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The Strategy Experience Testbank Questions

Phase 2
1. When considering appropriate generic strategies for WRSX and their
competitors, using Porters framework, which TWO of the following
statements are correct?
a) Boutique agencies that specialise in high quality services to a narrow
range of clients are pursuing a focussed differentiation strategy.
b) Large agencies who offer a wide range of services at low cost are
pursuing a cost focus strategy.
c) WRSX seek to satisfy clients by offering high quality services to a wide
range of clients and are pursuing a differentiation strategy.
d) The largest four multinational agencies are competing for cost
leadership by offering high quality services at premium prices.

2. In response to growth in Asian markets, WRSX might decide to enter the


Chinese and Indian markets to sell its existing services. Which term does
Ansoff use for this strategic direction?
a) Market penetration.
b) Product development.
c) Market development.
d) Diversification.

3. Match the following terms used in describing corporate level strategy to


the relevant definitions.
TERMS: 1) Synergy Manager; 2) Diversification; 3) Outsourcing; 4)
Backward Vertical Integration
a) Development into activities concerned with the inputs into the
companys current business e.g. if WRSX were to acquire its own
printing facilities to produce advertising.
b) The process by which activities previously carried out internally are
subcontracted to external suppliers e.g. if WRSX uses a media agency
to deal with major media purchasing and planning.
c) Development of activities in different markets with new products,
thereby increasing the scope of an organisations activities e.g. if large
commercial banks expanded their activities into providing marketing
services.
d) A parent company seeking to enhance value for its business units by
managing linkages across business units e.g. if WRSX utilises
specialised knowledge in one of its subsidiaries to enhance expertise in
another subsidiary.
4) Match the following terms used in the BCG Growth- Share matrix to the
most appropriate explanation.
TERMS: 1) Dog; 2) Cash cow; 3) Question mark; 4) Star
a) An agency has a large market share in a fast growth market e.g. digital
media advertising.
b) An agency has a small market share in a fast growth market e.g. digital
media advertising.
c) An agency has a large market share in a low growth market e.g. daily
newspaper ads.
d) An agency has a small market share in a low growth market e.g. daily
newspaper ads.

5) Which TWO of the following could be considered as cost drivers in Yips


Drivers of Internationalisation model?
a) An international agency gains from economies of scale.
b) An agency has global customers.
c) Advertising regulations are being standardised across different regional
markets.
d) An agency is able to exploit cheaper labour in one of its locations e.g.
WRSX can employ new media expertise in Singapore at lower wage rates.

6) If WRSX decides to enter new markets, it will need to consider which entry
mode to choose. Which TWO of the following statements about entry modes
is correct?
a) A wholly owned subsidiary in a greenfield start up operation would be
the lowest risk option.
b) A joint venture with a local partner would enable the company to tap
into the partners cultural know-how, linkages and reputation.
c) A wholly owned subsidiary would be suitable in markets where the
agency has broad competitive advantages that can easily be transferred
to the new markets.
d) Franchising or licensing of the agencys brand name to a local firm is a
high cost/high risk option which should only be used in exceptional
circumstances.

7) Interactive and digital media are presenting many new innovation


opportunities for advertising agencies. Match the following innovation
concepts to the most appropriate explanations.
TERMS: 1) First Mover Advantage; 2) Tipping Point; 3) Open
Innovation; 4) Disruptive Innovation
a) Something which creates substantial growth by offering a new
performance trajectory that has the potential to be markedly superior to
existing technologies .
b) An organisation is better off than its competitors as a result of being a
pioneer with a new product, process or service.
c) Demand for a product or service takes off with explosive growth.
d) The deliberate import and export of knowledge by an organisation in
order to accelerate and enhance its products and services.
8) WRSX has grown primarily through a series of mergers and acquisitions.
Which TWO of the following might be advantages of this form of strategic
development?
a) It expands the range of capabilities available to the organisation
b) It enables the organisation to spread the cost of new investment over a
longer time period.
c) It avoids integration problems and cultural fit difficulties.
d) It expands the market coverage of an organisation by entering new
geographical markets.

9) Using the Ashridge Parenting Matrix (Goold and Campbell), match the
following terms to the most appropriate explanations of how subsidiary
businesses might fit with the parent organisation.
TERMS : 1) Alien Business; 2) Ballast Business; 3) Value Trap
Business; 4) Heartland Business
a) There is a clear opportunity for the parent to add value but the parent
lacks understanding of the subsidiary.
b) The parent understands the subsidiary well and can continue to add
value.
c) The parent has little understanding of the subsidiary business and
there is little or no opportunity to add value to the subsidiary.
d) The parent has a clear understanding of the subsidiary business but
there is little need (or opportunity) for the parent to add value to the
subsidiary.

10) Currently WRSX adopts a multi-domestic approach to managing its


subsidiaries. Which TWO of the following points are advantages of such an
approach?
a) It gives the subsidiary businesses a good deal of autonomy and this
motivates local managers to perform better.
b) It enables all the subsidiary businesses to co-ordinate their activities
and build synergistic linkages between them.
c) It allows the subsidiary to focus on local clients and specifically
tailor its services to the needs of these clients.
d) By concentrating activities in one or two locations the business is
able to reap economies of scale and cut costs.

11) If WRSX, or one of its competitors, decided to try to increase market share by
offering higher quality services whilst simultaneously seeking ways of
lowering costs in order to lower prices, this is an example of which kind of
competitive strategy according to the Strategy Clock?
a) Differentiation strategy.
b) Non competitive strategy.
c) Low price strategy.
d) Hybrid strategy.
12) Which TWO of the following are sensible reasons for WRSX to avoid
diversifying into new activities beyond its core marketing services?
a) There are no possibilities for economies of scope.
b) Research shows that unrelated diversification is negatively co-related
with performance.
c) The potential for synergy is limited as the activities are not related.
d) Spreading risk across a wide range of activities reduces dependence on
one market.