Strategic Management — Part 1 MCQs with Explanations

Strategy is developed by the visionary chief executive in entrepreneurial mode of strategic management. In the entrepreneurial mode, strategy is developed mainly by a strong visionary chief executive who actively searches for new opportunities, is heavily oriented towards growth and is willing to make bold decisions or to shift strategies whenever necessary.

Stability strategy is a corporate level strategy. A stability strategy refers to a strategy by a company where the company stops the expenditure on expansion, in other words it refers to situation where company do not venture into new markets or introduce new products.

Strategies are the means by which long term objectives will be achieved. Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture.

Marketing strategy is a functional strategy type of strategy. Functional Strategy is the strategy or organisational plan adopted by each functional area, viz. marketing, production, finance, human resources and so on, in line with the overall business or corporate strategy, to achieve organisational level objectives.

When an industry relies heavily on government contracts, Political forecasts can be the most important part of an external audit. Political forecasting provides the contexruulity needed for decision-making and for forecasting 'non-political' trends.

A possible and desirable future state of an organization is called Vision. Vision is a future-oriented concept of the business. Forming a strategic vision is an exercise in thinking about where a company needs to head to be successful.

Question mark symbolize Remain Diversified in BCG matrix. The BCG growth-share matrix is used to help the company decide what it should keep, sell, or invest more in. The BCG growth-share matrix breaks down products into four categories: dogs, cash cows, stars, and “question marks.”

Selling all of a companys assets in parts for their tangible worth is called Liquidation. Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.

Cash Cows symbolize Stable in BCG matrix. Cash cows are the leaders in the marketplace and generate more cash than they consume. These are business units or products that have a high market share but low growth prospects.

The BCG matrix is based on Industry growth rate and relative market share. BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential.

Policies are the guides to decision making. Policies are standing plans that provide guidelines for decision making. They are guides to thinking that establish the boundaries or limits within which decisions are to be made.

In strategic thinking, more than 5 years long is the long term, approximately. Most strategic plans look about 3 to 5 years into the future.

Buying another company by one company means acquisition. An acquisition is when one company purchases most or all of another company's shares to gain control of that company. Purchasing more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company's shareholders.

Low cost, Differentiation and Focus are examples of Business strategies. A low-cost provider seeks to sell its products at the lowest price it can, while still making a profit so that it can draw customers to the market. This is the broad version of the low-cost strategy because such companies try to appeal to a broad market.

Technological environment can create new market and new business segments. Technological environment refers to the state of science and technology in the country and related aspects such as rate of technological progress, institutional arrangements for development and application of new technology, etc.

The word tactics is most likely to be associated with Operational strategy. Operational strategies refers to the methods companies use to reach their objectives. By developing operational strategies, a company can examine and implement effective and efficient systems for using resources, personnel and the work process.

Buyers market exist when buyers purchases in large volume. A buyer's market refers to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations.

SWOT Matrix contains nine cells in which four are key factor cells, four strategy cells and one blank cell.

The Reasons for diversification is to increase organizational capabilities. Diversification strategies are used to expand firms' operations by adding markets, products, services, or stages of production to the existing business. The purpose of diversification is to allow the company to enter lines of business that are different from current operations.

Strategic Management handles external issues. Strategic management is the ongoing planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives. Changes in the business environment require organizations to constantly assess their strategies for success.

Vision is the starting point of strategic intent. The fundamental purpose of strategic planning is to align a company's mission with its vision. Without mission and vision, the plan exists in a vacuum, as the mission is the starting point for planning, the vision is the destination, and the strategic plan is the roadmap that helps you navigate from one to the other.

Corporate level strategy deals with objectives of the corporate. we can simply say that corporate level strategies are concerned with questions about what business to compete in. Corporate Strategy involves the careful analysis of the selection of businesses the company can successful compete in. Corporate level strategies affect the entire organization and are considered delicate in the strategic planning process.

Technology development activity does not comes under the primary activities of value Chain analysis. Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage.

Vision statement can be identified as a best statement that represents a firms big picture statements, describing a desired end state, general in scope and not restrictive. A vision statement is an organization's declaration of its mid-term and long-term goals, stating what they want to become in the future. Vision statements act as a goal for a company to strive toward.

One of the top level manager of a large manufacturing plant uses to spend her day trying to ensure that the material waste is not more than 10% , she spends her day performing the management process of controlling. Control is a primary goal-oriented function of management in an organisation. It is a process of comparing the actual performance with the set standards of the company to ensure that activities are performed according to the plans and if not then taking corrective action.

All of the following are key opportunities and threats in external environment because of political, government and legal forces except Social security program. The Social Security program in the United States provides protection against the loss of earnings due to retirement, death, or disability.

Internal audit is done Parallel to external audit. An external audit is an examination that is conducted by an independent accountant. This type of audit is most commonly intended to result in a certification of the financial statements of an entity.

Bargaining power of customers is high if Differentiation of competitors product is low. The Bargaining Power of Buyers, one of the forces in Porter's Five Forces Industry Analysis Framework, refers to the pressure that customers/consumers can put on businesses to get them to provide higher quality products, better customer service, and/or lower prices.

The magnitude and changes that may affect an organization is survival owing to all of the following except Dubious firms.

Strategy implementation requires a firm to establish annual objectives, devise, policies, motivates employees and allocate resources for the execution of strategies. Strategic implementation is a process that puts plans and strategies into action to reach desired goals. The strategic plan itself is a written document that details the steps and processes needed to reach plan goals, and includes feedback and progress reports to ensure that the plan is on track.

Economic trend can be exemplified by the increasing numbers of two income households in a society. An economic trend is an indicator that shows how a region or country is doing financially.

The primary benefit brought from restructuring is cost reduction. Cost reduction is to be understood as the achievement of real and permanent reduction in the unit cost of goods manufactured or services rendered without impairing their suitability for the use intended or diminution in the quality of product.

Technological advancements can create Competitive advantage besides many other existing powerful advantages for the businesses. Competitive advantage results from matching core competencies to the opportunities.

WO strategies improve internal weaknesses by taking advantage of external opportunities. ST strategies use a firm's strengths to avoid or reduce the impact of external threats.

The sketch of the BCG matrix, Market share is the label of the horizontal axis. The Boston Consulting group's product portfolio matrix (BCG matrix) is designed to help with long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue or develop products.

The sketch of the BCG matrix, Industry growth rate is the label of the vertical axis. BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis.

An activity map is used to identify and understand strategic capability by mapping how the different activities of an organisation are linked together. An activity map is a diagnostic tool to identify your organisations competitive advantage. It connects your organisation's value proposition to the activities of your organisation that enable you to deliver this value proposition better than any competitors.

Industry/sector benchmarking compares Organisational performance between firms/public sector organisations in the same industry or sector. Competitive or Industry/sector benchmarking enables an organization to compare its performance with competitors trading in the same industry or sector. Functional or external benchmarking involves comparing your business activities with those of companies from other industries/sectors with similar processes.

Reg corporate strategies are not concerned with how the organization is going to compete in a specific business or industry.

Retrenchment can entail selling off land and buildings to raise needed cash, pruning product lines, closing marginal businesses, closing obsolete factories, automating processes, reducing the number of employees, and instituting expense control systems