Strategic Management Exam 1 Guide Flashcards
What is Strategy?
A set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
Define Strategic Positioning
The unique position a company occupies in an industry to gain a competitive advantage.
What is Competitive Advantage?
When a firm outperforms competitors or the industry average.
What does Competitive Disadvantage mean?
When a firm lags behind competitors.
What is Competitive Parity?
When a firm performs at the same level as its competitors.
Define Vision in a business context
A statement about what an organization ultimately wants to accomplish.
What is a Mission statement?
The description of what an organization does, including how it competes in its industry.
What are Values in an organization?
The principles guiding an organization’s behavior and decision-making.
Define Strategic Leadership
The use of power and influence by executives to direct activities toward achieving strategic goals.
What is Top-Down Strategic Planning?
A decision-making model where strategy is formulated by top management and implemented throughout the organization.
What is Scenario Planning?
A strategic decision-making approach where firms prepare for multiple possible future scenarios.
Define Stakeholder Theory
The idea that firms should consider the interests of all stakeholders, not just shareholders.
What is Shareholder Theory?
The idea that a firm’s primary goal is to maximize shareholder wealth.
What are Ethical Decision-Making Models?
Frameworks such as Rest’s model that guide ethical business decisions.
True or False: Bad Apples vs. Bad Barrels refers to individual choices causing unethical behavior.
True
What does PESTEL Analysis stand for?
Political, Economic, Sociocultural, Technological, Ecological, Legal.
What is Porter’s Five Forces?
A model assessing industry competitiveness through the power of buyers, suppliers, industry rivalry, threat of substitutes, and threat of new entrants.
Define Industrial Organization (I/O) Model
A view that industry structure determines firm performance more than internal resources.
What is the Resource-Based View (RBV)?
A model emphasizing a firm’s internal resources and capabilities as sources of competitive advantage.
What are Strategic Groups?
Firms within an industry that pursue similar strategies.
Define Mobility Barriers
Factors that prevent firms from easily shifting between strategic groups.
What are Switching Costs?
Costs incurred by customers when changing from one product or service to another.
What is the VRIO Framework?
A model for evaluating a firm’s resources based on Value, Rarity, Imitability, and Organization.
Define Core Competencies
Unique strengths that provide a competitive advantage.
What are Dynamic Capabilities?
The ability of a firm to adapt and reconfigure resources to maintain a competitive advantage.
What does Path Dependence mean?
The idea that past decisions limit future strategic options.
Define Causal Ambiguity
A situation where the cause of a firm’s success is unclear, making it difficult to imitate.
What is Social Complexity?
When competitive advantage is derived from complex relationships, making replication difficult.
What are Core Rigidities?
Once valuable competencies that have become outdated and now hinder performance.
What is Value Chain Analysis?
A framework that categorizes firm activities into primary and support functions to analyze competitive advantage.
How do vision, mission, and values impact firm performance?
They provide strategic direction, align organizational efforts, and shape corporate culture to improve decision-making and performance.
What are the differences between the I/O model and the RBV model?
The I/O model emphasizes industry structure in determining firm performance, while the RBV model focuses on internal resources and capabilities.
How does Porter’s Five Forces framework help in industry analysis?
It evaluates competitive pressures in an industry to assess profitability and strategic positioning.
What are the dimensions of PESTEL analysis?
- Political
- Economic
- Sociocultural
- Technological
- Ecological
- Legal
How do mobility barriers impact strategic groups?
They restrict firms from easily moving between strategic groups, limiting competition and preserving market segmentation.
What are the key isolating mechanisms that make resources costly to imitate?
- Path dependence
- Causal ambiguity
- Social complexity
- Intellectual property
- Future value
What are the advantages and disadvantages of top-down strategic planning vs. scenario planning?
- Top-down planning provides clear direction but may lack flexibility
- Scenario planning prepares for uncertainties but requires extensive analysis.
How does the stakeholder theory differ from the shareholder theory?
Stakeholder theory considers all stakeholders’ interests, while shareholder theory prioritizes maximizing shareholder wealth.
Why are switching costs an important consideration in strategic decision-making?
High switching costs lock in customers, reduce churn, and create competitive advantages for firms.
What factors contribute to a sustainable competitive advantage according to the VRIO framework?
A resource must be Valuable, Rare, Costly to Imitate, and Organized to capture value.
