SPP Strategic Analysis & Environmental Scanning 5 — Questions and Answers
Question 1: Which of the following is a key limitation of SWOT analysis as a standalone strategic tool?
- It cannot identify internal weaknesses
- It is overly quantitative and ignores qualitative factors
- It does not prioritize or weigh factors and can produce a long list without strategic insight (Correct answer)
- It focuses exclusively on external environmental factors
Correct answer: It does not prioritize or weigh factors and can produce a long list without strategic insight
SWOT analysis is criticized for generating extensive lists of factors without providing a mechanism to prioritize, weigh, or translate them into actionable strategy.
Question 2: An organization uses a 'strategic early warning system' (SEWS). What is its primary function?
- Monitoring employee performance indicators in real time
- Continuously scanning for signals of significant environmental change that may require strategic response (Correct answer)
- Issuing financial warnings to shareholders about earnings risk
- Tracking project milestones against strategic plans
Correct answer: Continuously scanning for signals of significant environmental change that may require strategic response
A SEWS is designed to detect early indicators of major environmental shifts so leadership can respond before changes become crises.
Question 3: When applying Porter's Diamond model to assess national competitive advantage, which element represents the role of related and supporting industries?
- Factor conditions
- Demand conditions
- Related and supporting industries (Correct answer)
- Firm strategy, structure, and rivalry
Correct answer: Related and supporting industries
The 'Related and Supporting Industries' element of Porter's Diamond examines the presence of internationally competitive supplier and related industries that bolster a firm's competitiveness.
Question 4: A strategist identifies that a market segment is growing rapidly but that the organization currently has a low market share in it. On the BCG matrix, this segment would be classified as:
- Star
- Cash cow
- Question mark (Correct answer)
- Dog
Correct answer: Question mark
A question mark (also called a problem child) has high market growth but low relative market share, requiring investment decisions.
Question 5: In environmental scanning, the 'STEEP' framework differs from 'PESTEL' primarily by:
- Including a separate Legal category not found in PESTEL
- Combining Political and Legal factors into a single category and excluding Environmental (Correct answer)
- Omitting Technological factors
- Adding a specific focus on competitive dynamics
Correct answer: Combining Political and Legal factors into a single category and excluding Environmental
STEEP (Social, Technological, Economic, Environmental, Political) merges legal considerations under Political and omits a separate Environmental category compared to PESTEL.
Question 6: A strategic planner assessing 'industry attractiveness' using the GE-McKinsey matrix would consider which of the following as a key input?
- Internal rate of return on current projects
- Industry growth rate, competitive intensity, and profitability trends (Correct answer)
- Number of employees and geographic reach
- Customer satisfaction scores
Correct answer: Industry growth rate, competitive intensity, and profitability trends
Industry attractiveness in the GE-McKinsey matrix is assessed using factors such as market size, growth rate, competitive intensity, and profitability.
Question 7: Which concept describes the tendency of organizations to focus scanning efforts on information that confirms existing assumptions, potentially missing disruptive signals?
- Environmental determinism
- Confirmation bias
- Strategic myopia (Correct answer)
- Groupthink
Correct answer: Strategic myopia
Strategic myopia occurs when an organization's scanning is too narrow or too focused on existing paradigms, causing it to overlook signals of transformative change.
SPP Strategic Analysis & Environmental Scanning 5
Which of the following is a key limitation of SWOT analysis as a standalone strategic tool?