Test 8: answer key

Question 1 · 2 marks · Strategic Choices - Portfolio Analysis Models · medium

Scenario. Global Infotech uses the General Electric Nine-Cell Matrix for portfolio planning. Alpha Cloud operates in a highly attractive industry and has strong business strength. Beta Legacy ERP operates in a moderately attractive industry with average business strength. Gamma Hardware operates in a low-attractiveness industry with weak business strength.

In the General Electric Nine-Cell Matrix, which two dimensions form the axes for portfolio analysis?

1. Market growth rate and relative market share
2. Industry attractiveness and business strength (correct answer)
3. Market growth rate and cost leadership
4. Competitive intensity and pricing trends

Answer: B — Industry attractiveness and business strength

Working. GE matrix dimensions: vertical = industry attractiveness; horizontal = business strength. It forms a nine-cell grid with invest, selective and harvest zones.

Explanation. The GE Nine-Cell Matrix uses industry attractiveness on the vertical axis and business strength on the horizontal axis. Market growth and relative market share belong to the BCG matrix.

Where it goes wrong. Confusing GE matrix axes with BCG matrix axes is a common error.

Authority. Chapter 4: Strategic Choices, Section 4.4.4 General Electric Matrix

Question 2 · 2 marks · Strategic Choices - Portfolio Analysis Models · medium

Alpha Cloud is in a highly attractive industry with strong business strength. Which strategic prescription is most appropriate?

1. Harvest and divest
2. Hold and protect without further investment
3. Invest and expand (correct answer)
4. Liquidate the business unit

Answer: C — Invest and expand

Working. Alpha Cloud maps to high attractiveness and strong strength, which is a green zone cell. The prescribed direction is invest and expand.

Explanation. High industry attractiveness combined with strong business strength places Alpha Cloud in the green invest and grow zone. The firm should allocate resources to expand its position.

Where it goes wrong. Treating every high-growth unit as a cash cow or harvesting it prematurely ignores the strength dimension.

Authority. Chapter 4: Strategic Choices, Section 4.4.4 General Electric Matrix

Question 3 · 2 marks · Strategic Choices - Portfolio Analysis Models · medium

Gamma Hardware is in a low-attractiveness industry with weak business strength. Which strategic direction is most appropriate?

1. Invest and expand
2. Build market share aggressively
3. Selectively invest for earnings
4. Harvest or divest (correct answer)

Answer: D — Harvest or divest

Working. Gamma Hardware maps to low attractiveness and weak strength. Red zone cells indicate harvest or divest.

Explanation. Low industry attractiveness and weak business strength place Gamma Hardware in the red zone. The appropriate prescription is harvest or divest rather than committing fresh resources.

Where it goes wrong. Continuing investment because the unit is part of the current portfolio ignores the weak industry and competitive position.

Authority. Chapter 4: Strategic Choices, Section 4.4.4 General Electric Matrix

Question 4 · 2 marks · Strategy Implementation and Evaluation - Strategic Change · medium

Scenario. Paramount Bank is shifting from manual loan processing to a cloud-based digital architecture. Management first communicates the need for change and creates awareness among employees. It then trains staff and migrates pilot branches to the cloud workflow. Finally, it revises standard operating procedures, links rewards to digital adoption and monitors stability of new habits.

Paramount Bank communicates the need for change and creates awareness among employees about digital loan processing. Which stage of Kurt Lewin model is this?

1. Unfreezing (correct answer)
2. Changing
3. Refreezing
4. Benchmarking

Answer: A — Unfreezing

Working. Lewin stages: unfreezing prepares readiness; changing introduces new behaviour; refreezing reinforces and stabilizes new behaviour.

Explanation. Unfreezing breaks down old attitudes and prepares employees for change. Awareness sessions and communication of the need for change are unfreezing actions.

Where it goes wrong. Calling awareness sessions refreezing because they involve communication is incorrect; refreezing stabilizes new behaviour after implementation.

Authority. Chapter 5: Strategy Implementation and Evaluation, Section 5.3.1 Strategic Change and Kurt Lewin Model

Question 5 · 2 marks · Strategy Implementation and Evaluation - Strategic Change · medium

Paramount Bank trains staff and migrates pilot branches to the cloud workflow. Which stage of Kurt Lewin model is this?

1. Changing (correct answer)
2. Unfreezing
3. Refreezing
4. Divesting

Answer: A — Changing

Working. Unfreezing creates readiness; changing introduces the new cloud workflow; refreezing reinforces new habits.

Explanation. Changing is the movement stage in which new behaviour, processes and systems are introduced. Training and pilot migration are implementation actions in the changing stage.

Where it goes wrong. Treating training as unfreezing is incorrect if the actual new process is being implemented.

Authority. Chapter 5: Strategy Implementation and Evaluation, Section 5.3.1 Strategic Change and Kurt Lewin Model

Question 6 · 2 marks · Strategy Implementation and Evaluation - Strategic Change · medium

Paramount Bank revises standard operating procedures, links rewards to digital adoption and monitors stability of new habits. Which stage of Kurt Lewin model is this?

1. Refreezing (correct answer)
2. Unfreezing
3. Changing
4. Strategic surveillance

Answer: A — Refreezing

Working. Refreezing actions include revised policies, performance measures, reward systems and continuous reinforcement of the new work method.

Explanation. Refreezing stabilizes the new behaviour so that employees do not revert to old practices. Revised procedures, reward alignment and monitoring reinforce new digital habits.

Where it goes wrong. Calling reward alignment changing is incorrect when the purpose is to stabilize and institutionalize the new behaviour.

Authority. Chapter 5: Strategy Implementation and Evaluation, Section 5.3.1 Strategic Change and Kurt Lewin Model

Question 7 · 2 marks · Strategy Implementation and Evaluation - Digital Transformation · hard

Scenario. Vaayu Retail is redesigning its order-to-delivery process. The chief digital officer wants radical end-to-end process redesign using digital workflow, process ownership and real-time data rather than merely automating existing manual steps. The board is also examining how digital transformation differs from incremental process improvement.

Which action most appropriately represents Business Process Reengineering in the order-to-delivery process?

1. Automating existing manual order entry without changing process steps
2. Reducing invoice matching time by 5 percent through incremental effort
3. Redesigning order-to-delivery from functional handoffs to an end-to-end digital workflow with process ownership (correct answer)
4. Adding a new report to the existing ERP system

Answer: C — Redesigning order-to-delivery from functional handoffs to an end-to-end digital workflow with process ownership

Working. BPR tests: radical change, cross-functional process view, end-to-end ownership and digital workflow design. Incremental time reduction and report addition are not BPR.

Explanation. BPR involves radical redesign of processes rather than mere automation or incremental improvement. End-to-end redesign with process ownership changes the way work is performed.

Where it goes wrong. Automating an existing manual step improves speed but does not reengineer the underlying process.

Authority. Chapter 5: Strategy Implementation and Evaluation, Section 5.3.2 Digital Transformation and Change Management

Question 8 · 1 marks · Strategy Implementation and Evaluation - Digital Transformation · medium

Digital transformation in Vaayu Retail most appropriately involves which of the following?

1. Only purchasing cloud software for the existing process
2. Incremental automation of a single task
3. Replacing all employees with technology
4. Redesigning processes, capabilities and culture around digital technologies to create new value (correct answer)

Answer: D — Redesigning processes, capabilities and culture around digital technologies to create new value

Working. Digital transformation scope: process redesign, new value creation, capability development, change management and culture alignment around digital technologies.

Explanation. Digital transformation is a fundamental organizational change that uses digital technologies to develop improved or new processes, products and services. It includes process redesign, capability building and cultural change.

Where it goes wrong. Equating digital transformation with software purchase or single-task automation reduces it to a technical upgrade.

Authority. Chapter 5: Strategy Implementation and Evaluation, Section 5.3.2 Digital Transformation and Change Management