher average profit margins than the acquirer's core business
Correct answer: Complements the acquirer's strategy, capabilities, or market position in a meaningful way
Strategic fit ensures the acquired firm strengthens the buyer's competitive position, fills capability gaps, or extends market reach in ways aligned with the overall strategy.
MEM Strategic Management 5
The 'innovator's dilemma,' as described by Clayton Christensen, explains why established firms often fail to adopt disruptive technologies because: