Strategic Choices

30 original practice MCQs, 2 marks each. Practice and separate-test stems differ. Standalone drills across the chapter, with a separate case-based test pack.

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.

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SM-C04-P001 · 2 marks

A group retains product-market scope but improves efficiency. Direction?

A. Stability. B. Always unrelated diversification. C. Automatic total liquidation. D. Doing nothing by definition.

Explanation

Correct answer A: Stability.

Incremental efficiency can accompany stable scope.

SM-C04-P002 · 2 marks

A firm consolidates after rapid growth. Which reason supports stability?

A. Strengthen existing position/resources before further expansion. B. All startups must refuse stability. C. Stability removes all risk. D. No investment can ever be needed.

Explanation

Correct answer A: Strengthen existing position/resources before further expansion.

Consolidation can fit circumstances; label is not a guarantee.

SM-C04-P003 · 2 marks

Substantial scope/activity/investment growth illustrates what?

A. Only low-priority stakeholder monitoring. B. Only an unchanged posture. C. Guaranteed profit. D. Expansion.

Explanation

Correct answer D: Expansion.

Expansion can follow several risky routes.

SM-C04-P004 · 2 marks

Existing product, existing market, increased use: Ansoff cell?

A. New/new diversification. B. Product development. C. Market penetration. D. Market development.

Explanation

Correct answer C: Market penetration.

Explicit product-market axes resolve SM 3 p 32 mislabels.

SM-C04-P005 · 2 marks

Existing product to a new region: Ansoff cell?

A. Market development. B. Product development merely because geography changes. C. Always unrelated diversification. D. Market penetration in every case.

Explanation

Correct answer A: Market development.

Market changes, product remains existing.

SM-C04-P006 · 2 marks

New related product to current customers: Ansoff cell?

A. Product development. B. Market development. C. Every new product must be conglomerate diversification. D. Market penetration merely because customers exist.

Explanation

Correct answer A: Product development.

New product/existing market.

SM-C04-P007 · 2 marks

New product to new market: Ansoff cell?

A. New/existing product development. B. Diversification. C. Existing/new market development. D. Existing/existing penetration.

Explanation

Correct answer B: Diversification.

Both axes are new relative to stated baseline.

SM-C04-P008 · 2 marks

A firm builds a new line using its own resources. Execution route?

A. A transaction with a rival is required. B. Every internal change is liquidation. C. Internal growth. D. Only external acquisition automatically.

Explanation

Correct answer C: Internal growth.

Direction and execution route differ.

SM-C04-P009 · 2 marks

A garment maker adds footwear using shared brand/channels. Relation?

A. Necessarily totally unrelated. B. Guaranteed synergy. C. Concentric/related diversification if meaningful links are established. D. Always supplier acquisition.

Explanation

Correct answer C: Concentric/related diversification if meaningful links are established.

Related process/technology/marketing links may help.

SM-C04-P010 · 2 marks

No important product/market/technology links exist for a new business. Relation?

A. Conglomerate/unrelated diversification. B. Risk always falls to zero. C. Always concentric because same owner exists. D. Always penetration.

Explanation

Correct answer A: Conglomerate/unrelated diversification.

New areas can require different skills/oversight.

SM-C04-P011 · 2 marks

A processor enters its input-provider business. Integration?

A. Backward. B. Horizontal same stage. C. Only a cash-cow label. D. Forward.

Explanation

Correct answer A: Backward.

Moves toward inputs in linked chain.

SM-C04-P012 · 2 marks

A processor enters retail distribution. Integration?

A. Backward input ownership. B. Forward. C. Only market harvesting. D. Horizontal solely because customers exist.

Explanation

Correct answer B: Forward.

Moves toward downstream channels/end use.

SM-C04-P013 · 2 marks

A processor acquires a similar processor at the same stage. Integration?

A. Backward solely because acquired. B. Forward solely because grew. C. No relation because names differ. D. Horizontal.

Explanation

Correct answer D: Horizontal.

Same-stage similarity is distinct from vertical chain moves.

SM-C04-P014 · 2 marks

Automation is called guaranteed productivity/profit improvement. Correction?

A. Every innovation needs no marketing. B. Automation eliminates competitive reaction. C. Research cannot fail. D. Assess customer benefit, adoption cost and feasibility rather than guarantee success.

Explanation

Correct answer D: Assess customer benefit, adoption cost and feasibility rather than guarantee success.

Innovation opportunities have costs/risks.

SM-C04-P015 · 2 marks

Buying control of a target is principally what?

A. Always a friendly merger. B. Acquisition. C. Always an independent alliance. D. No need to inspect legal/ownership terms.

Explanation

Correct answer B: Acquisition.

Control/structure matter; hostile tone is not essential.

SM-C04-P016 · 2 marks

Two direct same-stage competitors combine. Merger type?

A. Horizontal. B. Conglomerate despite direct rivalry. C. Vertical solely because two firms exist. D. Only strategic exit.

Explanation

Correct answer A: Horizontal.

Same industry/stage direct rivals.

SM-C04-P017 · 2 marks

A firm combines with a supplier. Merger type?

A. Horizontal only. B. No production-stage link. C. Vertical, with backward integration in the case. D. Conglomerate automatically.

Explanation

Correct answer C: Vertical, with backward integration in the case.

Supplier position links earlier chain stage.

SM-C04-P018 · 2 marks

Related product/technology firms combine without supplied direct rivalry or vertical chain. Type?

A. Always unrelated conglomerate. B. Always forward merger. C. Always identical to penetration. D. Co-generic, subject to actual link evidence.

Explanation

Correct answer D: Co-generic, subject to actual link evidence.

Related production/markets/technology can be co-generic.

SM-C04-P019 · 2 marks

Independent firms share contributions, benefits and control toward strategic objectives. Form?

A. No sharing risk can exist. B. Every partner loses separate status. C. One firm necessarily controls all the other's operations. D. Strategic alliance.

Explanation

Correct answer D: Strategic alliance.

Separate entities cooperate under agreed scope.

SM-C04-P020 · 2 marks

An alliance gives skills and distribution access. Advantage category?

A. Automatic political-law exemption. B. Only BCG relative share. C. Only physical liquidation. D. Organisational.

Explanation

Correct answer D: Organisational.

Partners can supply capability/capacity/channels.

SM-C04-P021 · 2 marks

An alliance shares costs/risks and uses co-specialisation. Advantage category?

A. Only employer headcount. B. Guaranteed zero cost. C. Economic. D. No relevance to scale.

Explanation

Correct answer C: Economic.

Potential gains require actual net-benefit assessment.

SM-C04-P022 · 2 marks

An ally may later compete using shared know-how. What risk matters?

A. Separate entities can never compete. B. Knowledge leakage/future competition and dependency. C. All information must be disclosed because collaboration exists. D. Agreement guarantees all secrets permanently safe.

Explanation

Correct answer B: Knowledge leakage/future competition and dependency.

Sharing/control/exit protections need scope and evidence.

SM-C04-P023 · 2 marks

A profitable company has subtarget growth and unclear future. Can turnaround be relevant?

A. No; cash flow can never matter. B. Yes; poor performance need not mean accounting loss. C. Yes; therefore layoffs automatically approved. D. No; only legal insolvency qualifies.

Explanation

Correct answer B: Yes; poor performance need not mean accounting loss.

Diagnose performance/viability and options.

SM-C04-P024 · 2 marks

A recovery plan starts with root causes and damage assessment. Stage?

A. Return to normal before diagnosis. B. Assessment of current problems. C. Portfolio share classification only. D. Automatic liquidation.

Explanation

Correct answer B: Assessment of current problems.

Immediate repair priorities follow cause/extent analysis.

SM-C04-P025 · 2 marks

A firm sells one mismatched division while retaining core operations. Strategy?

A. Necessarily total liquidation. B. Always market penetration. C. Divestment. D. No relation to restructuring.

Explanation

Correct answer C: Divestment.

Part/unit sale differs from total abandonment.

SM-C04-P026 · 2 marks

Can divestment ever be assessed without first attempting turnaround?

A. Yes when evidence makes divestment the clear fit; sequence is not mandatory universally. B. Every cash loss proves sale is compulsory. C. Only a BCG label can grant authority. D. Never under any circumstances.

Explanation

Correct answer A: Yes when evidence makes divestment the clear fit; sequence is not mandatory universally.

Source permits bypass; actual deal still needs terms/approval.

SM-C04-P027 · 2 marks

A group stabilises one line, expands another and retrenches a third. Direction?

A. Every unit must always follow one identical direction. B. Only focused differentiation. C. Only a new/new Ansoff cell. D. Combination strategy.

Explanation

Correct answer D: Combination strategy.

Mix directions to fit group needs.

SM-C04-P028 · 2 marks

ADL axes are what?

A. Only market growth and relative share. B. Industry maturity and competitive position. C. Only product novelty and market novelty. D. Only willingness to pay and cost.

Explanation

Correct answer B: Industry maturity and competitive position.

Four maturity stages/five positions organise ADL.

SM-C04-P029 · 2 marks

BCG unit share 30/largest other 20 gives relative share?

A. 30%alone is relative share. B. 50 because shares sum. C. 1.5. D. 20/30=.6667 for supplied definition.

Explanation

Correct answer C: 1.5.

Same market/period denominator specified.

SM-C04-P030 · 2 marks

GE uses what broader dimensions compared with BCG?

A. Only market growth and absolute shares. B. Multifactor market attractiveness and business strength. C. Only four product-market novelty cells. D. Only mandatory legal liquidation rankings.

Explanation

Correct answer B: Multifactor market attractiveness and business strength.

GE replaces narrower growth/share proxies.