COM Strategic Planning & Analysis 3 — Questions and Answers
Question 1: Which competitive strategy focuses on offering the lowest price in the market by minimizing operational costs?
- Differentiation strategy
- Focus strategy
- Cost leadership strategy (Correct answer)
- Market penetration strategy
Correct answer: Cost leadership strategy
Cost leadership strategy aims to become the lowest-cost producer in an industry, enabling competitive pricing while maintaining margins.
Question 2: An operations manager reviewing the external environment would use PESTLE analysis to examine:
- Internal process efficiency metrics
- Political, Economic, Social, Technological, Legal, and Environmental factors (Correct answer)
- Product quality defect rates
- Employee performance and retention
Correct answer: Political, Economic, Social, Technological, Legal, and Environmental factors
PESTLE analysis scans the macro-environment across six dimensions to identify external opportunities and threats.
Question 3: In the context of strategic planning, 'core competencies' refer to:
- Basic regulatory compliance requirements
- Unique capabilities that provide competitive advantage and are hard to imitate (Correct answer)
- Standard operating procedures for routine tasks
- Minimum skill requirements for frontline employees
Correct answer: Unique capabilities that provide competitive advantage and are hard to imitate
Core competencies are distinctive strengths deeply embedded in the organization that competitors cannot easily replicate.
Question 4: A company implementing an Ansoff Matrix chooses 'market development' when it:
- Sells existing products to new markets or customer segments (Correct answer)
- Develops new products for existing markets
- Diversifies into entirely new industries
- Increases market share in current markets with existing products
Correct answer: Sells existing products to new markets or customer segments
Market development means taking existing products into new geographic or demographic markets to drive growth.
Question 5: Which planning horizon is typically associated with operational planning as opposed to strategic planning?
- 10 to 20 years
- 5 to 10 years
- 3 to 5 years
- Less than 1 year (Correct answer)
Correct answer: Less than 1 year
Operational planning typically covers short-term horizons (weeks to one year), while strategic planning spans three to five or more years.
Question 6: A 'first-mover advantage' in strategic planning means:
- Being the last company to enter a market after risks are minimized
- Gaining a competitive edge by being first to enter a new market or adopt new technology (Correct answer)
- Moving production facilities closer to customers first
- Completing the annual planning cycle before competitors
Correct answer: Gaining a competitive edge by being first to enter a new market or adopt new technology
First-mover advantage allows a company to establish brand recognition, customer loyalty, and market share before competitors enter.
Question 7: Which financial metric is most commonly used to evaluate the attractiveness of a strategic investment during analysis?
- Gross margin percentage
- Return on Investment (ROI) (Correct answer)
- Employee turnover rate
- Inventory days on hand
Correct answer: Return on Investment (ROI)
ROI measures the profitability of an investment relative to its cost, making it a standard metric for evaluating strategic options.
COM Strategic Planning & Analysis 3
Which competitive strategy focuses on offering the lowest price in the market by minimizing operational costs?