MEM Strategic Management 2 — Questions and Answers
Question 1: Which strategic framework evaluates a firm's resources using the criteria of Value, Rarity, Imitability, and Organization?
- Porter's Five Forces
- VRIO framework (Correct answer)
- BCG Matrix
- Ansoff Matrix
Correct answer: VRIO framework
The VRIO framework assesses whether a firm's resources and capabilities can provide a sustained competitive advantage.
Question 2: In the context of corporate-level strategy, a company acquiring a supplier to control its input supply chain is an example of:
- Horizontal integration
- Backward vertical integration (Correct answer)
- Forward vertical integration
- Conglomerate diversification
Correct answer: Backward vertical integration
Backward vertical integration occurs when a company acquires or controls entities in its upstream supply chain.
Question 3: A 'first-mover advantage' in technology markets is BEST sustained through:
- Setting low initial prices
- Building switching costs and network effects (Correct answer)
- Avoiding patent filings to maintain secrecy
- Matching competitor product features
Correct answer: Building switching costs and network effects
Switching costs and network effects lock in early customers, making it costly or inconvenient for them to adopt competitor offerings.
Question 4: The concept of 'strategic intent' in an organization refers to:
- The annual operating plan approved by the board
- An ambitious long-term vision that stretches the organization beyond current capabilities (Correct answer)
- The documented risk tolerance of the executive team
- A competitor benchmarking report
Correct answer: An ambitious long-term vision that stretches the organization beyond current capabilities
Strategic intent, introduced by Hamel and Prahalad, describes a compelling aspirational goal that motivates organizational effort and innovation.
Question 5: When two engineering firms with complementary technologies form a joint venture, the PRIMARY strategic rationale is typically:
- Eliminating a competitor from the market
- Accessing resources and capabilities neither possesses alone (Correct answer)
- Reducing regulatory compliance burdens
- Increasing short-term quarterly earnings
Correct answer: Accessing resources and capabilities neither possesses alone
Joint ventures allow firms to combine complementary strengths, share risks, and enter markets or develop technologies that would be difficult to achieve independently.
Question 6: In a balanced scorecard, the 'learning and growth' perspective primarily measures:
- Customer satisfaction scores and retention rates
- Operational efficiency and defect rates
- Employee capabilities, information systems, and organizational culture (Correct answer)
- Revenue growth and return on invested capital
Correct answer: Employee capabilities, information systems, and organizational culture
The learning and growth perspective focuses on the intangible assets—human capital, information capital, and organizational capital—that enable strategy execution.
Question 7: A 'blue ocean strategy' is characterized by:
- Aggressive price undercutting in existing markets
- Creating uncontested market space by redefining industry boundaries (Correct answer)
- Maximizing market share in saturated competitive markets
- Forming defensive alliances against dominant incumbents
Correct answer: Creating uncontested market space by redefining industry boundaries
Blue ocean strategy, developed by Kim and Mauborgne, focuses on creating new demand in uncontested space rather than competing in existing 'red ocean' markets.
MEM Strategic Management 2
Which strategic framework evaluates a firm's resources using the criteria of Value, Rarity, Imitability, and Organization?