OM Strategic Planning & Decision Making 2 — Questions and Answers
Question 1: Which strategic planning tool maps an organization's activities against industry rivals to identify competitive positioning?
- Activity system map
- Value chain analysis
- Competitive profile matrix
- Strategic group map (Correct answer)
Correct answer: Strategic group map
A strategic group map clusters competitors by similar strategic dimensions, revealing competitive positioning across the industry.
Question 2: A company practicing 'satisficing' in decision making is:
- Optimizing every possible outcome before deciding
- Choosing the first option that meets a minimum acceptable threshold (Correct answer)
- Delegating all decisions to lower management
- Using quantitative models exclusively
Correct answer: Choosing the first option that meets a minimum acceptable threshold
Satisficing, a concept by Herbert Simon, means selecting the first option that satisfies minimum criteria rather than finding the optimal solution.
Question 3: In the McKinsey 7-S framework, which element is considered the central connecting factor among all others?
- Strategy
- Structure
- Shared values (Correct answer)
- Systems
Correct answer: Shared values
Shared values sit at the center of the 7-S model, interconnecting all seven elements and representing the organization's core culture and beliefs.
Question 4: When using a decision tree for strategic choices, what does a 'chance node' (circle) represent?
- A point where the decision maker chooses an action
- An outcome point showing final payoff
- A probabilistic event outside the decision maker's control (Correct answer)
- A constraint imposed by the environment
Correct answer: A probabilistic event outside the decision maker's control
Chance nodes represent uncertain events with assigned probabilities, distinguishing them from decision nodes where managers choose.
Question 5: A firm pursuing a 'blue ocean strategy' is primarily focused on:
- Beating competitors in existing market space
- Creating uncontested market space through value innovation (Correct answer)
- Cutting costs to undercut rivals on price
- Acquiring competitors to gain market share
Correct answer: Creating uncontested market space through value innovation
Blue ocean strategy, by Kim and Mauborgne, seeks to create new demand in uncontested market space rather than competing in existing industries.
Question 6: Which type of organizational strategy focuses primarily on managing a portfolio of different business units?
- Business-level strategy
- Functional strategy
- Corporate-level strategy (Correct answer)
- Operational strategy
Correct answer: Corporate-level strategy
Corporate-level strategy deals with the overall scope of the organization and how to manage multiple business units or product lines.
Question 7: The 'Delphi method' is used in strategic planning primarily to:
- Analyze financial ratios of competitors
- Reach consensus among experts through structured anonymous rounds (Correct answer)
- Map customer journey touchpoints
- Calculate net present value of strategic investments
Correct answer: Reach consensus among experts through structured anonymous rounds
The Delphi method gathers expert opinions through iterative anonymous questionnaires, reducing groupthink and building consensus.
OM Strategic Planning & Decision Making 2
Which strategic planning tool maps an organization's activities against industry rivals to identify competitive positioning?