Peregrine MBA Comprehensive
Practice Examination
Original Practice Questions
with Verified Answers &
Detailed Rationales
Question 1
A company operates in a highly competitive industry where
customers can easily switch between suppliers. Which strategic
response is most likely to create sustainable competitive
advantage?
,A. Increase prices substantially
B. Develop valuable capabilities that competitors cannot easily
imitate
C. Reduce employee training expenditures
D. Increase advertising without changing the underlying value
proposition
Rationale: Sustainable competitive advantage generally comes
from resources and capabilities that are valuable, relatively
rare, difficult to imitate, and effectively organized. Advertising
alone may produce temporary awareness but is usually easier
for competitors to replicate.
Question 2
A firm's senior management identifies rapid technological
change as a major external threat. Which strategic-
management activity should occur first?
A. Immediately eliminate the existing product line
B. Increase executive compensation
C. Assess how technological change could affect the firm's
,industry, customers, and capabilities
D. Acquire the largest competitor
Rationale: Strategic decisions should be based on environmental
analysis. Management must first understand the magnitude,
direction, and consequences of technological change before
selecting an appropriate response.
Question 3
Which statement best describes a firm's mission?
A. A detailed five-year operating budget
B. A list of quarterly performance targets
C. A broad statement describing the organization's
fundamental purpose and reason for existence
D. A forecast of annual shareholder returns
Rationale: A mission communicates why an organization exists,
whom it serves, and the broad value it seeks to create. Strategic
objectives and budgets translate that purpose into measurable
actions.
Question 4
, A company has strong manufacturing capabilities but weak
distribution capabilities. Which strategy would most directly
address this weakness?
A. Ignore distribution because production is the firm's core
competency
B. Develop, acquire, or partner for distribution capabilities
C. Reduce manufacturing capacity
D. Increase financial leverage
Rationale: A capability gap can prevent a company from
converting operational strengths into market value.
Partnerships, acquisitions, or internal development can
strengthen the missing capability.
Question 5
What is the primary purpose of a SWOT analysis?
A. Calculate return on equity
B. Forecast exact future sales
C. Connect internal strengths and weaknesses with external
Practice Examination
Original Practice Questions
with Verified Answers &
Detailed Rationales
Question 1
A company operates in a highly competitive industry where
customers can easily switch between suppliers. Which strategic
response is most likely to create sustainable competitive
advantage?
,A. Increase prices substantially
B. Develop valuable capabilities that competitors cannot easily
imitate
C. Reduce employee training expenditures
D. Increase advertising without changing the underlying value
proposition
Rationale: Sustainable competitive advantage generally comes
from resources and capabilities that are valuable, relatively
rare, difficult to imitate, and effectively organized. Advertising
alone may produce temporary awareness but is usually easier
for competitors to replicate.
Question 2
A firm's senior management identifies rapid technological
change as a major external threat. Which strategic-
management activity should occur first?
A. Immediately eliminate the existing product line
B. Increase executive compensation
C. Assess how technological change could affect the firm's
,industry, customers, and capabilities
D. Acquire the largest competitor
Rationale: Strategic decisions should be based on environmental
analysis. Management must first understand the magnitude,
direction, and consequences of technological change before
selecting an appropriate response.
Question 3
Which statement best describes a firm's mission?
A. A detailed five-year operating budget
B. A list of quarterly performance targets
C. A broad statement describing the organization's
fundamental purpose and reason for existence
D. A forecast of annual shareholder returns
Rationale: A mission communicates why an organization exists,
whom it serves, and the broad value it seeks to create. Strategic
objectives and budgets translate that purpose into measurable
actions.
Question 4
, A company has strong manufacturing capabilities but weak
distribution capabilities. Which strategy would most directly
address this weakness?
A. Ignore distribution because production is the firm's core
competency
B. Develop, acquire, or partner for distribution capabilities
C. Reduce manufacturing capacity
D. Increase financial leverage
Rationale: A capability gap can prevent a company from
converting operational strengths into market value.
Partnerships, acquisitions, or internal development can
strengthen the missing capability.
Question 5
What is the primary purpose of a SWOT analysis?
A. Calculate return on equity
B. Forecast exact future sales
C. Connect internal strengths and weaknesses with external
