Strategic Management Overview

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Questions and Answers

What is the primary focus of corporate-level strategy?

Strategic vision and mission statement

The overall scope and portfolio of the organization (correct)

Competitive advantage within a market

Specific functions like marketing and HR

Which component of Porter’s Five Forces refers to the influence suppliers have over the market?

Bargaining Power of Suppliers (correct)

Bargaining Power of Buyers

Threat of Substitutes

Rivalry

What does the 'Inimitability' factor in the VRIO framework signify?

Being rare among competitors

Having support infrastructure

Difficult to imitate by others (correct)

Creating customer value

In a PESTEL analysis, which of the following factors would most directly address issues like laws and taxation?

Legal Signup and view all the answers

Which type of forecasting technique provides the least certainty in its projections?

Scenario Analysis Signup and view all the answers

Primary activities in Value Chain Analysis include all of the following except:

Procurement Signup and view all the answers

What is one key characteristic of 'Dynamic Capabilities'?

Adapting capabilities to changing environments Signup and view all the answers

Which of the following best describes the concept of 'Business-Level Strategy'?

Gaining competitive advantage within a specific market Signup and view all the answers

What is a characteristic of mergers?

Combining two companies of similar size. Signup and view all the answers

Which of the following best describes a friendly acquisition?

Target management agrees to the acquisition. Signup and view all the answers

What is an example of a non-equity alliance?

McDonald’s franchising. Signup and view all the answers

Which motive for mergers and acquisitions is not strategic?

Achieving personal ambition. Signup and view all the answers

Which of the following parameters is included in evaluating economic performance?

Sales growth and market share. Signup and view all the answers

What does the feasibility criterion in evaluating strategies take into account?

Resources and capabilities for practical implementation. Signup and view all the answers

Which analysis tool identifies performance shortfalls?

Gap Analysis. Signup and view all the answers

What type of business model is characterized by providing a free service while charging for premium features?

Freemium model. Signup and view all the answers

What is a characteristic of a focus strategy?

Targets a specific niche segment Signup and view all the answers

Which of the following are considered cost drivers in a cost leadership strategy?

Input costs Signup and view all the answers

What type of diversification involves entering completely different industries?

Unrelated Diversification Signup and view all the answers

What is a key motive behind mergers and acquisitions?

Market share consolidation Signup and view all the answers

In the context of performance measures, what does the term 'effectiveness' refer to?

The ability to achieve desired outcomes Signup and view all the answers

Which framework helps evaluate whether a resource can create a competitive advantage?

VRIO Framework Signup and view all the answers

What does backward integration in vertical integration refer to?

Controlling suppliers Signup and view all the answers

Which growth strategy focuses on introducing new products to existing markets?

Product Development Signup and view all the answers

What is a primary goal of game theory in business strategy?

Consider competitors’ moves and countermoves Signup and view all the answers

What is characteristic of a hybrid strategy?

Balancing cost leadership and differentiation Signup and view all the answers

Which of the following best describes economies of scope?

Cost reductions from producing multiple products Signup and view all the answers

What kind of effect does a strategic alliance typically aim to achieve?

Leverage complementary capabilities Signup and view all the answers

In gap analysis, what is primarily identified?

Discrepancies between actual and desired performance Signup and view all the answers

What does the acceptability criterion in the SAFe framework assess?

Stakeholder reactions and potential risks Signup and view all the answers

Study Notes

Session 1: Introduction to Strategy

Strategy is the long-term direction and scope of an organization.
It considers internal and external stakeholder needs.
Strategic elements include vision, mission, and core values.
Strategy exists at various levels: corporate, business, and functional.

Session 2: External Analysis

PESTEL Analysis examines political, economic, social, technological, environmental, and legal aspects.
Porter's Five Forces analyzes industry competitiveness: rivalry, threat of new entrants, buyer power, supplier power, and threat of substitutes.
Forecasting techniques include single-point, range forecasting, and scenario analysis.

Session 3: Internal Analysis

Resources and capabilities are crucial for competitive advantage.
Resources are the assets, while capabilities are how those assets are used.
The VRIO framework assesses the value, rarity, imitability, and organizational support of resources/capabilities.
Value chain analysis considers primary (inbound/outbound logistics, operations, marketing/sales, service) and support (procurement, technology, HR, infrastructure) activities.
Dynamic capabilities involve sensing, seizing, and reconfiguring resources.

Session 4 & 5: Business Strategy

Porter's Generic Strategies: Cost leadership, differentiation, and focus (cost/differentiation).
Cost leadership aims for lowest costs.
Differentiation focuses on unique offerings.
Focus targets specific niches.
Hybrid strategies combine elements of cost leadership and differentiation.
Game theory and the interplay between cooperation and competition are crucial considerations.

Session 6: Corporate-Level Strategy

Ansoff's Growth Matrix outlines market penetration, product development, market development, and diversification strategies.
Diversification includes related and unrelated diversification.
Diversification decisions can create or destroy value based on factors like economies of scope, managerial ambition, and risk-spreading.
Vertical integration (backward/forward) is a corporate strategy for control over supply and distribution.

Session 7: M&A and Strategic Alliances

Organic development is internal growth.
Mergers and Acquisitions involve combining companies (friendly/hostile).
Post-acquisition integration methods include absorption, preservation, symbiosis, and intensive care.
Strategic alliances use equity or non-equity agreements for collaboration.

Session 8: Evaluating Strategies

Performance measures include economic success (sales, profit, market share) and effectiveness (balanced scorecard).
Gap analysis identifies performance discrepancies.
SAFe criteria evaluate suitability, acceptability, and feasibility.
Tools such as decision trees and sensitivity analysis help in strategic evaluation.

Unit 3: Resources, Capabilities, and Competitive Advantage

Resources are the tangible and intangible assets of a company.
Capabilities are how resources are used to reach goals.
Dynamic capabilities include sensing opportunities, seizing opportunities, and reconfiguring assets.
SWOT analyses identify internal strengths/weaknesses and external opportunities/threats.
Blue-Ocean strategies identify uncontested market spaces.

Unit 4: Generic Strategies & Competitive Advantage

Porter's generic strategies include cost leadership, differentiation, and focus.
Cost leadership seeks lowest costs, while differentiation seeks unique offerings.
Cost focus and differentiation focus target specific market niches.

Unit 5: Value Chain Analysis & Business Models

Value chain analysis breaks down activities into primary (logistics, operations, marketing, service) and support (procurement, technology, HR, infrastructure).
Business models include razor-and-blade, freemium, and multi-sided platforms.
- Sustainable Business Model Canvas (SBMC) integrates economic, environmental, and social factors.

Unit 6: Corporate Strategy & Diversification

Ansoff's Growth Matrix provides methods for market expansion.
Diversification is the introduction of new products/markets.
Related diversification is within similar industries.
Unrelated diversification is in unrelated industries.

Unit 7: Mergers, Acquisitions & Alliances

Mergers combine similar-sized companies.
Acquisitions involve one company purchasing another (friendly/hostile).
Strategic alliances are collaborations using equity or non-equity agreements.
M&A motives involve strategic, financial, and managerial factors.

Unit 8: Evaluating Strategies

Performance measures include economic performance, effectiveness, and feasibility.
Strategic evaluation uses tools such as gap analysis, break-even analysis, sensitivity analysis, and decision trees.

Key Takeaways

Master key frameworks and concepts like PESTEL, Porter's Five Forces, VRIO, SWOT, and Ansoff's Matrix.
Understanding various strategies (business-level, corporate-level).
Apply the SAFe criteria to assess strategic options.
Recognize diverse business models and M&A/alliances.

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Description

This quiz covers the fundamentals of strategic management, including its long-term direction, internal and external analyses. It delves into key concepts such as PESTEL and Porter's Five Forces, as well as the importance of resources and capabilities. Test your understanding of these essential components of strategy!