OM Strategic Planning & Analysis 2 — Questions and Answers
Question 1: Which analytical tool maps an organization's activities along a series of steps to identify where value is added and where costs are incurred?
- BCG Matrix
- Value Chain Analysis (Correct answer)
- Balanced Scorecard
- Ansoff Matrix
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: An organization's mission statement primarily serves to:
- Define specific annual financial targets
- Articulate the fundamental purpose and reason for the organization's existence (Correct answer)
- List the tactical steps for achieving quarterly goals
- Identify competitive threats in the external environment
Correct answer: Articulate the fundamental purpose and reason for the organization's existence
A mission statement defines the organization's core purpose, what it does, who it serves, and why it exists, providing direction for all strategic decisions.
Question 3: In a PESTLE analysis, the 'L' factor refers to:
- Leadership structures within the industry
- Liquidity ratios of competitors
- Legal and regulatory considerations affecting the business (Correct answer)
- Labor market trends and workforce demographics
Correct answer: Legal and regulatory considerations affecting the business
The 'L' in PESTLE stands for Legal factors, encompassing laws, regulations, court rulings, and compliance requirements that affect organizational operations.
Question 4: Which portfolio analysis tool classifies business units into 'Stars,' 'Cash Cows,' 'Question Marks,' and 'Dogs' based on market share and market growth?
- McKinsey-GE Matrix
- BCG Growth-Share Matrix (Correct answer)
- Ansoff Product-Market Matrix
- Porter's Five Forces
Correct answer: BCG Growth-Share Matrix
The BCG (Boston Consulting Group) Growth-Share Matrix uses market growth rate and relative market share to categorize business units for portfolio management decisions.
Question 5: Scenario planning in strategic management is best described as:
- Creating a single optimistic forecast for the future
- Developing multiple plausible future stories to prepare for uncertainty (Correct answer)
- Analyzing past performance to predict future results
- Setting fixed performance targets for the next fiscal year
Correct answer: Developing multiple plausible future stories to prepare for uncertainty
Scenario planning constructs several distinct, plausible future environments to help organizations develop flexible strategies that can succeed under different conditions.
Question 6: A 'blue ocean strategy' is characterized by:
- Competing aggressively in existing high-demand markets
- Creating uncontested market space by making competition irrelevant (Correct answer)
- Reducing prices below all competitors to win market share
- Focusing exclusively on defending existing market share
Correct answer: Creating uncontested market space by making competition irrelevant
Blue Ocean Strategy, by Kim and Mauborgne, involves creating new demand in uncontested market space rather than fighting over existing demand in competitive 'red oceans.'
Question 7: In the context of strategic planning, 'strategic drift' refers to:
- Deliberately shifting strategy in response to market changes
- The gradual divergence of an organization's strategy from its changing environment (Correct answer)
- Moving resources between strategic business units
- Aligning corporate strategy with divisional plans
Correct answer: The gradual divergence of an organization's strategy from its changing environment
Strategic drift occurs when an organization's strategy incrementally falls out of alignment with environmental changes, often going unnoticed until a crisis emerges.
OM Strategic Planning & Analysis 2
Which analytical tool maps an organization's activities along a series of steps to identify where value is added and where costs are incurred?