CALIFORNIA STATE UNIVERSITY, SACRAMENO

College of Business Administration

MGMT 182 - Strategic Management

STUDY GUIDE FOR EXAM I

INSTRUCTIONS

Exam I includes Chapters 1, 2, 3, and 4 from your Thompson and Strickland text. You are to study these chapters with a particular focus on the definitions, concepts, and tools outlined in this study guide.

How are a company's strategy and business model defined in the text?

What does the strategic management process entail?

What do mission and strategic vision concern or deal with and what are the differences between them?

Strategic and financial objectives: Why do companies need to set these objectives? Is the achievement of strategic objectives more important than the achievement of financial objectives or vice-versa?

Company strategies usually end up being a composite of planned actions and as-needed adaptive reactions.

What are the reasons for strategies to evolve over time?

What are the benefits of strategic thinking and planning?

Why do successful companies change their strategic vision and long-term direction?

What are business, functional, and operating strategies concerned with?

Tests of a winning strategy involve the goodness of fit test, the competitive advantage test, and performance test.

How is experience curve defined?

The five competitive forces are:

Rivalry among competing sellers is typically stronger when . . . .

The seriousness of the competitive threat of entry is greater when . . . .

The competitive force of substitute products is weaker when . . . .

The strength of suppliers as a strong competitive force is diminished when . . . .

Bargaining power of customers is weaker when . . . .

Attractive industries, from a profit making perspective, are characterized by high entry barriers, low competition from substitutes; both suppliers and customers have low bargaining power, and weak rivalry among industry's competitor.

Driving force analysis:

Addresses what the impact and consequences of each driving force will be.

Indicates to managers what newly developing external factors will have the greatest impact on the industry over the next several years.

Prompts managers to think about the kind of strategy needed to respond to the driving forces and their impact on the industry.

Using strategic group maps to divide industry members into strategic groups allows industry analysts to better understand the pattern of competition in complex industries and to pinpoint which companies are in closest competition with each other.

An industry's key success factors consist of three or four biggest determinants of financial and competitive success in an industry.

Tailoring strategy to a company's external opportunities and threats entails:

Pursuing market opportunities well-suited to the company's resources and capabilities.

Building a resource base that helps defend against threats to the company's business.

Value Chain Analysis is a tool for identifying the separate activities, functions, and business processes that a company performs in designing, producing, marketing, distributing, and supporting a product or service.

The key part of Strategic Cost Analysis is learning how the company's costs for various value chain activities compare with the estimated costs of competitors for these same activities.

Determining whether a company's prices and costs are competitive is best indicated by comparing a company's costs activity by activity against the costs of key rivals, so as to learn which value chain activities are a source of cost advantage or disadvantage.

A company's resource strengths, from a strategy-making perspective, provide potential for serving as the cornerstones of strategy and the building of competitive advantage.

Sizing up company resource strengths and weaknesses essentially involves constructing a strategic balance sheet where the company's resource strengths represent competitive assets and its weaknesses represent competitive liabilities (VRIO analysis).

A Core Competence:

Adds to a company's arsenal of competitive capabilities and competitive assets and is a genuine resource strength.

Typically resides in a company's people (skills and knowledge) and in its capabilities.

Is sometimes the product of effective collaboration among different organizational units and/or of individual resources teaming together.

A Distinctive Competence:

Is something a company does especially well in comparison to its competitors.

Represents a competitively superior company resource.

Is a basis for building competitive advantage.

Holds potential for being the cornerstone of a company's strategy.

The industry opportunities most relevant to a particular company are those that offer important avenues for profitable growth, are well-suited to a company's resource capabilities, and hold the most potential to build competitive advantage.

336 MGMT 182 Study Guide for Exam I