MULTIPLE CHOICE QUESTIONS WITH ANSWERS ON THE TOPIC:ANALYSIS OF BUSINESS ENVIRONMENT AND ENTITY’S BUSINESS STRATEGY ANALYSIS IN INDIA
Which of the following is NOT one of Michael Porter’s Five Forces?
a) Threat of new entrants
b) Bargaining power of suppliers
c) Internal competition among employees
d) Threat of substitute products
Answer: c) Internal competition among employees
In the context of Porter’s Five Forces, which factor most directly affects the bargaining power of buyers?
a) Number of suppliers
b) Availability of substitutes
c) Product differentiation
d) Government regulation
Answer: b) Availability of substitutes
Which industry characteristic is likely to increase the threat of new entrants according to Porter’s Five Forces model?
a) High capital requirements
b) Strong brand identity of existing companies
c) Lack of economies of scale
d) High customer loyalty
Answer: c) Lack of economies of scale
What does the ‘W’ in SWOT Analysis stand for?
a) Weaknesses
b) Workforce
c) Wealth
d) Willpower
Answer: a) Weaknesses
Which of the following is considered an external factor in SWOT analysis?
a) Strengths
b) Weaknesses
c) Opportunities
d) Capabilities
Answer: c) Opportunities
In SWOT analysis, which factor would be classified as a strength?
a) Competitors’ weaknesses
b) High employee turnover
c) Strong brand reputation
d) Economic downturn
Answer: c) Strong brand reputation
What does the ‘P’ in PEST Analysis stand for?
a) Political
b) Product
c) Price
d) Performance
Answer: a) Political
In PEST analysis, which of the following factors would be considered a social factor?
a) Tax policies
b) Technological advancements
c) Cultural trends
d) Interest rates
Answer: c) Cultural trends
Which of the following is NOT a factor considered in PEST analysis?
a) Political
b) Economic
c) Sociocultural
d) Technological
e) Competitive
Answer: e) Competitive
What are the two dimensions used in the GE/McKinsey Matrix?
a) Market attractiveness and business unit strength
b) Market growth rate and market share
c) Competitive intensity and cost leadership
d) Market size and product quality
Answer: a) Market attractiveness and business unit strength
Which strategy is recommended for business units in the high attractiveness and high strength quadrant of the GE/McKinsey Matrix?
a) Harvest
b) Divest
c) Invest/Grow
d) Maintain
Answer: c) Invest/Grow
In the GE/McKinsey Matrix, a business unit with low market attractiveness but high business strength should consider which strategy?
a) Invest/Grow
b) Divest
c) Hold/Maintain
d) Harvest
Answer: d) Harvest
The ADL Matrix is used to assess the position of a business based on which two criteria?
a) Market share and growth rate
b) Competitive position and industry maturity
c) Market size and profitability
d) Technological innovation and customer loyalty
Answer: b) Competitive position and industry maturity
In the ADL Matrix, a company in a strong competitive position and in a mature industry should follow which strategy?
a) Aggressive expansion
b) Product development
c) Cost leadership
d) Market exit
Answer: c) Cost leadership
A business in the ADL Matrix with a weak competitive position in a growth industry should focus on which of the following strategies?
a) Market penetration
b) Harvesting
c) Consolidation
d) Divestment
Answer: c) Consolidation
Core competencies are most effectively leveraged by companies to achieve which of the following?
a) Cost reduction
b) Competitive advantage
c) Employee satisfaction
d) Regulatory compliance
Answer: b) Competitive advantage
Which characteristic is NOT associated with core competencies?
a) Provides access to a wide variety of markets
b) Is easily imitated by competitors
c) Contributes significantly to customer benefits
d) Difficult for competitors to imitate
Answer: b) Is easily imitated by competitors
The concept of core competencies was popularized by which business theorists?
a) Michael Porter and Henry Mintzberg
b) C.K. Prahalad and Gary Hamel
c) Peter Drucker and Philip Kotler
d) Jim Collins and Jerry Porras
Answer: b) C.K. Prahalad and Gary Hamel
Which of the following factors would decrease the threat of substitute products?
a) High switching costs
b) Low product differentiation
c) Many alternative products
d) Low buyer loyalty
Answer: a) High switching costs
High supplier power in an industry is likely when:
a) There are many suppliers.
b) Suppliers offer standardized products.
c) Suppliers can easily integrate forward.
d) Buyers have many alternative sources of supply.
Answer: c) Suppliers can easily integrate forward
Which of the following would be considered a high barrier to entry in an industry?
a) Low capital requirements
b) Economies of scale
c) Easy access to distribution channels
d) Low customer loyalty
Answer: b) Economies of scale
Bargaining power of suppliers is high when:
a) There are many substitute products available.
b) The industry is not a major customer of the suppliers.
c) The suppliers’ products are highly differentiated.
d) Switching costs are low for buyers.
Answer: c) The suppliers’ products are highly differentiated
Which force is determined by factors such as customer concentration and the importance of volume to suppliers?
a) Threat of new entrants
b) Bargaining power of suppliers
c) Bargaining power of buyers
d) Industry rivalry
Answer: c) Bargaining power of buyers
When the intensity of competitive rivalry is high, a company is likely to:
a) Experience higher profitability.
b) Reduce its marketing expenditures.
c) Face significant pressure on prices.
d) Enjoy strong customer loyalty.
Answer: c) Face significant pressure on prices
In SWOT analysis, which factor would be classified as an external threat?
a) Emerging competitors
b) High employee morale
c) Superior product quality
d) Strong brand loyalty
Answer: a) Emerging competitors
Which of the following is an example of a weakness in SWOT analysis?
a) Strong research and development capability
b) High employee turnover
c) Expansion into new markets
d) Favorable government policies
Answer: b) High employee turnover
Opportunities in SWOT analysis refer to:
a) Internal capabilities
b) External conditions favorable to growth
c) Market weaknesses
d) Organizational strengths
Answer: b) External conditions favorable to growth
An example of a strength in a SWOT analysis is:
a) Increasing market competition
b) Poor supply chain management
c) Strong financial position
d) New government regulations
Answer: c) Strong financial position
Which of the following is considered an internal factor in SWOT analysis?
a) Economic trends
b) Technological changes
c) Organizational culture
d) Industry regulations
Answer: c) Organizational culture
A company’s ability to leverage its brand reputation to enter new markets is classified under which element of SWOT?
a) Strengths
b) Weaknesses
c) Opportunities
d) Threats
Answer: c) Opportunities
Which of the following is a political factor in PEST analysis?
a) Inflation rates
b) Labor laws
c) Population growth
d) Technological innovation
Answer: b) Labor laws
An example of an economic factor in PEST analysis is:
a) Cultural values
b) Interest rates
c) Government policies
d) Internet penetration
Answer: b) Interest rates
In PEST analysis, which of the following would be considered a technological factor?
a) Legal regulations
b) Income distribution
c) Innovation in product development
d) Demographic changes
Answer: c) Innovation in product development
Which PEST factor would include changes in tax policies?
a) Political
b) Economic
c) Social
d) Technological
Answer: a) Political
PEST analysis is primarily used to identify:
a) Internal business strengths and weaknesses
b) External macro-environmental factors
c) Core competencies
d) Competitive forces within an industry
Answer: b) External macro-environmental factors
In PEST analysis, demographic changes would be categorized under:
a) Political
b) Economic
c) Social
d) Technological
Answer: c) Social
Which factor is used to assess market attractiveness in the GE/McKinsey Matrix?
a) Market share
b) Industry profitability
c) Technological capability
d) Customer satisfaction
Answer: b) Industry profitability
What is the primary purpose of the GE/McKinsey Matrix?
a) To evaluate a company’s core competencies
b) To assess the competitiveness of an industry
c) To determine investment priorities for business units
d) To identify internal strengths and weaknesses
Answer: c) To determine investment priorities for business units
In the GE/McKinsey Matrix, a business unit with low industry attractiveness and low competitive strength should:
a) Invest heavily
b) Harvest or divest
c) Hold its current position
d) Expand aggressively
Answer: b) Harvest or divest
Which of the following is a dimension of the GE/McKinsey Matrix?
a) Market share growth
b) Product differentiation
c) Market attractiveness
d) Brand loyalty
Answer: c) Market attractiveness
A business unit with high market attractiveness and medium business strength should:
a) Hold
b) Invest/Grow
c) Divest
d) Harvest
Answer: b) Invest/Grow
Which of the following is NOT a typical factor used to assess business unit strength in the GE/McKinsey Matrix?
a) Market share
b) Customer loyalty
c) Regulatory environment
d) Production capacity
Answer: c) Regulatory environment
What does ADL stand for in the ADL Matrix?
a) Arthur D. Little
b) Advanced Development Leadership
c) Analytical Decision Logic
d) Adaptive Dynamic Learning
Answer: a) Arthur D. Little
The ADL Matrix is also known as:
a) Product-Market Growth Matrix
b) Life Cycle Portfolio Matrix
c) Strategic Position and Action Evaluation Matrix
d) Industry Life Cycle Matrix
Answer: b) Life Cycle Portfolio Matrix
In the ADL Matrix, which stage of the industry life cycle is characterized by high competition and market consolidation?
a) Birth
b) Growth
c) Maturity
d) Decline
Answer: c) Maturity
A business unit in the decline phase of the ADL Matrix with a weak competitive position should consider:
a) Market expansion
b) Product innovation
c) Harvesting or divestment
d) Aggressive investment
Answer: c) Harvesting or divestment
Which stage of the industry life cycle in the ADL Matrix typically involves high levels of innovation and product development?
a) Birth
b) Growth
c) Maturity
d) Decline
Answer: a) Birth
The ADL Matrix helps companies to:
a) Identify core competencies
b) Evaluate market attractiveness
c) Determine competitive position and industry maturity
d) Analyze internal strengths and weaknesses
Answer: c) Determine competitive position and industry maturity
Which of the following is an example of a core competency?
a) High market share
b) Efficient supply chain management
c) Favorable government policies
d) High employee turnover
Answer: b) Efficient supply chain management
A core competency should provide:
a) Temporary advantage
b) Limited market access
c) Unique customer benefits
d) Easily replicable processes
Answer: c) Unique customer benefits
