1. What is evident when a company does something especially well in comparison to its competitors
A. Competitive objectives
B. Core capabilities Correct
C. Strategic liaisons
D. Urban location
Explanation
Core capabilities are the unique strengths, skills, resources, or processes that a company performs exceptionally well compared to competitors. These distinctive abilities (e.g., superior supply chain management, innovative product design, or exceptional customer service) give the company a competitive edge and are difficult for rivals to imitate quickly. When a company consistently outperforms others in a specific area, it demonstrates core capabilities. Competitive objectives (A) are goals or targets set to achieve advantage, not the actual superior performance itself. Strategic liaisons (C) refer to partnerships or alliances, not internal strengths. Urban location (D) is a geographic factor that may help some businesses but is not evidence of doing something especially well.
2. Which competitive force is reduced by the barriers provided by government policies, capital requirements, brand identification, and cost disadvantages
A. Threat of customer power
B. Threat of substitutes
C. Threat of new entrants Correct
D. Threat of supplier power
Explanation
In Porter’s Five Forces model, the threat of new entrants is reduced when high barriers to entry exist. Government policies (regulations, licenses), high capital requirements (expensive equipment or facilities), strong brand identification (customer loyalty), and cost disadvantages (economies of scale or proprietary technology) make it difficult and costly for new companies to enter the market successfully. These barriers protect existing firms from new competition. Threat of customer power (A) is about buyer bargaining power. Threat of substitutes (B) is about alternative products. Threat of supplier power (D) is about supplier bargaining power.
3. A company is attempting to be efficient by offering a no-frills product. What type of strategy is the company pursuing
A. Resource
B. Operational
C. Functional
D. Low-cost Correct
Explanation
A low-cost strategy focuses on becoming the lowest-cost producer in the industry while maintaining acceptable quality. Offering a no-frills product (minimal features, basic design) allows the company to reduce costs, achieve high efficiency, and offer lower prices than competitors — a classic example of low-cost leadership (e.g., Walmart, Ryanair). Resource strategy (A) is not a standard term in this context. Operational (B) refers to day-to-day efficiency, not the overall competitive approach. Functional (C) refers to strategies at the department level (marketing, HR), not the business-level strategy described.
4. A computer manufacturer purchases the company that supplies computer chips for the company. Which type of corporate strategy is the company using
A. Domain selection
B. Conglomerate diversification
C. Vertical integration Correct
D. Strategic alliance
Explanation
Vertical integration occurs when a company acquires or controls a supplier (backward integration) or a distributor/customer (forward integration) in its supply chain. Purchasing the chip supplier is backward vertical integration — the manufacturer gains control over a key input, potentially reducing costs, ensuring supply reliability, and improving coordination. Domain selection (A) is about choosing markets. Conglomerate diversification (B) is unrelated businesses. Strategic alliance (D) is a partnership, not ownership.
5. During an annual staff meeting the CEO of a corporation addressed the audience by stating that the long-term goal of the corporation is to 'become the most competitive company in the world and to grow more rapidly than our competitors by providing the best customer service in the business.' What did the CEO's statement reflect
A. Strategic competencies
B. Strategic vision Correct
C. Strategic mission
D. Strategic analysis
Explanation
The CEO’s statement reflects a strategic vision — an inspiring, forward-looking picture of what the company aspires to become in the long term (most competitive, fastest-growing, best customer service). Vision statements are motivational, aspirational, and guide future direction. Strategic competencies (A) are actual capabilities. Strategic mission (C) defines current purpose and scope. Strategic analysis (D) is the process of assessing environment and resources.