Marks from these 15 questions will be scaled up to make up 40% of the exam score. You should aim to spend around three minutes on each question.

Please give one answer for each question on the “scantron” (computer-readable) answer sheet (not on this question sheet).

Your answer should represent the best of the alternatives given.

1   Henry Mintzberg’s five P’s for strategy include all of the following except:

a)   An organisation’s shared mindset.

b)   An organisation’s position in relation to its environment.

c)   The pattern in an organisation’s actions over time.

d)   An organisation’s portfolio of products.

e)   An organisation’s consciously intended plan of action.

2   Which of the following accurately characterises contemporary views on the role of strategic planning?

a)   Critics argue that it can be too inflexible and too close to the annual budgeting process.

b)   It facilitates extinction by instinct as well as paralysis by analysis.

c)   It is about experimentation and learning from side-bets and sub-systems.

d)   It is known to be effective in preventing the influence of political behaviour in strategy-making.

e)   It is about making strategy in logical fashion from the top down, avoiding the confusion that results otherwise.

3   Assuming that human beings are rational, self-interested, and opportunistic, managers as agents are inclined to practice managerial opportunism if:

a)   They previously worked for a competitor.

b)   Effective corporate governance mechanisms are in place.

c)   No effective corporate governance mechanisms are in place.

d)   The prevailing legislation does not allow for such behaviour.

e)   The managers are also shareholders in the company.

4   Which of the following was set out in class as a desirable characteristic in a scenario planning exercise carried out by a business?

a)   Scenarios should be derived from the two most important strategic drivers.

b)   Scenarios should be imaginative and not tied to identifiable drivers.

c)   Scenarios should be determined from the maximum number of drivers that can be identified.

d)   A distinct scenario should be built around each of the main individual drivers.

e)   Scenarios should be established around a specified future timeframe.

5In carrying out a 5-force competitive analysis on supermarket retailing in New Zealand, which of the following would be a sensible statement?

a)   There are a large number of competitors in the industry when the names of all the different chains are taken into account.

b)   Substitutes are readily available due to the presence of another supermarket in the adjacent suburb.

c)   Bargaining power of suppliers is high, as highlighted in recent years by some prominent politicians.

d)   Bargaining power of buyers is high due to the strong propensity of impoverished students and others to seek out the most compelling Specials.

e)   The small size of the New Zealand market reduces the influence of potential international entrants as a competitive force.

6           In strategic group analysis, which of the following is true?

a)   It is important that the two axes chosen correlate closely with one another when applied to the focal industry.

b)   Entry barriers prevent firms within the industry from moving from one strategic group to another.

c)   White spaces on the map, with no companies present, represent the most profitable opportunities due to lack of competition.

d)   The horizontal axis should be chosen to bring out ‘blue ocean’ characteristics that are not contested by existing firms.

e)   Strategic groups represent firms that are most similar to one another in terms of important strategic dimensions.

7   Which of the following statements best characterises what Abbey National bank’s former CEO concluded from the wave of bank sector selling scandals set out in class?

a)   That branch employees had a propensity to act unlawfully.

b)   That senior management had to plan, analyse, and transmit clear instructions to the workforce.

c)   That there was a need to move away from heavy emphasis on numbers-based incentive schemes.

d)   That there had been excessive reliance on standardised inputs.

e)   That a better way to ensure alignment would be to provide a ‘strategy map’ to all employees.

8          As set out in the course, a firm’s ‘dynamic capabilities’ can include all of the following except:

a)   Disaggregated capabilities from value chain analysis.

b)   Sensing issues in an evolving strategic environment.

c)   Forming new alliances to deal with shifting patterns of international demand.

d)   Developing new products in response to changing government regulations.

e)   Reconfiguring the firm to implement a chosen strategy

9   Which of the following is not a known difficulty with the focused differentiation strategy?

a)   Attempts to grow beyond the initial narrow market may undermine the firm’s positioning.

b)   Evolution of the industry may erode differences between segments.

c)   Firms need to be able to maintain differentiation at low enough cost.

d)   The differentiated part of the market is often the most vulnerable to economic downturns.

e)   Focusing on a small niche may not support a firm large enough to be viable

10   Which of the following statements about the industry life cycle is correct?

a)   The lifecycle occurs because firms must regularly update their products to keep up with competitors.

b)   Competitive conditions faced by firms vary according to the stages of the lifecycle.

c)   The maturity and decline stages are unattractive because income flows are typically at their lowest.

d)   A key benefit of using the lifecycle is the predictable shift to the next stage.

e)   Emergence of a dominant design typically indicates the beginning of the decline stage.

11   In an industry such as solar panel manufacture, shakeout conditions mean that firms should

a)   Continue to invest in research and development despite squeezed revenues.

b)   Invest in capacity to keep up with ongoing industry growth.

c)   Invest in product innovation to be able to ‘cross the chasm’ .

d)   Recognise that the main profitable industry stage has now passed.

e)   Use aggressive price signalling to maintain industry margins.

12   Which of the following statements best characterises the use of the business model concept in strategic management?

a)   It encourages strategists to think creatively about possibilities for their firm by building representational models using Lego as a metaphorical medium.

b)   It involves building mathematical models of the relationship between a range of factors and performance outcomes.

c)   It encourages strategists to think more creatively about their firms’ configuration of activities, value delivered, and sources of income.

d)   It became highly regarded following the sustained success of the original dot-com boom.

e)   It is a systematic method summarising best business practices in nine principal categories.

13   When Pfizer invested in novel mRNA vaccine technology in partnership with small biotech firms, this investment could best be characterised in the MacMillan/McGrath model as

a)   A disruptive innovation in which incumbents can ultimately be expected to lose.

b)   Part of a portfolio of real options intended to maintain organisational dynamism.

c)   A way to focus on product areas with lower technical and market uncertainty, which have a greater chance of success.

d)   A form of sustaining innovation enabling the existing firm to meet customer expectations.

e)   A form of innovation best managed by the ‘exploit mode’ due to its novelty.

14   Based on the example discussed in class, at the time of the company’s bid for Virgin America, shareholders should have asked the Alaska Airlines board all of the following except:

a)   What synergy gains would they create in the merged entity?

b)   What capital (financial) position would the firm be in post-merger?

c)   Whether they considered the businesses strategically related.

d)   What plans they had for post-merger integration.

e)   Whether Alaska Airlines or Virgin America shareholders would benefit most from the deal.

15         Corporate owner L’Oréal sold The Body Shop to a new owner after years of under-performance blamed on a mismatch of values between the business and L’Oréal’s head office. Which of the following is an accurate statement?

a)   This illustrates the typically limited life of strategic alliances between firms, as their strategic interests evolve.

b)   This illustrates a form of value destruction as illustrated by the corporate parenting matrix, hence the need to divest.

c)   Poor performance at The Body Shop classifies it as a ‘dog’, hence the need to divest.

d)   Loss of market share at The Body Shop have made it into a ‘question mark’, requiring a new owner to revive the market growth rate.

e)   Since both L’Oréal and The Body Shop sell cosmetics, their forms of value creation will inevitably have clashed at the corporate level.

PART B: Written Short Answers

Marks from the five questions that follow this short case will be scaled up to make up 60% of the exam score. You should aim to spend up to 12 minutes reading the case and 12 minutes answering each      question.

Mutual funds are managed by investment companies that raise money from multiple customers and invest the   money in a group of assets (typically shares and bonds). Each customer, often as part of a retirement plan, then owns shares that represent a portion of the holdings of the fund. They are charged an annual fee that covers     administrative costs, distribution fees, and other operating expenses.

The traditional way of competing in the industry has been via actively managed investments that try to generate as high returns as possible and thus are able to charge higher fees. Vanguard instead offered customers            considerably lower annual fees and costs. Comparisons showed that Vanguard’s fees or expense ratios were    65-80% less than the industry average depending on the specific investment asset. The company also launched the industry’s first index-based mutual fund that passively followed a stock market index without ambitions to      generate a better performance than the market, but which nevertheless outperformed many actively managed    funds.

‘Lowering the cost of investing is in our DNA’ blogged Tom Rampulla, former head of Vanguard Europe. Its low- cost strategy involved several components. First, unlike competitors it did not need to make a profit. Tim            Buckley, chief investment officer, explained that as a mutual company, when they made a profit they chose       between investing it back in the business and paying it out to their customers (who are also the owners of the    company) in the form of lower expenses. Second, Vanguard distributed its funds directly to customers and did   not need to pay commissions of around 8% to brokers. Third, the company used its own internal investment      analysts, resulting in lower costs than paying external managers. Fourth, it relied on a no-nonsense, thrifty         organisational culture in which managers were incentivised to control costs. Fifth, the company had only a few  retail centres and spent less on advertising than anyone else in the industry. Last but not least, as one of the     largest asset managers globally, it gained large economies of scale.