BUS 475 - Final Exam 230 Questions And Correct
Answers (Verified Answers) 2026|2027 Q&A | Instant
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What is the primary purpose of a firm's strategy? - correct answer -To create a competitive advantage
for a period of time, leading to above-average performance.
What does the acronym AFI stand for in strategic management? - correct answer -Analyze external
environment, Analyze internal environment, Formulate and Implement strategy.
What are the two types of strategies? - correct answer -Emergent strategies (unplanned, flexible) and
Intended strategies (top-down, planned).
What is the difference between Strategic Fit and Strategic Intent? - correct answer -Strategic Fit
assesses available resources for opportunities, while Strategic Intent focuses on creating new resources
to exploit significant opportunities.
What defines competitive advantage? - correct answer -The ability to create more value than
competitors through unique resources or capabilities.
What are the two main sources of competitive advantage? - correct answer -Preference for the firm's
output and cost advantage relative to competitors.
What is value migration? - correct answer -The process where value created by one company shifts to
another due to changes in consumer preferences.
What is not considered a strategy? - correct answer -Operational effectiveness and growth or
flexibility, as these are outcomes rather than strategies.
What is the formula for value (V) in relation to price (P) and costs (C)? - correct answer -V = P - C,
where V is value, P is price, and C is costs of production.
1|Page
,What are the three key principles of strategy? - correct answer -1. Unique/valuable offerings, 2. Trade-
offs, 3. Organizational fit.
What does 'trade-offs' mean in the context of strategy? - correct answer -Choices companies make to
give up one thing for another, which can affect brand identity.
What is organizational fit? - correct answer -The alignment of all systems, resources, and capabilities
within an organization to create value.
How does Rivian aim to achieve competitive advantage? - correct answer -By offering unique vehicles
and early entry into the EV truck market, fostering customer loyalty.
What challenges does Company A face in the heating market? - correct answer -Declining demand due
to natural gas competition and seasonal sales fluctuations.
What is the significance of strategic fit in organizations? - correct answer -It allows companies to
combine strengths, fill market gaps, and realize synergies for sustainable growth.
What happens when companies copy competitors without differentiation? - correct answer -They
drive prices down and give away value, undermining their competitive position.
What is the role of assumptions in strategy formulation? - correct answer -Assumptions about external
forces and resource deployment are crucial for effective strategy development.
What is the impact of consumer preferences on value migration? - correct answer -Changes in
consumer preferences can lead to a shift in value from one company to another.
What does 'functional fit' refer to in organizational strategy? - correct answer -The alignment of
various functions like marketing and distribution to support the overall strategy.
2|Page
, What is 'reinforcing fit' in the context of strategy? - correct answer -The consistency of customer
experiences that strengthen a company's market position.
What is the relationship between strategy and performance? - correct answer -Performance is
dependent on the industry and the organization's resources, capabilities, and strategies.
What does it mean for a strategy to be 'staddling'? - correct answer -Attempting to operate in multiple
markets simultaneously, which can dilute brand identity.
What is the consequence of lacking organizational fit? - correct answer -If one system or resource is
missing, the organization may lose value and competitive advantage.
What does ROIC stand for? - correct answer -Return on Invested Capital
How is ROIC calculated? - correct answer -ROIC = NOPAT / Invested Capital
What is the formula for Capital Charge? - correct answer -Capital Charge = Invested Capital × WACC
What does EVA represent? - correct answer -Economic Value Added, calculated as EVA = NOPAT −
(Invested Capital × WACC)
What does a positive EVA indicate? - correct answer -It indicates a profit higher than what
shareholders were expecting.
What does a negative EVA signal? - correct answer -It signals the need to move or sell off assets,
indicating a lack of sustainable competitive advantage.
What does PEST analysis stand for? - correct answer -Political, Economic, Social, and Technological
factors in the macroenvironment.
3|Page
Answers (Verified Answers) 2026|2027 Q&A | Instant
Download Pdf
What is the primary purpose of a firm's strategy? - correct answer -To create a competitive advantage
for a period of time, leading to above-average performance.
What does the acronym AFI stand for in strategic management? - correct answer -Analyze external
environment, Analyze internal environment, Formulate and Implement strategy.
What are the two types of strategies? - correct answer -Emergent strategies (unplanned, flexible) and
Intended strategies (top-down, planned).
What is the difference between Strategic Fit and Strategic Intent? - correct answer -Strategic Fit
assesses available resources for opportunities, while Strategic Intent focuses on creating new resources
to exploit significant opportunities.
What defines competitive advantage? - correct answer -The ability to create more value than
competitors through unique resources or capabilities.
What are the two main sources of competitive advantage? - correct answer -Preference for the firm's
output and cost advantage relative to competitors.
What is value migration? - correct answer -The process where value created by one company shifts to
another due to changes in consumer preferences.
What is not considered a strategy? - correct answer -Operational effectiveness and growth or
flexibility, as these are outcomes rather than strategies.
What is the formula for value (V) in relation to price (P) and costs (C)? - correct answer -V = P - C,
where V is value, P is price, and C is costs of production.
1|Page
,What are the three key principles of strategy? - correct answer -1. Unique/valuable offerings, 2. Trade-
offs, 3. Organizational fit.
What does 'trade-offs' mean in the context of strategy? - correct answer -Choices companies make to
give up one thing for another, which can affect brand identity.
What is organizational fit? - correct answer -The alignment of all systems, resources, and capabilities
within an organization to create value.
How does Rivian aim to achieve competitive advantage? - correct answer -By offering unique vehicles
and early entry into the EV truck market, fostering customer loyalty.
What challenges does Company A face in the heating market? - correct answer -Declining demand due
to natural gas competition and seasonal sales fluctuations.
What is the significance of strategic fit in organizations? - correct answer -It allows companies to
combine strengths, fill market gaps, and realize synergies for sustainable growth.
What happens when companies copy competitors without differentiation? - correct answer -They
drive prices down and give away value, undermining their competitive position.
What is the role of assumptions in strategy formulation? - correct answer -Assumptions about external
forces and resource deployment are crucial for effective strategy development.
What is the impact of consumer preferences on value migration? - correct answer -Changes in
consumer preferences can lead to a shift in value from one company to another.
What does 'functional fit' refer to in organizational strategy? - correct answer -The alignment of
various functions like marketing and distribution to support the overall strategy.
2|Page
, What is 'reinforcing fit' in the context of strategy? - correct answer -The consistency of customer
experiences that strengthen a company's market position.
What is the relationship between strategy and performance? - correct answer -Performance is
dependent on the industry and the organization's resources, capabilities, and strategies.
What does it mean for a strategy to be 'staddling'? - correct answer -Attempting to operate in multiple
markets simultaneously, which can dilute brand identity.
What is the consequence of lacking organizational fit? - correct answer -If one system or resource is
missing, the organization may lose value and competitive advantage.
What does ROIC stand for? - correct answer -Return on Invested Capital
How is ROIC calculated? - correct answer -ROIC = NOPAT / Invested Capital
What is the formula for Capital Charge? - correct answer -Capital Charge = Invested Capital × WACC
What does EVA represent? - correct answer -Economic Value Added, calculated as EVA = NOPAT −
(Invested Capital × WACC)
What does a positive EVA indicate? - correct answer -It indicates a profit higher than what
shareholders were expecting.
What does a negative EVA signal? - correct answer -It signals the need to move or sell off assets,
indicating a lack of sustainable competitive advantage.
What does PEST analysis stand for? - correct answer -Political, Economic, Social, and Technological
factors in the macroenvironment.
3|Page
