Strategic Management Exam 1 Study Guide

Key Concepts in Strategic Management

• Strategy: A plan of action designed to achieve long-term goals and objectives in a competitive environment.
• Competitive Advantage: The unique strengths that enable an organization to outperform competitors.
• Sustainable Competitive Advantage: Long-lasting benefits that cannot easily be replicated by competitors.
• Strategic Parity: A situation where firms possess equal levels of competitive advantage.
• Competitive Disadvantage: Weaknesses that hinder an organization’s ability to compete effectively.
• Strategic Management Process: A systematic approach to formulating and implementing strategies.
• Corporate Strategy: Overall direction for a company, including decisions about business acquisitions and divestitures.
• Business Strategy: How a company competes in a particular market.
• Global Strategy: Strategic approaches to compete in international markets.
• Functional Strategy: Specific actions within departments (marketing, finance) to support overall strategy.

Strategic Planning Approaches

• Top-Down Strategic Planning: Centralized approach where senior management sets the strategy.
• Scenario Planning: Development of scenarios to anticipate future changes and strategize accordingly.
• Planned Emergence: Flexibility in strategy formulation allowing adaptation to changing circumstances.

Vision, Mission, and Objectives

• Vision: Aspirational long-term goals for the organization.
• Mission: Purpose of the organization; why it exists.
• Strategic Objectives: Specific measurable targets aligned with the mission.

Environmental and Industry Structure

• General Environment: External factors impacting the firm, including economic, social, technological, and legal aspects.
• Industry: A group of businesses that share similar products or services.
• Types of Competition: Varying industry structures such as monopoly, oligopoly, and perfect competition.

Market Dynamics

• Barriers to Entry: Obstacles preventing new competitors from entering the market.
• Barriers to Exit: Challenges associated with leaving a market, making it difficult for firms to exit.
• Barriers to Imitation: Factors that prevent competitors from copying successful strategies, also known as isolation mechanisms.
• Mobility Barriers: Constraints that hinder firms' ability to move into or out of strategic groups.
• Switching Costs: Expenses incurred by consumers when changing providers.
• Economies of Scale: Cost advantages gained through production volume increases.
• Learning Curve Effects: Cost reductions resulting from increased experience and efficiency.
• Bargaining Power: The influence stakeholders have over prices and terms of business.

Strategic Configuration and Lifecycle

• Strategic Groups: A cluster of firms in an industry following similar strategies.
• Industry Life Cycle: Stages through which industries pass, including introduction, growth, maturity, and decline.

Value Creation

• Value Chain: Framework illustrating primary and support activities that create value.
• Firm Resources:
  • Tangible Resources: Physical and financial assets.
  • Intangible Resources: Non-physical assets like brand reputation and intellectual property.
• Core Competencies: Unique strengths that differentiate a firm from its competitors.
• Organizational Capabilities: The ability of an organization to effectively utilize resources.
• Dynamic Capabilities: The firm's capacity to adapt, reconfigure, and deploy resources in response to market changes.

Performance and Stakeholders

• Shareholder Value Creation: Financial performance measured by stock prices and dividends.
• Economic Value Creation: The value created when a firm's products exceed the cost of production and service.
• Stakeholders: All parties with interest in the firm's activities, including employees, customers, suppliers, and the community.
• Non-Financial Performance: Evaluated through tools like the balanced scorecard and the triple bottom line, focusing on social and environmental impact.

Strategic Analysis Models

• Five-Force Model: Analyzes competitive forces within an industry to assess its attractiveness.
• PESTEL Framework: Evaluates external environmental factors such as Political, Economic, Social, Technological, Environmental, and Legal influences.
• Value-Chain Analysis: Identifies key activities within the organization that create value and competitive advantage.
• VRIO Analysis: Evaluates resources based on Value, Rarity, Imitability, and Organization to assess competitive potential.
• Value-Price-Cost (V-P-C) Analysis: Assesses the relationship among value offered, price charged, and costs incurred.
• Financial Performance Analysis: Involves interpreting various accounting ratios to assess a firm's financial health.

Case Studies Insights

• Disney: Examined strategies relating to brand management, diversification, and global expansion.
• Airborne Express: Focused on competitive positioning, operational efficiency, and innovations in logistics.

This study guide helps you prepare for the Exam 1 in Strategic Management, covering key concepts from Chapters 1-5 and the industry life cycle in Chapter 7. It includes definitions and explanations of essential terms such as strategy, competitive advantage, and various types of strategic planning processes.