1. FALSE.

Each industry has its own unique set of competitive forces, barriers to entry,
customer demands, technologies and regulatory environments. Porter’s Five Forces
framework highlights this by showing how competition in an industry depends on: Threat of
new entrants, threat of substitute products and services, Intense rivalry among existing
players, Bargaining power of suppliers, Bargaining power of customers. (tr75)
2. TRUE. Horizontal integration refers to the consolidation of partner corporations to expand
its scale by merging or acquiring competitors operating at the same level in the value chain.
When those competitors are doing poorly, this can be a strategic opportunity for horizontal
integration.
6. TRUE. According to Porter (1985), Corporations usually use three basic strategies:
low-cost production, differentiation, and cost or differentiation focus. Here operations are
firstly regarded as one of the functions to support competitive business strategy, and used to
enhance the competitiveness of business. (tr3)
7. FALSE ( use competitor resources → use own company’s resources). Each company
should identify and exploit those resources, skills and organizational characteristics that give
it a comparative advantage over its competitors.
8. TRUE. Corporate-level strategy primarily focuses on identifying which industries or
markets the firm should compete in, with the ultimate goal of maximizing long-term
profitability and sustainable competitive advantage.
12. FALSE (Disadvantage → Advantage). According to VRIO Framework, a company with
valuable, rare, inimitable, and well-organized resources achieves a sustained competitive
advantage. Therefore, if a company's profitability is higher than the industry average, it is not
at a disadvantage — it is enjoying a competitive advantage, likely due to its unique and
well-managed resources.
20. FALSE. Wake Up Coffee is unlikely to achieve the same unit manufacturing costs as
established competitors due to a lack of economies of scale, industry experience, supplier
relationships, and the short duration of its trial run.
52. TRUE. Differentiation is a strategy to enhance the market attractiveness of service. By
differentiating, a firm creates customer value that competitors can't easily replicate, which
leads to competitive advantage and the ability to charge higher prices.

53. True

A virtual corporation is a network-based organization that relies heavily on

outsourcing and partnerships. It typically outsourced most or all of its key functions
(like production, distribution, HR, etc.) to focus on core competencies such as
coordination or branding.

54. True

Span of control refers to the number of employees who report directly to a single
manager. A wider span means more subordinates; a narrow span means fewer.

55, F (localization -> global)​

The statement is false because it describes a global strategy, not a localization
strategy. A localization strategy focuses on adapting products to local markets to
better meet customer needs and increase revenues, while a global strategy aims to
reduce costs through economies of scale and location economies.

62.T

Strategy formulation is typically done by a small group of top executives, as it

involves making high-level decisions about the direction of the company. However,
strategy implementation involves the entire organization, requiring coordination
across many levels and departments to effectively execute the strategy.

64. T

Stakeholders include anyone who is affected by the company’s actions—such as

employees, customers, shareholders, suppliers, and the community. They have an
interest in how well the company performs because it directly or indirectly impacts
them

66. T

A company gains a competitive advantage when it can achieve higher profitability

than its industry average, typically through superior efficiency, differentiation, or cost
leadership. This enables the company to outperform competitors, attract more
customers, and sustain long-term success in the market.

67. T (8.2)

Marketing strategy involves key decisions on pricing, promotion, advertising, product

design, and distribution to gain a competitive edge. It aligns with operations strategy
to ensure global effectiveness, whether through standardization or adaptation, based
on market needs and competitive goals.

68. T (2.3.2 tr56)

When a company faces strong cost reduction pressures, it seeks strategies that offer
greater control and cost efficiency. Exporting and wholly owned subsidiaries allow a
company to manage operations more directly, reduce costs, and optimize production
without relying on third parties, which helps in achieving cost savings and improving
profitability.

69. F (2.2.3 tr50)

Companies using a global standardization strategy often involve global coordination

of R&D to reduce costs, access talent, and respond to market needs — not
centralize it only at home.

74. F
More hierarchical levels often lead to greater risk of information distortion and higher
management costs, not less. Flatter structures are usually more efficient and
transparent.

75. F (tr144)

While it relates to Porter’s Five Forces (specifically barriers to entry), it is incorrect

because entry barriers are not only legal prohibitions. They include many factors like
economies of scale, brand loyalty, capital requirements, and access to distribution —
legal restrictions are just one type.

76. F

Stockholders, employees, managers, executives, and board members are

considered internal stakeholders because they are directly involved in the company
while external stakeholders include parties outside the organization, such as
customers, suppliers, creditors, government, and the community.

78. F(1.4 tr26)

Vertical integration is not mainly for short-term profit, nor does it mean entering
entirely new industries — it refers to gaining control over parts of the same supply
chain to support long-term strategy.
82. False

A differentiator is protected from industry competitors not by cost advantage, but by

offering unique products or services that are valued by customers. This uniqueness
can reduce price sensitivity and create brand loyalty. Cost advantage is typically a
strategy used by cost leaders, not differentiators.

1,Strategic management focuses only on short-term planning => False.

Because strategic management is not limited to short-term plans; instead, it is

primarily concerned with achieving long-term objectives. Strategies are the means by
which long-term objectives will be achieved. While, annual objectives are short-term
milestones that organizations must achieve to reach long-term objectives.
Furthermore, strategic management is the art and science of formulating,
implementing, and evaluating cross-functional decisions that enable an organization
to achieve its objectives which emphasizes its comprehensive and long-term
orientation rather than a narrow focus on short-term planning.

2, International business strategy aims to compete effectively in the global economy

=> True. International business strategy focuses on how to compete successfully in

the global economy that the core purpose of international business strategy is to
enhance a company’s ability to compete on a global scale.Furthermore, the intent of
international business strategy is to outcompete other companies in the global
economy by increasing and then sustaining superior organizational performance,
creating economic value, while satisfying stakeholder goals. (includes: coordination
and configuration to respond effectively to global challenges).

3, Annual objectives are used for long-term planning => False.

Annual objectives are short-term milestones that organizations must achieve to

reach long-term objectives. It should be measurable, quantitative, challenging,
realistic, consistent, and prioritized. This means that annual objectives are not tools
for long-term planning, but rather short-term goals that support the implementation of
long-term strategies. They break down larger objectives into manageable steps that
can be monitored and evaluated annually.

4, Strategy formulation ends once external opportunities and threats are identified =>
False.

“Strategy formulation includes: developing a vision and mission, identifying an

organization’s external opportunities and threats, determining internal strengths and
weaknesses, establishing long-term objectives, generating alternative strategies,
choosing particular strategies to pursue.” Identifying external opportunities and
threats is only one step in the strategy formulation process, it does not mark the end.

5, Differentiation focus is a generic strategy that applies only to high-cost markets =>
False.

“Porter (1985) states that corporations use three basic strategies: low-cost
production, differentiation, and cost or differentiation focus.” These strategies are not
limited to any specific type of market, such as high-cost markets. The differentiation
focus strategy refers to targeting a specific market segment and offering unique
features that meet the needs of that segment — regardless of whether it is a
high-cost or low-cost market. The strategy is about specialization, not about the cost
level of the market it targets. Therefore, the idea that it applies only to high-cost
markets is incorrect.

6, International strategic management prioritizes financial benefits over non-financial

benefits => False.

Financial Benefits: significant improvement in sales, profitability, and productivity

superior long-term financial performance relative to their industry

Nonfinancial Benefits

•enhance awareness of external threats, improved understanding of competitors’

strategies, increase employee productivity, reduce resistance to change, and a
clearer understanding of performance–reward relationships •​enhances the
problem-prevention capabilities of organizations
•empower managers and employees, increase discipline, improve coordination,
enhance communication

•increase forward thinking, improve decision making increase synergy and allocate
time and resources more effectively

•can be the beginning of an efficient and effective managerial system

•may renew confidence in the current business strategy or point to the need for
corrective actions

•provide a basis for identifying and rationalizing the need for change to all managers
and employees of a firm

•Help managers and employees view change as an opportunity rather than as a

threat This indicates that both types of benefits are highly valued, and there is no
indication that financial benefits are prioritized over non-financial.