SEVI 3013 (WELSH) EXAM/ACTUAL EXAM QUESTIONS AND ANSWERS PLUS
RATIONALES/NEWEST UPDATE 2026
Question 1
Which of the following best defines "Strategy" in a business context?
A) A set of rules to punish underperforming employees
B) A goal-directed set of actions firms take to gain and sustain superior performance relative to
competitors
C) The process of hiring the cheapest available labor
D) A short-term reaction to a competitor's price change
E) The daily operational tasks required to keep a factory running
Correct Answer: B) A goal-directed set of actions firms take to gain and sustain superior
performance relative to competitors
Rationale: Strategy is not just a single action or a reaction; it is a holistic, goal-oriented plan
designed to achieve an advantage over rivals in the long term.
Question 2
What are the three pillars that form the basis of a "Good Strategy"?
A) Profit, Revenue, and Expenses
B) Hiring, Training, and Firing
C) Diagnosis, Guiding Policy, and Coherent Actions
D) Marketing, Sales, and Distribution
E) Vision, Mission, and Stock Price
Correct Answer: C) Diagnosis, Guiding Policy, and Coherent Actions
Rationale: According to strategic framework, a good strategy must first identify the
challenge (Diagnosis), decide how to deal with it (Guiding Policy), and then take
coordinated steps to fix it (Coherent Actions).
Question 3
In the three elements of a good strategy, what is the primary purpose of the "Diagnosis"?
A) To set the budget for the next fiscal year
B) To identify the core competitive challenge through internal and external analysis
C) To design the company's logo and branding
D) To fire the CEO if performance is low
E) To predict the exact movements of the stock market
Correct Answer: B) To identify the core competitive challenge through internal and external
analysis
Rationale: Diagnosis is the analytical phase where a firm uses tools like SWOT or PESTEL
to understand what specific obstacles are preventing it from achieving superior
performance.
Question 4
Which element of a good strategy provides an overall approach to address the competitive
challenge and provides direction for the firm?
, 2
A) Coherent Actions
B) Diagnosis
C) Strategic Positioning
D) Guiding Policy
E) Competitive Parity
Correct Answer: D) Guiding Policy
Rationale: The Guiding Policy is the "map" that follows the diagnosis. It outlines the
specific strategic approach the firm will take to overcome the identified hurdles.
Question 5
What does the "Coherent Actions" element of a good strategy represent?
A) The aspirational future of the company
B) Random tasks performed by different departments
C) Specific, coordinated steps taken to execute the guiding policy
D) The legal contracts signed with suppliers
E) The historical performance of the company
Correct Answer: C) Specific, coordinated steps taken to execute the guiding policy
Rationale: Strategy is useless without execution. Coherent Actions are the implementation
phase where the firm aligns its resources and departments to act in unison.
Question 6
A firm achieves "Competitive Advantage" when it exhibits:
A) Performance that is equal to its closest rival
B) Superior performance relative to other competitors in the same industry or the industry
average
C) The ability to pay its employees the highest wages in the country
D) A high level of internal conflict between departments
E) The largest physical headquarters in the city
Correct Answer: B) Superior performance relative to other competitors in the same industry
or the industry average
Rationale: Competitive advantage is always relative, not absolute. A firm must perform
better than the average of its peers to claim an advantage.
Question 7
If two firms in the same industry perform at roughly the same level, they are said to be in a state
of:
A) Competitive Advantage
B) Competitive Disadvantage
C) Competitive Parity
D) Strategic Positioning
, 3
E) Monopoly
Correct Answer: C) Competitive Parity
Rationale: Competitive Parity occurs when there is no significant difference in performance
or value creation between rivals; they are essentially "on even ground."
Question 8
When a firm underperforms its rivals or the industry average, it is experiencing:
A) Competitive Parity
B) Competitive Disadvantage
C) Sustainable Advantage
D) Stakeholder Strategy
E) Cost Leadership
Correct Answer: B) Competitive Disadvantage
Rationale: A disadvantage exists when a firm’s strategy fails to create as much value or
efficiency as its competitors, leading to lower profitability.
Question 9
What characterizes a "Sustainable Competitive Advantage"?
A) An advantage that lasts for only one month
B) Outperforming competitors over a prolonged period because they cannot easily copy the
strategy
C) Having the most expensive product on the market
D) Hiring a celebrity spokesperson
E) Following the exact same strategy as every other firm
Correct Answer: B) Outperforming competitors over a prolonged period because they
cannot easily copy the strategy
Rationale: Sustainability in strategy refers to durability. It means the advantage is resistant
to erosion from competition and survives changes in the market environment.
Question 10
Apple has maintained a competitive advantage over Samsung and other rivals for over a decade.
This is an example of:
A) Competitive Parity
B) Sustainable Competitive Advantage
C) Competitive Disadvantage
D) Product Focused Vision
E) Short-term gains
Correct Answer: B) Sustainable Competitive Advantage
Rationale: Apple’s ability to remain highly profitable across different product cycles and
RATIONALES/NEWEST UPDATE 2026
Question 1
Which of the following best defines "Strategy" in a business context?
A) A set of rules to punish underperforming employees
B) A goal-directed set of actions firms take to gain and sustain superior performance relative to
competitors
C) The process of hiring the cheapest available labor
D) A short-term reaction to a competitor's price change
E) The daily operational tasks required to keep a factory running
Correct Answer: B) A goal-directed set of actions firms take to gain and sustain superior
performance relative to competitors
Rationale: Strategy is not just a single action or a reaction; it is a holistic, goal-oriented plan
designed to achieve an advantage over rivals in the long term.
Question 2
What are the three pillars that form the basis of a "Good Strategy"?
A) Profit, Revenue, and Expenses
B) Hiring, Training, and Firing
C) Diagnosis, Guiding Policy, and Coherent Actions
D) Marketing, Sales, and Distribution
E) Vision, Mission, and Stock Price
Correct Answer: C) Diagnosis, Guiding Policy, and Coherent Actions
Rationale: According to strategic framework, a good strategy must first identify the
challenge (Diagnosis), decide how to deal with it (Guiding Policy), and then take
coordinated steps to fix it (Coherent Actions).
Question 3
In the three elements of a good strategy, what is the primary purpose of the "Diagnosis"?
A) To set the budget for the next fiscal year
B) To identify the core competitive challenge through internal and external analysis
C) To design the company's logo and branding
D) To fire the CEO if performance is low
E) To predict the exact movements of the stock market
Correct Answer: B) To identify the core competitive challenge through internal and external
analysis
Rationale: Diagnosis is the analytical phase where a firm uses tools like SWOT or PESTEL
to understand what specific obstacles are preventing it from achieving superior
performance.
Question 4
Which element of a good strategy provides an overall approach to address the competitive
challenge and provides direction for the firm?
, 2
A) Coherent Actions
B) Diagnosis
C) Strategic Positioning
D) Guiding Policy
E) Competitive Parity
Correct Answer: D) Guiding Policy
Rationale: The Guiding Policy is the "map" that follows the diagnosis. It outlines the
specific strategic approach the firm will take to overcome the identified hurdles.
Question 5
What does the "Coherent Actions" element of a good strategy represent?
A) The aspirational future of the company
B) Random tasks performed by different departments
C) Specific, coordinated steps taken to execute the guiding policy
D) The legal contracts signed with suppliers
E) The historical performance of the company
Correct Answer: C) Specific, coordinated steps taken to execute the guiding policy
Rationale: Strategy is useless without execution. Coherent Actions are the implementation
phase where the firm aligns its resources and departments to act in unison.
Question 6
A firm achieves "Competitive Advantage" when it exhibits:
A) Performance that is equal to its closest rival
B) Superior performance relative to other competitors in the same industry or the industry
average
C) The ability to pay its employees the highest wages in the country
D) A high level of internal conflict between departments
E) The largest physical headquarters in the city
Correct Answer: B) Superior performance relative to other competitors in the same industry
or the industry average
Rationale: Competitive advantage is always relative, not absolute. A firm must perform
better than the average of its peers to claim an advantage.
Question 7
If two firms in the same industry perform at roughly the same level, they are said to be in a state
of:
A) Competitive Advantage
B) Competitive Disadvantage
C) Competitive Parity
D) Strategic Positioning
, 3
E) Monopoly
Correct Answer: C) Competitive Parity
Rationale: Competitive Parity occurs when there is no significant difference in performance
or value creation between rivals; they are essentially "on even ground."
Question 8
When a firm underperforms its rivals or the industry average, it is experiencing:
A) Competitive Parity
B) Competitive Disadvantage
C) Sustainable Advantage
D) Stakeholder Strategy
E) Cost Leadership
Correct Answer: B) Competitive Disadvantage
Rationale: A disadvantage exists when a firm’s strategy fails to create as much value or
efficiency as its competitors, leading to lower profitability.
Question 9
What characterizes a "Sustainable Competitive Advantage"?
A) An advantage that lasts for only one month
B) Outperforming competitors over a prolonged period because they cannot easily copy the
strategy
C) Having the most expensive product on the market
D) Hiring a celebrity spokesperson
E) Following the exact same strategy as every other firm
Correct Answer: B) Outperforming competitors over a prolonged period because they
cannot easily copy the strategy
Rationale: Sustainability in strategy refers to durability. It means the advantage is resistant
to erosion from competition and survives changes in the market environment.
Question 10
Apple has maintained a competitive advantage over Samsung and other rivals for over a decade.
This is an example of:
A) Competitive Parity
B) Sustainable Competitive Advantage
C) Competitive Disadvantage
D) Product Focused Vision
E) Short-term gains
Correct Answer: B) Sustainable Competitive Advantage
Rationale: Apple’s ability to remain highly profitable across different product cycles and
