SEVI 30103 - STRATEGIC MANAGEMENT CH. 1-3
EXAM STUDY GUIDE
Strategy - Answers - goal-directed actions taken to gain and sustain superior
performance relative to competitors.
Goal of a good strategy - Answers - create a durable competitive advantage by
providing customer value and enabling the firm to earn above-average returns.
Three elements of a good strategy - Answers - 1. Diagnosis of the competitive
challenge. 2. A guiding policy. 3. A set of coherent actions.
Competitive advantage - Answers - occurs when a firm outperforms competitors or the
industry average.
Competitive parity - Answers - occurs when two or more firms perform at the same
level.
Competitive disadvantage - Answers - occurs when a firm underperforms compared to
rivals or the industry average.
Sustainable competitive advantage - Answers - a competitive advantage if it
outperforms competitors over a prolonged period.
Actions to gain competitive advantage - Answers - Provide goods/services that
consumers value more highly than competitors or at a lower price.
Unique strategic positioning - Answers - allows a firm to create value while controlling
costs, increasing the likelihood of competitive advantage.
Internal Stakeholders of a firm - Answers - include stockholders, employees, and board
members.
External Stakeholders of a firm - Answers - include customers, suppliers, creditors,
media, governments, and communities.
Interests/claims of stakeholders - Answers - Stakeholders have vested interests such as
job security, wages, return on investment, product quality, and service.
Role of stakeholders in decision-making - Answers - Stakeholders influence firm
performance, trust levels, and business adaptability, affecting competitive advantage.
, Difference between internal and external stakeholders - Answers - Internal stakeholders
are directly involved in the firm's operations, while external stakeholders indirectly
impact the firm.
Characteristics of stakeholders - Answers - 1. Power: Ability to influence decisions. 2.
Legitimacy: Legal or appropriate claim. 3. Urgency: Requires immediate attention.
Steps in stakeholder impact analysis - Answers - 1. Identify stakeholders. 2. Assess
their interests/claims. 3. Analyze threats and opportunities. 4. Evaluate responsibilities.
5. Determine actions.
Vision - Answers - statement defines what the company aspires to be and its long-term
goal.
Mission - Answers - statement defines how the company competes in the market and its
core purpose.
Values - Answers - define how employees should behave to achieve strategic goals.
Purpose of vision, mission, and values - Answers - Vision provides strategic intent,
mission outlines how the firm competes, and values guide behavior.
Difference between vision and mission statement - Answers - A vision statement
defines purpose and long-term aspiration, while a mission statement focuses on how
the firm competes.
Customer-oriented vision statement - Answers - focuses on meeting customer needs
(e.g., Amazon: 'To be the Earth's most customer-centric company').
Product-oriented vision statement - Answers - focuses on product improvements (e.g.,
Remington Typewriters: 'Expand the position as #1 market leader with reliable
machines for home and business').
Role of core values - Answers - influence company culture, ethical behavior, and
decision-making.
SWOT analysis - Answers - helps firms analyze internal and external conditions to
develop strategies.
Use of SWOT analysis - Answers - It identifies Strengths, Weaknesses, Opportunities,
and Threats to guide strategic decision-making.
Environmental scanning - Answers - involves monitoring external trends to anticipate
industry changes.
EXAM STUDY GUIDE
Strategy - Answers - goal-directed actions taken to gain and sustain superior
performance relative to competitors.
Goal of a good strategy - Answers - create a durable competitive advantage by
providing customer value and enabling the firm to earn above-average returns.
Three elements of a good strategy - Answers - 1. Diagnosis of the competitive
challenge. 2. A guiding policy. 3. A set of coherent actions.
Competitive advantage - Answers - occurs when a firm outperforms competitors or the
industry average.
Competitive parity - Answers - occurs when two or more firms perform at the same
level.
Competitive disadvantage - Answers - occurs when a firm underperforms compared to
rivals or the industry average.
Sustainable competitive advantage - Answers - a competitive advantage if it
outperforms competitors over a prolonged period.
Actions to gain competitive advantage - Answers - Provide goods/services that
consumers value more highly than competitors or at a lower price.
Unique strategic positioning - Answers - allows a firm to create value while controlling
costs, increasing the likelihood of competitive advantage.
Internal Stakeholders of a firm - Answers - include stockholders, employees, and board
members.
External Stakeholders of a firm - Answers - include customers, suppliers, creditors,
media, governments, and communities.
Interests/claims of stakeholders - Answers - Stakeholders have vested interests such as
job security, wages, return on investment, product quality, and service.
Role of stakeholders in decision-making - Answers - Stakeholders influence firm
performance, trust levels, and business adaptability, affecting competitive advantage.
, Difference between internal and external stakeholders - Answers - Internal stakeholders
are directly involved in the firm's operations, while external stakeholders indirectly
impact the firm.
Characteristics of stakeholders - Answers - 1. Power: Ability to influence decisions. 2.
Legitimacy: Legal or appropriate claim. 3. Urgency: Requires immediate attention.
Steps in stakeholder impact analysis - Answers - 1. Identify stakeholders. 2. Assess
their interests/claims. 3. Analyze threats and opportunities. 4. Evaluate responsibilities.
5. Determine actions.
Vision - Answers - statement defines what the company aspires to be and its long-term
goal.
Mission - Answers - statement defines how the company competes in the market and its
core purpose.
Values - Answers - define how employees should behave to achieve strategic goals.
Purpose of vision, mission, and values - Answers - Vision provides strategic intent,
mission outlines how the firm competes, and values guide behavior.
Difference between vision and mission statement - Answers - A vision statement
defines purpose and long-term aspiration, while a mission statement focuses on how
the firm competes.
Customer-oriented vision statement - Answers - focuses on meeting customer needs
(e.g., Amazon: 'To be the Earth's most customer-centric company').
Product-oriented vision statement - Answers - focuses on product improvements (e.g.,
Remington Typewriters: 'Expand the position as #1 market leader with reliable
machines for home and business').
Role of core values - Answers - influence company culture, ethical behavior, and
decision-making.
SWOT analysis - Answers - helps firms analyze internal and external conditions to
develop strategies.
Use of SWOT analysis - Answers - It identifies Strengths, Weaknesses, Opportunities,
and Threats to guide strategic decision-making.
Environmental scanning - Answers - involves monitoring external trends to anticipate
industry changes.
