MGMT 485W MIDTERM EXAM QUESTIONS &
ANSWERS
What is the goal of business strategy? - Answer -The goal of business strategy is to
gain and sustain a competitive advantage over rivals.
What are the three requirements for achieving competitive advantage? - Answer -(1)
Provide unique value to customers, (2) Develop superior resources and capabilities,
and (3) Sustain advantage by preventing imitation.
What are the four key choices involved in strategy formulation? - Answer -(1) What
markets to pursue, (2) What unique value to offer, (3) What resources and capabilities
to use, and (4) How to sustain advantage.
What are the main steps in the strategic management process? - Answer -(1) Select
mission, (2) Conduct external and internal analyses, (3) Formulate strategy, and (4)
Implement strategy.
What is the difference between external and internal analysis? - Answer -External
analysis examines market and industry factors; internal analysis examines a firm's
resources and capabilities.
What are the three levels of strategy within an organization? - Answer -Corporate,
business unit, and functional strategy.
What is corporate strategy? - Answer -Decisions made by top executives about which
industries and markets to compete in.
What is business unit strategy? - Answer -How each business unit competes to gain
and sustain competitive advantage.
What is functional strategy? - Answer -How departments like HR, operations, or
marketing implement the business unit strategy effectively.
What are strategy vehicles? - Answer -Strategic choices such as diversification,
acquisitions, alliances, vertical integration, or international expansion used to achieve
objectives.
Give an example of diversification as a strategy vehicle. - Answer -Uber expanding
from ride services to food delivery through Uber Eats.
What is vertical integration? - Answer -Expanding into different stages of the value
chain (e.g., Apple creating its own retail stores).
, What is strategy implementation? - Answer -Translating strategy into action through
aligned processes, systems, and functional activities.
What framework helps align an organization during strategy implementation? - Answer
-The McKinsey 7-S Framework—strategy, structure, systems, staff, skills, style, and
shared values.
Who are strategic leaders? - Answer -Leaders responsible for formulating,
communicating, and implementing a company's strategy.
What are deliberate strategies? - Answer -Planned actions based on intentional
analysis and decision-making (e.g., Target's upscale repositioning).
What are emergent strategies? - Answer -Strategies that develop over time in response
to unexpected opportunities (e.g., Apple's shift after the iPod).
What ethical dilemma do strategists often face? - Answer -Balancing the needs of
shareholders and customers with those of employees and communities.
Who are the four main stakeholder groups in a business? - Answer -Capital market
(shareholders, banks), product market (customers, suppliers), organizational
(employees), and community (governments, local groups).
Why is understanding strategy important for your career? - Answer -It helps you
evaluate employers, contribute to company goals, and improve your career
advancement opportunities.
What is an industry in strategic management? - Answer -A group of companies offering
products or services that are close substitutes for each other.
What is the main purpose of industry analysis? - Answer -To understand competitive
forces and determine the key factors that influence profitability.
What are Michael Porter's Five Forces of competition? - Answer -(1) Rivalry among
competitors, (2) Threat of new entrants, (3) Threat of substitutes, (4) Bargaining power
of buyers, and (5) Bargaining power of suppliers.
How does rivalry among competitors affect industry profitability? - Answer -Intense
rivalry drives down prices and profitability as firms compete for market share.
What factors increase the threat of new entrants? - Answer -Low barriers to entry,
limited brand loyalty, low capital requirements, and minimal government regulation.
What is the threat of substitutes in an industry? - Answer -The risk that customers will
switch to alternative products that perform the same function, limiting price and profit
potential.
ANSWERS
What is the goal of business strategy? - Answer -The goal of business strategy is to
gain and sustain a competitive advantage over rivals.
What are the three requirements for achieving competitive advantage? - Answer -(1)
Provide unique value to customers, (2) Develop superior resources and capabilities,
and (3) Sustain advantage by preventing imitation.
What are the four key choices involved in strategy formulation? - Answer -(1) What
markets to pursue, (2) What unique value to offer, (3) What resources and capabilities
to use, and (4) How to sustain advantage.
What are the main steps in the strategic management process? - Answer -(1) Select
mission, (2) Conduct external and internal analyses, (3) Formulate strategy, and (4)
Implement strategy.
What is the difference between external and internal analysis? - Answer -External
analysis examines market and industry factors; internal analysis examines a firm's
resources and capabilities.
What are the three levels of strategy within an organization? - Answer -Corporate,
business unit, and functional strategy.
What is corporate strategy? - Answer -Decisions made by top executives about which
industries and markets to compete in.
What is business unit strategy? - Answer -How each business unit competes to gain
and sustain competitive advantage.
What is functional strategy? - Answer -How departments like HR, operations, or
marketing implement the business unit strategy effectively.
What are strategy vehicles? - Answer -Strategic choices such as diversification,
acquisitions, alliances, vertical integration, or international expansion used to achieve
objectives.
Give an example of diversification as a strategy vehicle. - Answer -Uber expanding
from ride services to food delivery through Uber Eats.
What is vertical integration? - Answer -Expanding into different stages of the value
chain (e.g., Apple creating its own retail stores).
, What is strategy implementation? - Answer -Translating strategy into action through
aligned processes, systems, and functional activities.
What framework helps align an organization during strategy implementation? - Answer
-The McKinsey 7-S Framework—strategy, structure, systems, staff, skills, style, and
shared values.
Who are strategic leaders? - Answer -Leaders responsible for formulating,
communicating, and implementing a company's strategy.
What are deliberate strategies? - Answer -Planned actions based on intentional
analysis and decision-making (e.g., Target's upscale repositioning).
What are emergent strategies? - Answer -Strategies that develop over time in response
to unexpected opportunities (e.g., Apple's shift after the iPod).
What ethical dilemma do strategists often face? - Answer -Balancing the needs of
shareholders and customers with those of employees and communities.
Who are the four main stakeholder groups in a business? - Answer -Capital market
(shareholders, banks), product market (customers, suppliers), organizational
(employees), and community (governments, local groups).
Why is understanding strategy important for your career? - Answer -It helps you
evaluate employers, contribute to company goals, and improve your career
advancement opportunities.
What is an industry in strategic management? - Answer -A group of companies offering
products or services that are close substitutes for each other.
What is the main purpose of industry analysis? - Answer -To understand competitive
forces and determine the key factors that influence profitability.
What are Michael Porter's Five Forces of competition? - Answer -(1) Rivalry among
competitors, (2) Threat of new entrants, (3) Threat of substitutes, (4) Bargaining power
of buyers, and (5) Bargaining power of suppliers.
How does rivalry among competitors affect industry profitability? - Answer -Intense
rivalry drives down prices and profitability as firms compete for market share.
What factors increase the threat of new entrants? - Answer -Low barriers to entry,
limited brand loyalty, low capital requirements, and minimal government regulation.
What is the threat of substitutes in an industry? - Answer -The risk that customers will
switch to alternative products that perform the same function, limiting price and profit
potential.
