Strategic Management Practice Test: Other Important Strategy Choices | Practice Test / Quiz / MCQs

1. The central strategy-making challenge in a turbulent market environment is

how often to change the company's business model without impairing profitability. deciding when to cut prices versus when to improve product features and performance.remaining the industry's first-mover.building stronger supply chain alliances than rivals.managing change.

2. A blue ocean strategy

involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.involves a preemptive strike to secure an advantageous position in a fast-growing market segment.works best when a company is the industry’s low-cost leader.involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.is an offensive attack used by a market leader to steal customers away from unsuspecting smaller rivals.

3. A slow-exit type of end-game strategy involves

withdrawing, one by one, from the various market segments in which the firm competes and then selling the business to the buyer offering the highest price.a gradual phasing down of operations coupled with an objective of generating the greatest possible harvest of cash from the business for as long as possible.pruning the product line down to a few select products which the firm can still market profitably for a few more years, then when they begin to decline selling out to the highest bidder. retreating to a market niche which the firm can defend for a few years.selling off assets gradually and liquidating the business.

4. In trying to deal with a turbulent, fast-changing market, a company's three strategic options are

to pursue short-term profitability, intermediate-term profitability, or long-term profitability.to pursue low-cost, differentiation, or best-cost strategies.to be a first-mover, a fast follower, or a slow-mover?whichever is most expedient.to react to change, to anticipate change, and/or to try to lead change.play offense, play defense, or utilize focus strategies to compete in those market segments where change occurs at a more leisurely pace.

5. Which of the following does not generally account for why the supply side of an industry may be fragmented and contain thousands of companies?

A condition where most all competitors have, for one reason or another, chosen to pursue focus and market niche strategiesThe scope of the geographic market for the industry's product or service is transitioning from national to global, putting companies in more and more countries in the same competitive arena Buyer preferences and requirements are so diverse that very large numbers of firms can easily coexist trying to accommodate differing buyer tastes, expectations, and pocketbooksAn absence of scale economies permits small companies to compete on an equal cost footing with larger firmsLow entry barriers that permit small firms to enter cheaply and quickly

6. The typical strategic mistakes companies can make during the transition from fairly rapid growth to industry maturity include

sacrificing long-term competitive position for short-term profits; outsourcing too many value chain activities to allies and partners, and not pursuing aggressive acquisition of weaker rival firms.pursuing a low-cost leadership strategy; spending too little on marketing and advertising efforts; and putting too much emphasis on new product R&D and product innovation.pursuing a differentiation strategy instead of a low-cost strategy; not capitalizing on economies of scale; and failing to adequately broaden the product line.merging with weaker rather than stronger rivals; failing to pursue product differentiation; and abandoning strategic alliances with outsiders.steering a middle course between low-cost, differentiation, and focusing; being slow to respond to stiffening competition; and overexpanding in the face of slowing growth.

7. A company that decides to stick with a stagnant or declining industry

may be able to grow and prosper if market demand decays very slowly and it has the competitive capabilities to take market share away from weaker competitors.is doomed to have declining revenues and profits.is well-advised to revamp its value chain to achieve strong product differentiation.may have a promising future if it is the industry’s low-cost leader and has deep financial pockets to withstand bitter price wars and lots of industry-wide overcapacity.may still be successful if it aggressively expands into the markets of more and more foreign countries using a global differentiation strategy.

8. To be successful in emerging industries, companies usually have to fashion a strategy that includes such strategic elements as

not cutting prices until buyer demand really mushrooms and being a late-mover in introducing new products (so as to avoid the costs and risks of introducing something that turns out to be a bust in the marketplace). pushing hard to perfect the technology, improve product quality, and develop additional attractive performance features.avoiding the “first mover disadvantages” associated with making early commitments to alternative technologies, wider product selection, different styling, or new distribution channels.charging first-time buyers a premium price (to help grow revenues quickly) and being a technological follower (so as to conserve scarce financial resources).building core competencies and competitive capabilities rapidly so as to avoid having to enter into strategic alliances and partnerships and thus share the firm's potential long-term profitability with outsiders.

9. Which of the following are commonly encountered types of market conditions that must be considered by strategy-makers?

Entrepreneurial industries, change dominant markets, and resource based industries.Hostile markets, competitive markets, oligopolies, and monopolies.Lowe cost markets, differentiation markets, best cost markets, and focused industries.Emerging markets, mature markets, fragmented markets, and turbulent markets.Moderately competitive industries, fiercely competitive industries, and weakly competitive industries.

10. A strategic alliance

is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence.is a collaborative arrangement where companies join forces to defeat mutual competitive rivals.involves two or more companies joining forces to pursue vertical integration.is usually a cheaper and more effective way for companies to join forces than is merger. is a partnership between two companies that is typically intended to eliminate the need to engage in outsourcing.

11. Entering into strategic alliances and collaborative partnerships can be competitively valuable because

cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology.working closely with outsiders is essential in developing new technologies and new products in virtually every industry.they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations.they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages.they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

12. Commonly encountered market conditions that must be considered when choosing among strategic options include:

All of the above.Rapidly growing markets.Stagnant or declining industries.Mature, slow-growth markets.Fragmented markets comprised of a large number of relatively small sellers.

13. Which one of the following is not a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products?

To improve supply chain efficiencyTo expedite the development of promising new technologies or productsTo enable greater opportunities for employee advancementTo improve access to new marketsTo overcome disadvantages of small production volumes that limit scale economies and low production cots

14. Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies?

Whether to employ a market share leadership strategyWhether to bolster the company’s market position and competitiveness via acquisition or merger Whether to outsource certain value chain activitiesWhether to integrate forward or backward into more stages of the industry value chainWhether to enter into strategic alliances or collaborative partnerships

15. Outsourcing strategies

carry the substantial risk of making a company overly dependent on its suppliers.are nearly always a more attractive strategic option than merger and acquisition strategies.involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.carry the substantial risk of raising a company’s costs.increase a company's risk exposure to changing technology and/or changing buyer preferences.

16. Relying on outsiders to perform certain value chain activities offers such strategic advantages as

improving the company's ability to innovate by allying with “best-in-world” suppliers.obtaining higher quality and/or cheaper components or services.All of the above.reducing the company’s risk exposure to changing technology and/or changing buyer preferences.increasing the firm's ability to assemble diverse kinds of expertise speedily and efficiently.

17. Which of the following is not a potential advantage of backward vertical integration?

Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity)Reduced risks of disruptions in obtaining crucial components or support servicesReduced costsAdding to a company’s differentiation capabilities and perhaps achieving a differentiation-based competitive advantageReduced business risk because of controlling a bigger portion of the overall industry value chain

18. The strategic impetus for forward vertical integration is to

control price at the retail level.build a core competence in mass merchandising.gain better access to end users and better market visibilitybypass distributors-dealers and sell direct to consumers at the company’s Web site.achieve the same scale economies as wholesale distributors and/or retail dealers.

19. Which one of the following statements does not represent one of the typical fundamental changes in an industry as it approaches maturity?

Industry profitability falls temporarily or permanentlyFirms encounter growing difficulty in coming up with new product innovations and developing new uses and applications for the product Increased competitive emphasis is placed on lowering costs and improving serviceNew scale economies develop and overall costs per unit produced and sold drop significantlyInternational competition increases

20. Being first to initiate a particular strategic move can have a high payoff when

pioneering helps build up a firm's image and reputation with buyers.moving first can result in a cost advantage over rivals.moving first can constitute a preemptive strike, making imitation extra hard or unlikely.first-time buyers remain strongly loyal to pioneering firms in making repeat purchases.All of these.

21. An industry is said to be fragmented when

the industry value chain is divided into 15 or more distinctly different stages.demand for the product is scattered over many different country markets.it contains an unusually large number of different market segments and distinct buyer groups.the annual number of buyer-seller transactions is in the millions (or higher).the supply side of the market is populated by hundreds, perhaps thousands of sellers, no one of which has a substantial share of total industry sales.

22. Strategic alliances

are the cheapest means of developing new technologies and getting new products to market quickly.are collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes.are best used to insulate a company from the impact of the five competitive forces.are a proven means of reducing the costs of performing value chain activities.help insulate a firm from the adverse impacts of industry driving forces.

23. The two best reasons for investing company resources in vertical integration (either forward or backward) are to

gain a first mover advantage over rivals in revamping the industry value chain.achieve product differentiation and/or lengthen the company’s value chain to include more activities performed in-house and thereby gain greater ability to reduce internal operating costs.broaden the firm's product line and/or avoid the need for outsourcing.expand into foreign markets and/or control more of the industry value chain.strengthen the company's competitive position and/or boost its profitability.

24. Promising strategic options for companies competing in a fragmented industry include

becoming a best-cost provider and pursuing a multicountry strategy to achieve above–average growth.striving to become the industry’s low-cost leader.constructing and operating customized facilities at many different locations so as to match local buyer expectations and varying market conditions.specializing by product type or by customer type, becoming a low-cost operator, and focusing on a limited geographic area.using a broad differentiation strategy to set the company’s product offering well apart from rivals and striving to sell in an ever larger number of country markets.

25. First-mover disadvantages (or late-mover advantage) arise when

rapid market evolution gives fast-followers an opening to leapfrog the pioneer with next-generation products of their own.the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover.All of these.the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products.the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer.

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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 |

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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