BSG EXAM WITH VERIFIED QUESTIONS AND ANSWERS

BSG EXAM WITH VERIFIED QUESTIONS AND ANSWERS Lecture 1 ● company’s strategy - represents managerial commitment to undertake one set of actions rather than another ● What is a competitive advantage and why does it matter? ○ when a large number of buyers are drawn to purchase its products/services over a competitor ● What is a sustainable competitive advantage? ○ when basis for buyer preferences for product/service compared to competitors is durable, despite competitors’ best efforts to nullify/overcome appeal of its offering ● What is a business model and how does it differ from a company’s strategy? ○ Concerns whether revenues & costs flowing from strategy demonstrate firm can be profitable & viable ● Customer Value - How firm will satisfy customer needs at a price customers consider a good value. ● Profit Proposition - How firm will create/deliver customer value in a cost-efficient manner, at a price that produces enough revenues to cover costs & attractive profits. ● What are the tests of the validity of a company’s profit proposition? ○ Goodness of fit test, competitive advantage test, performance test (must pass all 3) Lecture 2 ● What are the definitions of a strategic vision, vision statement, and mission statement? ○ Strategic Vision - describes route a firm intends to take in developing & strengthening its business, lays out the firm’s strategic course in preparing for the future. ○ Vision statement - clearly conveys a firm’s long-term direction ○ Mission statement - Briefly describes the present business ● What are the key differences between them? ○ Strategic vision is forward looking and mission statement is present ● What are a company’s core values? ○ Beliefs, traits, behavioral norms that firms employees are expected to display when conducting business ● What are a firm's objectives? What is a stretch objective? ○ Objectives - organizations performance targets - results management wants to achieve ○ Stretch objectives - use compensation incentives to motivate organization members to perform ● What are the key elements of a company’s strategic plan? ○ Strategic vision, business mission, core values ○ Strategic & financial objectives ○ Chosen strategy Lecture 3 ● What is game theory? ○ Formal study of strategic interaction ● Know the three elements that make up a game. What are the definitions of each element? ○ Players - set of participants in game ○ Strategies - choices available to players in game ○ Payoffs - What each player receives in game based on actions chosen by players ● What is a simultaneous game? A sequential game? What are the differences? ○ Simultaneous game - players in game either make their decisions at the same time or make choices without knowledge of the other players choice ○ Sequential game - where game has a strict order in which players make their choices ○ Difference → ● What are the two common ways a game can be represented? ○ Normal form - Elements are represented in a game matrix, often used in simultaneous games/incomplete information games ○ Extensive form - Elements are represented in game tree, often used in sequential move, imperfect information, incomplete information games ● Know the definition of perfect information, imperfect information, complete information, and incomplete information. ○ Perfect information - each player when making their decision is aware of all choices/events that have previously occurred ○ Imperfect information - Some (or all) players in game are unaware of some (or all) of previous choices ○ Complete information - each player is aware of payoffs & strategies of each other later in game ○ Incomplete information - some (or all) of players in game are unaware of payoffs & strategies of some (or all) of the other players in game ● Make sure you are comfortable with all the elements of the matrix game and game tree. ● What is a dominated strategy? Know how to apply the definition. ○ A strategy is dominated for a player if another strategy gives a higher payoff no matter what other player chooses ● What is iterated elimination of dominated strategies? Know how to solve matrix games using iterated elimination of dominated strategies. ○ In this process, you consider each player in turns, deleting strategies that are strictly dominated, continuing until there are no dominated strategies left ● Know the definition of a Nash equilibrium. You need to be comfortable solving for Nash equilibrium (especially in matrix games. Use the circle technique) ○ A set of strategies is a Nash Equilibrium if no player can do strictly better by unilaterally changing their strategy ● What is backward induction? Know how to solve for an equilibrium using backward induction. Make sure to write out the complete plan of action in stating equilibrium. ○ Starting at the end of the game tree and figuring out what that player would do, working backwards to figure out equilibrium path ● What is a pure strategy? What is a mixed strategy? What is the difference? ( you will not need to solve for mixed strategy Nash equilibrium but you need to know the definition) ○ Strategy that a person chooses with 100% chance Lecture 4 ● What are external factors or “macro-environmental” variables that influence a firm’s decisions? How do they relate to the other competitive industry forces? ○ General economic conditions, political regulatory and legal influences, technological influences, sociocultural forces, considerations relating to natural environment, immediate industry & competitive environment. ○ ● What are the five competitive forces? ○ Market maneuvering & jockeying for buyer patronage among rival sellers in industry ○ Threat of new entrants into market ○ Attempts of companies in other industries to win buyers over to their own substitute products ○ Exercise of supplier bargaining power ○ Exercise of buyer bargaining power ● What steps are needed to analyze the five competitive forces? ○ 1. Identify specific competitive pressures associated with each of the five forces ○ 2. Evaluate how strong pressures comprising each of the five forces are ○ 3. Determine whether collective strength of the five competitive forces is conducive to earning attractive profits ● Why is rivalry a competitive force? What are strategies that are often used to battle rivals? ○ Rivals must respond with countermoves to preserve their market & profitability ○ Strategies → Reducing prices, introducing different products, offering coupons ● What factors make rivalry more intense and less intense? How does that influence competition? ○ More intense when buyer demand is growing slowly, competing sellers are active in making fresh moves ○ Less intense when buyer demand is growing rapidly, products are differentiated