Study Guide

The Final Exam is comprehensive and you are responsible for all materials covered in class,
PowerPoints and textbook. “Focus”, means that you might get questions outside of these areas.

The study guide is simply a tool which will help you focus your efforts. You are responsible
for all materials covered in lectures and textbooks.

For chapter one focus on:

1. Know the two perspectives of leadership and their implications.

- Romantic View: Leader is the key force in the organization’s success

- External Control Perspective: External forces determine the organization’s success

*Leaders must be proactive and continually refine strategies. They should also be aware of
external opportunities and threats. Strategic management should be both a process and a way of
thinking throughout the organization.

*Successful leaders should:

- Anticipate structural changes in the industry

- Stay aware of changes in the external environment

- Acknowledge the need to make tough strategic choices

2. Know the three components of strategic management process and its four key attributes.

- Analysis:

- Strategic goals (vision, mission, strategic objectives)

- Internal and external environment

- Decision Making:

- What industries should we compete in?

- How should we compete in those industries?

- Actions- implementations

- Allocate necessary resources

- Design the organization to bring intended strategies to reality

 - 4 key attributes:

- Directs the organization toward overall goals and objectives

- Includes multiple stakeholders in decision making

- Needs to incorporate short-term and long-term perspectives

- Recognizes trade-offs between efficiency and effectiveness

3. Know what is required to achieve sustainable competitive advantage.

To achieve sustainable competitive advantage, you have to perform different activities

from rivals or perform similar activities in different ways

4. Know the difference between organizational versus the individual rationality

perspective.

- Organizational: it’s an intended strategy > everyone should work together

- Individual: it’s a realized strategy > everyone fends for themselves

5. Know the difference between effectiveness and efficiency.

- Effectiveness: “doing the right thing” – tailoring to needs of an organization than

wasting effort

- Efficiency: “doing things right” – performing at a low cost relative to benchmark

6. Know the difference between deliberate, realized and emergent strategies.

- Deliberate: Analysis

- Realized: Organizational decisions are determined by both analysis and unforeseen

environmental developments, unanticipated resource constraints, and/or changes in
managerial preferences

- Emergent: Unforeseen environmental developments, unanticipated resource constraints,

and/or changes in managerial preferences

7. Know the key factors that contribute to rivalry.

- Slow industry growth

- High fixed or storage costs

- Lack of differentiation or switching costs

 - Capacity increased in large increments

- Diverse competitors

- High strategic stakes

- High exit barriers

8. Know the various approaches to managing relationships with stakeholders.

- Stockholders > Dividends, capital appreciation

- Employees > Wages, benefits, safe working environment, job security

- Suppliers > Payment on time, assurance of continued relationship

- Creditors > Payment of interest, repayment of principal

- Customers > Value, warranties

- Government > Taxes, Compliance with regulations

- Communities > Good citizenship behavior such as charities, employment, not polluting
the environment

9. Know why top level executives are important for strategic implementation other than the
fact that they formulate the strategy

- Effective leaders:

- Set the direction

- Design the organization

- Develop an organization committed to excellence & ethical behavior

- Create a “learning organization” that benefits from individual & collective talents

10. Know the Triple Bottom Line concept

The Triple Bottom Line concept is an assessment of a firm’s financial, social, and
environmental performance- accounting for the environmental and social cost of doing
business.

11. Know the Shared Value Concept.

The Shared Value Concept are policies and operating practices that enhance the
competitiveness of a company while simultaneously advancing the economic and social
 conditions in which it operates. This value is shared with society in a mutually beneficial
relationship

12. Know the relationship between Vision, Mission Statement, and Strategic Objectives

- Vision: Evokes powerful & compelling mental images of a shared future

- Mission: Encompasses the organization’s current purpose, basis of competition, and

competitive advantage

- Strategic objectives: Operationalize the mission statement with specific yardstick

13. Know the difference between Zero-Sum and Symbiosis approach

- Zero-sum: Stakeholders compete for attention & resources. A gain of one is a loss to the
other

- Symbiosis: Stakeholders are depended upon each other for success & well-being. They
receive mutual benefits

For chapter two focus on:

1. Know the Five Forces Model very thoroughly. Know what factors increase or decrease
the level of competition, buyers’ power, suppliers’ power, threat of new entrants, threat of
substitute products.

- Threat of new entrants

- Bargaining power of buyers

- Bargaining power of suppliers

- Threat of substitution

- Intensity of Rivalry

2. Know what is meant by Hard Trends and Soft Trends

- Hard Trends: something that will happen in the future

- Soft Trends: something that might happen in the future

3. Know what is meant by Environmental Scanning

- Involves surveillance of a firm’s external environment

- Predicts environmental changes to come
 - Detects changes already underway

- Allows firm to be proactive

4. Know what is meant by Environmental Monitoring

- Tracks evolution of environmental trends

- Sequences of measurable facts/ events

- Streams of activities or trends from outside organization

5. Know what is meant by Competitive Intelligence gathering.

- Helps firms define & understand their industry

- Identifies rivals’ strengths and weaknesses

- Collect data on competitors

- Interpret intelligence data

- Helps firms avoid surprises

- Anticipate competitors’ moves

- Decrease response time

- Beware of the potential for unethical behavior while gathering intelligence

6. Know what is meant by Scenario Analysis

- An in-depth approach to environmental forecasting that involves experts’ detailed

assessments of social trends, economics, politics, technology, or other dimensions of the
external environment

7. Become thoroughly familiar with SWOT

S- strength

W- weakness

O- opportunities

T- threats

8. Know the categories of the General Environment and what goes in each category

- Demographic: easily understandable & quantifiable

 - Sociocultural: forces influence on the values, beliefs, and lifestyle of a society

- Political/ Legal: Processes & legislation influence environmental regulations

- Technological: Developments lead to new products & services & can create new
industries & alter existing ones

- Economic: Forces affect= interest rates, unemployment, CPI, GDP, stock market

- Global: Forces can offer both opportunities and risks

9. Know what we mean by the competitive environment and what goes in that environment

Competitive environment are factors that pertain to an industry and affects a firm’s
strategy. It consists of factors in the task or industry environment that are particularly
relevant to a firm’s strategy

Competitors, Customers, Suppliers

10. Know what a Strategic Group is and why and how it is used in strategic analysis.

Strategic groups are clusters of firms that share similar strategies:

- Breadth of product & geographic scope

- Price/ quality
- Degree of vertical integration
- Type of distribution

For Chapter three focus on

1. Know the key attributes of a resource which provides sustainable competitive advantage.
2. Know what is meant by social complexity, path dependency and causal ambiguity.

- Social Complexity: Resources that result from social engineering such as interpersonal
relations, culture
- Path Dependency: Hard to duplicate because all that has happened along the path
followed in the development and/or accumulation of resources
- Casual Ambiguity: Impossible to explain what caused a resource to exist or how to re-
create it
3. Know what are the available categories of financial ratios and what do they imply;
particularly solvency, asset utilization and profitability categories.
4. Know what we mean by Historical Comparison, Industry Norms and Comparison with
key competitors.
- Historical Comparison: Look to the past and compare it to the company now
- Industrial Norms: What is normal to the industry?
- Comparison with key competitors: Compare yourselves with you competitors
5. Know what is meant by a balance score card, what its four categories are, and how it is
utilized.
The balanced scorecard is a meaningful integration of many issues that come into
evaluating performance
- Customer: How do customers see us?
- Internal: What must we excel at?
- Innovation & Learning: Can we continue to improve and create value?
- Financial: How do we look to shareholders?
6. Know what are the key customer concerns under the customer perspective in the
balanced score card.
Customer perspective measures the firm’s performance that indicate how well the firms
are satisfying customers’ expectations
- Time
- Quality
- Performance and Service
- Cost

7. Know what is meant by Value Chain and how value chain analysis is applied
Value chain analysis is a strategic analysis of an organization that uses value-creating
activities. Value is the amount buyers are willing to pay for what a firm provides. The
value received must exceed cost of production

8. Know what we mean by primary activities and support activities and examples of each
category.
- Primary Activities: Sequential activities of the value chain that refer to the physical
creation of the product or service, its sale and transfer to the buyer, and its service after
sale
- Inbound Logistics
 - Operations
- Outbound Logistics
- Marketing & Sales
- Service
- Support Activities: Activities of the value chain that either add value by themselves or
add value through important relationships with both primary activities and other support
activities
- Procurement
- Technology Development
- Human Resource Management
- General Administration
9. Know the difference between tangible assets, organizational capabilities, and intangible
assets.
- Tangible Assets: Assets you can touch
- Organizational Capabilities: The competencies and skills that a firm employs to
transform inputs into outputs
- Outstanding customer service
- Excellent product development capabilities
- Superb innovation processes & flexibility in manufacturing processes
- Ability to hire, motivate, & retain human capital
- Intangible Assets: Assets you cannot touch
10. Know what is meant by resource based view of the firm and how you can extend that to
bargaining power of employees and management.
The resource based view is the perspective that firms’ competitive advantages are due to
their own endowment of strategic resources that are valuable, rare, costly to imitate, and
costly to substitute.
- An internal analysis of phenomena within a company
- An external analysis of the industry & its competitive environment
For Chapter Four focus on
1. Know what market value is and what book value is and what the difference between the
two implies.
2. Know which companies tend to have a higher market value than their book value.
3. Know what we mean by intellectual assets.
4. Know what is meant by knowledge economy, knowledge worker,
5. Know what is meant by human capital, and social capital, and what is included in each
category.
6. Know the best methods for acquiring and retaining human capital and what role social
capital plays in retaining employees.
7. Know what can go wrong with too much emphasis on social capital.
8. Know what the Pied Piper effect is and what that implies for acquiring human capital.
9. Know the different methods of employee evaluation including 360 degree evaluation
10. Know what Tacit Knowledge is and what is Explicit knowledge.
11. Know what social network analysis is and how that helps us retain human capital.
12. Know what a bridging relationship is and what the closure segment of a social network
looks like and what it means.
13. Know what dynamic capabilities are.
For chapter five focus on

1. Know what is the primary aim of strategic management at business level strategy
2. Know the three generic business strategies, their use and also their pitfalls.
3. Know which strategies generate higher rates of return.
4. Know how you can combine the generic strategies.
5. Know what are some methods that a firm can use to achieve low cost leadership position.
6. Know what are some methods that a firm can use to achieve a differentiated position.
7. Know how a firm can use a focus strategy.
8. Know what is an industry profit pool and how can it be utilized.
9. Know how the internet helps (or hurts) the three generic strategies.
10. Know what an Industry life cycle is and which strategies can be used for which stages.
11. Know what a turnaround strategy is and how it can be used.
For chapter six focus on

1. Know what we mean by Corporate level Strategy and how that is different from business
level.
2. Know what a core competence is and how it comes into play when we consider
diversification strategies.
3. What are the three requirements for a core competence to become the basis of
strengthening of business unit.
4. Know what is vertical integration and what types of vertical integration do we have.
5. Know what is parenting and how that relates to diversification.
6. Know what mergers and acquisitions are and what the difference between them is.
 7. Know what a strategic alliance is and what is a joint venture and what is the difference
between them.
8. Know the downside of mergers and acquisitions, strategic alliances and joint ventures.
9. Know what is restructuring and when we use it.
10. Know the Boston Consulting Group’s portfolio analysis tool. Thoroughly familiarize
yourself with its 4 different categories.
11. Know what we mean by management of intellectual property (IP) and what is considered
an IP.
For chapter seven focus on

 Dilemmas of international trade,

 Michael Porter’s national competitiveness factors,
 Currency exchange rates and
 Arbitrage.
 Outsourcing
 Offshoring
 International expansion
o What are the different strategies? When do you choose each one?
o Why companies decided to do it
o Theodore Levitt assumptions supporting a pure global strategy
o What are the methods of entry
 Exporting
 Franchising
 Licensing
 joint venture,
 wholly owned subsidiary
  transfer prices
 Royalties
 Dividends

For chapter eight focus on

 Characteristics of Entrepreneurs
 Opportunity recognition
 Opportunity Evaluation
 Sources of financing for entrepreneurs
 Angel Investors
 Venture Capitalists
 Crowd funding
  Application of the generic Strategies
 Co-optition
 Forbearance
 Market Commonality
 Market Dependence
 Competitive Dynamics
 Threat analysis

For chapter nine focus on

 Organizational Culture
o Its Role
o How do you sustain it
o How does it tie in to reward and incentive systems
o What are boundaries

 What is a corporation
 What are the control systems that a firm has,
 The difference between new and old approaches,
 Reward and incentive system,
 Corporate governance
o Characteristics of a good board
o Related concepts such as CEO duality & unity of command
 Agency Theory
 Takeover constraint
 Shareholder Activism
 Book versus market value and the role of analysts in shaping that value.

For Chapter 10

 Know the definition of organizational structure

 Know the relationship between structure and strategy
 Know the different forms of organizational structure
 The simple Structure
 The Functional Structure
 The Divisional Structure
 The SBU structure
 The Matrix Structure
 The Holding Company structure
 Know what we mean by a global start up
 Know what we mean by Boundaryless organizational design
 Know the advantages does outsourcing provide an organization.
 Know what we mean by a Modular Organization
 Know what is mean by Ambidextrous Organizations.