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Strategic Management Practice Test: Evaluating a Company’s Resources and Competitive Position

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Strategic Management Practice Test: Evaluating a Company’s Resources and Competitive Position

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1. Determining whether a company's prices and costs are competitive

All of these.requires looking at the costs of a company’s competitively relevant suppliers and forward channel allies (distributors/dealers).typically involves the use of activity-based cost accounting.requires considering the costs of a company’s internally performed activities. involves the use of benchmarking the costs in a company’s value chain system (the costs of its suppliers, its internally performed activities, the costs of its distributors/dealers) against the costs of the value chain systems employed by rival firms.

2. Which of the following is not a component of evaluating a company’s resources and competitive position?

Scanning the environment to determine a company's best and most profitable customersPinpointing what strategic issues and problems merit front-burner management attentionEvaluating whether the company is competitively stronger or weaker than key rivalsEvaluating how well the present strategy is workingAssessing whether the company's costs and prices are competitive

3. Which of the following is not an option for remedying a supplier-related cost disadvantage?

Switch to lower priced substitute inputs.Integrate backward into the business of high-cost suppliers in an effort to reduce the costs of the items being purchasedPersuade forward channel allies to implement best practicesCollaborate closely with suppliers to identify mutual cost-saving opportunitiesNegotiate more favorable prices with suppliers

4. The spotlight in analyzing a company’s resources, internal circumstances, and competitiveness includes such questions/concerns as

whether the company's present strategy is better than the strategies of its closest rivals based on such performance measures as earnings per share, ROE, dividend payout ratio, and average annual increase in the common stock price.what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.what are the company’s resource strengths and weaknesses and its external opportunities and threats.whether the company's key success factors are more dominant than the key success factors of close rivals.whether the company has the industry's most efficient and effective value chain.

5. Activity-based cost accounting is used to

determine the costs of each strategic action a company initiates.benchmark the costs of primary value chain activities against the costs of the support value chain activities.determine whether the value chains of rival companies are similar or different.None of the above accurately describes what activity-based costing is about. determine the costs of each primary and support activity comprising a company’s value chain and thereby reveal the nature and make-up of a company’s internal cost structure.

6. Which of the following is not accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention?

It entails drawing on the results and conclusions from evaluating the company’s own resources and competitive positionIt entails drawing upon the results and conclusions from analyzing the company’s external environmentIt entails developing a “worry list” of “how to…,” “whether to….,” and “what to do about…..”Developing a list of what issues and problems that managements needs to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the company’s position and prospects.Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company’s internal and external environment.

7. To build a competitive advantage by out-managing rivals in performing value chain activities, a company must

position itself in the industry’s more favorably situated strategic group.develop resources strengths that will enable it to pursue the industry's most attractive opportunities.eliminate its resource weaknesses. outsource most all of its value chain activities to world-class vendors and suppliers.develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage.

8. Which of the following is not an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)?

Shifting to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outletsInsisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house, and those performed by distributors-dealersWorking closely with forward channel allies to identify win-win opportunities to reduce costsPressuring distributors-dealers and other forward channel allies to reduce their costs and markups so as to make the final price to buyers more competitive with the prices of rivalsTrying to make up the difference by cutting costs earlier in the value chain

9. 54. Identifying the primary and secondary activities that comprise a company’s value chain"

is called resource value analysis. is called benchmarking.is a first step in understanding a company’s cost structure (since each activity in the value chain gives rise to costs).indicates whether a company’s resource strengths will ultimately translate into greater value for shareholders.reveals whether a company’s resource strengths are well-matched to the industry's key success factors.

10. The best quantitative evidence of whether a company's present strategy is working well is

whether the company has more competitive assets than it does competitive liabilities.whether the company is in the industry's best strategic group.whether the company is in the Fortune 500. whether the company has a shorter value chain than close rivals.the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

11. Identifying the strategic issues a company faces and compiling a “worry list” of problems and roadblocks is an important component of company situation analysis because

without a precise fix on what problems/issues a company confronts, managers cannot know what the industry’s key success factors are.these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue.the “worry list” helps company managers clarify their thinking about how best to modify the company’s value chain.without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark.the “worry list” sets the management agenda for taking actions to improve the company’s performance and business outlook.

12. The value of doing competitive strength assessment is to

determine how competitively powerful the company's core competencies are.learn whether a company has a distinctive competence.learn if the company's market opportunities are better than those of its rivals.learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals.determine whether a company's resource strengths are sufficient to allow it to earn bigger profits than rivals.

13. A company's resource strengths are important because

they provide extra muscle in helping lengthen the company’s value chain.they provide extra organizational muscle in turning a core competence into a key success factor.they give it competitive protection against the industry's driving forces.they represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace.they pave the way for establishing a low-cost advantage over rivals.

14. One of the lessons of SWOT analysis is that a company's strategy should

All of these.be aimed at those market opportunities that offer the best potential for both profitable growth and competitive advantage.be grounded in its resource strengths and capabilities.seek to defend against threats to the company’s future profitability.generally not place heavy demands on areas where company resources are weak or unproven.

15. Which of the following is not pertinent in identifying a company’s present strategy?

The company’s mission, strategic objectives, and financial objectivesManagement’s planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on)The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employingThe strategic role of its collaborative partnerships and strategic alliances with others Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions

16. For a company to translate its performance of value chain activities into competitive advantage, it must

have at least three distinctive competencies.have more core competencies than rivals.develop core competencies and maybe a distinctive competence over rivals and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities.have competencies that allow it to produce the highest quality product in the industry.have more competitive assets than competitive liabilities.

17. The options for remedying an internal cost disadvantage include

All of these.eliminating some cost-producing activities from the value chain, especially low value-added activities.investing in productivity-enhancing, cost-saving technological improvements.redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly.implementing the use of best practices, particularly for high-cost activities.

18. Which one of the following is an accurate interpretation of the scores that result from doing a competitive strength assessment?

High scores indicate which rivals are most vulnerable to competitive attack.High scores indicate that a company is a power-user of best practices while low scores signal minimal or ineffective adoption of best practices.The company with the lowest score has the lowest-cost value chain.High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores.The company with the lowest score has the strongest net competitive advantage over its rivals.

19. When a company is good at performing a particular internal activity, it is said to have

a company competence.a distinctive competence.a competitive advantage over rivals.a core competence.a competitive capability.

20. A weighted competitive strength assessment is generally analytically superior to an unweighted strength assessment because

it singles out which competitor has the most competitively potent core competencies.an unweighted ranking doesn't discriminate between companies with high and low market shares.a weighted ranking identifies which competitive advantages are most powerful.all of the various measures of competitive strength are not equally important.weighting each company’s overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive strength.

21. A company resource strength can concern

a skill, specialized expertise, or competitively important capability.competitively valuable alliances or cooperative ventures.an achievement or attribute that puts the company in a position of market advantage.valuable human assets and intellectual capital.All of these.

22. A core competence

adds to a company's arsenal of competitive capabilities and competitive assets and is a genuine resource strength.is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs.All of the above.is often grounded in cross-department combinations of knowledge and expertise.is typically knowledge-based, residing in a company's intellectual capital and not in its tangible physical assets on the balance sheet.

23. A company resource weakness or competitive deficiency

prevents a company from having a distinctive competence.causes the company to fall into a lower strategic group than it otherwise could compete in. usually stems from having a missing link or links in the industry value chain.represents a problem that needs to be turned into a strength because weaknesses prevent a firm from being a winner in the marketplace.is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace.

24. A company's strategic options for remedying cost disadvantages in internally performed value chain activities do not include

revamping its value chain to eliminate or bypass some cost-producing activities (particularly low value-added activities).switching to activity-based costing. implementing the use of best practices, particularly for high-cost activities.outsourcing the performance of high-cost activities to vendors that can perform them more cheaply.investing in productivity-enhancing, cost-saving technological improvements.

25. Which one of the following is not something that can be learned from doing a competitive strength assessment?

Whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (with the size of the advantage/disadvantage being indicated by the differences among the companies’ competitive strength scores)Which of the rated companies is competitively strongest and what size competitive advantage it enjoysThe factors on which a company is competitively strongest and weakest vis-à-vis key rivalsWhich rival company is competitively weakest and the areas where it is most vulnerable to competitive attackWhether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain

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25 Questions

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know? Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson© 2026 Fatskills.com

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
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Without work one finishes nothing. - Ralph Waldo Emerson
© 2026 Fatskills.com