Strategic Management Exam 1 Guide

Question 1

What is Strategy?

Answer 1

A set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

Question 2

Define Strategic Positioning

Answer 2

The unique position a company occupies in an industry to gain a competitive advantage.

Question 3

What is Competitive Advantage?

Answer 3

When a firm outperforms competitors or the industry average.

Question 4

What does Competitive Disadvantage mean?

Answer 4

When a firm lags behind competitors.

Question 5

What is Competitive Parity?

Answer 5

When a firm performs at the same level as its competitors.

Question 6

Define Vision in a business context

Answer 6

A statement about what an organization ultimately wants to accomplish.

Question 7

What is a Mission statement?

Answer 7

The description of what an organization does, including how it competes in its industry.

Question 8

What are Values in an organization?

Answer 8

The principles guiding an organization’s behavior and decision-making.

Question 9

Define Strategic Leadership

Answer 9

The use of power and influence by executives to direct activities toward achieving strategic goals.

Question 10

What is Top-Down Strategic Planning?

Answer 10

A decision-making model where strategy is formulated by top management and implemented throughout the organization.

Question 11

What is Scenario Planning?

Answer 11

A strategic decision-making approach where firms prepare for multiple possible future scenarios.

Question 12

Define Stakeholder Theory

Answer 12

The idea that firms should consider the interests of all stakeholders, not just shareholders.

Question 13

What is Shareholder Theory?

Answer 13

The idea that a firm’s primary goal is to maximize shareholder wealth.

Question 14

What are Ethical Decision-Making Models?

Answer 14

Frameworks such as Rest’s model that guide ethical business decisions.

Question 15

True or False: Bad Apples vs. Bad Barrels refers to individual choices causing unethical behavior.

Answer 15

True

Question 16

What does PESTEL Analysis stand for?

Answer 16

Political, Economic, Sociocultural, Technological, Ecological, Legal.

Question 17

What is Porter’s Five Forces?

Answer 17

A model assessing industry competitiveness through the power of buyers, suppliers, industry rivalry, threat of substitutes, and threat of new entrants.

Question 18

Define Industrial Organization (I/O) Model

Answer 18

A view that industry structure determines firm performance more than internal resources.

Question 19

What is the Resource-Based View (RBV)?

Answer 19

A model emphasizing a firm’s internal resources and capabilities as sources of competitive advantage.

Question 20

What are Strategic Groups?

Answer 20

Firms within an industry that pursue similar strategies.

Question 21

Define Mobility Barriers

Answer 21

Factors that prevent firms from easily shifting between strategic groups.

Question 22

What are Switching Costs?

Answer 22

Costs incurred by customers when changing from one product or service to another.

Question 23

What is the VRIO Framework?

Answer 23

A model for evaluating a firm’s resources based on Value, Rarity, Imitability, and Organization.

Question 24

Define Core Competencies

Answer 24

Unique strengths that provide a competitive advantage.

Question 25

What are Dynamic Capabilities?

Answer 25

The ability of a firm to adapt and reconfigure resources to maintain a competitive advantage.

Question 26

What does Path Dependence mean?

Answer 26

The idea that past decisions limit future strategic options.

Question 27

Define Causal Ambiguity

Answer 27

A situation where the cause of a firm's success is unclear, making it difficult to imitate.

Question 28

What is Social Complexity?

Answer 28

When competitive advantage is derived from complex relationships, making replication difficult.

Question 29

What are Core Rigidities?

Answer 29

Once valuable competencies that have become outdated and now hinder performance.

Question 30

What is Value Chain Analysis?

Answer 30

A framework that categorizes firm activities into primary and support functions to analyze competitive advantage.

Question 31

How do vision, mission, and values impact firm performance?

Answer 31

They provide strategic direction, align organizational efforts, and shape corporate culture to improve decision-making and performance.

Question 32

What are the differences between the I/O model and the RBV model?

Answer 32

The I/O model emphasizes industry structure in determining firm performance, while the RBV model focuses on internal resources and capabilities.

Question 33

How does Porter’s Five Forces framework help in industry analysis?

Answer 33

It evaluates competitive pressures in an industry to assess profitability and strategic positioning.

Question 34

What are the dimensions of PESTEL analysis?

Answer 34

* Political * Economic * Sociocultural * Technological * Ecological * Legal

Question 35

How do mobility barriers impact strategic groups?

Answer 35

They restrict firms from easily moving between strategic groups, limiting competition and preserving market segmentation.

Question 36

What are the key isolating mechanisms that make resources costly to imitate?

Answer 36

* Path dependence * Causal ambiguity * Social complexity * Intellectual property * Future value

Question 37

What are the advantages and disadvantages of top-down strategic planning vs. scenario planning?

Answer 37

* Top-down planning provides clear direction but may lack flexibility * Scenario planning prepares for uncertainties but requires extensive analysis.

Question 38

How does the stakeholder theory differ from the shareholder theory?

Answer 38

Stakeholder theory considers all stakeholders' interests, while shareholder theory prioritizes maximizing shareholder wealth.

Question 39

Why are switching costs an important consideration in strategic decision-making?

Answer 39

High switching costs lock in customers, reduce churn, and create competitive advantages for firms.

Question 40

What factors contribute to a sustainable competitive advantage according to the VRIO framework?

Answer 40

A resource must be Valuable, Rare, Costly to Imitate, and Organized to capture value.