MENT 4900 Exam LATEST UPDATED 2025 WITH COMPLETE SOLUTIONS
Business –
Self contained unit managers - translate corporate general strategy to their
specific strategic business units (SBUs) - work with corporate to determine
business strategy
Functional –
different organizational activities in each SBU (e.g., Finance, HR, Customer
Service, Marketing, etc.)
Corporate executives at
headquarters formulate corporate strategy.
Components:
Mission, External Analysis (opportunities/threats), Internal Analysis
(strengths/weaknesses), Select and formulate strategies, Implement
Sequential process (top-down planning approach)
New cycle every year with feedback loop to modify and/or reaffirm
Product-oriented -
specifies the products and services a firm plans to provide (myopic view)
Customer-oriented -
specifies the markets in which the firm intends to compete, and the customer
needs it intends to serve
Critique of the Formal Planning Process
It is not flexible to deal with uncertainty
It does not consider that top managers can be emotionally committed to the
status quo
Leaders' future vision can be wrong
It doesn't consider lower-level manager initiatives
It doesn't account for myopia
May not adapt well to change
, Information flows in one way
Formulation separate from implementation
Strategy
A set of actions taken to exploit core competencies and gain competitive
advantage
Competitive Advantage
Superior performance relative to other competitors in the same industry
Sustainable Competitive Advantage
A firm that is able to outperform its competitors or the industry average over a
prolonged period
Competitive advantage example:
In terms of stock market valuation, Tesla has appreciated much more in recent
years than GM, Ford, or Chrysler, and thus appears to have a competitive
advantage, at least on this dimension.
Sustained competitive advantage example:
Apple has enjoyed a sustainable competitive advantage over Samsung in the
smartphone industry for over a decade since its introduction of the iPhone in
2007. Other phone makers such as Microsoft (which purchased Nokia) and
BlackBerry have all but exited the smartphone market, while new entrants such as
Xiaomi and Huawei of China are trying to gain traction.
Competitive Disadvantage
When a firm underperforms its rivals and the industry average
For example, is 15% ROIC superior?
Competitive Parit
When two or more firms perform at the same level
Shareholder Value Maximization
Profitability + Profit Growth
Shareholders have a claim as owners since they provide risk capital
Business –
Self contained unit managers - translate corporate general strategy to their
specific strategic business units (SBUs) - work with corporate to determine
business strategy
Functional –
different organizational activities in each SBU (e.g., Finance, HR, Customer
Service, Marketing, etc.)
Corporate executives at
headquarters formulate corporate strategy.
Components:
Mission, External Analysis (opportunities/threats), Internal Analysis
(strengths/weaknesses), Select and formulate strategies, Implement
Sequential process (top-down planning approach)
New cycle every year with feedback loop to modify and/or reaffirm
Product-oriented -
specifies the products and services a firm plans to provide (myopic view)
Customer-oriented -
specifies the markets in which the firm intends to compete, and the customer
needs it intends to serve
Critique of the Formal Planning Process
It is not flexible to deal with uncertainty
It does not consider that top managers can be emotionally committed to the
status quo
Leaders' future vision can be wrong
It doesn't consider lower-level manager initiatives
It doesn't account for myopia
May not adapt well to change
, Information flows in one way
Formulation separate from implementation
Strategy
A set of actions taken to exploit core competencies and gain competitive
advantage
Competitive Advantage
Superior performance relative to other competitors in the same industry
Sustainable Competitive Advantage
A firm that is able to outperform its competitors or the industry average over a
prolonged period
Competitive advantage example:
In terms of stock market valuation, Tesla has appreciated much more in recent
years than GM, Ford, or Chrysler, and thus appears to have a competitive
advantage, at least on this dimension.
Sustained competitive advantage example:
Apple has enjoyed a sustainable competitive advantage over Samsung in the
smartphone industry for over a decade since its introduction of the iPhone in
2007. Other phone makers such as Microsoft (which purchased Nokia) and
BlackBerry have all but exited the smartphone market, while new entrants such as
Xiaomi and Huawei of China are trying to gain traction.
Competitive Disadvantage
When a firm underperforms its rivals and the industry average
For example, is 15% ROIC superior?
Competitive Parit
When two or more firms perform at the same level
Shareholder Value Maximization
Profitability + Profit Growth
Shareholders have a claim as owners since they provide risk capital
