MGM 399 Exam 2 2026 Questions with Correct
Solutions
Strategy research
How and why some firms outperform others?
Strategy
A set of goal-directed actions a firm takes to gain and sustain superior performance (relative) to
competitors
What are the fundamental questions that need to be addressed to develop strategies
- Where do firms compete
- What resources and capabilities do firms have?
- Who is in charge of using resources that a firm has
Analysis definition
- A diagnosis of the competitive challenge and strength
Formulation definition
- A guiding policy to address the competitive challenge and to maximize your strength
Implementation definition
- A set of coherent actions to implement the firm's guiding policy
What does AFI stand for?
- Analysis, formulation, implementation
,Analysis
- Diagnosis of the competitive challenge
- Analysis of the firms internal and external environments
Formulation
- Effective guiding policy to address the competitive challenge
- Firms corporate, business, and functional strategies
- Backed by strategic commitments
o Investments
o Changes
Competitive advantage
- Superior performance (relative) to other competitors in the same industry or the industry
average
o Always relative, not absolute
- Assess competitive advantage
o Compare firm to competitors in the same industry
o Compare firm to industry average
Competitive disadvantage
- Under performing its rivals or the industry average
o Example: Is 15% ROIC superior?
§ Depends on the industry
§ 20% ROIC is expected in the consulting industry
, - Competitive parity
o Performance of two or more firms at the same level
Strategic positioning
- A unique position within an industry that allows the firm to provide value to customers, while
controlling costs
- Value-costs= economic contribution
o The greater, the better
Strategic positioning requires trade-offs
- Managers must make conscious trade-offs
- Example: retail industry
o Walmart- Cost leader
§ Big box outlet/low prices
o Nordstrom- Differentiator
§ Professional salespeople/luxury setting
o Their customer segments overlap a little
The key to successful strategy
- requires combining activities for a unique position in an industry
Competitive advantage has to come from:
- performing different activities or
- performing the same activities differently than rivals
Defining vision, mission, and values
Solutions
Strategy research
How and why some firms outperform others?
Strategy
A set of goal-directed actions a firm takes to gain and sustain superior performance (relative) to
competitors
What are the fundamental questions that need to be addressed to develop strategies
- Where do firms compete
- What resources and capabilities do firms have?
- Who is in charge of using resources that a firm has
Analysis definition
- A diagnosis of the competitive challenge and strength
Formulation definition
- A guiding policy to address the competitive challenge and to maximize your strength
Implementation definition
- A set of coherent actions to implement the firm's guiding policy
What does AFI stand for?
- Analysis, formulation, implementation
,Analysis
- Diagnosis of the competitive challenge
- Analysis of the firms internal and external environments
Formulation
- Effective guiding policy to address the competitive challenge
- Firms corporate, business, and functional strategies
- Backed by strategic commitments
o Investments
o Changes
Competitive advantage
- Superior performance (relative) to other competitors in the same industry or the industry
average
o Always relative, not absolute
- Assess competitive advantage
o Compare firm to competitors in the same industry
o Compare firm to industry average
Competitive disadvantage
- Under performing its rivals or the industry average
o Example: Is 15% ROIC superior?
§ Depends on the industry
§ 20% ROIC is expected in the consulting industry
, - Competitive parity
o Performance of two or more firms at the same level
Strategic positioning
- A unique position within an industry that allows the firm to provide value to customers, while
controlling costs
- Value-costs= economic contribution
o The greater, the better
Strategic positioning requires trade-offs
- Managers must make conscious trade-offs
- Example: retail industry
o Walmart- Cost leader
§ Big box outlet/low prices
o Nordstrom- Differentiator
§ Professional salespeople/luxury setting
o Their customer segments overlap a little
The key to successful strategy
- requires combining activities for a unique position in an industry
Competitive advantage has to come from:
- performing different activities or
- performing the same activities differently than rivals
Defining vision, mission, and values
