1. Strategic Management Inputs

Question 1

How is strategic competitiveness achieved?

Answer 1

By implementing a value creating strategy.

Question 2

What is a strategy?

Answer 2

Integrated and coordinated actions that exploit core competences and gain competitive advantage.

Question 3

What is a competitive advantage?

Answer 3

A strategy that competitors find costly to imitate or are unable to replicate.

Question 4

What are above-average returns?

Answer 4

More profit than investors expected.

Question 5

What is a risk?

Answer 5

Uncertainty about economic gains and losses.

Question 6

What is a strategic management process? (SMP)

Answer 6

Decisions and actions a firm implements to achieve strategic competitiveness and gaining above-average returns.

Question 7

True or false: The strategic management process is dynamic.

Answer 7

True

Question 8

What is a factor that changes markets?

Answer 8

Governments when they fear a market will fail.

Negotiating with politicians complicates building competitive advantages.

Question 9

Where does hyper competition happen?

Answer 9

Unstable markets.

Question 10

What does hyper competition entail? Give two points.

Answer 10

1) Rapidly escalating price quality competition. First-movers have an advantage.
2) High aggression between firms.

Question 11

What is a global economy?

Answer 11

An economy in which goods, services, people and skills freely move geographically.

Question 12

Define globalisation.

Answer 12

Increasing economic interdependence between countries.

Question 13

List two benefits of globalisation.

Answer 13

1) Increased opportunities for firms.

2) Increased performance standards (quality, cost, productivity and operational efficiency)

Question 14

Give two risks of globalisation.

Answer 14

1) It takes time to adapt to foreign markets.

2) Over-diversification: becoming so international that extended operations are hard to manage.

Question 15

Define technology diffusion.

Answer 15

The rate at which new technology becomes available and is used.

Increased substantially the last 15-20 years.

Question 16

Define perpetual diffusion.

Answer 16

Describes how rapidly/consistently new information and technology replaces old ones..

Question 17

What benefit does perpetual diffusion reduce?

Answer 17

Patents because competitors will find out about the new technology.

Question 18

What do disruptive technologies do?

Answer 18

Destroy the value of existing technology and creates new markets.

Question 19

What is an incumbent?

Answer 19

A firm of a market.

Question 20

Can incumbents overcome disruptive technologies?

Answer 20

Only if they have superior resources, experience and access to the new technology.

Question 21

How is knowledge gained?

Answer 21

Through experience, observation and interference.

Question 22

How is knowledge processed in companies?

Answer 22

Firms capture intelligence, transform it into usable knowledge and diffuse it throughout the company.

Question 23

Define strategic flexibility.

Answer 23

Capabilities that respond to demands/opportunities in dynamic/uncertain markets.

Question 24

What does the industrial organisation (I/O) model explain?

Answer 24

The external environment’s dominant influence on a firm’s strategic actions.

Question 25

What are the four underlying assumptions of the I/O model?

Answer 25

1) The external environment pressures and constraints strategies. 2) Competing firms within an industry pursue similar strategies and relevant resources. 3) Resources to implement strategies are highly mobile across firms so resource differences are short lived. 4) Organisational decision makers are rational and decide in firm's best interest.

Question 26

What does Porter's five forces entail?

Answer 26

- competitive rivalry - supplier power - buyer power - threat of new entrants - threat of substitution

Question 27

What is Porter's five forces used for?

Answer 27

- identifies attractiveness of an industry and the best position for a firm to take in the industry - determines the type of strategy needed for above-average returns - 20% of firm profitability is explained by the industry the firm picks.

Question 28

Define a resource based model.

Answer 28

Resources and capabilities of a firm are a basic for strategy and above-average returns.

Question 29

What is a resource?

Answer 29

Input for a firm's production.

Question 30

What are the three categories of resources?

Answer 30

1) Human 2) Physical 3) Organisational capital

Question 31

What are the two natures of resources?

Answer 31

Tangible, intangible

Question 32

What are the four points that determine wether resources have a competitive advantage?

Answer 32

Valuable, rare, costly to imitate, non-substitutabe

Question 33

Define capability.

Answer 33

Ability to exploit resources.

Question 34

What is a core competence?

Answer 34

Capabilities that have competitive advantages.

Question 35

What order should a process with these three words have? Strategy, Vision, Mission

Answer 35

Vision --> Mission --> Strategy

Question 36

What are stakeholders?

Answer 36

Individuals/groups that affect a firm's vision and are affected strategic outcomes.

Question 37

True or false: Companies that manage stakeholder relations effectively outperform those that do not.

Answer 37

True

Question 38

True or false: All stakeholders are equal.

Answer 38

False. Some stakeholders have more influence.

Question 39

List the three stakeholder groups.

Answer 39

1) Capital Market Stakeholders 2) Product market stakeholders 3) Organisation stakeholders

Question 40

Describe capital market stakeholders.

Answer 40

They are major suppliers of a firm's capital. They may sell stock of dissatisfied.

Question 41

Describe product market stakeholders.

Answer 41

They are the primary customers, suppliers, host communities and unions (workforce).

Question 42

Describe organisation stakeholders.

Answer 42

All employees of a firm.

Question 43

What are strategic leaders?

Answer 43

People involved in the strategic managerial process. They are crucial for assigning strategic responsibilities to employees.

Question 44

Define organisational culture.

Answer 44

Complex set of ideology in firm that determines how it conducts business.

Question 45

What is a profit pool?

Answer 45

Total profit in an industry in all parts of the value chain.

Question 46

What are the four steps for identifying a profit pool?

Answer 46

1) Define the boundaries of the pool. 2) Estimate the size of the pool. 3) Estimate the size of the value chain in the pool. 4) Reconcile the calculations.