strategic management midterm spring 2025 laurier

What is a company's strategy?

A set of coordinated actions taken by managers to outperform competitors and achieve superior profitability.

What is the primary objective of a company's strategy?

To achieve lasting success that supports growth and secures the company's future, rather than just temporary profits.

How does a company compete differently from its rivals?

By doing what competitors don't or can't do, involving choices in marketplace positioning, customer attraction, and performance targets.

What is competitive advantage?

A situation where a company provides buyers with superior value compared to rivals or offers the same value at a lower cost.

What makes a competitive advantage sustainable?

It persists despite competitors' efforts to match or surpass it.

What are the routes to achieving competitive advantage?

Delivering superior value or producing products/services more efficiently.

How does a company's strategy evolve over time?

It is a work in progress, blending proactive planned initiatives and reactive responses to market changes.

What is the difference between deliberate strategy and emergent strategy?

Deliberate strategy involves planned initiatives, while emergent strategy involves reactive responses to unanticipated developments.

Why is frequent strategic adjustment necessary in high-velocity environments?

Rapid technological advances and changing market conditions require companies to adapt their strategies regularly.

What makes a strategy ethical?

It does not involve actions that cross the moral line from 'can do' to 'should not do' and does not harm stakeholders.

What are the consequences of unethical actions in a company's strategy?

They can reflect poorly on the company and adversely impact stakeholders, provoking public outcry.

What is a business model?

Management's blueprint for delivering a valuable product/service to customers in a way that generates sufficient revenue to cover costs and yield profit.

What are the two key elements of a business model?

Customer Value Proposition (V-P) and Profit Formula (P-C).

What does the Customer Value Proposition (V-P) entail?

The company's approach to satisfying buyer wants and needs at a price considered good value by customers.

What does the Profit Formula (P-C) represent?

The company's approach to determining a cost structure that allows for acceptable profits based on pricing.

What are the three tests for a winning strategy?

The Fit Test, the Competitive Advantage Test, and the Performance Test.

What does the Fit Test evaluate?

How well the strategy fits the company's situation, including external, internal, and dynamic fit.

What does the Competitive Advantage Test assess?

Whether the strategy is helping the company achieve a sustainable competitive advantage.

What indicators are used in the Performance Test?

Gains in profitability, financial strength, competitive strength, and market standing.

Why are crafting and executing strategy important tasks?

A company's performance is directly linked to the quality of its strategy and the proficiency of its execution.

What happens to well-conceived strategies if not executed proficiently?

They will likely fall short of achieving their intended outcomes.

What are the five interrelated stages of the strategy-making, strategy-executing process?

1. Developing a strategic vision, mission statement, and core values. 2. Setting objectives for performance and progress. 3. Crafting a strategy to achieve objectives and the vision. 4. Executing the chosen strategy efficiently and effectively. 5. Monitoring developments, evaluating performance, and initiating corrective adjustments.

What does a strategic vision represent for a company?

A company's long-term direction and aspirations for its future, answering 'where we are going'.

What characteristics should a strategic vision possess?

It should be distinctive, specific, graphic, forward-looking, directional, focused, feasible, and memorable.

What is the purpose of a mission statement?

It describes the enterprise's present business and purpose, answering 'who we are, what we do, and why we are here'.

What should a mission statement ideally identify?

It should identify products/services, buyer needs/customer groups, and give the company its own identity.

What are core values in the context of a company's strategy?

The beliefs, traits, and behavioral norms that company personnel are expected to display in conducting business and pursuing the vision/mission.

What are objectives in the strategy-making process?

Objectives are the organization's performance targets—the specific results management wants to achieve.

What are the characteristics of well-stated objectives?

They must be specific, measurable, time-limited, challenging, and achievable.

What are the two types of objectives required in a company?

1. Financial objectives: Goals for financial performance. 2. Strategic objectives: Goals concerning market standing and competitive position.

What is the importance of a balanced approach to objectives?

Both financial and strategic objectives are crucial; strategic performance enables improved financial performance.

What is the Balanced Scorecard?

A widely used method for combining and tracking both strategic and financial objectives, providing a comprehensive view of performance.

How should objective setting be approached in an organization?

It should be a top-down process, with company-wide targets broken down into performance targets for each organizational level.

What are stretch objectives?

High performance targets set to push the organization to its full potential.

What does crafting a strategy involve?

It involves addressing 'hows' such as attracting customers, competing with rivals, market positioning, and responding to changes.

Who has lead responsibility for the total enterprise in strategy-making?

The CEO.

What is the role of senior executives in strategy-making?

They have influential roles for their respective functions, such as CFO and VPs for production and marketing.

What is the strategy-making hierarchy in diversified companies?

1. Corporate Strategy: Overall game plan for managing a set of businesses. 2. Business Strategy: Strengthening market position for a single line of business. 3. Functional Area Strategies: Details of business strategy for major functional activities. 4. Operating Strategies: Narrow approaches for managing key operating units.

What is corporate strategy?

The overall game plan for managing a set of businesses in a diversified company.

What is business strategy?

It focuses on strengthening market position and improving performance for a single line of business.

What do functional area strategies flesh out?

They flesh out details of business strategy for major functional activities such as marketing, R&D, and logistics.

What are operating strategies?

Narrow approaches for managing key operating units and specific strategic activities.

What are the components of a strategic plan?

Vision, Mission, Objectives, and Strategy.

What does a strategic plan map out?

It maps out where the company is headed, its targets, business model, and competitive moves.

What is involved in executing a strategy?

Converting strategic plans into actions and results, including creating a supportive structure, staffing, developing resources, allocating resources, instituting policies, managing operations, and fostering a supportive culture.

What is the most demanding part of strategic management?

Executing the strategy.

What is the purpose of evaluating performance in strategic management?

To decide whether to continue or change the vision, mission, objectives, strategy, business model, or execution methods.

What are the four important obligations of the board of directors?

1. Oversee financial accounting and reporting practices. 2. Critically appraise the company's direction, strategy, and business approaches. 3. Evaluate the caliber of senior executives' strategic leadership skills. 4. Institute a compensation plan for top executives that rewards them for serving stakeholder interests.

Why is an independent board crucial in corporate governance?

To challenge management and protect shareholder interests.

What does strategic thinking begin with?

Appraising a company's external environment and internal environment.

What are the seven questions to assess a company's industry and competitive environment?

1. Do macro-environmental factors and industry characteristics offer opportunities? 2. What competitive forces are industry members facing? 3. What forces are driving industry change? 4. What market positions do rivals occupy? 5. What strategic moves are rivals likely to make next? 6. What are the key factors of competitive success? 7. Does the industry outlook offer good prospects for profitability?

What is the macro-environment in strategic management?

The broad environmental context in which a company's industry is situated.

What does PESTEL analysis assess?

The strategic relevance of Political, Economic, Sociocultural, Technological, Environmental, and Legal/Regulatory factors.

What are societal shocks in the context of strategic management?

Irregular but significant external factors such as pandemics and terrorism.

What does the Five Forces Framework diagnose?

Principal competitive pressures from five sources.

What is the strongest competitive pressure according to the Five Forces Framework?

Rivalry among competing sellers.

What factors intensify rivalry among competing sellers?

Low switching costs, undifferentiated products, excess inventory/capacity, and many equal competitors.

What are competitive weapons used in rivalry?

Discounting, promotions, advertising, product innovation, new features, customization, dealer networks, and warranties.

What does the threat of new entrants depend on?

Entry barriers, which can be high or low.

What is the role of managers in assessing the macro-environment?

To identify which factors are strategically relevant for decision-making.

What is the significance of the competitive dynamics assessment?

It focuses on using tools like the five forces framework, value net, driving forces, strategic groups, competitor analysis, and key success factors.

What is the purpose of the strategic plan's time period?

To set a timeline for achieving goals.

What does proficient execution of strategy require?

It can take months to years and involves multiple organizational processes.

What happens if a strategy does not pass the three tests of a winner?

Changes are needed to the strategy.

What determines the threat of new entrants in an industry?

It depends on entry barriers (high vs. low) and the expected reaction of existing members.

What are some high barriers to entry?

Economies of scale, experience curve effects, strong brand preferences, high capital requirements, distribution difficulties, restrictive regulations, and retaliation by incumbents.

How can certain companies overcome high entry barriers?

Companies with strong resources and capabilities can hurdle high barriers.

What creates competitive pressures from substitute products?

Strong pressures arise when good substitutes are readily available and attractively priced, creating a price ceiling for industry members.

What are signs of increasing pressure from substitute products?

Sales of substitutes growing faster, producers investing in capacity, and earning higher profits.

What factors contribute to strong supplier bargaining power?

High demand/short supply, differentiated inputs, high switching costs, dominance by a few large suppliers, and the threat of backward integration by suppliers.

What conditions lead to strong buyer bargaining power?

Weak buyer demand, standardized products, low switching costs, few large buyers, credible threat of backward integration, well-informed buyers, or the ability to postpone purchases.

When does price sensitivity among buyers increase?

When buyers earn low profits/income, the product is a large fraction of their purchases, or quality is not a primary concern.

What is the strongest of the five forces in industry analysis?

It determines the extent of downward pressure on industry profitability.

What are complementors in the context of the Value Net?

Producers of complementary products that enhance the value of a firm's products when used together.

What does the Value Net framework emphasize?

It highlights cooperative interactions among industry participants, not just competitive ones.

What are driving forces in industry dynamics?

Major underlying causes of change in industry and competitive conditions.

What are the three steps in analyzing driving forces?

Identifying driving forces, assessing their impact on industry attractiveness, and determining necessary strategy changes.

What is a strategic group in industry analysis?

A cluster of industry rivals with similar competitive approaches and market positions.

What is strategic group mapping?

A technique for displaying the positions of firms within strategic groups based on competitive characteristics.

What is the value of strategic group maps?

They reveal close vs. distant rivals and show that not all positions are equally attractive due to varying competitive pressures.

What are mobility barriers?

Barriers that restrict movement between strategic groups.

What is the purpose of competitor analysis?

To gather competitive intelligence to prepare defensive countermoves and craft strategic moves.

What does the SOAR Framework identify?

Four indicators of a rival's likely strategic moves: Strategy, Objectives, Assumptions, and Resources and Capabilities.

How can information for competitor analysis be gathered?

From public sources, while ensuring ethical conduct.

What are Key Success Factors (KSFs)?

Essential strategy elements, product/service attributes, operational approaches, resources, and capabilities necessary for survival and success in an industry.

How can firms deduce Key Success Factors?

By asking what buyers choose based on, what resources/capabilities are needed for success, and what shortcomings cause competitive disadvantage.

What are the key factors that can cause competitive disadvantage?

Usually no more than five key factors, with two or three being most important.

What does the industry outlook for profitability synthesize?

Insights from PESTEL, five forces, Value Net, driving forces, strategic group mapping, and KSFs.

What indicates an attractive industry for profitability?

An industry is attractive if it presents good opportunity for above-average profitability.

What are the two best indicators of a company's present strategy effectiveness?

Gains in financial strength and profitability, and improving competitive strength and market standing.

What does sluggish financial performance indicate about a company's strategy?

It indicates a weak strategy, weak execution, or both.

What is SWOT Analysis used for in evaluating a company?

It identifies the company's strengths, weaknesses, market opportunities, and external threats.

What defines internal strengths in a SWOT analysis?

Attributes that enhance a company's competitiveness or activities performed with proficiency.

What is a core competence?

An activity performed proficiently and central to a company's strategy and competitive success.

What are internal weaknesses in a SWOT analysis?

Conditions that put a company at a disadvantage or something it lacks or does poorly.

How do market opportunities affect a company's strategy?

They shape strategy and can be plentiful or scarce, fleeting or lasting.

What are external threats in the context of a company's strategy?

Factors that pose challenges to the company's future profitability and competitive position.

What is the payoff of conducting a SWOT analysis?

It provides conclusions about the company's situation and implications for strategy improvement.

What are resources and capabilities in a company?

They are competitive assets and determinants of competitiveness and ability to succeed.

What are tangible resources?

Easily identified resources such as physical, financial, technological, and organizational assets.