Questions

Question 1

The main factor causing the transition from corporate planning to strategic management was the work of Michael Porter and fellow academics at Harvard Business School.

1. True
2. False

Question 2

An intended strategy is a set of initial ethical intentions; an emergent strategy comprises actions or changes that emerge from the organization or its environment; and finally, the realized strategy is the set of strategic changes and actions that actually takes place.

1. True
2. False

Question 3

If a firm adjusts its strategy to ensure it is consistent with its external environment, it benefits from a:

1. Strategic fit
2. Strategic leadership
3. Location within an attractive industry
4. A license to operate

Question 4

To survive and prosper over the long run requires a firm to:

1. Commit itself to growing its sales
2. Be responsive to its external environment—including its social, political, and natural environment
3. Pursue simultaneously strategies of low cost and differentiation
4. Ensure the ethical conduct of executives

Question 5

The primary justification for the assumption that the primary goal of strategy is to maximize profits over the long term is:

1. The fact that in today’s intensely competitive markets, firms must focus on profit maximization in order to survive
2. The legal requirement on Boards of Directors to ensure that companies are operated in the interests of their shareholders
3. In order to earn profits over the long run, firms must attend to the interests of all their stakeholders
4. Shareholders will oust CEOs that are not effective at maximizing profits.

Question 6

Maximizing enterprise value and maximizing shareholder value are linked because:

1. Enterprise value and shareholder value are the same thing
2. Shareholder value is calculated by adding debt and other non-equity financial claims to the DCF value of the firm
3. Shareholder value is calculated by subtracting debt and other non-equity financial claims from the enterprise value of the firm
4. It is obvious that they must be linked

Question 7

In formulating strategies under uncertainty, real option analysis is a valuable strategic tool because:

1. It allows firms to create value from flexibility
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