Strategic Management Chapters 1-5 Exam
Questions With Verified Answers
Strategic management - answer✔✔An integrative management field that combines analysis,
formulation, and implementation in the quest for competitive advantage.
Never ending cycle of analysis, formulation, implementation, and feedback.
Competitive advantage - answer✔✔Superior performance relative to other competitors in the
same industry or the industry average.
A firm that formulates and implements a strategy that leads to superior performance relative to
competitors has this.
Sustainable competitive advantage - answer✔✔Outperforming competitors or the industry
average over a prolonged period of time.
Competitive disadvantage - answer✔✔Under performance relative to other competitors in the
same industry or the industry average.
Competitive parity - answer✔✔Performance of two or more firms at the same level.
Strategy - answer✔✔The goal-directed actions a firm intends to take in its quest to gain and
sustain competitive advantages.
Manager's "theory" about how to gain and sustain.
Strategic positioning - answer✔✔Staking out a unique position in an industry that allows the
firm to provide value to customers while controlling costs.
Co-opetition - answer✔✔Cooperation by competitors to achieve a strategic objective.
Firm effects - answer✔✔The results of managers' actions to influence firm performance.
Industry effects - answer✔✔The results attributed to the choice of industry in which to compete.
Corporate-level strategy - answer✔✔Involves decisions made at the highest level of the firm
about where to compete. Which industries, markets, and geographies their company should
compete, and how well they can create synergies across different business units.
Business-level strategy - answer✔✔Involves deciding how to compete in order to achieve
superior performance within the business unit. Formulated by general managers.
Functional-level strategy - answer✔✔Involves deciding how to implement the business-level
strategy. Functional managers within a single functional area (accounting, HR, finance, IT,
customer service) are responsible for decisions and actions.
Strategic business unit (SBU) - answer✔✔Standalone division of a larger conglomerate, with its
own profits and losses.
Business model - answer✔✔The translation of the strategy into action takes place here, and it
details the firm's competitive tactics and initiatives. How the firm intends to make money.
Network effects - answer✔✔The increase in value of a product of service as more people use it.
Bottom of the pyramid - answer✔✔The largest but poorest socioeconomic group of the world's
population. Can yield significant business opportunities.
Externalities - answer✔✔Side-effects of production and consumption that are not reflected in the
price of a product.
Crowdsourcing - answer✔✔A process in which a group of people voluntarily performs tasks that
were traditionally completed by a firm's employees.
Threadless T-shirt company used this.
Stakeholders - answer✔✔Individuals or groups who can affect of are affected by the actions of a
firm.
AFI strategy framework - answer✔✔A model that links three interdependent strategic
management tasks that together help firms conceive and implement a strategy that can improve
performance and result in a CA.
Strategic management process - answer✔✔Method by which mangers conceive of and
implement a strategy that can lead to a sustainable CA.
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