Strategic Quiz 1

1. According to Porter, what is the key difference between Operational Effectiveness (OE) and Strategy?

• OE focuses on industry structure; Strategy focuses on profit
• OE is about doing similar activities better; Strategy is about doing different activities
• OE is about leadership; Strategy is about management
• OE focuses on differentiation; Strategy focuses on cost
• OE is optional; Strategy is mandatory

2. What is the “productivity frontier”?

• The boundary of industry profitability
• The maximum value that can be created at a given cost with current best practices
• The lowest possible cost achievable in an industry
• A company’s growth limit in the short term
• The maximum advertising spend limit

3. Why is OE not sufficient for long-term profitability?

• OE requires too much investment
• OE always leads to higher costs
• OE improvements diffuse quickly, leading to competitive convergence
• OE reduces customer loyalty
• OE prevents strategic positioning

4. Which airline illustrates strategy through unique activities, according to Porter?

• Delta
• American Airlines
• Southwest Airlines
• United Airlines
• British Airways

5. Which furniture retailer is used as an example of strategic positioning through activity choices?

• Ashley Furniture
• Wayfair
• IKEA
• Walmart
• Costco

6. Trade-offs in strategy mean:

• A company must serve all customer needs
• A company must choose what not to do
• A company should copy best practices
• A company avoids cost differentiation
• A company outsources all activities

7. Which type of strategic fit means activities reinforce one another?

• First-order fit
• Zero-order fit
• Second-order fit
• Third-order fit
• Strategic imitation

8. Continental Lite failed because it attempted to:

• Grow too fast
• Straddle two incompatible positions
• Reduce costs excessively
• Outsource operations
• Focus too narrowly on premium customers

9. What is the essence of strategy according to Porter?

• Improving OE continuously
• Avoiding trade-offs
• Competing on cost alone
• Choosing to perform different activities
• Competing on advertising spend

10. Which of the following is a danger of focusing only on OE?

• Higher market share
• Greater trade-offs
• Zero-sum competition and profit erosion
• Unique positioning
• Stronger brand differentiation