Basics of Strategic Management

Question 1

What four types of strategy are in the strategy hierarchy?

Answer 1

1. Corporate Strategy
2. Business Strategy
3. Functional area Strategy
4. Operating Strategy

Question 2

What is corporate strategy?

Answer 2

• Corporate strategy answers questions like: Where to compete?
• Concerns Scope of company in terms of industries and markets
• Steered by top management

Question 3

What is business strategy?

Answer 3

• Asks questions like: How to compete?
• Concerns competitive approach in an industry and market
• Steered by management of specific industry / market branches of a company

Question 4

What is functional area strategy?

Answer 4

• Concerns how to implement a business strategy
• Steered by heads of different functional areas
• OVerlaps with several other subjects

Question 5

What is operating strategy?

Answer 5

This is steered by middle management
Executes business and functional area strategy

Question 6

What is strategy?

Answer 6

The definition of strategy consists of 4 parts:
- Strategy is the creation of a unique and valuable position involving a different set of activities.
- The essence of strategic positioning is to choose activities that are different from rivals
- Strategy entails trade-offs, choosing what not to do
- Strategy is about creating fit among activities or a system of activities.

It combines analysis, decision and action

Question 7

What is analysis in strategy?

Answer 7

Evaluating the match between a company’s internal and external environment.

Question 8

What does an internal analysis of strategy consist of?

Answer 8

This concerns the question: does a company’s strategy fit its resources and capabilities, goals and values, structures and systems

Question 9

What is an external analysis in strategy?

Answer 9

This concerns the question: does a company’s strategy fit its external environment?

Question 9

What internal factors play a role in internal analysis?

Answer 9

1. Strenghts: what gives you an advantage over competitors
2. Weaknesses: what gives you a disadvantage over competitors

Question 10

Which external factors are considered in an external analysis?

Answer 10

1. Opprtunities: what external elements can be exploited?
2. Weaknesses: what external elements pose a challenge / risk?

Question 11

What is a competitive advantage and how can it be achieved?

Answer 11

Competitive advantage is achieved when a company meets its customers’ needs more effectively or efficiently than its competitors. It is a combination of:
- The firm’s resources and capabilities
- Industry environment
- National environment

Question 12

What is sustainable competitive advantage?

Answer 12

Sustainable competitive advantages is rooted in elements that give customers continued reason to choose one company over others.

Question 14

Successful strategy requires effective implementation. What steps does the process of implementation require?

Answer 14

1. Simple, consistent, long-term goals
2. Deep insights into the composition of external environment
3. Objective evaluation of internal resources and capabilities

Question 15

What is a strategy process?

Answer 15

Strategic analysis of internal and external environment –> Intended strategy (shaped by mission, value and vision)

Question 15

What is a mission?

Answer 15

states why we exist. A mission statement is the least specific guide and explains the underlying motivation for being in business

Question 15

What are values in the strategy process?

Answer 15

define what a company believes in and serve as guidelines to behavior, traits and beliefs. Many business have a small set of core values.

Question 15

What is vision in a strategy process?

Answer 15

sets the direction by stating what we want to be.

Question 15

Name three basic elements of a strategy statement?

Answer 15

1. Objective = Ends
2. Scope = Domain (three dimensions)
3. Advantage = Means

Question 16

What does objective mean in a strategy statement?

Answer 16

convert mission and vision into concrete targets that should be specific, measurable, and time bound.

Question 17

Name three functions of strategic objectives?

Answer 17

1. Concentrate and keep actions aligned
2. Provide a standard that can be used in evaluating performance
3. Motivate and inspire employees.

Question 18

What is intended strategy?

Answer 18

Actions and decisions companies intend to take based on mission, values and vision. This is the proactive part of a strategy

Question 19

What is realized strategy?

Answer 19

These are actions and decisions companies ultimately take. Consists of intended and emergent strategy

Question 20

What is unrealized strategy?

Answer 20

This is the part of the intended strategy that was not taken/ performed

Question 21

What is emergent strategy?

Answer 21

This is the part of the realized strategy that was not inteded originally. This is reactive based on the broader market context.

Question 22

Name 5 characteristics of intended strategy?

Answer 22

1. Top-down 2. Cyclical 3. Predetermined 4. Limited involvement of organization 5. Established rules and procedures

Question 23

Name 5 characteristics of emergent strategy?

Answer 23

1. Bottom-up 2. Continuous 3. Adapted 4. Extensive involvement of organisation 5. Coordination based on adaptation and spontaneous interventions