Strategic Management - Practice Test

[#221] Which of the following statements best describes scenario planning?

(A) Exploring future possibilities by looking at potential outcomes from particular causes and seeking to explain why things might occur

(B) Considering three likely scenarios for future developments, and devising a strategy according to the likeliest outcome

(C) Helping managers come to terms with the threats and opportunities within the company by devising a possible scenario to eliminate the threats and capitalize on the opportunities

(D) Planning the best way to secure the scenario outcome that would benefit the company most

Correct Answer

(A) Exploring future possibilities by looking at potential outcomes from particular causes and seeking to explain why things might occur

Explanation

Solution: Exploring future possibilities by looking at potential outcomes from particular causes and seeking to explain why things might occur best describes scenario planning. Scenario planning is making assumptions on what the future is going to be and how your business environment will change overtime inlight of that future. More precisely, Scenario planning is identifying a specific set of uncertainties, different “realities” of what might happen in the future of your business.

[#222] Managers should study international business because

(A) international business comprises a large and growing portion of the worlds total business

(B) global events and competition affect almost all companies

(C) a company operating internationally will engage in modes of business that differ from those it is accustomed to domestically

(D) all of the above

Correct Answer

(D) all of the above

Explanation

Solution: Managers should study international business because international business comprises a large and growing portion of the worlds total business, global events and competition affect almost all companies and a company operating internationally will engage in modes of business that differ from those it is accustomed to domestically

[#223] How is an organization most likely to secure and sustain a position of strength in its associated environment?

(A) By seeking to influence and manage their external environment

(B) By seeking to influence their competitors' environment

(C) By seeking to influence and manage their internal environment

(D) By seeking to restrict changes within their environment

Correct Answer

(A) By seeking to influence and manage their external environment

Explanation

Solution: An organization most likely to secure and sustain a position of strength in its associated environment by seeking to influence and manage their external environment. An external environment is composed of all the outside factors or influences that impact the operation of business. The business must act or react to keep up its flow of operations.

[#224] What would NOT be a reason for a company to engage in international business?

(A) To maximize competitive risk

(B) To acquire resources

(C) To expand sales

(D) To diversify sources of sales and supplies

Correct Answer

(A) To maximize competitive risk

Explanation

Solution: To maximize competitive risk would NOT be a reason for a company to engage in international business. International business encompasses all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across national boundaries.

[#225] Which of the following would not be considered a barrier to entry?

(A) High innovation

(B) Concentration of distribution channels

(C) Steep experience curves

(D) Concentration of suppliers

Correct Answer

(A) High innovation

Explanation

Solution: High innovation would not be considered a barrier to entry. Innovation is about being creative and original in your work and thinking.

Strategic Management - Study Mode

[#221] Which of the following statements best describes scenario planning?

Correct Answer

Explanation

[#222] Managers should study international business because

Correct Answer

Explanation

[#223] How is an organization most likely to secure and sustain a position of strength in its associated environment?

Correct Answer

Explanation

[#224] What would NOT be a reason for a company to engage in international business?

Correct Answer

Explanation

[#225] Which of the following would not be considered a barrier to entry?

Correct Answer

Explanation