Section 1: Strategic Analysis (External & Internal)

1. Question: What is the primary difference between a Mission Statement and a Vision Statement?
   • Answer: A Mission Statement describes what the organization does now (its purpose and customers). A Vision Statement describes what the organization aspires to become in the future.
2. Question: What does the PESTEL framework analyze?
   • Answer: It analyzes the Macro-environment using six factors: Political, Economic, Social, Technological, Environmental, and Legal.
3. Question: In Porter’s Five Forces, what does “Threat of Substitutes” refer to?
   • Answer: It refers to products or services from outside the industry that can meet the same customer need (e.g., Zoom is a substitute for business travel).
4. Question: What are the components of the SWOT Analysis?
   • Answer: Strengths, Weaknesses (Internal), Opportunities, and Threats (External).

5. Question: What is the purpose of the VRIO Framework?
   • Answer: To determine if a resource or capability provides a sustained competitive advantage. It stands for Valuable, Rare, Inimitable, and Organized to capture value.

6. Question: What is a Strategic Group?
   • Answer: A set of companies within a specific industry that pursue similar strategies (e.g., luxury automakers like BMW and Mercedes).
7. Question: Define Competitive Advantage.
   • Answer: When a firm is able to create more economic value than its rival firms.
8. Question: What is the Value Chain?
   • Answer: A string of activities that a firm performs to deliver a valuable product or service to the market, divided into Primary Activities (e.g., operations, marketing) and Support Activities (e.g., HR, Tech).
9. Question: What happens if a resource is Valuable and Rare, but not costly to imitate?
   • Answer: The firm has a temporary competitive advantage.
10. Question: What is Environmental Scanning?
    • Answer: The surveillance of a firm’s external environment to predict environmental changes and detect changes already under way.
11. Question: How do Switching Costs affect the power of buyers?
    • Answer: High switching costs reduce buyer power because it is difficult or expensive for customers to move to a competitor.
12. Question: What is Backward Vertical Integration?
    • Answer: When a firm incorporates an activity that is “upstream” in the value chain, such as a manufacturer buying its raw material supplier.
13. Question: What are Complementors?
    • Answer: Companies or entities that sell products or services that make your own product more valuable (e.g., app developers are complementors to smartphone makers).
14. Question: What is Economies of Scale?
    • Answer: Cost advantages that a firm obtains due to expansion; the cost per unit of output generally decreases with increasing scale as fixed costs are spread out.
15. Question: What is a Concentrated Industry?
    • Answer: An industry dominated by a few large firms (e.g., the soft drink industry).

Section 2: Business-Level and Corporate-Level Strategy

16. Question: What are the two “Generic Strategies” proposed by Michael Porter?
    • Answer: Cost Leadership (being the low-cost producer) and Product Differentiation (being unique and commanding a premium price).
17. Question: What is a Focus Strategy?
    • Answer: Targeting a specific, narrow segment of the market (a niche) rather than the entire market.
18. Question: What is the “Stuck in the Middle” trap?
    • Answer: When a firm fails to choose between cost leadership and differentiation, resulting in low profitability because it has neither a low-cost structure nor a unique product.
19. Question: Define Corporate-Level Strategy.
    • Answer: The level of strategy that addresses where a company will compete (which industries and markets) rather than how it will compete.
20. Question: What is Related Diversification?
    • Answer: Entering a new business activity that is linked to a company’s existing business activity (e.g., a bicycle company starting to make motorized scooters).
21. Question: What is Unrelated Diversification?
    • Answer: Entering a new business that has no meaningful connection to a company’s current value chain (often called a conglomerate strategy).
22. Question: What is the BCG Matrix used for?
    • Answer: To evaluate a company’s portfolio of business units based on Market Growth Rate and Relative Market Share.
23. Question: In the BCG Matrix, what is a “Cash Cow”?
    • Answer: A business unit with high market share in a low-growth industry; it generates more cash than it needs to reinvest.
24. Question: What is Forward Vertical Integration?
    • Answer: Moving “downstream” in the value chain, closer to the end consumer (e.g., a clothing manufacturer opening its own retail stores).
25. Question: What is a Strategic Alliance?
    • Answer: A cooperative agreement between two or more firms to combine resources and efforts for a specific goal, without fully merging.
26. Question: What is a Joint Venture?
    • Answer: A type of strategic alliance where two or more firms create a legally independent company to share profits and resources.
27. Question: Define Merger.
    • Answer: The joining of two independent companies to form a combined entity.
28. Question: What is an Acquisition?
    • Answer: The purchase or takeover of one company by another.
29. Question: What is Synergy?
    • Answer: The concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts ($1 + 1 = 3$).
30. Question: What is a Transnational Strategy?
    • Answer: A global strategy that seeks to achieve both global efficiency (standardization) and local responsiveness.

Section 3: Implementation, Governance, and Ethics

31. Question: What is the Balanced Scorecard?
    • Answer: A strategic management tool used to track organizational performance across four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth.

32. Question: What is Corporate Governance?
    • Answer: The system of rules, practices, and processes by which a company is directed and controlled, balancing the interests of stakeholders.
33. Question: What is the Agency Problem?
    • Answer: A conflict of interest that occurs when the agents (managers) do not act in the best interest of the principals (shareholders).
34. Question: Who are Internal Stakeholders?
    • Answer: Employees, managers, and board members.
35. Question: Who are External Stakeholders?
    • Answer: Customers, suppliers, creditors, unions, communities, and governments.
36. Question: What is Strategic Leadership?
    • Answer: The ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.
37. Question: What is an Organizational Structure?
    • Answer: The formal system of task and reporting relationships that determines how employees use resources to achieve organizational goals.
38. Question: Define Simple Structure.
    • Answer: A structure in which the owner-manager makes all major decisions and monitors all activities.
39. Question: What is a Matrix Structure?
    • Answer: An organizational structure that combines functional and divisional chains of command, where employees often report to two bosses (e.g., a functional manager and a project manager).
40. Question: What is the role of the Board of Directors?
    • Answer: To provide oversight of management, ensure the company is run in the interests of shareholders, and handle CEO hiring/firing.
41. Question: What is Social Responsibility (CSR)?
    • Answer: The obligation of a business to contribute to the well-being of the community and society at large.
42. Question: What is Business Ethics in strategy?
    • Answer: The principles and standards that determine acceptable conduct in business organizations during the formulation and implementation of strategy.
43. Question: What is Strategic Implementation?
    • Answer: The process of putting strategies into action through the development of programs, budgets, and procedures.
44. Question: What is Benchmarking?
    • Answer: Comparing a firm’s performance or processes against industry best practices or the performance of competitors.
45. Question: What is Organizational Culture?
    • Answer: The shared values, beliefs, and norms that influence the way employees think, feel, and behave within an organization.