E3: Strategic Management

• Topic 01

  The Strategy Process

  54 questions
• Topic 02

  Analysing the Organisational Ecosystem

  54 questions
• Topic 03

  Digital Strategy

  54 questions
• Topic 04

  Generating Strategic Options

  54 questions
• Topic 05

  Making Strategic Choices

  45 questions
• Topic 06

  Strategic Control

  54 questions

A few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.

1. What characterises a "big bang" approach to digital transformation?

   • A
     Focusing digital changes on one department at a time
   • B
     Implementing comprehensive changes across the entire organisation simultaneously
     Correct answer
   • C
     Outsourcing digital transformation to external consultants
   • D
     Testing digital initiatives in small pilot projects first
   Explanation

   A big bang approach involves rapid, comprehensive transformation across the whole organisation at once, rather than gradual or phased implementation. This contrasts with evolutionary approaches that introduce changes incrementally over time.

2. A technology firm adopted a differentiation strategy based on premium customer service. After implementing their Balanced Scorecard, management found that customer satisfaction scores (85 CSAT) and retention rates (92%) both exceeded targets, yet market share declined by 1.5 percentage points. Which analysis of the customer perspective is MOST appropriate?

   • A
     The customer perspective is performing well; the market share decline must be caused by poor internal process efficiency requiring operational improvements
   • B
     The customer perspective metrics may not fully capture competitive positioning; investigate whether competitors offer better value propositions or whether target market preferences have shifted
     Correct answer
   • C
     The customer perspective targets were set too low; increase CSAT target to 95 and retention to 98% to drive market share recovery
   • D
     The high satisfaction and retention scores validate the strategy; market share decline is temporary and will reverse as word-of-mouth grows
   Explanation

   This scenario demonstrates the importance of comprehensive customer perspective evaluation and the interconnection between Balanced Scorecard perspectives.

   Key insights:

   1. Customer satisfaction and retention are lag indicators - they show past performance but may not predict future competitive position
   2. Market share decline despite strong satisfaction suggests external factors:
      • Competitors may offer superior value propositions
      • Customer preferences may have shifted
      • Acquisition of new customers may be weak even if retention is strong
   3. The customer perspective should include both satisfaction and competitive metrics - satisfaction alone does not guarantee strategic success

   Why other options are less appropriate:

   • Blaming other perspectives ignores that customer metrics show a potential blind spot
   • Assuming the problem is temporary without investigation risks strategic drift
   • Simply raising targets does not address root causes
   • Financial or learning perspectives may contribute, but the customer perspective analysis is incomplete

   This reflects double-loop learning - questioning whether the metrics themselves capture what matters for strategy success.

3. A manufacturing company has invested heavily in cloud infrastructure and AI-powered analytics but sees limited competitive advantage. The CEO believes they have achieved digital transformation. What is the MOST likely explanation for the lack of results?

   • A
     Competitors have exactly the same technology, making differentiation impossible
   • B
     The company should have chosen different cloud vendors with better performance
   • C
     The company focused only on technology adoption without transforming business model, processes, culture, or customer engagement dimensions
     Correct answer
   • D
     Manufacturing industries cannot benefit from digital transformation due to physical constraints
   Explanation

   Digital transformation is not simply technology adoption - it requires fundamental restructuring across all four dimensions: business model (how value is created and delivered), processes (how operations work), culture (mindset, agility, experimentation), and customer engagement (how customers interact). Technology is an enabler, not the transformation itself. A company can have advanced cloud and AI infrastructure but fail to see results if it has not changed how it operates, competes, engages customers, or makes decisions. This scenario illustrates the common mistake of equating technology investment with transformation, missing the strategic and organisational change required for competitive advantage.