Strategic Analysis: External Environment
30 original test MCQs, 2 marks each. Practice and separate-test stems differ. T001-T010 use one shared case below; T011-T030 stand alone.
Original practice, not official ICAI questions or suggested answers. Scores are temporary and not synced to Study Hub. Contract/current-rule/accounting/tax boundaries are included in the review pack.
Not scored yet.
Willow Boxes: shared case for T001-T010
Willow Boxes: one shared case for T 001-T 010
The fictional industry is reusable insulated lunch boxes sold in the stated regional market. Two large retailers buy most output and can readily switch among similar brands. A single supplier controls a crucial specialised liner; switching requires costly redesign and no ready liner substitute is supplied. Several box rivals cut prices in slow market growth, with spare capacity and high fixed/exit costs. New entry requires substantial tooling capital and access to established channels, but is not impossible.
Meal subscriptions from another industry can meet the broader lunch need without consumers carrying their own box. Compare their price/performance and customer needs rather than assume equal substitution for everyone. Waste-reduction attitudes and physical heat exposure influence demand; no current government policy or law is supplied. Customers particularly value durability and reliable seals.
The supplied willingness-to-pay framework gives V=200, selling price P=140 and firm creation cost C=100 rupees per box. Define total value created as V-C, customer surplus as V-P and firm margin as P-C before unspecified other costs. These are case assumptions, not observed market prices; the source's surplus wording tension is disclosed.
Seal testing transforms/checks boxes in operations. Input-contract acquisition is procurement. Service handling, process know-how and staff training must work with design/material choices. Willow must assess relative capabilities and focused key success factors, not assume entry barriers or one favourable value calculation guarantee profit. First ten questions use this same case and score independently. No real-company claim, spending or external communication is authorised by the scenario.
SM-C02-T001 · 2 marksRead shared case
Willow's changing waste attitudes and physical heat exposure belong principally to what?
Explanation
Correct answer A: Social and environmental respectively.
Attitudes and physical/ecological conditions differ; no actual law is inferred.
Read shared case
Two large retailers buy most output and can switch among similar brands. What force is supported?
Explanation
Correct answer B: Buyer power.
Concentration and alternatives support negotiation leverage.
Read shared case
One crucial liner supplier has costly switching. What force is supported?
Explanation
Correct answer A: Supplier power.
Input criticality and switching costs support leverage.
Read shared case
Rivals cut prices in slow growth, spare capacity and high exit costs. What follows?
Explanation
Correct answer A: Evidence supports strong rivalry pressure, subject to actual competitive context.
Fixed/capacity/exit conditions can intensify price competition.
Read shared case
Substantial tools and channel access required for entry mainly indicate what?
Explanation
Correct answer A: Entry barriers that can impede, not absolutely prevent, newcomers.
Barriers reduce ease of entry without erasing other pressures.
Read shared case
Meal subscriptions offer an outside-industry solution to carrying lunch. In the defined box industry they may be what?
Explanation
Correct answer C: Substitutes, depending price/performance and customer needs.
Substitutes meet similar end needs from other industries.
Read shared case
Under Willow's supplied model V 200,P 140,C 100, total value created is what?
Explanation
Correct answer B: 100 rupees per box.
V-C=100; surplus/margin are separate intervals.
Read shared case
Under the same model, customer surplus and firm margin are what?
Explanation
Correct answer D: 60 and 40 rupees per box.
V-P=60;P-C=40; they sum to 100.
Read shared case
Seal testing transforms/checks the product, while input contracts acquire liners. Which classification fits?
Explanation
Correct answer D: Operations primary activity and procurement support respectively.
Classify action purpose, not merely department names.
Read shared case
Given valued durability/seals and competitive pressures, what is a focused KSF/outlook judgment?
Explanation
Correct answer A: Prioritise proven valued quality/cost-service capabilities and assess relative position; profit is not guaranteed.
KSFs concentrate attention and attractiveness depends on forces/position.
A current strategy reflects years of small decisions and later revisions. Which issue is shown?
Explanation
Correct answer C: Strategy evolves over time with experience/outcomes.
Everyday choices and changed results shape strategy.
Gradually changing internal skills conflict with the original plan. Which risk-grid category fits?
Explanation
Correct answer D: Long-time internal inconsistency.
Internal capacities/preferences can change relative to strategy.
A firm learns new customer needs and updates managers' skills through environmental interaction. Which benefits fit?
Explanation
Correct answer A: Opportunity/threat identification and continuous learning.
Interaction supports learning and direction without certainty.
A proposed subsidy is treated as confirmed cash entitlement. Which correction is sound?
Explanation
Correct answer D: Political-policy signal needs verification of actual status/eligibility before reliance.
A case policy signal is not verified current benefit availability.
A regional report hides one country's distinctive culture and entry restrictions. What should be added?
Explanation
Correct answer D: Customised country environmental assessment.
Country assessment examines specific economic/legal/political/cultural conditions.
A device's five-year physical useful life is compared with its market-sales curve. What is correct?
Explanation
Correct answer C: Individual useful life and market product life cycle are different concepts.
Market stages concern sales/acceptance, not just one item's durability.
A mature product is assumed to provide cash regardless of margins, stocks and investment. What qualification is needed?
Explanation
Correct answer C: Maturity may supply cash but does not guarantee cash surplus.
Portfolio choices need costs/cash/market evidence.
Installation/repair after sale principally belongs to what primary activity?
Explanation
Correct answer B: Service.
Service enhances/maintains product value.
Process know-how and product design improvements principally support what activity group?
Explanation
Correct answer B: Technology development.
Technology spans product/process/resource development.
Cost savings in dispatch damage installation reliability. What value-chain insight is needed?
Explanation
Correct answer C: Manage linkages and total customer value, not isolated cost reductions.
Coordinated systems/routines can underpin advantage.
A newcomer lacks incumbent brand recognition and distribution. What entry constraints are indicated?
Explanation
Correct answer B: Brand identity and channel access barriers.
Building brand/channels can consume time/resources.
A powerful buyer demands better service that needs new investment. What does this illustrate?
Explanation
Correct answer C: Buyer power can affect costs/investments as well as price.
The force can change supplier service burdens.
A standard-product industry grows slowly with many competitors. What tendency is supported?
Explanation
Correct answer D: More intense rivalry for share, subject to actual context.
Slower growth/differentiation conditions can intensify share competition.
An efficient niche firm profits in a generally weak industry while an entrant lacks channels. What follows?
Explanation
Correct answer B: Attractiveness is relative to firm position/capability, not absolute for all.
Relative capabilities can change opportunity/defence.
Cumulative production improves learning/redesign. How does this differ from current scale alone?
Explanation
Correct answer D: Experience tracks accumulated learning; current scale is a distinct volume mechanism.
Drivers can overlap but permanent automatic savings are not proved.
A firm differentiates and charges more, but extra costs exceed the price gain. What conclusion is sound?
Explanation
Correct answer A: Differentiation does not guarantee higher profit; price and cost effects matter.
Value, price and creation cost jointly affect profitability.
A parent buys groceries eaten by the family. Which role distinction fits?
Explanation
Correct answer B: Purchasing customer and consuming users may differ.
Purchaser/user roles can coincide or be separate.
A buyer identifies need, searches, compares and purchases. What should post-decision analysis add?
Explanation
Correct answer B: Satisfaction/dissonance and possible repeat/recommendation behaviour.
Post-decision outcomes matter, with behavioural variation.
A competitor map contains names but no products, strengths, weaknesses or use of findings. What remains?
Explanation
Correct answer C: Understand offers/position, assess evidence-based strengths/weaknesses and combine insights into improvements.
The landscape steps go beyond identification; legitimate evidence is needed.
Managers call 30 minor attributes equally key. What should KSF analysis do?
Explanation
Correct answer A: Prioritise the few factors most affecting customer choice, capabilities and sustainable success.
KSFs vary and focus attention; three/four is a usual observation, not rigid cap.