12/04/2024, 19:05 GSL M5 – Module Quiz 2 - KnowledgEquity
GSL M5 – Module Quiz 2
YOU SCORED 3 OUT OF A POSSIBLE 10 [30%]
Question 1 Marks: 0
XYZ Ltd (XYZ)’s website states that XYZ ‘aims to help people to do more, feel better,
live longer by being a science-led global healthcare company’.
Which of the following strategic components best summarises XYZ’s aim, as stated on
its website?
Answer Options
You answered A. The correct answer is D
USER SELECTION CORRECT ANSWER
A Vision—it is a sweeping description of XYZ’s ideal future.
B Goals—it provides specific outcomes that XYZ aims to achieve.
Values—it provides guiding principles to direct XYZ’s journey and help
C
prioritise decisions.
Mission—it captures XYZ’s reason for being and energises its stakeholders
D
to pursue common goals.
Answer Explanation
D is correct because XYZ’s stated aim captures their fundamental purpose, or why they
exist (to help people do more, feel better and live longer). It also explains how they will
achieve their vision (being a science-led global healthcare company). Both these parts
form what is known as the mission.
A is incorrect because the vision describes what an organisation wishes to achieve—it
is a description of its ideal future state.
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B is incorrect because goals set the desired achievement outcomes for the
organisation.
C is incorrect because values support the mission by guiding behaviour.
Module: 5 > 5.1 Aligning vision, mission, values, goals and strategy >
Page: 297
Question 2 Marks: 1
Which of the following is the best approach when evaluating strategic options using
value/effort assessment?
Answer Options
You answered B. The correct answer is B
USER SELECTION CORRECT ANSWER
A Ignore any options that will require high effort.
B Always pursue those options considered ‘low-hanging fruit’.
Focus only on the low-effort options, as it will be easy to implement these
C
and achieve quick wins.
Ignore ‘blood, sweat and tears’ options, as they are high-effort options that
D
require time and resources.
Answer Explanation
B is correct. The value/effort assessment tool evaluates the potential impacts of the
strategic options. The options are plotted in four quadrants according to value
contribution and level of effort. Low-hanging fruit (high-value and low-effort) options
should always be pursued.
A is incorrect because low-value and high-effort options are ‘dead ducks’ that are not
worth extensive effort, given the expected limited value.
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C is incorrect as the ‘delegate or dump’ options are low-value and low-effort options
that can often be delegated as tasks to the lower levels of the organisation.
Alternatively, given the minimal value creation, these tasks can be dumped (rejected)
altogether if they do not provide sufficient value.
D is incorrect as ‘blood, sweat and tears’ options are high-value and high-effort options
requiring time and resources, but they have great potential to create high value for the
organisation. These options should be seriously considered, including the possibility of
focusing on fewer options because of the extensive effort needed to realise each
option.
Module: 5 > 5.3 Evaluating The strategic options and determining
the strategic fit > Value/effort assessment > Page: 314
Question 3 Marks: 0
Which of the following steps is likely to be the most valuable outcome to an
organisation when using a risk assessment framework?
Answer Options
You answered C. The correct answer is A
USER SELECTION CORRECT ANSWER
A Determining a risk rating for identified risks
B Identifying risk issues in undertaking new projects
C Determining possible causes and possible consequences
Determining the current likelihood that the organisation will be exposed to a
D
specific risk
Answer Explanation
A is correct because determining a risk rating is the bringing together of all of the
previous steps in the risk assessment framework. The inherent risk is determined in
terms of consequence and likelihood ratings. Understanding the risk rating of each
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option will enable an organisation to have a good perspective on each option’s potential
risks, effects on the organisation’s stated goals, and the broader impact on the
organisation overall.
B, C and D are components of the risk assessment framework but do not in themselves
enable an organisation to gain an insight into the potential effect on stated goals and
any broader impact. It is important to undertake each of these steps, but the most value
is derived from determining the risk rating as this relates to impact.
Module: 5 > 5.4 Risk assessment > Risk management framework >
Page: 322
Question 4 Marks: 0
Simon’s Seafood Shop sells freshly cooked fish and chips. As part of a growth strategy,
Simon has identified outlet expansion as a strategic theme.
Which of the following factors indicates that outlet expansion is not feasible?
Answer Options
You answered B. The correct answer is A
USER SELECTION CORRECT ANSWER
Simon purchased his current fish and chip shop two years ago, as an
A
existing business.
There are very few shops selling fish and chips in the area Simon has
B
identified for a new shop.
Customer demand for fish and chips is increasing as time-poor consumers
C
buy dinner on their way home.
Small businesses can claim an immediate deduction on equipment up to
D
$20,000 in value under a new tax initiative.
Answer Explanation
A is correct because Simon purchased the business two years ago. As such, he has no
experience in setting up a new shop. If we consider the strategic theme from a
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feasibility point of view, it is unlikely that Simon has the skills or capabilities to establish
new outlets on his own. Many organisations seek stretch targets in their business
strategy, but the targets must be within the range of the organisation’s capabilities.
B and C are incorrect because it is important not to confuse whether the option is a
good idea—in the context of the external operating environment and agreement with
strategy— with whether the it can realistically be achieved.
D is incorrect because the possibility of a tax deduction suggests this would assist
Simon’s capability to set up a new shop.
Module: 5 > 5.5 Integrating strategic options > Evaluating strategic
options using Rumelt's criteria > Page: 332
Question 5 Marks: 1
Which of the following provides the best reason for setting key performance metrics
(KPMs)?
Answer Options
You answered D. The correct answer is D
USER SELECTION CORRECT ANSWER
Revenue and cost KPMs should be carefully tracked to identify areas that
A
are meeting targets.
Customer satisfaction KPMs will help the organisation know how
B
participating customers view performance.
Measuring industry benchmark KPMs will allow assessment of performance
C
relative to competitors.
KPMs will assist management to report on the achievement of strategic
D
goals and determine whether the strategy is being achieved.
Answer Explanation
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D is correct because this statement provides an overarching description of how KPMs
can assist management to achieve organisational goals, its missions and vision. It is
important that management are able to track whether the strategy is being achieved,
and KPIs provide a measure to report against for this purpose.
A, B and C are incorrect because, although they all provide reasons for setting KPMs,
individually they don’t explain how these KPIs will assist an organisation to achieve its
strategic goals.
Module: 5 > 5.6 Finalising strategy development > Setting key
performance metrics > Page: 340
Question 6 Marks: 0
Which of the following statements does not represent an example of a vision?
Answer Options
You answered A. The correct answer is C
USER SELECTION CORRECT ANSWER
A Maximising long-term returns to shareholders.
Being a great place to work where people are inspired to be the best they
B
can be.
Providing a global trading platform where practically anyone can trade
C
practically anything.
Excelling at securing and enhancing the financial wellbeing of people,
D
businesses and communities.
Answer Explanation
C is correct because it represents a mission statement and is not an example of a
vision. It addresses what the organisation is going to do to achieve its vision.
A vision is a sweeping yet succinctly articulated description of an organisation’s ideal
future state. The vision does not include the specifics of how the organisation will
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achieve this state—those details are included in the organisation’s goals. A vision
encapsulates the aspirations and values of an organisation and its management, rather
than the practical processes that could transform the organisation to this state.
A, B and D are incorrect answers because they are all examples of visions. These
statements all meet several of John Kotter’s seven questions on what makes a good
vision statement.
Module: 5 > 5.1 Aligning vision, mission, values, goals and strategy >
Vision and strategy development > Page: 298
Question 7 Marks: 0
Which of the following statements is the most correct in developing strategic options
for an organisation?
Answer Options
You answered D. The correct answer is B
USER SELECTION CORRECT ANSWER
A Organisational structure is not relevant in a discussion of strategic options.
The organisation must determine how to differentiate itself before setting
B
revenue goals.
Setting revenue and profit goals first will assist in guiding product and
C
market Analysis.
The current capability of the organisation’s workforce will dictate what
D
options are realistically achievable.
Answer Explanation
B is correct because to develop strategic options you have first completed both an
external and internal analysis for the organisation. From this analysis you must
determine how the organisation will differentiate itself from competitors. This might be
through products or new markets; through operational functions like customer service
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or low-cost manufacturing. Only after this has been completed can you then consider
operational levers like revenue and growth, or organisational and people levers.
A, C and D are incorrect because these represent the operational and organisational
levers that an organisation pulls on to implement a strategic option, not develop a
strategic option.
Module: 5 > 5.2 Strategic drivers and considerations > Page: 303
Question 8 Marks: 0
Which of the following statements best describes the intent of ‘what-if’ analysis?
Answer Options
You answered A. The correct answer is C
USER SELECTION CORRECT ANSWER
To do what-if modelling, it is first necessary to estimate the benefit of the
A
successful implementation of an option.
The aim is to apply the same approach to all the options in order to
B
subjectively determine which options require further detailed analysis.
To make an informed decision about whether a risk is worth the reward
C requires an understanding of the scope and scale of both the risks and
rewards available.
Management needs to influence the strategy content to highlight that the
D interactions between process content and context give a three-dimensional
quality to strategy development and implementation.
Answer Explanation
C is correct because greater rewards often entail greater risks. Making an informed
decision about whether a risk is worth the reward requires an understanding of the
scope and scale of the risks and rewards available.
To do what-if modelling, it is first necessary to estimate the benefit of the successful
implementation of an option. You can then determine the impact of expected risks on
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achieving the expected value by multiplying the total value by the expected percentage
risk.
A is incorrect because this is only the first step in what-if analysis.
B is incorrect because the intent of what-if analysis is to apply the same approach to all
options to objectively determine which options are more promising.
D is incorrect because this describes what a what-if analysis is and not its intent.
Module: 5 > 5.4 Risk assessment > Quantifying costs and benefits >
Page: 328
Question 9 Marks: 1
Simon’s Seafood Shop sells freshly cooked fish and chips. As part of a growth strategy,
Simon has identified outlet expansion as a strategic theme.
Which of the following factors indicates that outlet expansion is externally consistent?
Answer Options
You answered B. The correct answer is B
USER SELECTION CORRECT ANSWER
A Simon has experience in running a fish and chip shop.
Demand for fish is increasing as it is viewed by consumers as a healthy
B
food.
C Simon’s bank has agreed to lend him the money for the business expansion.
There are many shops selling fish and chips in the area he has identified for
D
a new shop.
Answer Explanation
B is correct because it shows that the option of outlet expansion is consistent with the
external environment. People view fish as healthy, which is a social factor related to the
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remote environment
Options A and C are incorrect because they are examples of facts that would be
considered in assessing feasibility and not external consistency.
D is incorrect because the fact that there is much competition in the area selected
indicates that the option is not externally consistent.
Module: 5 > 5.5 Integrating strategic options > Evaluating strategic
options using Rumelt's criteria > Page: 332
Also see: Mintzberg, H. & Quinn, J. 1996, The Strategy Process: Concepts, Context
and Cases, 3rd edn, Prentice Hall, New Jersey.
Question 10 Marks: 0
Pfizer is one of the world’s largest pharmaceutical companies.
Which of the following statements best describes a reason for competitive advantage?
Answer Options
You answered B. The correct answer is C
USER SELECTION CORRECT ANSWER
A Pfizer is a large company and can dominate smaller competitors.
B Pfizer invests heavily in research and development of new products.
Pfizer protects its intellectual property by taking out patents on major drug
C
discoveries.
Pfizer has a solid reputation, not having had any major product recalls for
D
over five years.
Answer Explanation
C is correct because patents provide a unique competitive advantage that prevents
competitors from replicating the product for a defined period of time. If Pfizer is able to
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develop new drugs before other companies then it can gain patents that render
competitors’ research and development for the same drugs as sunk cost.
A is incorrect because being a large company does not necessarily mean you will
dominate small companies.
B is incorrect because investing heavily in R&D can be copied by competitors and may
not provide Pfizer competitive advantage.
D is incorrect because having a good reputation helps build brand equity but doesn’t
necessarily result in sustainable competitive advantage.
Module: 5 > 5.5 Integrating strategic options > Evaluating strategic
options using Rumelt's criteria > Page: 332
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