Business Strategy and Corporate Governance Practice Test

Part I: Strategic Management Fundamentals

1. Which of the following terms has no relationship with the definition of business strategy?
   Answer: d. Executives
2. Which of the following aspects has no relationship with the nature of firm strategy?
   Answer: b. Tactics
3. Amongst the most frequent causes of strategic failure, we can mention:
   Answer: d. Organizational inertia
4. In the definition of the corporate strategy of the firm, we must pay special attention to:
   Answer: c. The definition of the scope of the firm
5. The diagnosis of the opportunities and strengths of the firm takes place along the stage of:
   Answer: d. No one of the previous answers is true
6. Deliberate strategy is associated with:
   Answer: b. A rational approach to business strategy
7. Amongst the limitations to the rationality of the strategic process associated with the limited rationality of the deciders, we can find:
   Answer: c. The availability of incomplete information
8. The definition of the price policy of the firm belongs to its:
   Answer: c. Functional strategy
9. Which of the following agents normally take place in the formulation of a firm’s strategy?
   Answer: a. The executives of the company, b. The board of directors, c. External consultants
10. Competitive advantage is related with:
    Answer: b. Business strategy

Part II: Value Creation and Corporate Governance

11. If the ROA of a firm is higher than the profitability required by its shareholders:
    Answer: d. No one of the previous answers is true
12. In the value curve, if a firm is creating value:
    Answer: a. The higher the reinvestment of profits, the higher the value creation
13. In which of the following situations can we surely assume that a firm is creating value?
    Answer: d. No one of the previous answers is true
14. Can a person belong to two different stakeholders at the same time?
    Answer: a. Yes
15. Can a stakeholder be internal and primary at the same time?
    Answer: a. Yes
16. How do we call a stakeholder which has power but lacks legitimacy and urgency at a given conflict situation?
    Answer: a. Latent
17. The members of the board representing the interest of the public and the small shareholders are called:
    Answer: c. Independent directors
18. Which of the following mechanisms turns an executive into a stakeholder?
    Answer: a. Stock options
19. A tender offer is called hostile when:
    Answer: c. It is rejected by the top managers of the firm
20. A golden parachute is:
    Answer: b. A payment given to members of the executive team if they are rejected