CM 4223 Midterm Exam Study Guide Questions and Answers
2025/2026 with complete solution(rationales);LSU
Question 1
The primary goal of the strategic management process is to:
A) Maximize short-term profits for shareholders.
B) Achieve and maintain a sustainable competitive advantage.
C) Create a detailed annual financial plan.
D) Respond to daily operational issues.
E) Minimize employee turnover.
Correct Answer: B) Achieve and maintain a sustainable competitive advantage.
Rationale: The overarching objective of strategic management is not just to be successful in
the short term, but to develop strategies that allow an organization to outperform its rivals
over the long term. This is known as achieving and maintaining a sustainable competitive
advantage.
Question 2
Generally, an organization's external opportunities and threats are considered to be:
A) Largely within the control of a single organization.
B) The primary focus of an internal audit.
C) Irrelevant to the strategy formulation process.
D) Largely uncontrollable by a single organization.
E) The same for all organizations within an industry.
Correct Answer: D) Largely uncontrollable by a single organization.
Rationale: External factors—such as economic shifts, new government regulations,
technological breakthroughs, and changing social trends—are part of the broader
environment in which a firm operates. A single organization can influence them very little,
if at all. The goal of an external audit is to identify these factors so the firm can develop
strategies to react to them effectively.
Question 3
The rise of the internet has fundamentally altered the marketplace by transferring power
primarily from ________ to ________.
,[Type here]
A) governments; businesses
B) individuals; businesses
C) businesses; individuals
D) businesses; governments
E) individuals; governments
Correct Answer: C) businesses; individuals
Rationale: The internet has empowered consumers by providing them with vast amounts of
information, price comparison tools, and platforms to share reviews and opinions. This
access to information has shifted the balance of power, forcing businesses to be more
transparent, competitive, and responsive to individual customer needs and preferences.
Question 4
Which of the following is NOT a characteristic of a well-defined long-term objective?
A) Measurable
B) Challenging
C) Continually changing
D) Consistent
E) Reasonable
Correct Answer: C) Continually changing
Rationale: Long-term objectives provide a stable direction for an organization over a
period of several years. While they may be revised periodically, they should not be in a
constant state of flux. Their purpose is to be measurable, challenging yet reasonable, and
consistent with the company's mission and vision to guide strategic actions effectively.
Question 5
Apple's strategy of not owning its own manufacturing facilities has allowed the company to:
A) Control the entire supply chain directly.
B) Remain financially lean and flexible.
C) Guarantee the highest possible product quality.
D) Pay the highest wages in the industry.
E) Avoid all marketing and distribution costs.
,[Type here]
Correct Answer: B) Remain financially lean and flexible.
Rationale: By outsourcing manufacturing, Apple avoids the massive capital investment and
fixed costs associated with building and maintaining its own factories. This strategy allows
the company to remain financially "lean," focus its resources on its core competencies of
design and innovation, and adapt more quickly to changes in demand and technology.
Question 6
An organization's vision statement is designed to answer which fundamental question?
A) "What is our business?"
B) "What are our financial goals for the year?"
C) "Who are our primary customers?"
D) "What do we want to become?"
E) "How can we outperform our competitors?"
Correct Answer: D) "What do we want to become?"
Rationale: The vision statement is a forward-looking declaration of an organization's long-
term aspirations. It creates a mental image of the future state that the organization wants
to achieve, serving as a source of inspiration and a clear focal point for all strategic
planning.
Question 7
The strategic-management process is best described as a(n) ________, ________, and ________
approach for determining a company's future direction.
A) intuitive; informal; subjective
B) rigid; unchanging; historical
C) logical; systematic; objective
D) short-term; reactive; financial
E) random; creative; philosophical
Correct Answer: C) logical; systematic; objective
Rationale: Strategic management is not a random or purely intuitive process. It involves a
structured and disciplined approach that includes conducting objective research,
systematically analyzing data (both internal and external), and making logical decisions to
chart a course for the future.
, [Type here]
Question 8
The idea that firms, like living organisms, must be "adept at adapting" or they risk not surviving
is a core principle of strategic management.
A) True
B) False
Correct Answer: A) True
Rationale: The business environment is constantly changing due to new technologies,
evolving customer preferences, and competitive actions. Firms that fail to adapt to these
external changes become obsolete and are often driven out of business. Strategic
management is the process by which organizations continuously monitor and adapt to their
environment.
Question 9
According to management expert Peter Drucker, when is the ideal time for an organization to ask
the fundamental questions, "What do we want to become?" and "What is our business?"
A) Only when the firm is facing a major crisis.
B) When the firm is successful.
C) At the beginning of every fiscal year.
D) When a new CEO is appointed.
E) When the firm is struggling financially.
Correct Answer: B) When the firm is successful.
Rationale: Drucker argued that the best time to re-evaluate a firm's purpose and direction
is from a position of strength, not weakness. When a firm is successful, it has the resources,
confidence, and mental space to think proactively about the future and make necessary
changes before a crisis forces it to react defensively.
Question 10
In terms of stakeholder interests, the general public is often most interested in ________, while a
company's stockholders are typically most interested in ________.
A) profitability; social responsibility
B) social responsibility; profitability
C) product quality; employee benefits
2025/2026 with complete solution(rationales);LSU
Question 1
The primary goal of the strategic management process is to:
A) Maximize short-term profits for shareholders.
B) Achieve and maintain a sustainable competitive advantage.
C) Create a detailed annual financial plan.
D) Respond to daily operational issues.
E) Minimize employee turnover.
Correct Answer: B) Achieve and maintain a sustainable competitive advantage.
Rationale: The overarching objective of strategic management is not just to be successful in
the short term, but to develop strategies that allow an organization to outperform its rivals
over the long term. This is known as achieving and maintaining a sustainable competitive
advantage.
Question 2
Generally, an organization's external opportunities and threats are considered to be:
A) Largely within the control of a single organization.
B) The primary focus of an internal audit.
C) Irrelevant to the strategy formulation process.
D) Largely uncontrollable by a single organization.
E) The same for all organizations within an industry.
Correct Answer: D) Largely uncontrollable by a single organization.
Rationale: External factors—such as economic shifts, new government regulations,
technological breakthroughs, and changing social trends—are part of the broader
environment in which a firm operates. A single organization can influence them very little,
if at all. The goal of an external audit is to identify these factors so the firm can develop
strategies to react to them effectively.
Question 3
The rise of the internet has fundamentally altered the marketplace by transferring power
primarily from ________ to ________.
,[Type here]
A) governments; businesses
B) individuals; businesses
C) businesses; individuals
D) businesses; governments
E) individuals; governments
Correct Answer: C) businesses; individuals
Rationale: The internet has empowered consumers by providing them with vast amounts of
information, price comparison tools, and platforms to share reviews and opinions. This
access to information has shifted the balance of power, forcing businesses to be more
transparent, competitive, and responsive to individual customer needs and preferences.
Question 4
Which of the following is NOT a characteristic of a well-defined long-term objective?
A) Measurable
B) Challenging
C) Continually changing
D) Consistent
E) Reasonable
Correct Answer: C) Continually changing
Rationale: Long-term objectives provide a stable direction for an organization over a
period of several years. While they may be revised periodically, they should not be in a
constant state of flux. Their purpose is to be measurable, challenging yet reasonable, and
consistent with the company's mission and vision to guide strategic actions effectively.
Question 5
Apple's strategy of not owning its own manufacturing facilities has allowed the company to:
A) Control the entire supply chain directly.
B) Remain financially lean and flexible.
C) Guarantee the highest possible product quality.
D) Pay the highest wages in the industry.
E) Avoid all marketing and distribution costs.
,[Type here]
Correct Answer: B) Remain financially lean and flexible.
Rationale: By outsourcing manufacturing, Apple avoids the massive capital investment and
fixed costs associated with building and maintaining its own factories. This strategy allows
the company to remain financially "lean," focus its resources on its core competencies of
design and innovation, and adapt more quickly to changes in demand and technology.
Question 6
An organization's vision statement is designed to answer which fundamental question?
A) "What is our business?"
B) "What are our financial goals for the year?"
C) "Who are our primary customers?"
D) "What do we want to become?"
E) "How can we outperform our competitors?"
Correct Answer: D) "What do we want to become?"
Rationale: The vision statement is a forward-looking declaration of an organization's long-
term aspirations. It creates a mental image of the future state that the organization wants
to achieve, serving as a source of inspiration and a clear focal point for all strategic
planning.
Question 7
The strategic-management process is best described as a(n) ________, ________, and ________
approach for determining a company's future direction.
A) intuitive; informal; subjective
B) rigid; unchanging; historical
C) logical; systematic; objective
D) short-term; reactive; financial
E) random; creative; philosophical
Correct Answer: C) logical; systematic; objective
Rationale: Strategic management is not a random or purely intuitive process. It involves a
structured and disciplined approach that includes conducting objective research,
systematically analyzing data (both internal and external), and making logical decisions to
chart a course for the future.
, [Type here]
Question 8
The idea that firms, like living organisms, must be "adept at adapting" or they risk not surviving
is a core principle of strategic management.
A) True
B) False
Correct Answer: A) True
Rationale: The business environment is constantly changing due to new technologies,
evolving customer preferences, and competitive actions. Firms that fail to adapt to these
external changes become obsolete and are often driven out of business. Strategic
management is the process by which organizations continuously monitor and adapt to their
environment.
Question 9
According to management expert Peter Drucker, when is the ideal time for an organization to ask
the fundamental questions, "What do we want to become?" and "What is our business?"
A) Only when the firm is facing a major crisis.
B) When the firm is successful.
C) At the beginning of every fiscal year.
D) When a new CEO is appointed.
E) When the firm is struggling financially.
Correct Answer: B) When the firm is successful.
Rationale: Drucker argued that the best time to re-evaluate a firm's purpose and direction
is from a position of strength, not weakness. When a firm is successful, it has the resources,
confidence, and mental space to think proactively about the future and make necessary
changes before a crisis forces it to react defensively.
Question 10
In terms of stakeholder interests, the general public is often most interested in ________, while a
company's stockholders are typically most interested in ________.
A) profitability; social responsibility
B) social responsibility; profitability
C) product quality; employee benefits
