EXAM 2017 Flashcards
Which of the following does not accurately characterise James Quinn’s ‘logical
incrementalism’ view of strategy development?
a) It involves experimentation and learning from partial commitments.
b) Strategy proceeds according to a pre-set logic that systematically builds a position in
incremental steps.
c) It is more deliberate in nature than alternative models such as path dependence or political
processes.
d) It is form of emergent strategy development.
e) It incorporates actions taken in organizational sub-units and sub-systems.
Strategy proceeds according to a pre-set logic that systematically builds a position in
incremental steps.
Which of the following is not amongst the widely-made criticisms of strategic planning?
a) Its reliance on an annual cycle is too inflexible for rapidly evolving industries.
b) It can be rather detached from operational realities across the business.
c) It is not very strategic if it is mostly about an annual budgeting cycle.
d) It leads firms to ‘extinction by instinct’, whereas ‘paralysis by analysis’ is better.
e) If run rigidly and top down, it can have a stifling effect on innovation.
It leads firms to ‘extinction by instinct’, whereas ‘paralysis by analysis’ is better.
To formulate future strategy, a high-technology firm needs to understand the range of outcomes for its industry in the medium term. If its management team chooses to use scenario planning to help achieve this, which of the following should it avoid?
a) It should consult widely and make maximum use of expert knowledge within and outside the business.
b) It should incorporate a degree of divergent thinking commensurate with the timescale under consideration.
c) It should be sure to model all the drivers that will ultimately influence outcomes in order to understand cause and effect as accurately as possible.
d) It should base its thinking about scenario drivers on specific research as far as possible.
e) It should consider logical links between drivers in order to limit the number of scenarios it develops in detail.
It should be sure to model all the drivers that will ultimately influence outcomes in order to understand cause and effect as accurately as possible.
Which of the following statements about rigorous use of Porter’s 5-force framework is
correct?
a) A firm in the focal industry buys from its suppliers and supplies its buyers.
b) Buyer power is always from the point of view of the final customer.
c) Competitors should come from the same strategic group.
d) Substitute products enable buyers to satisfy their needs from elsewhere in the industry.
e) Competition is typically fierce when there are few large competitors.
A firm in the focal industry buys from its suppliers and supplies its buyers.
In strategic group analysis, which of the following is true?
a) It is important that the two axes chosen correlate closely with one another when applied to the focal industry.
b) Entry barriers prevent firms within the industry from moving from one strategic group to another.
c) White spaces on the map, with no companies present, represent the most profitable opportunities due to lack of competition.
d) The horizontal axis should be chosen to bring out ‘blue ocean’ characteristics that are not contested by existing firms.
e) Strategic groups represent firms that are most similar to one another in terms of important strategic dimensions.
Strategic groups represent firms that are most similar to one another in terms of important strategic dimensions.
A fast-growing technology firm retains the same board and management team over a sustained period of success. Which of the following types of bias is not likely to affect their decisions? a) Hubris b) Groupthink c) Survivor bias d) Confirmation bias e) Prior hypothesis bias.
Survivor bias
When carrying out a resource-based analysis of a firm such as The Warehouse or the
Briscoes Group, which of the following would be correct?
a) The analyst must gain a clear, tangible idea of how each resource generates its value.
b) The analysis should seek resources whose availability is rare within the company.
c) It is important to focus on resources that are distinctive and easily imitable.
d) Non-substitutability is not important as a factor when using the VRIO acronym.
e) The analyst must evaluate a resource’s value relative to its costs.
The analyst must evaluate a resource’s value relative to its costs.
Which of the following is not one of the pitfalls of evaluating business performance as
set out in the relevant class?
a) Central allocation of R&D costs can distort reported profits in different operating units.
b) Use of output measures such as sales income can promote unprofitable activities.
c) Systems of measures tend to have limitations in at least one of the criteria of timeliness, accuracy and flexibility.
d) Profits or lack of them motivate action most strongly, but can lag underlying competitiveness or loss thereof.
e) When reported performance is linked to executive bonuses, this can have a distorting effect on executive decisions.
When reported performance is linked to executive bonuses, this can have a distorting effect on executive decisions.
Which of the following is not a feature of Hax and Wilde’s Delta Model?
a) Closer customer bonding.
b) Best Product Strategy.
c) Total customer solutions.
d) Best Cost Producer Strategy.
e) Complementor Lock-in.
Best Cost Producer Strategy.
Shortcomings of some so-called cost leaders include all of these except
a) That their low cost image and prices are not fully reflected by low internal costs.
b) That low cost operating practices must pervade the organisation.
c) That they rely excessively on a price sensitive market segment.
d) That their cost advantages have been eroded by competitors.
e) That their low cost status is compromised by rising input costs that they cannot control.
That low cost operating practices must pervade the organisation.
When a fast-growth industry enters a shakeout stage, which manufacturer is least likely to be profitable after several more years?
A firm that determinedly invests in capacity growth to keep up with growing demand.
Which of the following is recognised as a dilemma faced by established firms in innovation?
a) That established firms are better at process innovation, which leaves them vulnerable to new
firms with new products.
b) That established firms put in place disciplined processes for product innovation, which suppress the most interesting inventions.
c) That established firms pursuing incremental innovations valued by their customers inadvertently open the door to disruptive innovations.
d) That if a firm already dominates the market, innovation becomes an unnecessary luxury that dilutes shareholder wealth.
e) That they seldom actually pursue innovations, because managers and developers overestimate innovation costs by 140-600%.
That established firms pursuing incremental innovations valued by their customers inadvertently open the door to disruptive innovations.
Early in 2017, bids were under way to take The Body Shop into independent ownership, after years of under-performance blamed on mismatched values with its corporate owner L’Oréal. Which of the following is an accurate statement?
a) This illustrates the typically limited life of strategic alliances between firms, as their strategic interests evolve.
b) Poor performance at The Body Shop classifies it as a ‘dog’, hence the need to divest.
c) Since both L’Oréal and The Body Shop sell cosmetics, their forms of value creation will inevitably have clashed at the corporate level.
d) This illustrates a form of value destruction as illustrated by the corporate parenting matrix, hence the need to divest.
e) Loss of market share at The Body Shop have made it into a ‘question mark’, requiring a new owner to revive the market growth rate.
This illustrates a form of value destruction as illustrated by the corporate parenting matrix, hence the need to divest.
Which of the following is not one of the reasons ‘conglomerates’ like GE are nowadays typically less favoured than they used to be?
a) The skills and culture of the head office cannot be a good match for a range of unrelated constituent companies.
b) The diversification benefits can be achieved by investors in other ways.
c) Synergy gains are harder to achieve between firms that are unrelated.
d) Value added by head office is not thought to justify the level of corporate overhead charges.
e) ‘Conglomerate discount’ makes the constituent companies more valuable outside conglomerate ownership
Synergy gains are harder to achieve between firms that are unrelated.
