MGT 3013 - Ronald Anderson Exam 2
Latest Update: 2025/2026
Full Practice Test
Instructions: Choose the best possible answer for each question. The correct answer is highlighted
in bold and followed by a rationale.
Section 1: Strategy & Competitive Advantage (Questions 1-20)
1. Most experts suggest that well-crafted strategies break down due to:
a) Poor economic conditions
b) Flawed execution and a lack of infusion into daily activities
c) Aggressive competitors
d) Unrealistic long-term goals
Rationale: Even the best strategy is useless if it cannot be executed. Failure typically happens in the
implementation phase, not the formulation phase .
2. An organization's performance is also known as:
a) Its market share
b) Its ability to execute strategy
c) Its stock price
d) Its annual profit
Rationale: Performance is directly linked to how well a company can implement its strategic initiatives.
Execution capability is a key differentiator between successful and failing firms .
3. According to lecture and course materials, the three factors that must be aligned for excellent
organizational performance/strategy execution are:
a) Planning, organizing, and controlling
b) Marketing, finance, and operations
c) Organizational culture, organizational structure, and HR practices
d) Mission, vision, and values
Rationale: These three elements form the foundation of an organization's ability to execute strategy.
They must be internally consistent and support the strategic goals .
4. The VRIO framework is used to analyze a firm's competitive advantage. The "O" stands for:
a) Objective
,b) Operations
c) Organized to capture value
d) Opportunity
Rationale: VRIO stands for Value, Rarity, Imitability, and Organization. A resource provides sustained
competitive advantage only if the firm is organized to exploit it .
5. A resource that is valuable and rare but easy to imitate provides a firm with:
a) Sustained competitive advantage
b) Temporary competitive advantage
c) Competitive disadvantage
d) No advantage
Rationale: If competitors can easily copy the resource, the advantage is only temporary. For an
advantage to be sustained, the resource must also be costly to imitate .
6. The "razor-razorblade" business model (like Gillette) is based on:
a) Selling a durable product cheaply to drive sales of consumable complements
b) Charging a subscription fee for access to a service
c) Selling products in bulk at a wholesale price
d) Offering a basic service for free and charging for premium features
Rationale: This model focuses on capturing recurring revenue. The initial product (razor) is sold at a low
margin to lock in customers who will repeatedly buy the high-margin consumables (blades) .
7. A company that signs customers up for a recurring payment, whether they use the service or not
(e.g., Netflix, Spotify), is using the:
a) Wholesale model
b) Subscription model
c) Freemium model
d) Agency model
Rationale: The subscription model provides predictable, recurring revenue by charging customers at
regular intervals for continued access to a product or service .
8. When a firm introduces a new business model that significantly alters an existing market or creates
a new one, it is called:
a) Evolution
b) Sustaining innovation
c) Disruption
d) Retrenchment
Rationale: Disruption occurs when a smaller company with fewer resources is able to successfully
challenge established incumbent businesses, often by targeting overlooked market segments with a
novel business model .
9. "Market commonality" and "resource similarity" are two factors used to understand:
a) A firm's internal structure
b) Competition between firms
c) The economic environment
d) Employee engagement
, Rationale: These are key dimensions of competitor analysis. Firms with high market commonality and
resource similarity are direct and mutually acknowledged competitors .
10. A competitor analysis is used to help a firm understand its competitors by studying their:
a) Future objectives, current strategies, assumptions, and capabilities
b) Employee satisfaction scores
c) Office locations and building size
d) Only their financial statements
Rationale: A comprehensive competitor analysis goes beyond just looking at financials. It involves
predicting competitors' future behavior by understanding their goals, strategies, underlying
assumptions, and resources .
11. In which type of market are competitive advantages shielded from imitation, allowing them to be
sustained for longer periods?
a) Fast-cycle markets
b) Standard-cycle markets
c) Slow-cycle markets
d) No-cycle markets
Rationale: Slow-cycle markets are characterized by proprietary technologies and strong intellectual
property protections (like patents) that make competitive advantages difficult to replicate .
12. A corporate-level strategy asks which fundamental question?
a) How should we compete in our current market?
b) Who are our first-line managers?
c) What businesses should we be in?
d) How do we motivate our employees?
Rationale: Corporate-level strategy is concerned with the overall scope and direction of the organization
and which industries or markets it chooses to compete in .
13. If less than 70% of a company's revenue comes from its primary business and there are no links
between its different businesses, it is pursuing a strategy of:
a) Single business
b) Dominant business
c) Related diversification
d) Unrelated diversification
Rationale: This describes a conglomerate (unrelated diversification) where the businesses are not
strategically related to one another (e.g., a company that owns a hotel chain and a movie studio) .
14. A primary advantage of unrelated diversification is:
a) The ability to share activities between businesses
b) The transfer of core competencies
c) Financial economies through efficient internal capital allocation
d) Increased market power via multipoint competition
Rationale: In unrelated diversification, the primary value created comes from financial economies—the
corporate office can allocate capital more efficiently across different business units than the external
market could .
Latest Update: 2025/2026
Full Practice Test
Instructions: Choose the best possible answer for each question. The correct answer is highlighted
in bold and followed by a rationale.
Section 1: Strategy & Competitive Advantage (Questions 1-20)
1. Most experts suggest that well-crafted strategies break down due to:
a) Poor economic conditions
b) Flawed execution and a lack of infusion into daily activities
c) Aggressive competitors
d) Unrealistic long-term goals
Rationale: Even the best strategy is useless if it cannot be executed. Failure typically happens in the
implementation phase, not the formulation phase .
2. An organization's performance is also known as:
a) Its market share
b) Its ability to execute strategy
c) Its stock price
d) Its annual profit
Rationale: Performance is directly linked to how well a company can implement its strategic initiatives.
Execution capability is a key differentiator between successful and failing firms .
3. According to lecture and course materials, the three factors that must be aligned for excellent
organizational performance/strategy execution are:
a) Planning, organizing, and controlling
b) Marketing, finance, and operations
c) Organizational culture, organizational structure, and HR practices
d) Mission, vision, and values
Rationale: These three elements form the foundation of an organization's ability to execute strategy.
They must be internally consistent and support the strategic goals .
4. The VRIO framework is used to analyze a firm's competitive advantage. The "O" stands for:
a) Objective
,b) Operations
c) Organized to capture value
d) Opportunity
Rationale: VRIO stands for Value, Rarity, Imitability, and Organization. A resource provides sustained
competitive advantage only if the firm is organized to exploit it .
5. A resource that is valuable and rare but easy to imitate provides a firm with:
a) Sustained competitive advantage
b) Temporary competitive advantage
c) Competitive disadvantage
d) No advantage
Rationale: If competitors can easily copy the resource, the advantage is only temporary. For an
advantage to be sustained, the resource must also be costly to imitate .
6. The "razor-razorblade" business model (like Gillette) is based on:
a) Selling a durable product cheaply to drive sales of consumable complements
b) Charging a subscription fee for access to a service
c) Selling products in bulk at a wholesale price
d) Offering a basic service for free and charging for premium features
Rationale: This model focuses on capturing recurring revenue. The initial product (razor) is sold at a low
margin to lock in customers who will repeatedly buy the high-margin consumables (blades) .
7. A company that signs customers up for a recurring payment, whether they use the service or not
(e.g., Netflix, Spotify), is using the:
a) Wholesale model
b) Subscription model
c) Freemium model
d) Agency model
Rationale: The subscription model provides predictable, recurring revenue by charging customers at
regular intervals for continued access to a product or service .
8. When a firm introduces a new business model that significantly alters an existing market or creates
a new one, it is called:
a) Evolution
b) Sustaining innovation
c) Disruption
d) Retrenchment
Rationale: Disruption occurs when a smaller company with fewer resources is able to successfully
challenge established incumbent businesses, often by targeting overlooked market segments with a
novel business model .
9. "Market commonality" and "resource similarity" are two factors used to understand:
a) A firm's internal structure
b) Competition between firms
c) The economic environment
d) Employee engagement
, Rationale: These are key dimensions of competitor analysis. Firms with high market commonality and
resource similarity are direct and mutually acknowledged competitors .
10. A competitor analysis is used to help a firm understand its competitors by studying their:
a) Future objectives, current strategies, assumptions, and capabilities
b) Employee satisfaction scores
c) Office locations and building size
d) Only their financial statements
Rationale: A comprehensive competitor analysis goes beyond just looking at financials. It involves
predicting competitors' future behavior by understanding their goals, strategies, underlying
assumptions, and resources .
11. In which type of market are competitive advantages shielded from imitation, allowing them to be
sustained for longer periods?
a) Fast-cycle markets
b) Standard-cycle markets
c) Slow-cycle markets
d) No-cycle markets
Rationale: Slow-cycle markets are characterized by proprietary technologies and strong intellectual
property protections (like patents) that make competitive advantages difficult to replicate .
12. A corporate-level strategy asks which fundamental question?
a) How should we compete in our current market?
b) Who are our first-line managers?
c) What businesses should we be in?
d) How do we motivate our employees?
Rationale: Corporate-level strategy is concerned with the overall scope and direction of the organization
and which industries or markets it chooses to compete in .
13. If less than 70% of a company's revenue comes from its primary business and there are no links
between its different businesses, it is pursuing a strategy of:
a) Single business
b) Dominant business
c) Related diversification
d) Unrelated diversification
Rationale: This describes a conglomerate (unrelated diversification) where the businesses are not
strategically related to one another (e.g., a company that owns a hotel chain and a movie studio) .
14. A primary advantage of unrelated diversification is:
a) The ability to share activities between businesses
b) The transfer of core competencies
c) Financial economies through efficient internal capital allocation
d) Increased market power via multipoint competition
Rationale: In unrelated diversification, the primary value created comes from financial economies—the
corporate office can allocate capital more efficiently across different business units than the external
market could .
