BEC Strategic Planning and Risk Management 1 — Questions and Answers
Question 1: A SWOT analysis evaluates a company's:
- Strengths, Weaknesses, Opportunities, and Threats (Correct answer)
- Sales, Workflow, Operations, and Talent
- Strategy, Workforce, Objectives, and Targets
- Systems, Workflows, Outputs, and Timelines
Correct answer: Strengths, Weaknesses, Opportunities, and Threats
SWOT analysis is a strategic planning tool that assesses internal strengths and weaknesses alongside external opportunities and threats facing the organization.
Question 2: Porter's Five Forces model analyzes competitive intensity by examining:
- Rivalry, new entrant threat, substitutes, buyer power, and supplier power (Correct answer)
- Market share, revenue growth, profit margin, brand strength, and innovation rate
- Political, economic, social, technological, legal, and environmental factors
- Customer segments, value propositions, channels, revenue streams, and cost structure
Correct answer: Rivalry, new entrant threat, substitutes, buyer power, and supplier power
Porter's Five Forces framework assesses industry attractiveness through five competitive forces: competitive rivalry, threat of new entrants, threat of substitutes, bargaining power of buyers, and bargaining power of suppliers.
Question 3: Enterprise risk management (ERM) is best described as:
- A comprehensive framework for identifying, assessing, and managing risks across the entire organization (Correct answer)
- A system for managing only financial and accounting risks
- An insurance strategy to transfer all business risks externally
- A compliance program designed solely to meet regulatory requirements
Correct answer: A comprehensive framework for identifying, assessing, and managing risks across the entire organization
ERM is an integrated, organization-wide approach to risk management that addresses all categories of risk — strategic, operational, financial, and compliance — in a coordinated manner.
Question 4: A company pursuing a cost leadership strategy aims to:
- Achieve the lowest cost structure in its industry to offer competitive prices and earn above-average profits (Correct answer)
- Offer premium products at the highest prices in the market
- Focus on a narrow market segment with specialized offerings
- Grow through acquisitions of competitors and related businesses
Correct answer: Achieve the lowest cost structure in its industry to offer competitive prices and earn above-average profits
Cost leadership strategy, as defined by Porter, seeks to become the lowest-cost producer in an industry, enabling competitive pricing or higher margins than rivals.
Question 5: A key performance indicator (KPI) should be:
- Specific, measurable, and directly tied to strategic objectives (Correct answer)
- Set at levels that are always easily achievable to motivate employees
- Focused exclusively on financial metrics such as revenue and profit
- Reviewed annually at the end of the fiscal year only
Correct answer: Specific, measurable, and directly tied to strategic objectives
Effective KPIs are specific, measurable, actionable metrics that are directly linked to strategic goals and reviewed regularly to track progress and drive accountability.
Question 6: The risk response strategy of 'risk avoidance' involves:
- Eliminating the risk by not undertaking the activity that creates it (Correct answer)
- Purchasing insurance to transfer financial consequences to a third party
- Accepting the risk and monitoring it without taking proactive action
- Implementing controls to reduce the probability or impact of the risk
Correct answer: Eliminating the risk by not undertaking the activity that creates it
Risk avoidance eliminates a risk entirely by choosing not to engage in the activity that generates it, often by canceling a project, exiting a market, or changing a business process.
BEC Strategic Planning and Risk Management 1
A SWOT analysis evaluates a company's: