Deck 10: Directions Methods

Question 1

Which of the following is considered to be a major disadvantage of internal development?

A) The firm can get exactly the result it wants without compromise.
B) The organisation shares all costs and risks.
C) In a rapidly changing environment it takes too much time to achieve.
D) It is difficult to achieve dramatic change from within.

Answer 1

C

Question 2

Which of the following criteria is likely to be a key determinant in your university's decision to launch a degree in E- business?

A) The risk associated with the proposal
B) Number of competitors offering similar programmes
C) Prevailing market conditions
D) Acceptability of the proposal to the department for education

Answer 2

C

Question 3

Which of the following are good reasons why an organisation may focus on organic development? Choose all that apply.

A) It maximises the need for short- term investment.
B) The organisation produces highly technical products.
C) It minimises disruption to existing activities.
D) It increases internal knowledge and capability development.

Answer 3

B, C, D

Question 4

Which of the following statements best defines market development?

A) The introduction of new products for existing customers to exploit customer loyalty
B) The use of existing products to enter new markets or new segments of existing markets
C) The growth of market share by intensive advertising and sales promotions
D) The emergence of new market segments that the firm might target if resources allow

Question 5

Which of the following is not involved when evaluating the acceptability of a strategic option?

A) The competitive advantage likely to be achieved by the strategy in terms of profitability, costs and benefits and impact on shareholder value
B) The ability of the organisation to secure the resources required to implement the strategy
C) The attractiveness of the strategy to the organisation's stakeholders
D) The degree of risk that the strategy involves in terms of the risk and the ability of the business to stand that risk

Question 6

Which of the following does not determine the feasibility of a strategy?

A) The competences and core competences required
B) The resource requirements of the strategy
C) The willingness of key shareholders to support the strategy
D) The organisational system requirements of the strategy

Question 7

Which of the following is not a technique for evaluating the risk associated with a strategy?

A) Simulation modelling
B) Scenario analysis
C) Profitability analysis
D) Sensitivity analysis

Question 8

Which of the following factors should be taken into account when evaluating the acceptability of a strategy?

A) The attractiveness of the strategy to the organisation's stakeholders
B) The degree of fit with the organisation's culture, structure and systems
C) The impact on strategic capability development
D) The match between the aims of the strategy and external trading conditions

Question 9

Which of the following is not a form of alliance?

A) Customer relationships
B) Network
C) Subcontracting
D) Franchising

Question 10

Which of the following issues would not be considered when evaluating the 'acceptability' of a strategic option?

A) Values and ethics
B) Competitor opinions
C) Risk
D) Financial returns

Question 11

Which of the following explains why related diversification is considered to involve a lower level of risk the unrelated diversification?

A) It achieves a more balanced portfolio.
B) It focuses on existing products and markets.
C) It utilises the skills of alliance partners.
D) It leverages existing strategic capability.

Question 12

When evaluating strategic options which of the following criteria would you not normally use?

A) Acceptability of the strategy
B) Feasibility of the strategy
C) Suitability of the strategy
D) Imitability of the strategy

Question 13

Which of the following stakeholders would you not expect to be involved in determining strategy for an NHS Trust?

A) Shareholders
B) Employees
C) Government
D) Customers

Question 14

Which of the following criteria do you think will be critical in determining whether a proposed merger goes ahead?

A) Suitability for prevailing environmental conditions
B) Acceptability of the deal to shareholders of the two companies
C) Feasibility in terms of available competencies
D) Acceptability of the deal to rivals of the two firms

Question 15

If an organisation's objective is to spread market portfolio by gaining a presence in foreign markets, which would be the most suitable of the following alternatives?

A) Forming a strategic alliance with a supplier abroad
B) Investing heavily in the development of a new product
C) Investing heavily in an advertising campaign on national television
D) Forming a strategic alliance with a distributor abroad

Question 16

When screening strategic options what does 'feasibility' relate to?

A) The likelihood of being able to 'sell' the strategy to shareholders
B) Whether the strategy is likely to achieve organisational objectives
C) The number of competitors serving the market already
D) Available resources and competencies

Question 17

Why is market penetration considered the least risky of the strategic directions?

A) The competition is known to the firm.
B) The business has knowledge of its existing markets and is selling a proven product.
C) The business has existing skills in developing new products for the market.
D) Mature markets exhibit little dynamic change.

Question 18

Which of the evaluation criteria listed below do you believe will have greatest importance for a medium sized firm seeking to grow in a dynamic industry?

A) Feasibility in terms of available resources and competencies
B) Suitability of the strategy for the situation facing the firm
C) Consistency with the organisation's mission and objectives
D) Acceptability to shareholders

Question 19

Which of the following is not typically provided by a franchiser to a franchisee?

A) Investment capital
B) Marketing
C) Products
D) Brand name

Question 20

Using the real- options approach what action would you recommend in relation to a project of low volatility where the value- to- cost was 0.5.

A) Never invest
B) Invest now
C) Probably never invest
D) Probably invest later

Question 21

In which of the following situations might diversification prove an appropriate strategy?

A) When the market is mature or existing products are at the end of their lifecycles.
B) When the product development of rivals is better than your own.
C) When market share is being lost to other firms in the sector.
D) When the market is experiencing high growth and an influx of new entrants.

Question 22

Which of the following factors does not explain why some organisations may be more willing to take risks than others?

A) The organisational culture
B) Competitive position
C) The leader of the organisation
D) The nature of the industries they are in

Question 23

Which of the following statements best defines product development?

A) The evolution of products supplied by an industry over time
B) The development of the underlying technologies used in the products the firm sells
C) R&D activity to generate possible new products for launch if sales of existing ones decline
D) The development of new products to sell in existing markets

Question 24

Which of the following is not an example of market development?

A) Dell enters a previously untapped segment with a selection of products from its existing portfolio.
B) Sony begins exporting Play Station 2 to North Korea.
C) Tesco opens ten new stores in Germany.
D) Jaguar launches the X Type or 'baby Jag'.

Question 25

In evaluating strategic options, what is the purpose of the 'suitability' test?

A) To determine if the strategic option is appropriate for the circumstances facing the organisation.
B) To determine if the organisation has the resources needed to implement the strategy.
C) To determine if the riskiness of the strategy matches what is acceptable to the organisation.
D) To determine if the strategic option suits the management style of the organisation.

Question 26

Which technique assesses the extent to which the success of a preferred strategy depends on key assumptions which underlie the strategy?

A) How- much analysis
B) Liquidity testing
C) Cash- flow analysis
D) Sensitivity analysis

Question 27

Which of the following does not help explain how Amazon.com was able to maintain its growth strategy, even though it took a long time before it made a profit?

A) The company was able to build its technical competencies and brand effectively.
B) The strategy proved suitable given growth of the Internet.
C) Amazon.com was able to raise large amounts of money from share issues to finance its growth.
D) The macroenvironment was very turbulent.

Question 28

Which of the following evaluation tools is most suited to assessing strategic options against a list of key factors, eliminating certain options until a preferred option emerges?

A) TOWS
B) Decision tree
C) Scenarios
D) Ranking strategic options

Question 29

Which of the following financial methods most easily shows whether a company's cumulative cash flow over a given period is likely to exceed the funds invested?

A) Payback period
B) Discounted cash flow
C) Non- discounted cash flow
D) Return on capital employed

Question 30

Which of the following is a method of strategy development?

A) Diversification
B) Market penetration
C) Product development
D) Internal development

Question 31

Which of the statements below relates to the suitability criterion for evaluating strategic option evaluation?

A) Entering into a price war with a cash rich rival will be very expensive.
B) Embarking on a strategy that will depress profits for the next three years may provoke shareholders criticism.
C) Investing in an expensive new design system requiring risky sources of funding
D) Investing in new production capacity is not a good idea with a recession forecast.

Question 32

Which of the following is not an advantage of internal development?

A) It is a quick means of adding new organisational competencies.
B) A slower pace of change means less disruption to the business.
C) The development is funded from retained profits so is less risky.
D) Greater control over the development process

Question 33

Which of the following is not a disadvantage of external methods of development?

A) New skills and competencies can be obtained quickly.
B) Cultural differences leading to conflict over methods of working
C) Potential conflict of objectives between partner organisations
D) The high cost of mergers and acquisitions

Question 34

Which of the following would a market penetration strategy not involve?

A) Efficiency gains and cost reductions
B) Improved service or quality to improve the reputation of the organisation and differentiate it
C) Improving existing core competencies or building new ones.
D) Existing core competencies
E) Exporting to increase sales

Question 35

In developing new directions for strategy development why may it be necessary to develop new capabilities?

A) New capabilities may be needed to operate in new markets or to develop new products.
B) The HR manager introduces a new training programme.
C) Existing capabilities are already best practice in the industry.
D) The organisation has achieved 'lock- in'.

Question 36

What is the TOWS matrix?

A) An upside down SWOT analysis
B) A matrix assessing Time versus Opportunity and Willingness versus Strength
C) A matrix assessing Technology, Organisation, Work processes and Systems
D) A way of identifying strategic options addressing different combinations of internal factors(strengths and weaknesses) and external factors (opportunities and threats)

Question 37

The UK Competition Commission blocking a proposed merger between two mobile telephone companies would be an example of which evaluation criteria determining strategic choice?

A) Feasibility
B) Acceptability
C) Suitability

Question 38

On what grounds might the Competition Commission block a merger or acquisition?

A) It will result in job losses.
B) It creates very high fees for advisors.
C) It is damaging to consumer interests.
D) Unacceptably high pay- offs to managers

Question 39

How does a joint venture differ from a strategic alliance?

A) A joint venture is where two organisations act as venture capitalists to fund the development of a third organisation, whereas an alliance involves contributing expertise rather than money.
B) The two terms are interchangeable and both describe collaboration between two or more organisations.
C) A joint venture is when two or more organisations set up a new enterprise, whereas a strategic alliance is a temporary collaboration to achieve a shared goal.
D) A joint venture is where two companies own equal shares in a third, whereas a strategic alliance is where one of them is a junior partner, owning less than an equal share.

Question 40

Which of the following factors might explain why an industry experiences a rash of mergers and acquisitions?

A) High profitability
B) High growth
C) Falling profitability
D) Innovation

Question 41

Strategic choices involve decisions about corporate strategy, business strategy and the efficient management of ongoing operations.

Question 42

Risk concerns the probability and consequences of the the failure of a strategy.

Question 43

A strategic alliance is where two or more organisations share resources and activities to pursue a strategy.

Question 44

Assessing feasibility will employ techniques that allow comparison of the requirements of the strategy in terms of resources, competencies and systems and the extent to which the organisation already meets the requirements and the ease with which it can meet them in the future.

Question 45

In a situation where a market is declining, consolidation may involve which of the following?

A) Entry into new markets
B) Withdrawal
C) Related diversification
D) Building capacity

Question 46

Which of the following characteristics do you not associate with product development strategy?

A) It aims to attract new customers and to increase market share.
B) It is based upon knowledge of existing markets and customer needs.
C) It is based on some existing strategies and competencies.
D) It is the most risky of the strategic directions.

Question 47

In dynamic high technology industries, such as electronics and computing, suitability criteria are likely to assume greater importance as choosing the right strategy for the changing environment becomes more critical.

Question 48

Which criteria do you think take precedence in strategy selection by political parties?

A) Costs to the taxpayer
B) Acceptability of the strategy to stakeholders
C) Feasibility of the strategy in terms of resources and competencies
D) Financial returns to the party

Question 49

Which of the following defines a market penetration strategy?

A) Entering new markets and segments with existing products
B) Developing new products for sale in existing markets
C) Attempting to increase share in existing markets with existing products
D) Developing new products to sell in new markets

Question 50

Sensitivity analysis is sometimes referred to as 'so what?' analysis.