TMA Introduction to Strategy 5

Question 1

Which of the following best describes a 'blue ocean strategy' and its relevance to distressed companies?

Accepted Answer

Creating uncontested market space by offering a new value proposition, reducing competitive pressure

Answer

Blue ocean strategy creates new demand in uncontested markets, which can help a distressed firm escape brutal competition draining its margins.

Question 2

In a strategic plan, 'key performance indicators' (KPIs) serve primarily to:

Accepted Answer

Measure progress against strategic objectives so management can adjust course

Answer

KPIs provide quantifiable benchmarks linked to strategic goals, enabling management to monitor progress and make data-driven corrections.

Question 3

A distressed manufacturer decides to outsource its logistics and focus only on product design and branding. This is an example of:

Accepted Answer

Strategic outsourcing / focusing on core competencies

Answer

By outsourcing non-core functions and concentrating on distinctive strengths, the firm applies the core-competency principle through strategic outsourcing.

Question 4

The 'urgency of action' in a turnaround situation is primarily driven by:

Accepted Answer

The rate at which the company is consuming cash (cash burn rate) relative to available liquidity

Answer

Cash burn rate versus available liquidity determines how much time management has before insolvency, creating the urgency for rapid strategic decisions.

Question 5

Which of the following frameworks is MOST useful for evaluating the long-term attractiveness of an industry when formulating a turnaround strategy?

Accepted Answer

Porter's Five Forces

Answer

Porter's Five Forces assesses industry structural attractiveness by examining competitive rivalry, entry barriers, supplier/buyer power, and substitutes.

TMA - Turnaround Management Association Practice Test

TMA - Turnaround Management Association Practice Test

TMA Introduction to Strategy 5