Strategic Mgmt Exam Questions And Verified Answers (2025 / 2026) / A+ Grade

Strategic Mgmt EXAM QUESTIONS AND VERIFIED ANSWERS (2025 / 2026) / A+ GRADE What is Business Strategy starting point ? - Answer- A vision, an ambition, a business Idea Vision - Answer- what does the company want to become ultimately ? Future state, a dream Strategy starting point - Answer- Business Idea Lead innovation with the Big Idea Change paradigm Create value Desire for a future state It is a destination Company's vision - Answer- A vision is very often articulated into a Mission, a statement intended for internal and external publics Mission Statement answers 2 types of questions « Why we exist and what we want to be » « What we believe in and how we will behave » • States a position and principles / values = company's culture Strategy Definition - Answer- Choice of the firm's future, its « future state »in the medium to long term and the roadmap to get from current state to desired future state • A unifying theme that gives direction to decisions and actions to get there • Future state : coherent picture of markets and segments, technology, industry, organisation, people antd their capabilities The strategy is a looking-forward process, It aims at designing the road to reach the desired future of the firm This is done in 3 steps 1- Define objectives based on today's situation and vision of the desired future, 2 - Identify key drivers to achieve objectives 3 - Develop capabilities required to support the process classical 5 steps approach - Answer- 1. Define Scope - industry, region, years 2. Identify Key Drivers - PESTEL, forecasts, cube 3. Develop distinct scenario stories - name scenarios 4. Identify Impacts - check & adapt strategies 5. Monitor Progress - early warning indicators Global Firm perspective - Answer- On existing On surviving On long term success of the organization • Involves all areas that can have a lasting effect on the organization Structure, competition, personnel, technology, production, regulation, etc. What is Strategy - Answer- the art and science of developing and employing instruments of national power in a synchronized and integrated fashion to achieve theater, national, and/or multinational objectives the AIDA Model - Answer- Attention, Interest, Desire, Action The winning strategy • Be different from competitors • Create interest • Create value for customers The 3 ingredients for a winning strategy - Answer- Be different from competitors • Create value for customers • In a durable fashion The 2 Strategy Levels - Answer- Ultimate goal : « generate profit in a durable way» • Corporate level: which industries do we want to be operating in • New product or service • Acquisition • Divestement • Business level: in a given industry, how can we beat competition è competitive advantage The Corporate Strategy aims at identifying in which sectors the firm wants to operate and how to combine all activities to generate the best profitability emergence of Strategic Business Units (SBUs) The Business Strategy aims at creating and maintaining a competitive advantage for the firm in a specific SBU A Strategic Business Unit (SBU) is an activity or a subset of activities that has the following characteristics : • specific clients, • specific markets, • specific distribution networks, • specific competitors, • specific technologies, • specific skills, • a specific cost structure The Concept of Rivalry - Answer- Objective is to get to unsurpassed postion • Rivals must be outperformed • Only if the company can establish a difference that it can preserve either by delivering greater value, or by creating comparable value at lower cost Michael Porter's Strategy Concepts - Answer- Michael Porter is an economist, researcher, teacher at Harvard Business School He has brought economic theory and strategy concepts to bear on many of the most challenging problems facing corporations. His classic work on competitive strategy is "The Five Competitive Forces That Shape Strategy" The concept of Industry - Answer- Michael Porter defined the term as "a group of companies offering products or services that are close substitutes for each other, that is, products or services that satisfy the same basic customers' needs." • It emphasizes the importance of industry borders and industry's role as a market supplier or producer of goods and service` • It distinguished it from a market, defined as a consumer of goods and services. Industry = activity defined by a group of firms that supply a market • Industry: global sector, broad approach, can cover different markets • Markets or market segments: more specific approach, Own customers, competitors Banking: retail, corporate, investment banking Industry may sometimes be too high a level to provide for a detailed understanding of competition • The industry forces can impact differently on different kinds of players, which requires a more fine-grained understanding • Hyundai and Porsche may be in the same broad industry (automobiles), but they are positioned differently and do not attract similar customers • Industries can be disaggregated into smaller and specific market sections known as segments The concept of Market Segment - Answer- The concept of market segment focuses on differences in customer needs A market segment is a group of customers who have similar needs, different from customer needs in other parts of the market • Segmentation should reflect an organisation's strategy and strategies based on market segments must keep customer needs firmly in mind 2 strategic paths • Focusing on customer needs that are highly distinctive from those typical in the market is one means of building a long-term segment strategy • Specialization within a market segment can also be an important basis for a successful segmentation strategy: called a 'niche strategy' Industry Attractiveness - Answer- 1st strategic decision: which industry should the firm be engaged in ? • Precisely define the relevant industry • Where to draw the boundaries : the risk of strategic myopia short-sighted view and mindset • Theodore Lewitt suggests that « businesses will do better in the end if they concentrate on meeting customers' needs rather than on selling products » • Attractiveness = profit potential • Key element : the competitive structure of an industry determines its profitability • Monopoly or near (duopoly) - Microsoft nearly monopoly in PCs operating systems in 1995/2002 - Cola wars : Coca vs Pepsi • High/Low Barriers to entry - Rapid evolution • Business strategy and environment analysis How to measure industry's potential for profit ? ROE è Return on Equity • Corporate finance: ROE is a measure of the profitability of a business in relaGon to the equity • ROE is a measure of how well a company uses investments to generate earnings growth • ROE = Net Income /Equity Return on Equity • ROE of 20% means that 100 euros contributed by the partners or shareholders generate 20 € of net profit • The more efficient the company is, the higher its ROE is and the more investors it attracts The Different Market Structures - Answer- perfect competition, monopolistic competition, oligopoly, monopoly Perfect Competition: large number of firms, no product differentiation • Niche Markets: product differentiation, localized competition (gas stations, clothing stores) • Oligopoly: few firms, strategic interdependence, profitability determined by behavior (automobiles, airlines, chain retailers) • Dominant Firm: one large firm, more small firms, pricing leadership, protected niches/competitive fringe (computer operating systems) • Monopoly: single firm (electric utilities)