Strategic Management Chapters 1-5 Exam
Questions With Correct 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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