SPP Strategic Analysis & Environmental Scanning 3 — Questions and Answers
Question 1: Which of the following best describes 'environmental turbulence' in strategic planning contexts?
- Short-term fluctuations in stock prices
- The degree of instability, complexity, and unpredictability in the external environment (Correct answer)
- Internal organizational conflict during restructuring
- Seasonal demand variations in consumer markets
Correct answer: The degree of instability, complexity, and unpredictability in the external environment
Environmental turbulence refers to the rate and unpredictability of change in an organization's external environment, affecting how strategies must be formulated.
Question 2: A strategist uses a 'five forces' analysis and finds that the industry has low barriers to entry and many undifferentiated products. What strategic implication does this most likely signal?
- The industry is highly attractive for new investment
- Profitability in the industry is likely to be low and competition intense (Correct answer)
- Buyers have little power over suppliers
- Substitutes pose minimal threat
Correct answer: Profitability in the industry is likely to be low and competition intense
Low entry barriers combined with undifferentiated products typically intensify rivalry and suppress industry profitability.
Question 3: What is the key distinction between 'monitoring' and 'scanning' in environmental analysis?
- Monitoring is proactive; scanning is reactive
- Scanning searches broadly for emerging trends; monitoring tracks specific identified trends over time (Correct answer)
- Monitoring uses quantitative data; scanning relies on qualitative data only
- Scanning is performed annually; monitoring is done daily
Correct answer: Scanning searches broadly for emerging trends; monitoring tracks specific identified trends over time
Environmental scanning casts a wide net to detect new trends, while monitoring involves ongoing tracking of previously identified trends.
Question 4: In a value chain analysis, 'primary activities' directly involved in creating and delivering a product include all of the following EXCEPT:
- Inbound logistics
- Operations
- Human resource management (Correct answer)
- Outbound logistics
Correct answer: Human resource management
Human resource management is a support activity in Porter's value chain, not a primary activity.
Question 5: Which scenario planning approach involves identifying two critical uncertainties and constructing four distinct scenarios at their intersections?
- Trend extrapolation
- Two-axis scenario matrix (Correct answer)
- Delphi method
- Monte Carlo simulation
Correct answer: Two-axis scenario matrix
The two-axis scenario matrix plots two key uncertainties on perpendicular axes to generate four distinct, plausible future scenarios.
Question 6: A company's external analysis identifies that a competitor has just filed for several patents covering next-generation battery technology. This is best captured under which scanning category?
- Economic environment
- Regulatory environment
- Technological environment
- Competitive environment (Correct answer)
Correct answer: Competitive environment
Competitor patent activity is a competitive intelligence signal captured in the competitive environment scanning category.
Question 7: The 'resource-based view' (RBV) of strategic analysis focuses primarily on:
- Industry structure and competitive forces
- Internal capabilities and resources as sources of sustainable competitive advantage (Correct answer)
- Macroeconomic conditions affecting demand
- Customer segmentation and positioning
Correct answer: Internal capabilities and resources as sources of sustainable competitive advantage
RBV argues that sustained competitive advantage derives from unique, valuable, rare, and hard-to-imitate internal resources and capabilities.
SPP Strategic Analysis & Environmental Scanning 3
Which of the following best describes 'environmental turbulence' in strategic planning contexts?