Chapter 4: Introduction to business strategy

1. In the home computer market, laptop computers are an example of a:

A. product form
B. Brand
C. product class
D. generic product

2. Masum works for Rupsha Ltd. Masum’s manager has asked him to undertake an internal analysis
of the company as part of a strategic planning review.

Requirement

Which three of the following analytical techniques will be useful in this context?

A. Value chain analysis

B. Porter’s five forces analysis
C. The BCG Matrix
D. PESTEL analysis
E. Analysis of distinctive competencies
F. Ansoff’s Matrix

3. Salma is carrying out a PESTEL analysis for her employer, Padma Ltd. During her research
Salma has realised the ageing of the Bangladesh’s population is a potentially important strategic
issue for the company. In which section of her analysis should Salma record this matter?

A. P
B. S
C. T
D. L

4. The Marketing Director of Padma Ltd. is formulating whether one of the company’s products,
which is aimed at a small niche market, should be differentiated from its close competitors. At
this stage she is unsure how such differentiation would be achieved in practice. The decision on
whether to differentiate or not is a decision concerning the company’s:

A. functional strategy
B. business strategy
C. competitive strategy
D. product/market strategy

5. Padma Ltd. has entered a market and achieved a reasonably dominant position in just under a
year. Padma Ltd. is pleased that the threat of new entrants into the market seems to be relatively
low.

Requirement

Which of the following factors is most likely to have contributed towards this situation?
A. Low initial capital cost
B. A customer base consisting of a few large customers
C. A highly competitive supplier market
D. The market is for services rather than manufacturing

6. In the past a major stakeholder in Padma Ltd. has exerted considerable influence over the
environmental impact of the company’s manufacturing operations. Specifically, a production
facility was temporarily closed down for three weeks as a result of one recent campaign
orchestrated by this stakeholder. The stakeholder writes regularly to the company’s chairman
about a range of environmental issues involving the company.

Requirement
In terms of Medlow’s matrix which of the following strategies should Padma Ltd. pursue for this
stakeholder?

A. Keep this stakeholder informed at all times about the company

B. Keep this stakeholder satisfied with regard to the company and its strategies
C. Take minimum effort with regard to this stakeholder as he always complains
D. Treat this stakeholder as a key player when formulating future strategies

7. Padma Ltd. provides exclusive scuba-diving holidays for people over 60 years of age. In terms of
Michael Porter’s generic competitive strategies, this represents a strategy of:

A. Differentiation
B. cost leadership
C. cost focus
D. differentiation focus

8. Matin is a Product Manager with Mango Ltd. He is preparing an assessment for the company’s
directors of each of the company’s product lines. In preparing his assessment, Matin is making
use of the BCG matrix. He has classified one particular product, the Pluton, as having a low
market share in a high growth market. Matin should recommend to the directors that, with regard
to the Pluton, the company should pursue:

A. either a hold or a divest strategy

B. either a hold or a harvest strategy
C. either a build or a harvest strategy
D. a build strategy

9. Mango Ltd manufactures washing machines. It has a 20% share of the Local market. The
company wants to increase its revenues so has decided to add tumble dryers to its range of
products. In terms of Ansoff’s matrix, this represents a growth strategy of:

A. market penetration
B. market development
C. product development
D. diversification

10. The board of directors of Mango Ltd is evaluating whether to pursue a new strategic option for a
major strategic business unit. The final decision should be judged against which three of the
following criteria?
 A. A cost of entry test
B. An acceptability test
C. A suitability test
D. A feasibility test
E. An attractiveness test
F. A payoffs test

11. Which of the following statements about a product life cycle diagram is true?

A. The life cycle diagram predicts when the decline phase will start
B. Sales growth always follows the introduction of a product
C. Profits are normally highest during the maturity phase
D. The mature phase usually lasts about 10 years

12. Millward Ltd sells garden sheds. It has a number of local competitors who regularly use price
cuts and other sales promotions to win business. Its competitors have noticed that Millward Ltd
responds to price cuts by matching prices and then launching a leafleting campaign to houses in
the local area. In terms of Philip Kotler’s competitor reaction profiles, Millward Ltd is:

A. laid back
B. a tiger
C. selective
D. stochastic

13. Manson Ltd aims to pursue a differentiation strategy for its Partex sliding-door product.

Requirement
Which three of the following will form part of this strategy?

A. Action to minimise labour and overhead costs

B. Action to improve productivity
C. Improved product features and benefits
D. Promotion of the Partex brand
E. Use of higher quality materials in the manufacturing process

14. Glenway Ltd sells package holidays from a chain of retail outlets. Brantham Ltd sells new and
used cars from a chain of car dealerships. Glenway Ltd and Brantham Ltd are:

A. brand competitors
B. industry competitors
C. generic competitors
D. form competitors

15. Hairdooz Ltd operates a large chain of hairdressing salons. Peter, a Management Consultant, has
undertaken a review of the company’s activities in providing its services to customers. In terms of
Porter’s Value Chain, Peter has been asked to focus on the primary activities of the company.
Peter will, therefore, be analyzing which three of the following?

A. Inbound logistics
B. Procurement
C. Firm infrastructure
D. Marketing and sales
E. Service

16. ABC ltd. operates in the financial services sector. Its marketing director is developing the firm’s
marketing plan. An external marketing consultant has recommended that the PESTEL framework
should be used as part of this process.

Requirement

Which of the following statements correctly describes the reason why the PESTEL framework might
prove useful?

A. It will identify ABC ltd.’s strengths and weaknesses

B. It will allow a detailed analysis of the structure of the financial services industry
C. It will act as a detailed checklist to assist in understanding the different influences in ABC ltd.’s
environment
D. It will help to identify the relative levels of interest and power of Simian plc’s stakeholders

17. ABC ltd. is a large supermarket chain which manages all its distribution internally. Each of the
120 stores is a profit centre. As part of its strategy development process, Asif plc has identified
the following two strategies.

Strategy (1): Offer its distribution capability from warehouse to stores as a service to other
supermarkets
Strategy (2): Train some store staff in the handling of personal safety issues

Requirement
Identify whether each strategy is a corporate strategy.

A. Strategy (1): A corporate strategy; Strategy (2): Not a corporate strategy

B. Strategy (1): Not a corporate strategy; Strategy (2): Not a corporate strategy
C. Strategy (1): A corporate strategy; Strategy (2): A corporate strategy
D. Strategy (1): Not a corporate strategy; Strategy (2): A corporate strategy

18. The specialist services division of ABC ltd. uses highly-qualified professional staff to provide its
government-accredited service to its customers. The company has prepared a draft Five Forces
Analysis. The following two statements are included in the draft analysis:

Statement (1): Government subsidies for existing providers will be removed, so there will be
increased rivalry
Statement (2): Two key customers of the specialist service will merge, so there will be increased
rivalry

Requirement
Identify whether each statement is accurate.

A. Statement (1) accurate; Statement (2) inaccurate

B. Statement (1) inaccurate; Statement (2) inaccurate
C. Statement (1) accurate; Statement (2) accurate
D. Statement (1) inaccurate; Statement (2) accurate
19. Simone, the strategy director of Principle plc recently undertook a review of a number of the
company’s product lines using the BCG matrix to develop recommendations. For one particular
product, ZD737, the model recommended that a ‘harvest’ or a ‘hold’ strategy should be adopted.

Requirement
Which of the following did the BCG matrix classify the ZD737 as?

A. A dog
B. A question mark
C. A cash cow
D. A star