SPP Strategy Formulation & Development 2 — Questions and Answers
Question 1: Which analytical tool maps an organization's strategic position by plotting business units based on market growth rate and relative market share?
- McKinsey 7-S Framework
- BCG Growth-Share Matrix (Correct answer)
- Porter's Five Forces
- Ansoff Matrix
Correct answer: BCG Growth-Share Matrix
The BCG Growth-Share Matrix categorizes business units as Stars, Cash Cows, Question Marks, or Dogs based on market growth rate and relative market share.
Question 2: In the context of strategy formulation, a 'Blue Ocean Strategy' is best described as:
- Competing aggressively in existing markets to capture rival market share
- Creating uncontested market space by making competition irrelevant (Correct answer)
- Focusing exclusively on cost leadership to undercut competitors
- Forming strategic alliances to defend against new market entrants
Correct answer: Creating uncontested market space by making competition irrelevant
Blue Ocean Strategy, developed by Kim and Mauborgne, involves creating new market space (blue oceans) rather than competing in saturated markets (red oceans).
Question 3: A company pursues a strategy of selling existing products to new customer segments. According to the Ansoff Matrix, this is called:
- Product development
- Diversification
- Market penetration
- Market development (Correct answer)
Correct answer: Market development
Market development involves taking existing products into new markets or customer segments, representing moderate risk in the Ansoff Matrix.
Question 4: Which element of the McKinsey 7-S Framework is considered a 'hard' element?
- Shared values
- Skills
- Style
- Strategy (Correct answer)
Correct answer: Strategy
Strategy, Structure, and Systems are the three 'hard' elements in McKinsey's 7-S Framework because they are tangible and directly influenced by management.
Question 5: What is the primary purpose of conducting a stakeholder analysis during strategy formulation?
- To determine the organization's cost structure and profitability
- To identify and assess the influence and interests of parties affected by strategic decisions (Correct answer)
- To evaluate competitors' strategic positioning in the market
- To map the organization's internal capabilities against market opportunities
Correct answer: To identify and assess the influence and interests of parties affected by strategic decisions
Stakeholder analysis identifies key parties, assesses their power and interest, and helps strategists manage relationships to reduce resistance and gain support.
Question 6: A firm operating in a highly fragmented industry with low barriers to entry and many competitors would be best served by which generic strategy?
- Broad differentiation to attract premium buyers across all segments
- Cost leadership to compete on price as margins compress
- Focus strategy targeting a specific niche with specialized offerings (Correct answer)
- Integration strategy to consolidate the industry through acquisitions
Correct answer: Focus strategy targeting a specific niche with specialized offerings
In a fragmented industry, a focus strategy allows a firm to dominate a specific niche where it can build sustainable advantages unavailable in the broader market.
Question 7: Which strategic planning concept describes the process of identifying and replicating successful small-scale experiments before committing resources to full implementation?
- Scenario planning
- Strategic intent
- Emergent strategy
- Pilot testing (Correct answer)
Correct answer: Pilot testing
Pilot testing involves running controlled small-scale experiments to validate strategic assumptions before full resource deployment, reducing implementation risk.
SPP Strategy Formulation & Development 2
Which analytical tool maps an organization's strategic position by plotting business units based on market growth rate and relative market share?