Question 1

A strategy states that the company will adopt a low-cost model but suppliers are expensive. What is the main strategic concern?

Accepted Answer

Cost structure does not support the strategy The direct answer is A: the cost structure does not support the low-cost strategy. A strategy is a broad plan for achieving a long-term purpose. A low-cost strategy aims to offer products or services at lower cost, usually so the organisation can charge competitive prices or earn a suitable margin. To make this strategy work, important inputs such as suppliers, production, transport, labour, and administration must be controlled efficiently. If suppliers are expensive, input costs remain high, and the company may be unable to maintain the promised low-cost model. Option A is therefore the main strategic concern because there is a mismatch between the chosen strategy and the organisation’s resource and cost position. Option B, office colour, is unrelated to the central competitive cost issue. Option C, a missing entry rule, concerns a procedure or administrative detail, not strategic cost alignment. Option D, a long form sequence, is also an operational paperwork issue and does not explain whether the business can compete on cost. The exam method is to check fit: strategy, resources, costs, and capabilities should support one another. A low-cost plan with expensive key suppliers signals poor strategic fit.

Question 2

Which option best illustrates the integrated nature of strategy?

Accepted Answer

Considering objectives, resources, the business environment, customers, and coordinated actions together The correct answer is A. Strategy is integrated because it connects organisational objectives with resources, environmental conditions, customer needs, and the actions chosen to achieve the objectives. The other choices describe isolated decisions.

Question 3

Which choice is the strongest indication of a differentiation strategy?

Accepted Answer

Offering a distinctive design and tailored after-sales service The correct answer is C. Differentiation means offering features or service that customers perceive as distinctive. A distinctive design and tailored after-sales service can set the company’s offer apart; reducing costs is more closely associated with cost leadership.

Question 4

An organisation has a strong local network and uses it to plan distribution in rural areas. What kind of strategic fit does this illustrate?

Accepted Answer

A fit between an internal strength and a market opportunity The correct answer is A. A strong local network is an internal strength, while the potential to serve rural customers is a market opportunity. Using the strength to pursue that opportunity is an example of strategic fit.

Question 5

A company has built a premium brand image but provides weak after-sales support. What strategic mismatch does this suggest?

Accepted Answer

A mismatch between premium positioning and the value actually delivered The correct answer is A. A premium position creates high customer expectations. If after-sales support is weak, the value delivered may not match the brand promise, creating a mismatch that can harm customer satisfaction and credibility.

Question 6

Which option correctly distinguishes a strategy from a procedure?

Accepted Answer

A strategy sets a broad direction for achieving objectives; a procedure specifies the ordered steps for a recurring task The correct answer is A. A strategy gives broad direction for achieving organisational objectives, whereas a procedure lays down the sequence of steps for carrying out a recurring activity. Thus, strategy concerns overall direction and procedure concerns how a task is performed.

Question 7

A company plans to provide personalised service to high-income customers. Which strategic question does this decision answer?

Accepted Answer

Whom will the company serve, and what value will it offer them? The correct answer is A. High-income customers identify the target customer group, and personalised service describes the value the company intends to offer that group. Both are central choices in a strategy.

Question 8

If a strategy has growth target but no risk safeguards what weakness exists?

Accepted Answer

risk management gap / Risk management gap The direct answer is A: risk management gap. A sound strategy does not look only at growth; it also studies threats, uncertainty, and possible losses. First, the organisation sets a growth target. Next, it should identify risks that may prevent that target, estimate their effect, and create safeguards such as controls, insurance, backup suppliers, or contingency plans. If these safeguards are absent, the strategy has an important risk-management weakness. Option A is correct. Option B, attendance gap, concerns employee presence and is not necessarily connected with strategic risk. Option C, colour gap, has no standard strategic meaning. Option D, receipt gap, concerns documents or transactions, not the stated weakness. Memory cue: growth target plus no protection means a risk-management gap.

Question 9

A company chooses an online-only model, but its target customers are rural people with limited internet access. What is the main strategic problem?

Accepted Answer

The chosen channel does not fit customers’ access and usage conditions The correct answer is A. An online-only channel depends on customers being able to access and use the internet. If the target customers have limited access, the chosen channel may prevent the company from reaching them effectively.

Question 10

Why is it important to identify an organisation’s internal weaknesses while formulating strategy?

Accepted Answer

To understand capability gaps and risks that may affect whether the strategy can be carried out The correct answer is A. Internal weaknesses can reveal gaps in skills, resources, or systems. Identifying them helps managers judge whether a strategy is feasible and decide what risks need to be reduced or addressed.

Question 11

Which option best illustrates a strategy as a broad course of action for reaching a target market?

Accepted Answer

Offering home trials and subscription packs to attract new mothers A strategy sets a broad course of action for achieving an objective. Home trials and subscription packs are coordinated actions aimed at attracting the specified customer segment; the other options are a goal alone or routine and one-time tasks.

Question 12

A competitor begins offering free delivery. A company keeps paid delivery but guarantees faster delivery. What kind of strategic response does this illustrate?

Accepted Answer

A competitive response that differentiates the offer through speed The company responds to the competitor but offers a different source of value: guaranteed speed rather than free delivery. This is a differentiated competitive response, not an administrative procedure or maintenance method.

Question 13

Which option includes the main elements needed to develop and carry out a strategy effectively?

Accepted Answer

Setting a clear objective, analysing the environment, aligning resources, implementing actions, and reviewing results An effective strategy connects a clear objective with analysis, suitable resources, implementation, and review. A slogan, décor change, or secrecy alone does not provide these connected elements.

Question 14

A company plans to enter the luxury market, but customers currently associate its brand with low prices and discounts. What strategic challenge does it face?

Accepted Answer

A gap between current brand perception and the desired market position The company wants a luxury position, but its existing discount image may not support that position. It must address the gap between how customers perceive the brand now and how the company wants it to be perceived.

Question 15

Which option is a rule instead of strategy?

Accepted Answer

Entry is prohibited without a safety card ‘Entry is prohibited without a safety card’ is a clear, compulsory instruction, so it is a rule. A rule specifies what must or must not be done in a particular situation. In contrast, expansion into new cities, focus on premium customers, and a cost-leadership model are long-term competitive approaches and are therefore strategies. Exam tip: words such as ‘prohibited’, ‘mandatory’, and ‘only’ often indicate a rule.

Question 16

A company adopts eco-friendly packaging because its urban customers value sustainability. What strategic fit does this show?

Accepted Answer

A fit between customer preferences and the product's positioning The packaging choice responds to a preference stated for the company's urban customers, helping align the product's positioning with customer expectations. The other options do not describe this market-and-product connection.

Question 17

Why can opportunity cost matter when a company chooses a strategy?

Accepted Answer

Choosing one market may mean giving up the benefits of the next-best alternative market Opportunity cost is the value of the next-best alternative that is given up. If a company commits resources to one market, it may forgo the benefits it could have gained from another market.

Question 18

A company begins expanding nationwide, but its supply chain is too weak to serve the larger market reliably. What is the main strategic execution issue?

Accepted Answer

Its operational capability is insufficient to support the scale of expansion A nationwide expansion requires the operational capacity to supply customers reliably across a larger area. A weak supply chain means the company's capabilities do not support the scale of its plan.

Question 19

Which option best describes monitoring a company's strategy?

Accepted Answer

Regularly tracking relevant results, such as market share and customer response, and changes in competitors' actions Strategy monitoring tracks relevant outcomes and changes in the competitive environment so the company can assess progress and respond when needed. The other options do not, by themselves, measure strategic performance.

Question 20

If the strategy promises faster service but the process is slow and approval-based, what mismatch exists?

Accepted Answer

Mismatch between the strategy promise and the internal process Correct answer: A, a mismatch between the strategy promise and the internal process. A strategy is credible only when the organisation’s internal systems can deliver what it promises. Here, the external promise is faster service, but the internal process requires slow approvals. Each approval may add waiting time, so the process cannot support the promised speed. This is a delivery or alignment problem: the strategic intention and the operating process are pulling in different directions. A comma in a budget and receipt has no connection with strategy or service speed. A rule and attendance may concern administration, but they do not identify the stated conflict. Pen colour is irrelevant to service delivery. The organisation may need to simplify approvals, delegate authority or redesign the workflow, but the first diagnosis remains option A. Memory cue: a promise is useful only when the process can deliver it.

Question 21

A company identifies a market opportunity but sets no implementation timeline or responsibility assignments. What is the main weakness in its plan?

Accepted Answer

It lacks execution planning, including a schedule and assigned responsibilities Identifying an opportunity is not enough to carry out a strategy. A timeline and clear responsibility assignments help translate the intended actions into implementation; without them, execution planning is incomplete.

Question 22

A company targets rural customers who primarily use a local language, but provides product instructions only in English. What strategic mismatch does this show?

Accepted Answer

Target market and communication are not well matched The communication does not suit the stated target customers’ language needs. A strategy is better aligned when product information is communicated in a language its intended customers can understand.

Question 23

A company makes a repair guarantee its main promise to distinguish itself from competitors. Which strategic concept does this illustrate?

Accepted Answer

Differentiation and a distinct value proposition The repair guarantee gives customers a distinct benefit that the company uses to set its offer apart from competitors. This is differentiation expressed through a value proposition.

Question 24

A company selects a high-growth market in its strategy but does not identify a funding source. What is the main weakness?

Accepted Answer

Resource planning and funding are unclear Choosing a growth market sets a direction, but pursuing it also requires resources. Without a funding source, the company has not made clear how it will finance the strategy.

Question 25

Which option shows a company changing its strategy in response to a social trend?

Accepted Answer

Adopting biodegradable packaging as concern about plastic increases Rising concern about plastic is a social trend. Changing packaging in response to it is a strategic choice because it adapts the company’s product or operations to changing expectations.

Strategy

Practice questions

01 A strategy states that the company will adopt a low-cost model but suppliers are expensive. What is the main strategic concern?

02 Which option best illustrates the integrated nature of strategy?

03 Which choice is the strongest indication of a differentiation strategy?

04 An organisation has a strong local network and uses it to plan distribution in rural areas. What kind of strategic fit does this illustrate?

05 A company has built a premium brand image but provides weak after-sales support. What strategic mismatch does this suggest?

06 Which option correctly distinguishes a strategy from a procedure?

07 A company plans to provide personalised service to high-income customers. Which strategic question does this decision answer?

08 If a strategy has growth target but no risk safeguards what weakness exists?

09 A company chooses an online-only model, but its target customers are rural people with limited internet access. What is the main strategic problem?

10 Why is it important to identify an organisation’s internal weaknesses while formulating strategy?

11 Which option best illustrates a strategy as a broad course of action for reaching a target market?

12 A competitor begins offering free delivery. A company keeps paid delivery but guarantees faster delivery. What kind of strategic response does this illustrate?

13 Which option includes the main elements needed to develop and carry out a strategy effectively?

14 A company plans to enter the luxury market, but customers currently associate its brand with low prices and discounts. What strategic challenge does it face?

15 Which option is a rule instead of strategy?

16 A company adopts eco-friendly packaging because its urban customers value sustainability. What strategic fit does this show?

17 Why can opportunity cost matter when a company chooses a strategy?

18 A company begins expanding nationwide, but its supply chain is too weak to serve the larger market reliably. What is the main strategic execution issue?

19 Which option best describes monitoring a company's strategy?

20 If the strategy promises faster service but the process is slow and approval-based, what mismatch exists?

21 A company identifies a market opportunity but sets no implementation timeline or responsibility assignments. What is the main weakness in its plan?

22 A company targets rural customers who primarily use a local language, but provides product instructions only in English. What strategic mismatch does this show?

23 A company makes a repair guarantee its main promise to distinguish itself from competitors. Which strategic concept does this illustrate?

24 A company selects a high-growth market in its strategy but does not identify a funding source. What is the main weakness?

25 Which option shows a company changing its strategy in response to a social trend?

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