Chap 1

Question 1

Common elements of successful strategies

Answer 1

effective implementation

clear, consistent, long term goals

profound understanding of competitive environment

objective appraisal of resources

Question 2

Strategic Fit

Answer 2

refers to the consistency of a firm’s strategy, first, with the firm’s external environment and, second, with its
internal environment, especially with its goals and values and resources and capabilities.

Question 3

Contingency Theory

Answer 3

Contingency theory postulates that there is no single best way of organizing or managing. The best way to design, manage, and lead anorganization depends upon circumstances—in particular the characteristics of
that organization’s environment.

Question 4

Activity Fit

Answer 4

activities that fit together to form a consistent, mutually reinforcing system

Question 5

Corporate Planning

Answer 5

aka long term planning, a systemic approach to long term development, usually using macroeconomic forecasts. Corporate planning using medium term economic forecasts

The typical format was a five-year corporate planning document that set goals and objectives, forecasted key economic trends (including
market demand, the company’s market share, revenue, costs, and margins), established priorities for different products and business areas of the firm, and allocated
capital expenditures

Question 6

resource based view of the firm

Answer 6

A focus on the profit sources within the firm. Firms identify how they are different from their competitors and design strategies that exploit these differences

Question 7

strategy

Answer 7

the means by which individuals or organizations

achieve their objectives

Question 8

why do firms need strategy

Answer 8

Strategy assists the effective management of organizations, first, by enhancing the quality of decision making,second, by facilitating coordination, and, third, by focusing organizations on the pursuit of long-term goals.

Question 9

Strategy as Decision Support (enhancing quality of decision making)

Answer 9

Strategy improves decision making in several ways:
● It simplifies decision making by constraining the range of decision alternatives considered and acts as a heuristic—a rule of thumb that reduces the search required to find an acceptable solution to a decision problem.
● The strategy-making process permits the knowledge of different individuals to be pooled and integrated.
● It facilitates the use of analytic tools—the frameworks and techniques that we will encounter in the ensuing chapters of this book.

Question 10

Strategy as a Coordination Device (facilitating coordination)

Answer 10

Strategy acts as a communication device to promote coordination. Statements of strategy are a means by which the CEO can communicate the identity, goals, and positioning of the company to all organizational members.

Question 11

Strategy as Target (long term goals)

Answer 11

Strategy is forward looking. It is concerned not only with
how the firm will compete now but also with what the firm will become in the future. A key purpose of a forward-looking strategy is not only to establish a direction for the firm’s development but also to set aspirations that can motivate and inspire members of the organization

Question 12

Strategic Intent

Answer 12

Desired strategic position. The implication is that strategy should be less about fit and resource allocation and more about stretch and resource leverage

Question 13

Corporate Strategy

Answer 13

Corporate strategy defines the scope of the firm in terms of the industries and markets in which it competes. Corporate strategy decisions include choices over diversification, vertical integration, acquisitions, and new ventures, and the allocation of resources between the different businesses of the firm.

Question 14

Business Strategy

Answer 14

Business strategy is concerned with how the firm competes within a particular industry or market. If the firm is to prosper within an industry, it must establish a competitive advantage over its rivals. Hence, this area of strategy is also referred to as competitive strategy.

Question 15

Intended Strategy

Answer 15

strategy as conceived of by the leader or top management team

Question 16

Realized Strategy

Answer 16

the actual strategy that is implemented

Question 17

Emergent Strategy

Answer 17

the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing circumstances

Question 18

Steps in Applied Strategy Analysis (ASA)

Answer 18

1. Identify Current Strategy
2. Appraise Performance
3. Diagnose Performance
4. Industry Analysis
5. Analysis of Resources and Capabilities
6. Formulate Strategy
7. Implement Strategy

Question 19

Identify Current Strategy

Answer 19

First step in ASA

Assuming we are dealing with an existing business,
as opposed to a new venture, the first task is to identify the current strategy of the business (drawing upon the sections above on “Where do We Find Strategy?” and “Describing Strategy”).

Question 20

Appraise Performance

Answer 20

Second step in ASA

How well is the current strategy performing? In the
next chapter we shall consider the use of financial analysis to measure firm performance.

Question 21

Diagnose Performance

Answer 21

Third step in ASA

Having determined the level and trend of the firm’s
performance, the next challenge is diagnosis: in the case of poor performance,can we use a combination of financial and strategic analysis to determine the
sources of unsatisfactory performance? In the case of good performance, can we identify the factors driving this? As Dick Rumelt observes, the core question in
most strategy situations is: “What’s going on here?”40 Chapter 2 offers guidance on such diagnosis

Question 22

Industry Analysis

Answer 22

Fourth step in ASA

Analyzing the fit between strategy and the firm’s industry
environment is a fundamental input into both diagnosing recent performance and generating future strategic options. Chapters 3 and 4 address industry
analysis.

Question 23

Analysis of Resources and Capabilities

Answer 23

Fifth step in ASA

Equivalently, analyzing the fit between
strategy and the firm’s resources and capabilities is a fundamental input into both diagnosing recent performance and generating future strategic options.
Chapter 5 describes the analysis of resources and capabilities

Question 24

Formulate Strategy

Answer 24

Sixth step in ASA

Performance diagnosis, industry analysis, and the analysis of resources and capabilities provide a basis for generating strategic options for the future, the most promising of which can be developed into a recommended strategy. Chapter 7 outlines how the intersection of internal strengths and external
success factors combine to offer a basis for competitive advantage

Question 25

Implement Strategy

Answer 25

Seventh step in ASA

Executing the chosen strategy requires linking the strategy to performance goals and resource allocations and establishing appropriate organizational structure and management systems. Chapter 6 outlines how this
can be done