Question 1

If a plan has an objective and a course of action but conflicts with organisational policy, what problem may arise?

Accepted Answer

Difficulty in implementation and approval An organisational policy provides broad guidelines for recurring decisions and indicates the boundaries within which plans should be designed and implemented. A specific plan may contain a clear objective and action sequence, but if it contradicts an accepted policy, managers may refuse to approve it, employees may receive inconsistent signals, and implementation may create conflict or non-compliance. Option A correctly describes these practical consequences. Option B is not a logical result of inconsistency. Option C wrongly dismisses the guiding role of policy, and D assumes achievement without execution. Alignment between plans and policies improves consistency, acceptance, coordination, and lawful or authorised implementation.

Question 2

A company aims to reach rural markets within two years. To pursue this objective, it plans to offer small, low-priced packs and use local distributors. What do these choices represent?

Accepted Answer

Strategy The correct answer is B. Reaching rural markets is the objective; choosing the product, pricing and distribution approach is part of the broad plan for achieving it, or the strategy.

Question 3

To compete with lower-priced rivals, a mobile phone company makes a better camera and a longer warranty central to its offer rather than cutting its price. Which strategic approach does this illustrate?

Accepted Answer

Differentiation The correct answer is A. The company emphasizes features that distinguish its offer from lower-priced rivals instead of competing on price. This is differentiation.

Question 4

A company has limited funds but wants to enter three new markets at once. What should it assess first when formulating its strategy?

Accepted Answer

The fit between available resources and market opportunities The correct answer is B. With limited funds, the company needs to compare the opportunities with the resources it can commit. This helps it choose a feasible strategic course.

Question 5

As health awareness increases, a food company decides to shift from fried snacks to baked snacks. Why is this a strategic decision?

Accepted Answer

Because it changes the product direction in response to an external social change The correct answer is C. The company is changing its product direction in response to a change in social preferences. Such a broad response to the external environment is strategic.

Question 6

Before entering a foreign market, a company studies language, packaging, local laws and potential partners. Which feature most clearly makes this a strategic matter?

Accepted Answer

It involves broad preparation for entry into a foreign market The correct answer is D. Foreign-market entry requires coordinated choices about factors such as laws, packaging and partners. This broad planning makes it a strategic matter, not merely a daily routine.

Question 7

Which set best describes the three main elements of a strategy?

Accepted Answer

Objectives, course of action, and resource allocation The correct answer is A. A strategy is a comprehensive plan that sets objectives, chooses a course of action, and allocates resources to achieve those objectives.

Question 8

A company wants to enter the premium market, but its main strength is low-cost production. What should it assess when formulating its strategy?

Accepted Answer

Whether its capabilities fit the needs of the target market The correct answer is A. A sound strategy should fit the company’s capabilities with the needs and opportunities of the market it wants to serve. Low-cost production alone may not provide an advantage in a premium segment.

Question 9

A competitor introduces same-day delivery, so a company plans to redesign its warehousing and delivery network. Which type of plan does this best illustrate?

Accepted Answer

A strategy that sets a broad direction in response to competition The correct answer is C. Redesigning the network is a broad response to a competitor’s service change and can guide several operational decisions, so it illustrates strategy rather than a single method, rule, or routine sequence.

Question 10

For a strategy to be practical, what should it take into account?

Accepted Answer

The organisation’s resources and capabilities, as well as relevant external opportunities The correct answer is A. A practical strategy must be achievable with the organisation’s resources and capabilities while responding to relevant opportunities in its external environment.

Question 11

Which situation would make reviewing a company’s strategy most necessary?

Accepted Answer

The main competitor launches a disruptive online business model The correct answer is B. A competitor’s disruptive business model can change customer expectations and the competitive environment, so the company may need to reassess whether its current strategy is still suitable.

Question 12

A company says it will compete through personal service rather than low prices. What does this choice primarily define?

Accepted Answer

A distinctive value proposition for customers The correct answer is C. Choosing personal service as the basis for competition explains the distinctive benefit the company intends to offer customers—its value proposition.

Question 13

Which statement best distinguishes strategy from policy?

Accepted Answer

Strategy is a broad plan for achieving objectives; policy is a general guideline for making decisions. The correct answer is A. Strategy sets a broad plan for achieving organisational objectives, while policy provides general guidance that helps people make decisions consistently within that plan.

Question 14

A company plans to open education centres in small cities over the next five years and partner with local teachers. What makes this a strategy?

Accepted Answer

It sets a long-term direction and indicates how resources and partnerships will support expansion The correct answer is D. The five-year expansion plan sets a long-term direction, while the centres and local-teacher partnerships indicate how the company intends to use resources to pursue it.

Question 15

Which option describes a procedure rather than a strategy?

Accepted Answer

Check an application, obtain approval, and then open an account The correct answer is A. It gives a fixed sequence of steps for completing a routine task, which is a procedure. The other choices describe broader strategic directions or plans.

Question 16

When developing a technology adoption strategy, which question is most important?

Accepted Answer

Will the technology improve customer value or the company’s competitive position? The correct answer is A. A technology choice is strategically important when it can create value for customers or strengthen the company’s competitive position; unrelated office details do not assess those effects.

Question 17

A retailer decides to target working professionals rather than all customers. Which strategic decision does this illustrate?

Accepted Answer

Selecting a target customer segment The correct answer is A. Choosing which customer group to serve is a target-market decision: the retailer focuses its strategy on working professionals instead of the entire market.

Question 18

What is a likely consequence of ignoring an external threat while formulating a strategy?

Accepted Answer

The strategy may be unrealistic or exposed to greater risk The correct answer is A. External threats, such as changes in competition or the business environment, can obstruct a plan. Ignoring them may therefore make a strategy less feasible or more risky.

Question 19

Which statement best describes the relationship between a strategy and a budget?

Accepted Answer

A strategy sets a broad direction, while a budget can show the numerical resources allocated to support it The correct answer is A. A strategy gives broad direction about what the organisation intends to do. A budget translates planned activities into numerical estimates of resources or expenditure; it supports the strategy but is not the strategy itself.

Question 20

A company adopts a low-cost model, but the quality of its service declines. What is a likely strategic risk?

Accepted Answer

Customers may perceive less value, reducing satisfaction or loyalty The correct answer is A. Lower costs do not automatically require lower service quality. However, if quality declines, customers may feel they receive less value and become less satisfied or loyal, weakening the company’s competitive position.

Question 21

Which option best explains differentiation as a business strategy?

Accepted Answer

Creating a distinctive offering or identity that sets the business apart from competitors The correct answer is A. Differentiation means making an offering distinct from competitors—for example, through features, service, or brand identity—so customers have a reason to prefer it.

Question 22

Which option has the broadest strategic scope?

Accepted Answer

Changing the product line and target market over the next three years The correct answer is C. Changing a product line and target market over several years affects the organisation’s longer-term direction and many activities. The other options are narrow, individual tasks.

Question 23

An airline plans to remove some services and amenities and offer low fares as part of a low-cost operating model. Which strategic direction does this illustrate?

Accepted Answer

Cost leadership The correct answer is A. The airline is aligning its operations around lower costs so it can offer lower fares. This illustrates a cost-leadership direction; simply cutting amenities without controlling costs would not, by itself, establish cost leadership.

Question 24

A strategy sets goals but assigns no responsibility for carrying them out. What is the most likely weakness?

Accepted Answer

Weak accountability for execution The correct answer is A. If no one is responsible for carrying out the strategy, it is harder to monitor actions and hold people accountable. The goals may remain, but execution is less clear.

Question 25

Which statement correctly distinguishes a strategy from an objective?

Accepted Answer

Premium positioning is a strategic direction, while increasing revenue within one year is an objective The correct answer is B. Premium positioning describes a broad strategic direction for how the company wants to compete. Increasing revenue within one year states a desired result and time frame, so it is an objective.

Strategy

Practice questions

01 If a plan has an objective and a course of action but conflicts with organisational policy, what problem may arise?

02 A company aims to reach rural markets within two years. To pursue this objective, it plans to offer small, low-priced packs and use local distributors. What do these choices represent?

03 To compete with lower-priced rivals, a mobile phone company makes a better camera and a longer warranty central to its offer rather than cutting its price. Which strategic approach does this illustrate?

04 A company has limited funds but wants to enter three new markets at once. What should it assess first when formulating its strategy?

05 As health awareness increases, a food company decides to shift from fried snacks to baked snacks. Why is this a strategic decision?

06 Before entering a foreign market, a company studies language, packaging, local laws and potential partners. Which feature most clearly makes this a strategic matter?

07 Which set best describes the three main elements of a strategy?

08 A company wants to enter the premium market, but its main strength is low-cost production. What should it assess when formulating its strategy?

09 A competitor introduces same-day delivery, so a company plans to redesign its warehousing and delivery network. Which type of plan does this best illustrate?

10 For a strategy to be practical, what should it take into account?

11 Which situation would make reviewing a company’s strategy most necessary?

12 A company says it will compete through personal service rather than low prices. What does this choice primarily define?

13 Which statement best distinguishes strategy from policy?

14 A company plans to open education centres in small cities over the next five years and partner with local teachers. What makes this a strategy?

15 Which option describes a procedure rather than a strategy?

16 When developing a technology adoption strategy, which question is most important?

17 A retailer decides to target working professionals rather than all customers. Which strategic decision does this illustrate?

18 What is a likely consequence of ignoring an external threat while formulating a strategy?

19 Which statement best describes the relationship between a strategy and a budget?

20 A company adopts a low-cost model, but the quality of its service declines. What is a likely strategic risk?

21 Which option best explains differentiation as a business strategy?

22 Which option has the broadest strategic scope?

23 An airline plans to remove some services and amenities and offer low fares as part of a low-cost operating model. Which strategic direction does this illustrate?

24 A strategy sets goals but assigns no responsibility for carrying them out. What is the most likely weakness?

25 Which statement correctly distinguishes a strategy from an objective?

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