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Question 1Strategic Management Frameworks and Analysis

In a SWOT analysis prepared for a retail bank, which element captures an external favourable condition that the bank could exploit?

  1. Threats
  2. Strengths
  3. Weaknesses
  4. Opportunities Correct answer.

Explanation

SWOT separates internal capabilities from external market conditions. Strengths and weaknesses are internal, while opportunities and threats are external. Opportunities are favourable external conditions that a bank can exploit, whereas threats are unfavourable ones.

Question 2Strategic Management Frameworks and Analysis

A bank depends on a single core-banking software vendor for its payments platform, and switching to another vendor would take three years. Which of Porter's five forces is most directly strengthened?

  1. Bargaining power of suppliers Correct answer.
  2. Bargaining power of buyers
  3. Threat of new entrants
  4. Rivalry among existing competitors

Explanation

Supplier power rises when switching costs are high and credible alternatives are few. A single vendor with a multi-year migration horizon can extract concessions from the bank. Buyer power concerns the bank's own customers, not its technology vendors.

Question 3Strategic Management Frameworks and Analysis

Under the BCG growth-share matrix, a business unit that holds a high market share in a slow-growing industry is classified as a:

  1. Star
  2. Dog
  3. Cash cow Correct answer.
  4. Question mark

Explanation

The BCG matrix positions business units by market growth and relative market share. High share in a low-growth industry generates surplus cash that can fund other units, which is the cash cow quadrant. Stars combine high growth with high share, while question marks and dogs have low share.

Question 4Strategic Management Frameworks and Analysis

A bank begins selling a newly designed pension product to its existing deposit customers. In Ansoff's product-market matrix, this move is:

  1. Diversification
  2. Market penetration
  3. Product development Correct answer.
  4. Market development

Explanation

Ansoff classifies strategy by whether the product and the market are existing or new. A new product sold into an existing customer base is product development. Market development would mean taking an existing product to a new market, while diversification involves both new products and new markets.

Question 5Strategic Management Frameworks and Analysis

Which of the following is a support activity in Porter's value chain?

  1. Operations
  2. Procurement Correct answer.
  3. Inbound logistics
  4. Outbound logistics

Explanation

Support activities in Porter's value chain include procurement, technology development, human resource management and firm infrastructure. These cut across the primary activities rather than forming part of the physical flow of the product or service. Inbound logistics, operations and outbound logistics are primary activities.

Question 6Strategic Management Frameworks and Analysis

A bank's proprietary credit-scoring model has been refined over 20 years and cannot be replicated by rivals because the underlying data history is unavailable to them. Under the resource-based view, which condition for sustained competitive advantage does this most directly satisfy?

  1. Organisational support
  2. Value
  3. Inimitability Correct answer.
  4. Rarity

Explanation

The resource-based view holds that advantage persists when resources are valuable, rare, difficult to imitate and supported by the organisation. The stem stresses that rivals cannot replicate the model because the data history is unavailable, so inimitability is the condition most directly met. Value and rarity may also be present, but they are not the focus of the evidence given.

Question 7Strategic Management Frameworks and Analysis

A new data-protection statute requires banks to obtain explicit consent before sharing customer data with third parties. In PESTEL analysis, this belongs to which category?

  1. Social
  2. Economic
  3. Technological
  4. Legal Correct answer.

Explanation

PESTEL separates political, economic, social, technological, environmental and legal forces. A binding statute that imposes rules on how banks handle customer data is a legal factor. It may concern technology, but its defining feature is that it is enacted law.

Question 8Strategic Management Frameworks and Analysis

A private bank deliberately targets only ultra-high-net-worth families and offers highly customised wealth services at premium fees. This is best described as:

  1. Broad differentiation
  2. Focus strategy Correct answer.
  3. Cost leadership
  4. Stuck in the middle

Explanation

Porter's generic strategies combine competitive scope with the source of advantage. Serving a narrow customer segment with tailored, premium service is a focus strategy, specifically focused differentiation. Broad differentiation would address a wide market rather than a single niche.

Question 9Strategic Management Frameworks and Analysis

In the Balanced Scorecard, expenditure on reskilling branch staff and upgrading employee information systems is recorded under which perspective?

  1. Learning and growth Correct answer.
  2. Internal business process
  3. Customer
  4. Financial

Explanation

The learning and growth perspective covers human capital, information capital and organisational capital that enable internal processes. Reskilling staff and upgrading employee systems are inputs to capability building. The customer perspective tracks customer outcomes, and the financial perspective tracks shareholder results.

Question 10Strategic Management Frameworks and Analysis

A bank simultaneously removes account-maintenance fees, reduces branch paperwork, raises mobile onboarding speed and creates a bundled financial-wellness service. This pattern of actions is closest to:

  1. Harvesting a cash cow in the BCG matrix
  2. Cost leadership under Porter's generic strategies
  3. Market penetration under Ansoff's matrix
  4. Value innovation in blue ocean strategy Correct answer.

Explanation

Blue ocean strategy uses value innovation through the eliminate-reduce-raise-create framework. The bank lowers cost by removing fees and paperwork while raising buyer value through faster onboarding and a new wellness bundle. This simultaneous pursuit of differentiation and low cost does not fit a single Porter generic strategy.

Question 11Strategic Management Frameworks and Analysis

A bank's strategy unit is assessing how a newly enacted statute that raises minimum capital-adequacy requirements will affect its lending plans. In a PESTEL analysis, this factor belongs primarily to which category?

  1. Technological
  2. Social
  3. Economic
  4. Legal Correct answer.

Explanation

PESTEL's legal category covers statutes, regulations and supervisory rules that constrain or enable an organisation. A capital-adequacy statute is a binding rule, so it is classified as legal even though it also has economic consequences. Economic factors would cover interest rates, inflation, growth and credit conditions rather than the statute itself.

Question 12Strategic Management Frameworks and Analysis

A payments bank finds that retail customers are moving balances into stored-value wallets operated by established non-bank fintechs instead of holding demand deposits. Which of Porter's five forces does this development most directly represent?

  1. Rivalry among existing competitors
  2. Threat of substitutes Correct answer.
  3. Threat of new entrants
  4. Bargaining power of suppliers

Explanation

Porter's threat of substitutes measures how readily customers can switch to a different product or technology that meets the same need. Non-bank wallets perform a payments and store-of-value function, so they substitute for the bank's deposit and payment services. Rivalry refers to competition among existing banks, while supplier power concerns inputs.

Question 13Strategic Management Frameworks and Analysis

A bank's board classifies the banking regulator as a stakeholder with high power to affect its licence and high interest in its compliance conduct. In a power-interest stakeholder matrix, how should the bank manage this stakeholder?

  1. Minimal effort
  2. Keep satisfied
  3. Manage closely Correct answer.
  4. Keep informed

Explanation

The power-interest matrix calls for close management of stakeholders who are both powerful and highly interested, because they can materially affect the organisation and are attentive to its actions. A regulator with licence-granting power and active compliance interest fits this quadrant. Lower-power or lower-interest stakeholders call for less intensive engagement.

Question 14Strategic Management Frameworks and Analysis

A retail bank's mobile banking app is valuable because it raises customer retention, but every major competitor offers an almost identical app. In VRIO analysis, the app most likely provides:

  1. Temporary competitive advantage
  2. Unused competitive potential
  3. Competitive parity Correct answer.
  4. Sustained competitive advantage

Explanation

Under VRIO, a resource that is valuable but not rare can improve performance but does not differentiate the firm, leading to competitive parity. Because rivals match the app, it cannot support temporary or sustained advantage. Organisation is relevant only after value, rarity and imitability have been established.

Question 15Strategic Management Frameworks and Analysis

A bank launches a robo-advisory service for young first-time investors, a customer segment it has not served before and a service type it has not offered. In Ansoff's product-market matrix, this move is best classified as:

  1. Product development
  2. Market development
  3. Diversification Correct answer.
  4. Market penetration

Explanation

Ansoff classifies growth by the newness of the product and the market. Offering a new service to a new customer segment is diversification because both dimensions are new. Product development would be a new product for existing markets, while market development would be an existing product for new markets.

Question 16Strategic Management Frameworks and Analysis

A bank unit has a low share of a fast-growing market and must decide whether to invest heavily to build share or withdraw. Under the BCG growth-share matrix, this unit is classified as a:

  1. Cash cow
  2. Star
  3. Dog
  4. Question mark Correct answer.

Explanation

BCG positions business units by market growth and relative market share. A low-share unit in a high-growth market is a question mark: it consumes cash and its future is uncertain, so management must decide whether to invest or divest. Stars combine high share with high growth, while cash cows combine high share with low growth.

Question 17Strategic Management Frameworks and Analysis

A bank measures the net promoter score of its small-business clients to track how strongly they recommend the bank to other firms. In the Balanced Scorecard, this measure belongs to which perspective?

  1. Learning and growth perspective
  2. Customer perspective Correct answer.
  3. Internal process perspective
  4. Financial perspective

Explanation

The customer perspective captures customer satisfaction, retention, acquisition and advocacy, including net promoter score. Financial metrics cover returns and revenue, internal process metrics cover efficiency and quality of processes, and learning and growth covers people and systems. A recommendation score is therefore a customer-perspective measure.

Question 18Strategic Management Frameworks and Analysis

A bank tries to appeal to all retail customers with standard products at average prices while lacking either the lowest cost base or distinctive features that customers value. According to Porter's generic strategies, the bank is at risk of becoming:

  1. A focused differentiator
  2. A cost leader
  3. A differentiator
  4. Stuck in the middle Correct answer.

Explanation

Porter's generic strategies require a clear choice among cost leadership, differentiation or focus. A firm that pursues broad appeal without either a cost advantage or valued differentiation is stuck in the middle and is likely to earn below-average performance. The stem explicitly removes both cost leadership and differentiation as sources of advantage.

Question 19Strategic Management Frameworks and Analysis

A bank possesses valuable, rare and costly-to-imitate resources, but decision rights are siloed and cross-functional coordination is weak. In VRIO analysis, what is the most likely consequence?

  1. Automatic sustained competitive advantage
  2. Loss of resource value and rarity
  3. Failure to exploit the resources Correct answer.
  4. Guaranteed competitive parity

Explanation

VRIO's organisation component asks whether the firm is organised to exploit valuable, rare and costly-to-imitate resources. Weak coordination and siloed decision rights can prevent the bank from converting resource potential into advantage. Valuable, rare and inimitable resources are necessary but not sufficient without organisational support.

Question 20Strategic Management Frameworks and Analysis

A bank's board wants a strategy that remains robust across several plausible futures for interest rates, regulation and digital adoption, rather than betting on a single forecast. Which strategic analysis tool is most appropriate?

  1. Scenario planning Correct answer.
  2. Sensitivity analysis on a single forecast variable
  3. Benchmarking against peers
  4. BCG growth-share matrix

Explanation

Scenario planning builds several internally consistent future environments and tests strategy against each, which suits uncertainty across multiple drivers. Sensitivity analysis varies one variable within a single model, while BCG and benchmarking do not address multiple uncertain futures. The board's requirement for robustness across several futures fits scenario planning.

Question 21Strategic Management Frameworks and Analysis

A bank’s planning team notes that the central bank has raised the policy interest rate and that inflation is expected to stay above target for the coming year. In a PESTEL analysis, these developments belong primarily under which heading?

  1. Economic conditions, because interest rates and inflation are macroeconomic variables Correct answer.
  2. Environmental factors, because inflation affects energy costs
  3. Technological factors, because rate changes affect digital pricing engines
  4. Political factors, because the central bank is a government institution

Explanation

PESTEL separates the macro-environment into political, economic, social, technological, environmental and legal influences. Economic factors include interest rates, inflation, growth, unemployment and exchange rates. The central bank may be a public institution, but a policy-rate change is analysed as an economic influence because it changes borrowing costs and demand.

Question 22Strategic Management Frameworks and Analysis

In a bank’s corporate-lending market, growth has slowed, several competitors are merging to remove excess capacity, and price competition has narrowed margins. Which stage of the industry life cycle best fits this description?

  1. Maturity stage, because growth has slowed and consolidation is occurring Correct answer.
  2. Decline stage, because margins have fallen
  3. Introduction stage, because the market is still forming
  4. Growth stage, because demand is rising quickly

Explanation

The maturity stage is marked by slowing demand, saturated markets, consolidation and stronger emphasis on efficiency and market share. Falling margins alone do not make an industry declining; decline requires a sustained contraction in demand. Introduction and growth stages are associated with emerging demand and rapid expansion, not shakeout and overcapacity.

Question 23Strategic Management Frameworks and Analysis

A bank publicly states: “By 2030 we will be the most trusted wealth manager for business-owning families in our region.” In strategic management terms, this statement is best classified as a:

  1. Mission statement, because it describes the bank’s day-to-day business
  2. Vision statement, because it describes a desired future position Correct answer.
  3. Tactical objective, because it covers a single branch
  4. Operating budget, because it sets spending priorities

Explanation

A vision statement describes an aspirational future position that the organisation wants to reach. A mission statement explains the organisation’s present purpose, business scope and stakeholders. Budgets and tactical objectives are shorter-term resource and action commitments, not statements of a future strategic identity.

Question 24Strategic Management Frameworks and Analysis

A retail bank wants to pursue a cost-leadership strategy in mass retail banking. Which combination of choices is most consistent with sustaining that strategy?

  1. Offering the broadest range of premium advisory services at premium fees
  2. Targeting only high-net-worth clients with bespoke products
  3. Focusing on a narrow customer niche with customised service
  4. Standardising products and driving process efficiency to achieve the lowest cost position Correct answer.

Explanation

Cost leadership requires a broad-market position built on the lowest cost of delivery, typically through standardisation, scale, automation and tight operating-cost control. Premium advice, bespoke high-net-worth service and narrow customised niches are differentiation or focus strategies. They may earn higher margins per customer, but they do not establish a cost-leadership position in mass retail banking.

Question 25Strategic Management Frameworks and Analysis

An analyst wants to map strategic groups in retail banking. Which pair of dimensions is most appropriate for distinguishing groups of competitors?

  1. Relative cost position and degree of service differentiation Correct answer.
  2. CEO tenure and head-office city
  3. Number of branches operated and average customer age
  4. Total assets and year of incorporation

Explanation

Strategic group mapping uses strategic dimensions on which firms genuinely differ in their competitive choices, such as cost position, differentiation, product scope, distribution mix and service breadth. Size and age may describe a firm but do not by themselves define its strategy. Demographic details of customers or managers are not strategic-group dimensions unless they reflect a deliberate competitive position.

Question 26Strategic Management Frameworks and Analysis

A bank has rewritten its strategy to emphasise cross-selling, but managers still reward branch staff solely for opening new accounts, and informal norms discourage sharing customer leads. In the McKinsey 7S framework, which elements are most directly misaligned with the new strategy?

  1. Style and staff
  2. Strategy and structure only
  3. Staff and skills
  4. Systems and shared values Correct answer.

Explanation

The McKinsey 7S framework requires alignment among strategy, structure, systems, staff, skills, style and shared values. The reward scheme is a system, and the informal norms that discourage lead-sharing are shared values. Because these two elements still reinforce the old behaviour, they directly undermine the new cross-selling strategy.

Question 27Strategic Management Frameworks and Analysis

A bank compares its mortgage-approval cycle time, error rates and cost per application against the best-performing peer and uses the findings to set improvement targets. This activity is best described as:

  1. Portfolio analysis
  2. Benchmarking against best practice Correct answer.
  3. Strategic drift
  4. Scenario planning

Explanation

Benchmarking compares processes, costs or performance measures with best practice or best-performing peers to identify gaps and set improvement targets. Scenario planning explores alternative futures, portfolio analysis allocates resources across businesses, and strategic drift describes failure to adapt strategy to environmental change. The stem describes a direct process comparison, which is benchmarking.

Question 28Strategic Management Frameworks and Analysis

A bank’s corporate centre is using a nine-box matrix that rates each business unit on industry attractiveness and competitive strength. A unit sits in the box with high industry attractiveness and strong competitive strength. What is the most appropriate strategic recommendation?

  1. Invest for growth Correct answer.
  2. Divest immediately
  3. Harvest the unit for cash
  4. Hold with selective investment

Explanation

The GE-McKinsey nine-box matrix combines industry attractiveness and business strength. A unit high on both dimensions is in the most favourable boxes, so the appropriate direction is to invest to build or protect its position. Harvesting and divestment fit low-attractiveness or weak-strength positions, while selective holding fits intermediate boxes.

Question 29Strategic Management Frameworks and Analysis

A bank’s branch-based model delivered steady growth for years, but customers have shifted to mobile channels and new digital entrants have taken share. Management continues to make only small incremental adjustments to branch operations and avoids questioning the underlying business model. This pattern is best described as:

  1. Strategic drift Correct answer.
  2. Portfolio rationalisation
  3. Strategic control
  4. A blue ocean strategy

Explanation

Strategic drift occurs when incremental changes and organisational inertia leave strategy increasingly out of step with a shifting environment. The bank is making small operational adjustments while avoiding a fundamental rethink of its branch-based model, which is the classic drift pattern. Blue ocean strategy deliberately creates new market space, portfolio rationalisation prunes businesses, and strategic control monitors strategy execution.

Question 30Strategic Management Frameworks and Analysis

A bank’s unsecured-lending division has reported losses for three consecutive years, and the board decides to shrink its product range, exit two loss-making regions and redeploy capital to wealth management. Which grand strategy is the bank applying to the division?

  1. Horizontal integration
  2. Retrenchment or turnaround Correct answer.
  3. Conglomerate diversification
  4. Market development

Explanation

Retrenchment or turnaround reduces scale or scope, cuts losses and redeploys resources to restore viability. Shrinking the product range, exiting weak regions and redirecting capital fit that strategy. Market development seeks new markets for existing products, horizontal integration acquires competitors, and conglomerate diversification enters unrelated businesses.

Question 31Strategic Management Frameworks and Analysis

In Michael Porter's value chain as applied to a retail bank, which of the following is a support activity rather than a primary activity?

  1. Resolving customer complaints at the branch counter
  2. Marketing deposit schemes to prospective retail customers
  3. Preparing statutory financial statements and managing regulatory reporting Correct answer.
  4. Disbursing approved loans to customers after credit sanction

Explanation

In Porter's value chain the support activities are firm infrastructure, human resource management, technology development and procurement; they underpin the whole chain rather than a single output. Statutory accounts and regulatory filings fall under firm infrastructure, i.e. general management and finance. Loan disbursement, marketing and complaint handling are primary activities - operations, marketing and sales, and service respectively.

Question 32Strategic Management Frameworks and Analysis

In the resource-based view of strategy, a core competence is best described as which of the following?

  1. Any activity that the firm performs more cheaply than its competitors do
  2. The largest business unit in the corporate portfolio measured by revenue
  3. A bundle of skills and technologies that is hard for rivals to imitate and can be leveraged across several products or markets Correct answer.
  4. A licence granted by the regulator permitting the bank to operate in a line of business

Explanation

A core competence, as framed by Hamel and Prahalad, is a bundle of skills and technologies that customers value, that competitors find difficult to imitate, and that can be extended to new products and markets. The three tests are customer value, competitor differentiation and extendability. Cost advantage, portfolio size and legal permissions do not satisfy those tests.

Question 33Strategic Management Frameworks and Analysis

A bank's strategy team is completing a SWOT analysis. Which of the following items belongs in the opportunities quadrant?

  1. The bank's legacy core banking system, which cannot support real-time payments
  2. The bank's forty-year-old brand and the trust it enjoys among depositors
  3. A projected rise in the number of affluent retirees in the bank's home region Correct answer.
  4. A new digital-only entrant with a materially lower cost structure

Explanation

Opportunities are favourable conditions in the external environment that the bank could exploit, and a demographic shift towards more affluent retirees is external potential demand. Brand trust is an internal attribute the bank already holds, and the legacy system is an internal limitation. A cheaper new entrant is an external adverse condition and therefore a threat.

Question 34Strategic Management Frameworks and Analysis

A bank already offers its small-business cash-management product in its home state. It decides to offer the same product, unchanged, to small businesses in two neighbouring states where it has no presence today. In the Ansoff matrix this move is best described as which of the following?

  1. Market development Correct answer.
  2. Market penetration
  3. Conglomerate diversification
  4. Product development

Explanation

Ansoff's matrix crosses products with markets. Selling an existing product to customers in a new geographic market is market development. Product development would require a new or substantially modified product, and diversification would require both a new product and a new market, neither of which is present here.

Question 35Strategic Management Frameworks and Analysis

In Porter's five forces, which condition most clearly increases the bargaining power of corporate borrowers negotiating term loans with a bank?

  1. The bank holds proprietary credit data on borrowers that no other lender can obtain
  2. The borrowers are numerous and each accounts for a tiny fraction of the bank's lending capacity
  3. Each borrower's requirement is large relative to the bank's loan book and loan terms are standardised across lenders Correct answer.
  4. The loan product must be customised extensively to each borrower's cash-flow cycle

Explanation

Buyer power rises when each buyer purchases a large share of the seller's capacity, when products are standardised so switching costs are low, and when buyers can credibly play lenders against one another. Large individual loan requirements combined with standardised terms give corporate borrowers exactly that leverage. The other conditions either raise switching costs or reduce each buyer's importance to the bank.

Question 36Strategic Management Frameworks and Analysis

A business unit holds a high share of a market that is growing slowly. Under the BCG growth-share matrix, the appropriate strategic posture for this unit is which of the following?

  1. Harvest cash to fund other units while defending the existing position Correct answer.
  2. Treat the unit as a question mark and defer the decision pending further study
  3. Invest heavily to build share, because rapid market growth will eventually reward the unit
  4. Divest immediately, because slow growth signals an unattractive industry

Explanation

A high-share unit in a low-growth market is a cash cow: it generates more cash than it consumes and should be defended while its surplus funds stars or selected question marks. Heavy investment is inappropriate because the market offers little growth, and immediate divestment forgoes a reliable cash stream.

Question 37Strategic Management Frameworks and Analysis

A bank redesigns its wealth-management offer for mass-affluent customers by removing relationship-manager-initiated annual reviews, reducing the investment menu to a short curated list, raising fee transparency, and creating a digital goal-tracking tool. In Kim and Mauborgne's four-actions framework, the removal of annual reviews represents which action?

  1. Raise
  2. Create
  3. Reduce
  4. Eliminate Correct answer.

Explanation

The four-actions framework asks which factors an industry takes for granted should be eliminated, which should be reduced below the industry standard, which should be raised well above it, and which should be created that the industry has never offered. Withdrawing annual relationship-manager reviews removes an accepted industry practice, so it is an eliminate action.

Question 38Strategic Management Frameworks and Analysis

In the McKinsey 7S framework, which set consists only of the hard elements?

  1. Style, systems, skills
  2. Shared values, style, staff
  3. Strategy, structure, systems Correct answer.
  4. Skills, strategy, staff

Explanation

In the McKinsey 7S framework the hard elements are strategy, structure and systems - the formal, documented and relatively easier-to-change levers. Shared values, style, staff and skills are the soft elements, rooted in people and culture and slower to shift. Any set containing a soft element therefore fails the 'only hard elements' test.

Question 39Strategic Management Frameworks and Analysis

A bank's corporate strategy rests on the premise that the central bank will keep the policy rate below 5% throughout the planning horizon. Which type of strategic control is designed to trigger a review when such an assumption is falsified?

  1. Operational control exercised through monthly budget variance analysis
  2. Premise control Correct answer.
  3. Special alert control invoked during an unexpected crisis
  4. Strategic surveillance through broad, unfocused scanning of the environment

Explanation

Premise control monitors the environmental and industry assumptions on which a strategy is built, so the strategy is revisited when an assumption such as a policy-rate range no longer holds. It is distinguished from strategic surveillance, which is broad and unfocused scanning, and from special alert control, which responds to sudden crises.

Question 40Strategic Management Frameworks and Analysis

A bank acquires a company that currently supplies it with the core banking software it has been licensing from third parties. In vertical-integration terms, this acquisition is best described as which of the following?

  1. Forward integration
  2. Horizontal integration
  3. Conglomerate diversification
  4. Backward integration Correct answer.

Explanation

Backward integration means moving upstream towards a supplier. Core banking software is an input the bank currently buys, so acquiring that supplier brings the stage in-house. Forward integration would mean moving towards customers or distribution, and horizontal integration would mean combining with a rival at the same stage of the chain.

Question 41Strategic Management Frameworks and Analysis

A bank states: “We exist to make banking simple for every household in India.” In strategic-management terms, this statement is best classified as:

  1. A strategic objective
  2. A vision statement
  3. A core value statement
  4. A mission statement Correct answer.

Explanation

A mission statement captures the organisation's present purpose: what it does, whom it serves and why it exists. The wording “we exist to make banking simple” is a current raison d'être, not a future destination. A vision is future-oriented, values are enduring beliefs, and objectives are measurable targets.

Question 42Strategic Management Frameworks and Analysis

A retail bank already serves its existing savings-account customers and launches a new recurring-deposit product for them. Under the Ansoff matrix, this move is best classified as:

  1. Market penetration
  2. Diversification
  3. Market development
  4. Product development Correct answer.

Explanation

Ansoff's matrix classifies growth by whether the product and the market are existing or new. Selling a new recurring-deposit product to the bank's existing savings customers changes the product while keeping the market, which is product development. Market penetration would use existing products, market development would take existing products to new customers, and diversification would change both dimensions.

Question 43Strategic Management Frameworks and Analysis

A bank's digital payments unit holds a high share of a market that is forecast to grow at double digits for the next five years. Under the BCG growth-share matrix, the unit is best classified as a:

  1. Question mark
  2. Cash cow
  3. Dog
  4. Star Correct answer.

Explanation

In the BCG growth-share matrix, a star combines a high relative market share with a high-growth market. Stars typically require investment to sustain their position but have strong future profit potential. A cash cow has high share in a slow-growth market, a question mark has low share in a high-growth market, and a dog has low share in a slow-growth market.

Question 44Strategic Management Frameworks and Analysis

A bank's analytics platform is valuable, rare and costly for rivals to imitate, but the bank's performance-management system still rewards product silos rather than cross-selling through the platform. Under the VRIO framework, the platform currently represents:

  1. A competitive disadvantage
  2. A sustained competitive advantage
  3. An unused competitive advantage Correct answer.
  4. Competitive parity

Explanation

VRIO asks whether a resource is valuable, rare, costly to imitate and supported by the organisation. The analytics platform meets the first three tests, but the silo-based reward system prevents the bank from exploiting it. That gap makes the resource an unused competitive advantage rather than a sustained advantage.

Question 45Strategic Management Frameworks and Analysis

A bank earns most of its fee income from personal loans. Which development would most directly raise the threat of substitutes for this business?

  1. The central bank raises the cash reserve ratio for all banks
  2. A retailer offers instant instalment credit at checkout Correct answer.
  3. A rival bank opens twenty new branches in the same city
  4. Corporate borrowers consolidate their banking relationships

Explanation

A substitute is a different way of meeting the same customer need, not a rival bank offering a similar loan. Point-of-sale instalment credit lets a customer finance a purchase without taking the bank's personal loan, so it directly raises substitution pressure. Reserve requirements affect industry costs, new branches affect rivalry, and corporate consolidation affects buyer power in a different segment.

Question 46Strategic Management Frameworks and Analysis

A bank's balanced scorecard tracks “percentage of relationship managers certified in data-driven advisory skills”. Under the four perspectives of the balanced scorecard, this measure belongs to the:

  1. Internal business process perspective
  2. Customer perspective
  3. Financial perspective
  4. Learning and growth perspective Correct answer.

Explanation

The learning and growth perspective covers the human, information and organisational capital needed to support strategy. Certification of relationship managers in data-driven advisory skills builds employee capabilities, so it belongs there. Financial measures track returns, customer measures track satisfaction and retention, and internal-process measures track operating activities.

Question 47Strategic Management Frameworks and Analysis

For several years a bank keeps expanding its branch network even though most routine transactions have moved to mobile, and its return on equity slips steadily. This pattern is best described as:

  1. Benchmarking
  2. Strategic drift Correct answer.
  3. Scenario planning
  4. Related diversification

Explanation

Strategic drift describes a gradual failure to adapt strategy as the environment changes, often because the organisation keeps exploiting familiar routines. Continuing branch expansion while customers move to mobile channels fits that pattern. Benchmarking compares performance, scenario planning explores alternative futures, and related diversification enters new businesses.

Question 48Strategic Management Frameworks and Analysis

A banking regulator has high power over a bank's proposed digital-lending product and high interest in its consumer-protection safeguards. Using Mendelow's power-interest matrix, the bank should:

  1. Manage closely Correct answer.
  2. Keep informed
  3. Keep satisfied
  4. Minimal effort

Explanation

Mendelow's matrix maps stakeholders by power and interest. A regulator with both high power and high interest must be managed closely through proactive engagement and consultation. Minimal effort suits low-power, low-interest parties; keeping informed suits high-interest, low-power parties; keeping satisfied suits high-power, low-interest parties.

Question 49Strategic Management Frameworks and Analysis

A country's banks develop advanced supply-chain finance products because local manufacturing firms are demanding sophisticated working-capital solutions. In Porter's diamond, this influence is best classified as:

  1. Factor conditions
  2. Related and supporting industries
  3. Firm strategy, structure and rivalry
  4. Demand conditions Correct answer.

Explanation

Porter's diamond identifies demand conditions as the nature and sophistication of home-country customer needs. Demanding local manufacturing firms push banks to develop advanced supply-chain finance, which is a demand-side influence. Factor conditions concern inputs such as skilled labour, related industries concern suppliers and clusters, and firm strategy/rivalry concerns domestic competition.

Question 50Strategic Management Frameworks and Analysis

A diversified group owns a mid-sized bank. The group head office sets strict annual profit and capital-return targets, reviews monthly variances, and leaves product, customer and people decisions to the bank's management. Under the Ashridge parenting matrix, this style is:

  1. Financial control Correct answer.
  2. Strategic control
  3. Central services
  4. Strategic planning

Explanation

The Ashridge parenting matrix distinguishes styles by how the centre adds value. Financial control parenting sets financial targets and reviews results while leaving operating decisions to business managers, which matches the group head office described. Strategic planning parenting would shape the bank's strategy, strategic control would balance both, and central services would provide shared functions.