Question 1

A company formulates its strategy by looking only at competitors’ prices and ignoring customer preferences. What is the most likely weakness?

Accepted Answer

Its understanding of the market is incomplete The correct answer is A. Competitors’ prices provide only part of the market picture. Without understanding what customers value and prefer, the company may choose a strategy that does not meet their needs.

Question 2

Which option describes a policy rather than a strategy?

Accepted Answer

A general guideline to ensure fair and consistent handling of customer complaints The correct answer is A. A policy provides a general guideline for making consistent decisions, such as how to handle complaints. The other choices describe broad plans for competing or expanding, which are strategies.

Question 3

After a new labelling law is introduced, a company changes how it adapts products and when it enters different markets. Why is this a strategic response?

Accepted Answer

Because an external legal change is shaping the company’s product and market-entry direction The correct answer is A. A new law is an external environmental change. When it influences product decisions and the timing of market entry, the company is adjusting its broad business direction—a strategic response.

Question 4

Which option most clearly demonstrates strategic fit?

Accepted Answer

Matching the company’s design strength with an opportunity in the premium furniture market The correct answer is A. Strategic fit means aligning what the company is good at—in this case, design—with an opportunity in its external environment, such as demand in a premium furniture market.

Question 5

A company plans to sell online courses to rural young people. Which decision would best support this strategy?

Accepted Answer

Offering content in local languages and using an app that consumes little data The correct answer is A. Local-language content and low data use address the likely needs of the target customers and make the online courses more accessible to them. The other choices do not support the target market strategy.

Question 6

A strategy worked well for a long time, but customer behaviour has suddenly changed. What is the most appropriate managerial action?

Accepted Answer

Review the strategy and make necessary changes The correct answer is A. A change in customer behaviour can alter the conditions on which a strategy was based. Reviewing the strategy helps managers decide whether it should be adapted to remain suitable.

Question 7

Which option is an example of a failure to implement a strategy?

Accepted Answer

The company chooses a premium-service strategy but does not provide staff training or build the required service systems The correct answer is A. A strategy needs suitable people, systems and actions to put it into practice. Choosing premium service without training staff or building the required systems creates a gap between the plan and its implementation.

Question 8

A company adopts a digital subscription model to reduce its dependence on one-time sales. Which strategic issue does this decision address?

Accepted Answer

The direction of the company’s revenue model The correct answer is A. Moving from one-time sales toward subscriptions changes how the company earns revenue and seeks more recurring income. That is a broad business-model decision, not a routine administrative procedure.

Question 9

Which question is most strategic when a company is formulating its strategy?

Accepted Answer

Which customer segment offers the strongest long-term growth opportunity? The correct answer is A. Choosing a customer segment for long-term growth concerns the company’s future market direction, which is a strategic decision. The other questions concern routine workplace choices.

Question 10

Which option gives the correct difference between strategy and method?

Accepted Answer

Strategy is overall market direction and method is specific task technique Direct answer: Option A is correct. A strategy is a broad plan or overall direction used to reach important long-term goals, while a method is the particular way or technique used to perform a task. Start with the idea of scope. Strategy answers questions such as: Where should the organisation compete? Should it expand, enter a new market or protect its present position? Method answers a narrower question: How exactly will a particular activity be done? Option A correctly describes strategy as overall market direction and method as a specific task technique. Option B reverses the meanings, so it is wrong: a technique is closer to a method, while expansion direction is closer to strategy. Option C is wrong because prohibition means a restriction or ban, and policy is a guiding rule; neither pair gives the normal difference between strategy and method. Option D is wrong because sequence means the order of steps, and target means the result or goal to be achieved. A sequence may be part of a method, and a target may guide a strategy, but they are not the definitions of strategy and method. A useful chain is: goal or direction -> strategy -> particular procedure or technique -> method. Memory cue: strategy tells the broad ‘where and why’; method tells the specific ‘how’. The supplied answer and explanation are accurate, so the decision is pass.

Question 11

A company sees a growth opportunity but lacks the skills needed to pursue it. What gap should its strategy address?

Accepted Answer

A capability gap The correct answer is A. The company’s current skills do not match the capabilities needed to pursue the opportunity. This is a capability gap, which the company may need to address through training, hiring or another strategic choice.

Question 12

A company sells the same product in luxury packaging and focuses on premium customers. Which strategic concept does this most clearly illustrate?

Accepted Answer

Market positioning The correct answer is A. Luxury packaging and a focus on premium customers shape how the product is presented and the kind of place it aims to occupy in those customers’ minds. This is market positioning.

Question 13

Which option most clearly identifies external factors relevant to a company’s strategy?

Accepted Answer

Studying changes in consumer income and the possibility of new competitors entering the market The correct answer is A. Consumer income trends and new competitors arise outside the company and can affect demand and competition, so they are relevant external factors in strategic analysis.

Question 14

A strategy identifies its target customers but does not explain what value the product offers them. What is unclear?

Accepted Answer

The value proposition The correct answer is A. Identifying target customers explains whom the company aims to serve; the value proposition explains the benefit or value it offers those customers. Since that benefit is missing, the value proposition is unclear.

Question 15

A company uses temporary overtime after a sudden increase in demand. Under which condition could this action be part of its strategy?

Accepted Answer

When it supports a broader plan for capacity and market demand The correct answer is A. Overtime by itself is a short-term operational response. It can contribute to strategy when it is linked to a broader plan for meeting demand and managing the company’s capacity.

Question 16

Which option best illustrates the integrated nature of strategy?

Accepted Answer

Considering goals, resources, market conditions, threats and a coordinated course of action together The correct answer is A. Strategy brings together organisational goals, available resources, relevant market conditions and a course of action. Considering these factors together makes it an integrated plan rather than an isolated task.

Question 17

A company copies a competitor’s strategy without considering its own strengths or its customers. What is the main risk?

Accepted Answer

The strategy may not fit the company’s resources or customers The correct answer is A. A strategy that works for one company may not suit another company’s resources, capabilities or customers. Copying without checking this fit can therefore lead to a poor strategic choice.

Question 18

Which option gives a strategic decision followed by an operational decision, in that order?

Accepted Answer

Entering a new market segment; processing today’s pending invoices The correct answer is A. Entering a new market segment sets a broad direction for the business and is strategic. Processing invoices due today is a routine, short-term operational task.

Question 19

A company chooses premium pricing but does not provide additional value to support it. What strategic weakness does this show?

Accepted Answer

A mismatch between the company’s market positioning and the value it delivers The correct answer is A. Premium pricing signals that customers should receive value that justifies the higher price. If the company does not deliver supporting value, its positioning and customer offer are inconsistent.

Question 20

Which option best represents a strategic course of action?

Accepted Answer

Serving a rural market through local distributors and an app designed to use little data The correct answer is A. It describes a coordinated, market-specific way to reach rural customers. A strategic course of action sets a broader route towards a business objective, unlike the isolated routine tasks in the other options.

Question 21

A market opportunity appears attractive, but the associated threat is substantial. What should management do?

Accepted Answer

Assess the risks and make a decision with suitable safeguards The correct answer is A. Strategic decisions should consider both opportunities and threats. Assessing the risk helps management decide whether to pursue the opportunity and what safeguards may be needed; ignoring the threat would leave the decision poorly informed.

Question 22

Which option provides the strongest basis for a strategy to succeed?

Accepted Answer

Clear objectives, analysis of the environment, a fit with available resources and effective implementation The correct answer is A. Clear objectives give the strategy direction; environmental analysis informs the choice; resource fit makes the plan feasible; and implementation puts it into practice. Slogans or hidden plans alone cannot achieve these things.

Question 23

Which option describes an objective rather than a strategy?

Accepted Answer

Achieve a 25% market share within three years A 25% market share within three years is a specific, measurable result the business aims to achieve, so it is an objective. The other options describe strategic choices about how or where to compete.

Question 24

An education company plans to build trust through free content and earn revenue from paid test series. Which strategic issue does this illustrate?

Accepted Answer

Business model: creating value and generating revenue The plan combines how the company offers value—free content that helps build trust—with how it earns revenue—paid test series. Together, these describe its business model.

Question 25

A company decides to focus on innovative products because it has a strong research team. Which SWOT factor is the company using as the basis for its strategy?

Accepted Answer

Internal strength (strong research team) The correct answer is A, internal strength. A strong research team is a resource within the company, so it is an internal strength. The company is using that strength to support its strategy of developing innovative products.

Strategy

Practice questions

01 A company formulates its strategy by looking only at competitors’ prices and ignoring customer preferences. What is the most likely weakness?

02 Which option describes a policy rather than a strategy?

03 After a new labelling law is introduced, a company changes how it adapts products and when it enters different markets. Why is this a strategic response?

04 Which option most clearly demonstrates strategic fit?

05 A company plans to sell online courses to rural young people. Which decision would best support this strategy?

06 A strategy worked well for a long time, but customer behaviour has suddenly changed. What is the most appropriate managerial action?

07 Which option is an example of a failure to implement a strategy?

08 A company adopts a digital subscription model to reduce its dependence on one-time sales. Which strategic issue does this decision address?

09 Which question is most strategic when a company is formulating its strategy?

10 Which option gives the correct difference between strategy and method?

11 A company sees a growth opportunity but lacks the skills needed to pursue it. What gap should its strategy address?

12 A company sells the same product in luxury packaging and focuses on premium customers. Which strategic concept does this most clearly illustrate?

13 Which option most clearly identifies external factors relevant to a company’s strategy?

14 A strategy identifies its target customers but does not explain what value the product offers them. What is unclear?

15 A company uses temporary overtime after a sudden increase in demand. Under which condition could this action be part of its strategy?

16 Which option best illustrates the integrated nature of strategy?

17 A company copies a competitor’s strategy without considering its own strengths or its customers. What is the main risk?

18 Which option gives a strategic decision followed by an operational decision, in that order?

19 A company chooses premium pricing but does not provide additional value to support it. What strategic weakness does this show?

20 Which option best represents a strategic course of action?

21 A market opportunity appears attractive, but the associated threat is substantial. What should management do?

22 Which option provides the strongest basis for a strategy to succeed?

23 Which option describes an objective rather than a strategy?

24 An education company plans to build trust through free content and earn revenue from paid test series. Which strategic issue does this illustrate?

25 A company decides to focus on innovative products because it has a strong research team. Which SWOT factor is the company using as the basis for its strategy?

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