Test 15: answer key

Question 1 · 2 marks · Strategic Analysis: External Environment · medium

Scenario. NeoGen Automotive operates in electric vehicles. Setting up a new EV platform requires large capital expenditure and charging infrastructure. Battery technology is concentrated among a few suppliers. Fleet buyers negotiate hard on price. NeoGen has proprietary thermal management software protected by patents and rare engineering talent. Competitors can license broadly equivalent software from third parties.

Which Porter's Five Forces element is most directly represented by these large capital requirements and charging infrastructure needs in the electric vehicle industry?

1. Threat of new entrants (correct answer)
2. Bargaining power of buyers
3. Threat of substitutes
4. Bargaining power of suppliers

Answer: A — Threat of new entrants

Working. Model mapping: large capital requirement and infrastructure create barriers to entry, which reduce the threat of new entrants.

Explanation. Large capital requirements and the necessity of establishing widespread infrastructure create significant barriers to entry, which most directly shape the Threat of New Entrants under Porter's Five Forces framework.

Where it goes wrong. Confusing supplier concentration with entry barriers.

Authority. Chapter 2: Strategic Analysis: External Environment, Porter's Five Forces Model

Question 2 · 2 marks · Strategic Analysis: Internal Environment · hard

NeoGen's proprietary thermal management software is protected by patents and supported by rare engineering talent. Which VRIO attribute most directly supports a sustained competitive advantage?

1. Valuable only
2. Rare and costly to imitate (correct answer)
3. Substitutable
4. Organized for parity

Answer: B — Rare and costly to imitate

Working. VRIO check: valuable yes; rare yes; costly to imitate yes due to patents and talent; non-substitutable likely yes. The key attribute in the stem is rare and costly to imitate.

Explanation. A resource must be valuable, rare, costly to imitate and non-substitutable to be a source of sustained competitive advantage. Patents and rare talent point to rareness and costly imitation.

Where it goes wrong. Treating valuable alone as sufficient for sustained advantage.

Authority. Chapter 3: Strategic Analysis: Internal Environment, Role of Resources and Capabilities

Question 3 · 2 marks · Strategic Analysis: Internal Environment · medium

Under the VRIO framework, when a resource is valuable but competitors can easily license broadly equivalent systems from third parties, what competitive outcome does the firm achieve?

1. Sustained competitive advantage
2. No competitive advantage under any condition
3. Temporary competitive advantage
4. Competitive parity (correct answer)

Answer: D — Competitive parity

Working. VRIO: Valuable = Yes, Rare = No -> Competitive Parity.

Explanation. Under the VRIO framework, a resource that is valuable but not rare (since equivalent systems can be readily acquired or licensed by competitors) leads to competitive parity, rather than temporary or sustained competitive advantage.

Where it goes wrong. Assuming any valuable resource automatically gives sustained advantage.

Authority. Chapter 3: Strategic Analysis: Internal Environment, Criteria for Core Competencies

Question 4 · 2 marks · Strategic Choices · medium

Scenario. NeoGen Automotive currently sells electric cars to personal buyers. It proposes to enter commercial battery packs for fleet operators. Its portfolio data are: Product A has market growth 18 percent and relative market share 1.4; Product B has growth 6 percent and relative share 1.8; Product C has growth 20 percent and relative share 0.5; Product D has growth 4 percent and relative share 0.4.

NeoGen currently sells electric cars to personal buyers and proposes commercial battery packs for fleet operators. Under Ansoff's Product-Market Growth Matrix, this move is:

1. Market penetration
2. Product development
3. Market development
4. Diversification (correct answer)

Answer: D — Diversification

Working. Ansoff mapping: existing product and existing market is penetration; existing product and new market is market development; new product and existing market is product development; new product and new market is diversification.

Explanation. Commercial battery packs are a new product and fleet operators are a new market. New product plus new market is diversification under Ansoff.

Where it goes wrong. Treating fleet operators as existing customers or battery packs as an existing product.

Authority. Chapter 4: Strategic Choices, Ansoff's Product Market Growth Matrix

Question 5 · 2 marks · Strategic Choices · medium

In the BCG Growth-Share Matrix, which NeoGen product is classified as a cash cow?

1. Product B (correct answer)
2. Product A
3. Product C
4. Product D

Answer: A — Product B

Working. BCG mapping: Product A high growth and high share is a star; Product B low growth and high share is a cash cow; Product C high growth and low share is a question mark; Product D low growth and low share is a dog.

Explanation. A cash cow has low market growth and high relative market share. Product B has 6 percent growth and 1.8 relative share, which fits this quadrant.

Where it goes wrong. Classifying high growth products as cash cows or confusing relative share with absolute share.

Authority. Chapter 4: Strategic Choices, Boston Consulting Group Growth-Share Matrix

Question 6 · 2 marks · Strategic Choices · hard

For Product C, which is a question mark, which strategy is most appropriate for NeoGen?

1. Harvest immediately without investment
2. Build or selectively invest to convert it into a star (correct answer)
3. Divest in all circumstances
4. Hold without investment

Answer: B — Build or selectively invest to convert it into a star

Working. BCG post-identification strategy mapping: build is used where market growth is high and share can be increased; harvest and divest are considered only after evaluation.

Explanation. Question marks operate in high-growth markets with low share. Selective investment to build share and convert the product into a star is a common strategic option, subject to funding and feasibility.

Where it goes wrong. Treating question marks as automatic dogs or automatic divestment candidates.

Authority. Chapter 4: Strategic Choices, BCG Matrix Post Identification Strategies

Question 7 · 2 marks · Strategy Implementation and Control · medium

Scenario. NeoGen Automotive is moving from a functional structure to a Strategic Business Unit structure for its EV and battery businesses. It plans to set assumptions about continuity of EV subsidies and monitor abrupt policy changes. The CEO wants leaders to inspire teams, create a shared vision and drive change.

NeoGen sets assumptions about continuity of EV subsidies and monitors abrupt policy changes. Which strategic control is most directly described?

1. Budgetary control
2. Personal observation
3. Premise control (correct answer)
4. Special alert control

Answer: C — Premise control

Working. Control mapping: assumptions about subsidy continuity are premises; monitoring their validity is premise control; an abrupt unexpected event would trigger special alert control.

Explanation. Premise control systematically checks whether the assumptions on which strategy is based remain valid. Monitoring EV subsidy continuity is a premise control. Special alert control is triggered by sudden unexpected events.

Where it goes wrong. Confusing premise control with special alert control.

Authority. Chapter 5: Strategy Implementation and Control, Strategic Control

Question 8 · 1 marks · Strategy Implementation and Control · medium

The CEO wants leaders to inspire teams, create a shared vision and drive change. Which leadership style is most appropriate?

1. Transactional leadership
2. Laissez-faire leadership
3. Autocratic leadership
4. Transformational leadership (correct answer)

Answer: D — Transformational leadership

Working. Leadership mapping: inspiring teams, creating shared vision and driving change align with transformational leadership.

Explanation. Transformational leadership focuses on inspiring followers, communicating a shared vision, and driving organizational change. In contrast, transactional leadership relies primarily on contingent rewards, rules, and penalties under established routines.

Where it goes wrong. Selecting transactional leadership because it mentions rewards, but the stem emphasizes inspiration and change.

Authority. Chapter 5: Strategy Implementation and Control, Leadership and Strategic Change