PRACTICE QUESTIONS

I - Define Strategic Management (STM): II - How STM is different from general management? -

III a - What is 'Strategic Plan?' b - And why

it is important?

IV - List four components of Strategic Plan and describe

each one briefly.

V a - Define the term "Competitive Advantage."

V b - And give an example for 'Competitive Advantage.'

VI - What are the three stages of Strategic Management Process?

VII - List four activities that are carried in the StrategyFormulation stage / Strategy Implementation stage/ and Strategy evaluation stage

VIII – Differentiate Strategy formulation from Strategy implementation

IX – Differentiate the Leadership firms from the Runner-up firms

X – What are the components of a mission statement

XI – Know how to write financial objective and strategic objective

XII – understand the difference between a vision statement and a mission statement

XIII – Learn how to locate the components of a mission statement in a given mission, for example: try to locate the components in the mission of “Toyota”

Once there were two company presidents who competed in the same industry. These two

presidents decided to go on a camping trip to discuss a possible merger. They hiked deep into the

woods. Suddenly, they came upon a bear that rose up on its hind legs and snarled. Instantly, the first

president took off his backpack and got out a pair of running shoes. The second president said, “Hey,

you can’t outrun that bear.” The first president responded, “Maybe I can’t outrun that bear, but I

surely can outrun you!”

This story captures the notion of what concept? Strategic management

The term strategic management in the textbook (David, F., Ali, a., and Al-Aali, A. (2011). Strategic

Management: Concepts and Cases. (Arab World Edition). Pearson: England.) is used synonymously

with (what) term Strategic planning.

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Strategic Management is all about gaining and maintaining (what?) competitive

advantage.

Strategists are the individuals who are most responsible for the success or failure of an

organization.

It should be noted that, in the Arab world, various firms do not engage in strategic planning. List

at least six reasons why some firms do no strategic Planning?

i. ____________________________________________

ii. ____________________________________________

iii. ____________________________________________

iv. ____________________________________________

v. ____________________________________________

vi. ____________________________________________

More and more firms believe that ethics training and an ethics culture create strategic

advantage. For example, in its manual of ethics the Savola Group in Saudi Arabia stresses several

in relation to outsiders. List, at least, two of them below:

__________________________________________

__________________________________________

Gordon Greenley of Aston Business School in the UK stated that strategic management offers

several benefits. List four benefits that strategic management offers to organizations:

__________________________________________

__________________________________________

__________________________________________

__________________________________________

Good business ethics is expected to be the prerequisite for good strategic management.

All firms have a strategy, even if it is informal, unstructured, and sporadic. True / False

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‘Environmental scanning’ is otherwise called as ‘Industry Analysis.’ True / False

In the Arab World, the following factors are true or false:

vii. Low rate of birth True / False

viii. Youth segment is one of the largest and fast growing True / False

ix. 80% of the population is under 25 years of age True / False

x. In the year 2050 = 25% population > 60 years or older True / False

Revolutionary technological changes and discoveries are having a dramatic impact on

organizations. Along these lines, what factor would be acting as a national and global economic

engine that is spurring productivity, a critical factor in a country’s ability to improve living

standards; and it is saving companies billions of dollars in distribution and transaction costs from

direct sales to self-service systems.

a. Attitude toward work

b. Internet

c. Global economy

d. recycling

Match the following:

1 Vision Statement A Firm’s strengths that cannot be 10

3

easily matched or imitated by

competitors

2 Mission Statement B One of the forces on the Five-forces

model

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3 Competitive Advantage C To identify opportunities and threat

4 Strategy Formulation D What do we want to become? 1

5 Benefit of Vision and Mission statements

E First stage of Strategic Management

Model

4

6 Concern for Public

Image

F What is our Business? 2

7 Effective Missions G Provides a basis for allocation of

resources

5

8 Purpose of External

Audit

H Unique feature / competence of a

firm

3

9 Rivalry among

competing firms

I Reflect future growth 7

10 Distinctive competence J One of the components of Mission statement

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Learn to draw the Strategic Management Model including the key stages with major processes

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Know how to draw diagram to portray the levels of strategies:

o a) For a Single Business b) For a Corporate Business or a Business Group.a....

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b..............

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Know how to draw the “Five Forces Model of Competition” of Michael Porter

Know how to draw the Porter’s Model of Five Generic Strategies – with the strategies listed

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Are there any problems with BCG Matrix Model, in measuring the strategic performance of an Organization? List at least five problems below: (to be handwritten)

a. Refer to SWOT Matrix and answer the following:

b. SO Strategies mean: use a firm’s internal strengths to take advantage of

external opportunities.

c. ST Strategies mean: use a firm’s strengths to avoid or reduce the impact

of external threats.

d. WO Strategies mean: improving internal weaknesses by taking advantage

of external opportunities.

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e. WT Strategies mean: defensive tactics directed at reducing internal

weakness and avoiding external threats.

Statement Your Answer

Strategy formulation requires coordination among a few individuals, but

strategy implementation requires coordination among many.

True / False

A vision statement is, in essence, a company's game plan. True / False

The final stage in strategic management is strategy implementation True / False

Strategy formulation, implementation and evaluation activities occur at

three hierarchical levels in a large diversified organization: corporate,

divisional and functional.

True / False

One of the fundamental strategy evaluation activities is reviewing external

and internal factors that are the bases for current strategies.

True / False

An objective, logical, systematic approach for making major decisions in an

organization is a way to describe the strategic-management process.

True / False

Strategists are usually found in higher levels of management and have

considerable authority for decision-making in the firm.

True / False

Strategic management is an attempt to organize qualitative and

quantitative information in a way that allows effective decisions to be

made under conditions of uncertainty.

True / False

Anything the firm does especially well compared to rival firms could be

considered a competitive advantage.

True / False

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By occasionally monitoring external events, companies should be able to

identify when change is required. True / Fals e

The middle manager is the most visible and critical strategic manager. True / False

A vision statement answers the question, "What is our business?" whereas

a mission statement answers, "What do we want to become?"

True / False

A clear mission statement describes the values and priorities of an

organization.

True / False

Strengths and weaknesses are determined relative to competitors. True / False

Objectives should be measurable, challenging, reasonable, consistent and

clear.

True / False

For the strategic planning process to be effective, organizations must

continually strengthen the "good ethics is good business" policy.

True / False

Identifying an organization's existing vision, mission, objectives and

strategies is the final step for the strategic management process.

True / False

Low-performing firms typically underestimate their competitor's strengths

and overestimate their own firm's strengths.

True / False

Application of the strategic-management process is typically more formal

in larger and well-established organizations.

True / False

Strategic objectives include larger market share, quicker on-time delivery

than rivals, quicker design-to-market times than rivals, lower costs than

rivals, and wider geographic coverage than rivals.

True / False

Market penetration, market development, and product development are

intensive strategies.

True / False

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An appropriate strategy when an organization has excess production

capacity is market development.

True / False

Product development is an appropriate strategy when an organization has

successful products that are in the maturity stage of the product life cycle.

True / False

A best-value strategy offers products or services to a wide range of

customers at the best price-value available on the market.

True / False

A low-cost focus strategy offers products or services to a small range of

customers at the lowest price available on the market.

True / False

Unlike strategy formulation, strategy implementation varies considerably

among different types and sizes of organizations.

True / False

Four types of resources that can be used to achieve desired objectives are

financial, physical, human and technological.

True / False

Adequate, timely feedback is important to effective strategy evaluation. True / False

Regardless of the size of the organization, a certain amount of

"management by wandering around" at all levels is essential to effective

strategy evaluation.

True / False

Corrective action in strategy evaluation is necessary to keep an

organization on track toward achieving stated objectives.

True / False

What can be defined as the art and science of formulating, implementing and evaluating cross-

functional decisions that enable an organization to achieve its objectives?

A) Strategy implementation

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B) Strategic management

C) Strategy formulation

D) Strategy evaluation

E) Strategic leading

During what stage of strategic management are a firm's specific internal strengths and

weaknesses determined?

A) Implementation

B) Formulation

C) Goal-setting

D) Evaluation

E) Feedback

An important activity in ________ is taking corrective action.

A) Strategy leadership

B) Strategy evaluation

C) Strategy implementation

D) Strategy formulation

E) all of the above

What step in the strategic development process involves mobilizing employees and managers

to put strategies into action?

A) Competitive advantage

B) Strategic advantage

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C) Implementing strategy

D) Strategy evaluation

E) Formulating strategy

Which phase of strategic management is called the action phase?

A) Strategy evaluation

B) Strategy formulation

C) Strategy implementation

D) Allocating resources

E) Measuring performance

Long-term objectives are needed at which level(s) in an organization?

A) Corporate

B) Functional

C) Divisional

D) All of the above

E) None of the above

Financial objectives involve all of the following except:

A) Higher dividends.

B) Larger market share.

C) Growth in revenues.

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D) A rising stock price.

E) Greater return on investment.

Microsoft opening its own retail stores is an example of which type of strategy?

A) Related diversification

B) Forward integration

C) Backward integration

D) Horizontal integration

E) Unrelated diversification

Cadbury PLC selling its Australian drinks business to Asahi Breweries Ltd. of Japan is an example

of which type of strategy?

A) Divestiture

B) Unrelated diversification

C) Related diversification

D) Retrenchment

E) Liquidation

Burger King opening its first restaurant in Japan is an example of which type of strategy?

A) Product development

B) Forward integration

C) Market development

D) Backward integration

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E) Horizontal integration

Web sites that sell products directly to consumers are examples of which type of strategy?

A) Conglomerate diversification

B) Backward integration

C) Forward integration

D) Product development

E) Horizontal integration

Which of these strategies is effective when the number of suppliers is small and the number of

competitors is large?

A) Concentric diversification

B) Conglomerate diversification

C) Backward integration

D) Horizontal diversification

E) Forward integration

Which strategy seeks to increase market share of present products or services in present

markets through greater marketing efforts?

A) Product development

B) Backward integration

C) Forward integration

D) Market development

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E) Market penetration

Smithfield Foods laying off 1,800 employees, closing 6 of its 40 plants, and cutting production by

10 percent in 2009 in efforts to stop the liquidity drain on the firm is an example of

A) Retrenchment.

B) Divestiture.

C) Backward integration.

D) Liquidation.

E) Forward integration.

Which strategy would be effective when the stockholders of a firm can minimize their losses by

selling the organization's assets?

A) Liquidation

B) Differentiation

C) Integration

D) Cost leadership

E) Diversification

Business ethics, _______, and sustainability issues are interrelated and impact all areas of the

comprehensive strategic-management model.

A) Social networking

B) Fiscal irresponsibility

C) Cultural indifference

D) Social responsibility

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E) None of the above

Bad ethics can _______ strategic plans

A) Derail only poorly-intentioned

B) Derail all but the best

C) Derail only ill-conceived

D) Derail even the best

E) Never affect

Firms should strive to engage in social activities that

A) Have economic benefits.

B) Garner goodwill only, not profits.

C) Are detrimental to economic growth.

D) Drain financial resources.

E) Have no economic benefits.

Communication between domestic headquarters and overseas operations is often made difficult

by

A) Variations in business practices.

B) National differences.

C) Cultural differences.

D) Geographic distance.

E) all of the above

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_______ is a process of doing business worldwide, so strategic decisions are made based on

global profitability of the firm rather than just domestic considerations.

A) Foreign business culture

B) Protectionism

C) Multinational Corporation

D) World recession

E) Globalization

Match the following:1 Cost leadership – Low Cost strategy A One of the stages in Strategic Management

process 10

2 Market penetration strategy B One of the strategies for Industry leaders 9

3 Liquidation strategy C One of the strategies for Weak Businesses 8

4 High quality provider strategy D One of the strategies for Runner-up firms 7

5 Outsourcing E One of the strategic management tools 6

6 Value Chain Analysis F One of the means of achieving strategies 5

7 Vacant-niche strategy G One of the operational strategies 4

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8 Offensive Turnaround strategy H One of the defensive strategies 3

9 Stay-on the offensive strategy I One of the Intensive strategies 2

10 Strategy evaluation J One of Porter’s Generic Strategies 1

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