Business & Management Test: Business Strategy (Short)

Explanation
Unions are not considered one of the factors of the external environment. The external environment refers to the external factors that can impact an organization's operations and strategies. These factors include demographic factors, such as population size and characteristics, and sociocultural factors, such as cultural norms and values. Unions, on the other hand, represent a specific group within the internal environment of an organization, as they consist of employees who have formed a collective bargaining unit to negotiate with management on employment terms and conditions.

Explanation
Porter's five forces framework analyzes the competitive environment of a company and identifies the factors that can impact its profitability. The forces mentioned in the question - suppliers, competitors, customers, new entrants - are all external factors that affect a company's operations. The correct answer, substitutes, refers to alternative products or services that can fulfill the same customer needs. Substitutes can pose a threat to a company's market share and profitability if customers choose to switch to these alternatives instead of the company's offerings. Therefore, substitutes are an important force that needs to be considered in assessing a company's competitive position.

Explanation
The given correct answer suggests that one of the assumptions of the industry is that no two organizations are exactly the same. This means that each organization has its own unique characteristics, such as its culture, structure, processes, and strategies. This assumption recognizes that even organizations operating in the same industry will have differences in terms of their products, services, target markets, competitive advantage, and overall business approach. It emphasizes the importance of understanding and appreciating these differences when analyzing and making decisions about the industry.

Explanation
Location is not one of the characteristics of a strategic group. Strategic groups are formed based on firms that share similar strategies, such as their target market, product offerings, and competitive advantages. Location refers to the physical location of a firm's operations or offices, which may vary even within the same strategic group. Therefore, it is not a defining characteristic of a strategic group.

Explanation
The correct answer is Support activities and Primary Activities. The value chain consists of both support activities and primary activities. Support activities are those that provide support to the primary activities and include activities such as procurement, technology development, human resource management, and infrastructure. Primary activities, on the other hand, are directly involved in the creation and delivery of the product or service and include activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service. Both support activities and primary activities are essential in creating value for the firm and contributing to its profitability.

Explanation
Industries in which proportionally more value is added in upstream activities, such as logistics, are more likely to benefit from a global strategy. Upstream activities refer to the stages of production that involve acquiring raw materials, manufacturing, and distributing inputs to the next stage. By focusing on the upstream activities, industries can streamline their supply chain, optimize efficiency, and reduce costs, which are crucial elements for a successful global strategy. Therefore, industries that heavily rely on upstream activities are more likely to benefit from a global approach.

Explanation
Multinational firms often face the challenge of balancing the need for local adaptation, which involves customizing their products or services to meet the specific preferences and requirements of each local market, with the goal of global integration, which involves standardizing certain aspects of their operations and products to achieve economies of scale and consistent branding across different markets. This dilemma arises because firms need to strike a balance between catering to local market demands and achieving efficiency and consistency on a global scale.

Explanation
The primary participants in corporate governance are shareholders, management, and the board of directors. Shareholders are the owners of the company and have the ultimate decision-making power. Management is responsible for running the day-to-day operations of the company and implementing the strategies set by the board of directors. The board of directors is elected by the shareholders and is responsible for overseeing the management, making important decisions, and ensuring that the company is being run in the best interest of the shareholders.