Question 1.Choosing a preferred strategy makes sense not only because one can then defend the choice as being the best one, but also because, in Michael Porter’s words, “the essence of strategy is choosing what not to do.”

•   True
• False

Question 2.Which of the following is not a bona fide opportunity (product-market issue)?

•   Sell existing products to China
•   Modify the design of an auto to attract younger buyers
•   Make more money through cost reduction
•   Create an innovative product for existing customers
•   Continue producing products for current customers

Question 3.Which of the following is an activity ratio?

•   Current ratio
•   Inventory-to-net-working-capital ratio
•   Debt-to-equity ratio
•   Gross profit margin
•   Average collection period

Question 4.Which of the following is not a criterion when choosing the best bundle?

•   Shareholder value
•   Selling price of product
•   Revenue growth
•   ROI
•   Degree of risk

Question 5.Which element is not a part of an internal analysis?

•   Corporate culture
•   Competitive strength
•   Weaknesses
•   Competitive trends
•   Core competence

Question 6.A multidomestic strategy is similar to a transnational strategy.

•   True
• False

Question 7.Internal value chains need more analysis than external value chains.

•   True
• False

Question 8.Which of the following is a criterion for creating bundles?

•   They must not include different strategies
•   They must be feasible
•   They must invest in other industries
•   They must diversify through acquisition
•   None of the above

Question 9.Which of the following is not one of the criteria that distinguish a capability from a core competence?

•   Is it valuable?
•   Is it supported by top management?
•   Is it rare?
•   Is it costly to imitate?
•   Is it nonsubstitutable?

Question 10.The final list of strategic issues should match elements in the strategic-alternative bundles.

•   True
• False

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