Strategic Management Exam Flashcards

Questions and Answers

What is strategic management?

Consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.

What is the intended strategy?

Decisions are determined only by analysis.

What is the realized strategy?

Decisions are determined by both analysis and unforeseen environmental developments.

Leaders must be ________________.

proactive, anticipate change, and continually refine their strategies. Signup and view all the answers

What are the two fundamental questions in strategic management?

How should we compete to create competitive advantages? Signup and view all the answers

What constitutes strategic management?

All of the above Signup and view all the answers

What does SWOT analysis stand for?

Strengths, Weaknesses, Opportunities, Threats. Signup and view all the answers

What is the purpose of environmental scanning?

To predict environmental changes and detect changes already underway. Signup and view all the answers

What is the general environment?

Factors external to an industry that are usually beyond a firm's control. Signup and view all the answers

What are the primary activities in a value chain?

All of the above Signup and view all the answers

Value chain analysis examines how an organization creates value for its business and its customers by analyzing ______________.

value-creating activities. Signup and view all the answers

What is corporate governance?

The relationship among various participants in determining the direction and performance of corporations. Signup and view all the answers

Which of the following is a key attribute of strategic management?

Involvement of multiple stakeholders in decision making Signup and view all the answers

Management in this class is considered a science.

True Signup and view all the answers

SWOT analysis is solely an end point in strategic discussions.

False Signup and view all the answers

What is the importance of scenario analysis?

Experts assess various societal trends and consider multiple scenarios for future projections. Signup and view all the answers

What does 'Marketing and Sales' refer to?

Purchases of products and services by end users Signup and view all the answers

Which of the following are components of 'Service'?

Quick response to customer needs Signup and view all the answers

What are 'Support activities'?

General administration, human resource management, technology development, procurement Signup and view all the answers

Define 'Procurement'.

Purchasing inputs used in the firm's value chain Signup and view all the answers

What is 'Technology development'?

Activities embodied in processes, equipment, and product itself Signup and view all the answers

Explain 'Human Resource Management'.

Recruiting, hiring, training, developing, and compensating personnel Signup and view all the answers

What is the role of 'General Administration'?

Supports the entire value chain, not individual activities Signup and view all the answers

What does 'Prosumer' mean?

Customers as producers Signup and view all the answers

Define 'Crowdsourcing'.

Tapping into talent/ideas of online communities Signup and view all the answers

What is the resource-based view definition?

Perspective that firms' competitive advantages are due to their strategic resources Signup and view all the answers

List the 3 types of resources.

Tangible resources, intangible resources, organizational capabilities Signup and view all the answers

What are 'Tangible resources'?

Organizational assets that are relatively easy to identify Signup and view all the answers

Define 'Intangible resources'.

Assets that are difficult to identify and account for Signup and view all the answers

Explain 'Organizational capabilities'.

Competencies and skills to transform inputs into outputs Signup and view all the answers

Match the resource characteristics with their definitions:

Valuable = Neutralize threats, exploit opportunities Rare = Few firms possess Difficult to Imitate = Causal ambiguity, physically unique, path dependency, social complexity Difficult to Substitute = No equivalent resources or capabilities Signup and view all the answers

What does it mean for a resource to be 'valuable'?

Neutralize threats, exploit opportunities Signup and view all the answers

What does 'rare' indicate about a resource?

Few firms possess it Signup and view all the answers

What is meant by a resource being 'difficult to imitate'?

Causal ambiguity, physically unique, path dependency, social complexity Signup and view all the answers

Why is a resource considered 'difficult to substitute'?

No equivalent resources or capabilities Signup and view all the answers

What are sources of inimitability?

Physical uniqueness, path dependency, causal ambiguity, social complexity Signup and view all the answers

How can resources be a source of competitive advantage?

Enable strategies that improve efficiency or effectiveness Signup and view all the answers

What happens if resources possessed by competitors are similar?

There is no source of competitive advantage Signup and view all the answers

What constrains competition related to resources?

Difficulty in imitating resources Signup and view all the answers

What is critical regarding strategically equivalent valuable resources?

There must be no strategically equivalent valuable resources that are themselves not rare or inimitable Signup and view all the answers

Study Notes

Strategic Management Overview

Strategic management involves analyses, decisions, and actions to create and sustain competitive advantages.
Leaders must be proactive and adaptable to changes while refining strategies.
Two fundamental questions:
- How to compete for competitive advantages?
- How to create unique and valuable advantages that rivals cannot imitate?

Key Attributes of Strategic Management

Directs organizations toward overarching goals.
Incorporates multiple stakeholders in decision-making.
Balances short-term and long-term perspectives.
Recognizes trade-offs between efficiency and effectiveness.

Strategy Components

Intended strategy results from analytical decisions but may lead to unrealized strategies.
Realized strategy encompasses both planned actions and unforeseen factors, resulting in emergent strategies.

Corporate Governance

Involves relationships among shareholders, management (including CEO), and board of directors.
Board of directors provides oversight but often faces criticism for ineffectiveness.

Theories of Stakeholder Management

Zero-sum view: stakeholders compete for resources, gains for one lead to losses for others.
Stakeholder symbiosis view: stakeholders are interdependent, and mutual benefits enhance success.

Businesses are expected to positively impact society.
Emphasis on environmental sustainability in current business practices.

Strategic Objectives and Goals

Hierarchical organization of goals from vision statements to strategic objectives that guide the organization.
Vision: inspiring and overarching statements representing company values and aspirations.
Mission statements define company purpose and competitive means.

Analyzing the External Environment

External analysis tools include SWOT analysis, forecasting, Porter's Five Forces, and strategic group issues.
Environmental scanning monitors trends and critical changes.
Competitive intelligence collects data on industry competitors.

SWOT Analysis

Strengths: internal capabilities to build upon.
Weaknesses: areas needing improvement.
Opportunities: external prospects to capitalize on.
Threats: external risks requiring protection.

General Environment Factors

Demographic, sociocultural, legal/political, technological, economic, and global factors influence industry dynamics.

Porter's Five Forces Model

Threat of new entrants, bargaining power of buyers and suppliers, threat of substitutes, and rivalry among competitors determine industry attractiveness.

Strategic Group Analysis

Identifies groups of firms sharing similar strategies, determining barriers to mobility and competitive dynamics among firms within groups.

Internal Analysis

Value chain analysis examines primary (inbound logistics, operations, outbound logistics, marketing, service) and support activities (HR, technology, administration) in creating value.
Resource-based view emphasizes firm resources (tangible and intangible) and capabilities that contribute to competitive advantage.

Emerging Concepts

"Prosumer": customers act as producers, enhancing loyalty through increased involvement in customization.
Crowdsourcing leverages community talent/ideas but poses risks, such as adverse reputation impacts and declining quality of ideas.

Resource-Based View

Competitive advantages arise from strategic resources that are valuable, rare, costly to imitate, and non-substitutable.
Three types of resources: tangible, intangible, and capabilities that enable firms to outperform competitors.### Tangible Resources
Defined as organizational assets that are easy to identify.
Categories include:
- Financial: cash, equity raising capacity.
- Physical: property, plant, equipment.
- Technological: patents, trademarks.
- Organizational: evaluation and control systems.

Intangible Resources

Assets that are hard to identify and account for, embedded in routines and practices.
Categories include:
- Human: employee experience and capabilities, trust.
- Innovation and Creativity: technical skills and capacity for science.
- Reputation: brand name significance.

Organizational Capabilities

Represent competencies and skills used to transform inputs into outputs.
Capable of combining tangible and intangible resources for desired outcomes.
Examples include:
- Outstanding customer service.
- Excellent product development.
- Innovative product features.
- Effectiveness in hiring, motivating, and retaining talent.

Resource Characteristics

Resources must be:
- Valuable: has the ability to neutralize threats and exploit opportunities.
- Rare: not widely possessed by other firms.
- Difficult to Imitate: poses challenges in replication due to various complexities.
- Difficult to Substitute: lacks equivalent resources or capabilities.

Sources of Inimitability

Derived from:
- Physical uniqueness of resources.
- Path dependency: uniqueness due to a distinct series of events (e.g., QWERTY keyboard).
- Causal ambiguity: difficulty in determining the value or reproduction of resources.
- Social complexity: value derived from interpersonal relations, culture, and reputation.

Competitive Advantage

Resources serve as a competitive advantage only when they are valuable.
They enable strategies that enhance efficiency or effectiveness, as well as neutralize threats and leverage opportunities.
Resources held by competitors do not create competitive advantages; common strategies and similar resources equal no advantage.

Constraints on Competition

Imitating resources can limit competition, leading to sustainable profits from unique resources.
Critical inimitable characteristics include physical uniqueness, path dependency, causal ambiguity, and social complexity.

Substitutable Resources

There must be no strategically equivalent valuable resources that are both non-rare and non-inimitable.
Understanding substitutability is essential for assessing competitive positioning.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Prepare for your Strategic Management exam with these flashcards covering key concepts from Chapters 1, 2, 3, and 13, along with the Trader Joe's case study. Enhance your understanding of intended versus realized strategies and competitive advantages to excel in your class.