MBA Final Exam QUESTION AND
CORRECT ANSWER
strategy - CORRECT ANSWER-where should we compete and how? integrated set of
choices that positions the business in its industry so as to generate superior financial
returns over time,
Strong strategy is consistent, aligns with intended business model and positioning, How
a business performs in its environment compared to competitors
purpose and goal of strategy - CORRECT ANSWER-create a competitive advantage,
determines where to engage with the competition and choice of business model
Goal: superior performance, substantial positive return, above average profitability,
above average return on equity
Five Stages of the Strategic Management Process - CORRECT ANSWER-Analysis -
understand unique competitive strengths, how to create value
Formulation - vison, mission, goals, objectives, strategic approach
Implementation - allocate resources, organizational structure, employees, activities to
engage in
Evaluation - think and respond based on results and analysis
Performance - success or failure of strategy
Five Questions to Define strategy - CORRECT ANSWER-Why are firms different
How are competitive differences sustained?
What is special about strategic decisions
What is the nature of strategy in multi-divisional firm?
How is strategic effectiveness measured?
Competitive Advantage - CORRECT ANSWER-specialized approach to create value to
meet market expectations
Strategic Decision Making - CORRECT ANSWER-non-routine, affect entire
organizational functions, commitment of resources needed, difficult to reverse, making a
clear choice among alternatives, easily identified as failure or success
Clear Choice - what will it do and not do
Resources and capabilities that set a company apart
Long term vision
Company business model
External Analysis - CORRECT ANSWER-industries and competitors, how it is evolving,
growing and the importance
, Internal Analysis - CORRECT ANSWER-value chain and competitive advantage
Resource Based Analysis - CORRECT ANSWER-Sustainable competitive advantage
Strategy vs Tactics - CORRECT ANSWER-Strategy - long term plan, affects entire
company, difficult to change, fundamental to everything you do
Tactics - how to get there, day to day activities
how does strategy change over time - CORRECT ANSWER-Technology, big data, rapid
communication,
Globalization
Ease of access to finance and markets
24/7 pace of work
Rapid change and evolving conditions
how is strategy effectiveness measured - CORRECT ANSWER-Financial performance
metrics
Qualitative assessments
Stakeholder goals (internal and external)
SWOT Analysis - CORRECT ANSWER-Strenghth
Weakness
Opportunity
Threat
Porters Five Forces - Industry Analysis - CORRECT ANSWER-Evaluates structural
factors focusing on how they influence industry profitability
Threat of New Entrants - increases competition, captures market share (most important
in terms of profitability), capital requirements, economies of scale, absolute cost
advantages, access to inputs, access to distribution channels, need for product
differentiation, switching costs, expected retaliation, government regulation
Bargaining power of buyers - free to direct their purchases elsewhere, buyer
concentration, buyer volume, switching costs of buyers, buyer information, threat of
backward integration, availability of substitutes
Threat of Substitutes - relative price/performance of substitutes, switching costs of
buyers, buyer propensity to substitute
Bargaining power of suppliers - raise prices by offering a unique product, supplier
concentration, importance of volume to supplier, switching costs of suppliers,
differentiation of inputs required, presence of substitute inputs, cost of input relative to
total costs, threat of forward integration
Competitive Rivalry: industry growth rate, fixed costs as percentage of total costs,
overcapacity in industry, low product differentiation, low switching costs, informational
complexity, numerous or equally balanced competition, high strategic stakes, exit
barriers
