SPP Strategy Formulation & Development 3

Question 1

When formulating a corporate-level strategy, which of the following best represents a 'related diversification' approach?

Accepted Answer

A pharmaceutical company acquiring a medical device manufacturer to leverage healthcare expertise

Answer

Related diversification involves expanding into businesses that share strategic fit with core operations, allowing the company to leverage existing competencies and resources.

Question 2

The concept of 'strategic fit' in merger and acquisition strategy refers to:

Accepted Answer

The degree to which combining two entities creates synergies that enhance competitive advantage

Answer

Strategic fit measures the degree to which an acquisition creates value through synergies in resources, capabilities, markets, or technologies that strengthen competitive position.

Question 3

Which planning horizon is most associated with operational planning versus strategic planning?

Accepted Answer

Strategic: 3–5 years or longer; Operational: 1 year or less

Answer

Strategic planning typically spans 3–5 years or longer with a focus on direction-setting, while operational planning addresses near-term execution within a 1-year horizon.

Question 4

A company establishes a highly aspirational long-term goal that stretches the organization beyond its current capabilities. This concept is known as:

Accepted Answer

Strategic intent

Answer

Strategic intent, introduced by Hamel and Prahalad, describes an ambitious long-term desired leadership position that directs resource allocation and capability development over time.

Question 5

In scenario planning, what is the primary purpose of developing multiple future scenarios?

Accepted Answer

To test strategic robustness against a range of possible futures and reduce uncertainty

Answer

Scenario planning helps organizations test strategies against multiple plausible futures, building resilience and flexibility rather than relying on a single predicted outcome.

(SPP) Strategic Planning Professional Practice Test

(SPP) Strategic Planning Professional Practice Test

SPP Strategy Formulation & Development 3