OM Strategic Planning & Analysis 3 — Questions and Answers
Question 1: Which strategy involves an organization expanding by acquiring or developing businesses in completely different industries from its core operations?
- Horizontal integration
- Vertical integration
- Related diversification
- Conglomerate diversification (Correct answer)
Correct answer: Conglomerate diversification
Conglomerate (unrelated) diversification involves entering industries entirely unrelated to current operations, primarily to spread risk or capitalize on financial opportunities.
Question 2: The 'strategic gap' in organizational planning refers to:
- The difference between a firm's current position and its desired future position (Correct answer)
- The disparity in pay between executive and frontline employees
- Gaps in product line coverage compared to competitors
- The time lag between strategy formulation and implementation
Correct answer: The difference between a firm's current position and its desired future position
A strategic gap is the difference between where an organization currently stands and where it wants to be, driving the need for strategic initiatives to close that gap.
Question 3: Which of the following best describes a 'cost leadership' generic strategy according to Porter?
- Targeting a narrow market niche with premium pricing
- Offering unique products that justify a higher price
- Becoming the lowest-cost producer in an industry while maintaining acceptable margins (Correct answer)
- Differentiating through superior customer service only
Correct answer: Becoming the lowest-cost producer in an industry while maintaining acceptable margins
Cost leadership strategy aims to become the industry's lowest-cost producer, enabling competitive pricing or superior margins compared to rivals operating at similar prices.
Question 4: What does the acronym 'OKR' stand for in strategic performance management?
- Operational Key Results
- Objectives and Key Results (Correct answer)
- Organizational Knowledge Repository
- Output and Knowledge Review
Correct answer: Objectives and Key Results
OKR stands for Objectives and Key Results, a goal-setting framework that links high-level aspirational objectives with specific, measurable outcomes to track progress.
Question 5: In stakeholder analysis, a stakeholder with HIGH power but LOW interest should be:
- Managed closely with frequent detailed communication
- Kept satisfied with enough engagement to prevent negative interference (Correct answer)
- Informed regularly with detailed updates on all activities
- Monitored with minimal effort as they pose little risk
Correct answer: Kept satisfied with enough engagement to prevent negative interference
High-power, low-interest stakeholders should be kept satisfied to prevent them from becoming adversarial, without overwhelming them with unnecessary detail.
Question 6: Which strategic analysis tool is specifically designed to evaluate the attractiveness of an industry by examining five competitive forces?
- SWOT Analysis
- Porter's Five Forces (Correct answer)
- Balanced Scorecard
- VRIO Framework
Correct answer: Porter's Five Forces
Porter's Five Forces framework analyzes industry structure through supplier power, buyer power, competitive rivalry, threat of new entrants, and threat of substitutes.
Question 7: A 'first-mover advantage' in strategic management refers to:
- The benefit of entering a market after competitors have established demand
- Competitive benefits gained by being the first company to enter a new market or adopt an innovation (Correct answer)
- Moving resources to the most profitable business unit first
- Prioritizing the first item on a strategic agenda
Correct answer: Competitive benefits gained by being the first company to enter a new market or adopt an innovation
First-mover advantage refers to the competitive edge gained by the first organization to enter a new market, which can include brand recognition, customer loyalty, and scale economies.
