ANSWERS OF THE MID-TERM EXAM Q 1 (25 pts)

List and explain 5 elements of a good strategy from the perspective of Hambrick and Fredrickson, by using an example.
5 Elements of Good Strategy 1. Arenas ( Where will we be active ?) 2. Vehicles (How we will get there ?) 3. Differentiators (How will we win in the marketplace ?) 4. Staging (What will be our speed and sequence of moves ?) 5. Economic logic (How will we make money ?) (How will we obtain our resources ?)

Q 2 (25 pts)
Why environmental scanning is important? What are the advantages and disadvantages of environmental instability (degree of complexity + degree of change)?
The lesson is simple: To be successful over time, an organization needs to be in tune with its external environment. -- There must be a strategic fit between what the environment wants and what the corporation has to offer, as well as; -- between what the corporation needs and what the environment can provide

Poor fit leades to failure Close fit leads to success

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ENVIRONMENTAL UNCERTAINITY The degree of complexity + the degree of change Both ; a threat and (it hampers their ability to develop long range plans and to make strategic decisions to keep the corporation in equilibrium with its external environment) an opportunity (it creates a new playing field in which creativity and innovation can play a major part in strategic decisions)

Q 3 (25 pts)
Explain basic growth strategies on corporate level.

Q 4 (25 pts)
Explain below written concepts in short; Core competency

(primary expertise) Something that a corporation can do exceedingly well

Distinctive competency

When core competition is superior of the competition

Tacit knowledge It is knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporations culture Propitious niche
An extremely favorable niche that is so well suited to the firms internal and external environment that other corporations are not likely to challenge it

Hyper competition
Short product life-cycles Short product design cycles New technologies Frequent entry by unexpected outsiders Merging of diverse industries Redefinition of market boundaries leads to hyper (perfect) competition with minimal profits

Hyper-competitive market is characterized by a continuous series of multiple short- term initiatives that replace current products with new products before competitors can do so. Leads to an over emphasis on short-term tactics. It is becoming increasingly difficult to sustain a
competitive advantage for very long.