MGMT 449 exam PDF

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CHAPTER 1

1. What is strategy? A company’s strategy consists of the set of competitive moves and business approaches that management is employing to run the company Strategy is management’s “game plan” to     

Attract and please customers Stake out a market position Conduct operations Compete successfully Achieve organizational objectives

2. Concept of sustainable competitive advantage Performing different activities from rivals, or performing similar activities in different ways 3. Concept of evolving strategy - A strategy that changes in response to new market conditions and challenges - Strategy, like evolution itself, started at the beginning of time. ... Strategic planning is a process of evolution where making the right moves, with the right information, at the right time is vital to achieving strategic success. Strategy truly is a process of planning. 4. Strategy vs. business model

- Strategy: explains why the company matters in the marketplace by specifying an approach to creating superior value for customers and determining how capabilities and resources will be utilized to deliver the desired value to customers - Business model: A business model addresses “How do we make money in this business?” - Is the company’s strategy capable of deliveringgood bottomline results? - Do the revenue-cost-profit economicsof the strategy make good business sense? - Look at revenue streams thestrategy is expected to produce - Look at associated cost structureand potential profit margins - Do resulting earnings streams and ROI indicate the strategy has good potential to deliver acceptable profitability? 5. Tests of winning strategy

1. Strategic fit - how well does the strategy fit the company's situation? 2. Competitive advantage - is the strategy helping achieve a sustainable competitive advantage? 3. Performance - is the strategy producing good company performance? CHAPTER 2

1. Steps in the strategic management process 3 components of Strategic Management Process  Analysis - Strategic goals (vision, mission, strategic objectives) - Internal and External environment  Decisions – Formulation - What industries should we compete in? - How should we compete?  Actions – Implementation - Allocate necessary resources - Design the organization to bring intended strategies to reality 4 key attributes:

1. Directs the organization toward overall goals and objectives 2. Includes multiple stakeholders in decision making 3. Needs to incorporate short-term and long-term perspectives 4. Recognizes trade-offs between efficiency and effectiveness 2. Definition of vision, mission, and core values Involves thinking strategically about Future of company Where are we going? Statement about a company’s long-term direction Vision – A declaration that states the scope and purpose of the company (how it will make you feel) Mission Statement – A declaration that expresses the specific aspirations of a company (product in it) Core Values- A list of fundamental doctrines that guide and direct the educational institution. Sets moral directions. 3. Setting goals and objectives Goal: are outcome statements that define what an organization is trying to accomplish Desired thing/place/outcome that organization wants to realize Objective: very precise, time- based, and measurable actions that support the completion of a goal. "how are we going to achieve our goal"

Specific, measurable statements of what needs to be accomplished to reach the goal Objectives are numbered or bulleted statements of specific results that will lead to the achievement of the goal. Objectives must be: specific, measurable, attainable, time-bound, and mission-driven 4. Different levels of strategy -Corporate level -Business-level - Operational 5. What company must do to achieve operating excellence and execute its strategy proficiently Role and responsibility of board of directors CHAPTER 3

1. Components of macro-environment (PESTEL) PESTEL Analysis Focuses on principal components of strategic significance in the macro-environment:      

Political factors Economic conditions (local to worldwide) Sociocultural forces Technological factors Environmental factors (the natural environment) Legal/regulatory conditions

2. 5 forces analysis and key determinants  Industries change because forcesare driving industry participantsto alter their actions  Driving forces are themajor underlying causesof changing industry andcompetitive conditions - Where do driving forces originate?  Outer ring of macroenvironment  Inner ring of macroenvironment. Forces driving industry change       

Industry Driving forces: Internet and e-commerce opportunities Increasing globalization of industry Changes in long-term industry growth rate Changes in who buys the product and how they use it Product innovation Technological change/process innovation Marketing innovation 4. Strategic Group analysis

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Firms in same strategic grouphave two or more competitive characteristics in common Have comparable product line breadth Sell in same price/quality range Emphasize same distribution channels Use same product attributes to appealto similar types of buyers Use identical technological approaches Offer buyers similar services Cover same geographic areas 5. Key success factors Key Success Factors (KSFs) Are the strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities that are necessary for competitive success by any and all firms in an industry.

Vary from industry to industry, and over time within the same industry, and in importance as drivers of change and competitive conditions change. 6. Industry outlook for profitability The anticipated industry environment is fundamentally attractive if it presents a company with good opportunity for above-average profitability. The industry outlook is fundamentally unattractive if a firm’s profit prospects are unappealingly low. CHAPTER 4

1. How to evaluate whether a company’s strategy is working  Implementing and executing strategy involves a company’s whole management team and all of its employees  Just as every part of a watch plays a role in making the watch function properly, it takes all pieces of an organization working cohesively for a strategy to be well-executed  Top-level managers must lead the process and orchestrate major initiatives  But they must rely on the cooperation of middleand lower-level managers to see that things go well in the various parts of the organization and on employees to perform their roles competently on a daily basis 2. SWOT analysis S W O T analysis involves more thanjust developing the 4 lists of strengths, weaknesses, opportunities, and threats The most important part of S W O T analysis is - Using the 4 lists to draw conclusionsabout a company’s overall situation - Acting on the conclusions to

 Better match a company’s strategy to itsresource strengths and market opportunities  Correct the important weaknesses  Defend against external threats 3. Importance of resources and capabilities for competitive advantage 4. How value chain affects cost structure and value proposition 5. Benchmarking  Identify best and most efficient means of performing various value chain activities  Learn what is the “best” way to perform a particular activity from those companies who have demonstrated that they are “best-inindustry” or “best-in-world” at performing the activity  Learn what other firms do toperform an activity at lower cost  Figure out what actions to take to improve a company’s own cost competitiveness 6. Competitive Strength Assessment CHAPTER 5

1. Distinguish between the 5 generic strategies and understand why certain strategies work better under certain competitive conditions 2. Identify major avenues for pursuing low cost strategy

3. Identify major avenues for pursuing differentiation strategy Understand attributes of best cost/value strategy CHAPTER 6

1. Understand when and how to use offensive or defensive strategies 1. Understand first mover, fast follower, or late mover strategies 3. Advantages and pitfalls of expanding horizontally via mergers & acquisitions 4. Advantages and pitfalls of expanding vertically 5. Understand when to use outsourcing 6. How to capture benefits and minimize drawbacks of strategic alliances and partnerships CHAPTER 7

1. Reasons for going international 2. Different market conditions that affect a company’s international strategy 3. Differences among the primary modes of entry into foreign markets 4. Understand the 3 main approaches for competing internationally How to use international operations to improve overall competitiveness Unique aspects of competing in emerging markets

CHAPTER 8

1. When and how diversification can enhance shareholder value 2. How related diversification can produce cross-business strategic fit to deliver competitive advantage 3. Identify advantages and risks of unrelated diversification 4. How to evaluate a company’s diversification strategy 5. Understand the key corporate strategy options a diversified company can use to improve company performance...