Business Strategy Key Predicted Questions and Correct Answers 2024

What is business strategy about - it is about choices, choices on how to compete and choices on where to compete (what our competitive game plan will be) Strategy - integrated set of choices that positions a firm in its industry so as to generate superior financial returns (value) over the long run by creating and sustaining competitive advantage What is the caviot about strategy - it is usually resource intensive and hard to reverse (important) What are the three strategic questions firms must consider? - How will the firm create value? How will the firm capture value? How will the firm sustain value? What are the three elements of a strategy statement? - Objective, scope, advantage Objective - precise endpoint that will drive the business over a specific time period scope - domain including the customer or offering, the geography, and boundaries of firm activities advantage - the means by which the firm will achieve its objective containing the demand side: CVP Supply side: the unique combination of activities that allow the firm to deliver the value proposition tactics - the specific actions or steps taken to implement strategy -tactical decisions involve a lower level of commitment of resources and are more easily reversible Strategy vs tactics - competitive strategy is about being different to deliver a unique mix of value and they involve commitment of resources and are not easily reversed... Tactical decisions are just specific actions within a strategy and are lower commitments and are more easily reversed Total variable cost - Vc*Q (increase in variable cost as output increases) Total cost - TFC+TVC Total revenue (TR) - P*Q Profit - TR-TC contribution margin - Sales - Variable Costs Breakeven point - Fc/cm , Fc/(p-Vc), TR=TC accounting profit - (P*Q)-TC economic profit - (P*Q)- TC- opportunity cost what does a viable business model do - examines the impact on break-even when making choices related to strategic options What is a firms strategic goal? - A firm's strategic goal is to maximize economic profit by considering opportunity costs since the firm must choose from competing alternatives What is strategy about? - Strategy is about creating economic value and capturing as much of it as possibl