MM4311 – Strategic Management Course Review Sheet

Dr. Shuping Li Spring 2018

Notes:
1) Please combine the textbook, slides, and review guideline in preparing for the
final exam.
2) The guideline does not provide clues on the questions to be tested in the exam.
Rather, it aims to help you reflect on the course content and learn.
3) Content covered by the textbook but not by the slides will not be tested in the
exam.

Study Guideline

Introduction to Strategy
• Definitions
o Strategy
o Competitive advantage
 Measures
• Strategic planning process
o Two stages: Strategy formulation and implementation
 6 steps of planning
• Deliberate v. emergent strategy making
o Characteristics of emergent strategy making
 Communicated upwards
 Unplanned pattern of decision
 Adaptation and continuous learning
o Realized strategies: both deliberate and emergent

External Analysis
• Definitions
o Industry
o Segment
o Switching cost
o Brand loyalty
• Five forces analysis: determinants of each force
o Rivalry among Established Companies
 Demand condition
 Industry competitive structure
 Product differentiation
 Cost conditions
 Exit barriers
o Entry by Potential Competitors
 Economies of scale
 Absolute cost advantage
 Brand loyalty
 Switching costs
 Government regulations

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MM4311 – Strategic Management Course Review Sheet
Dr. Shuping Li Spring 2018

o Bargaining Power of Buyers

 Distribution of buyers
 Switching cost
o Bargaining Power of Suppliers
o Distribution of suppliers
o Switching cost of buyers
o Substitutes
o Threat of Substitutes
 Brand loyalty
 Switching costs
 Technology development
• Firm strategies to counter the five forces
o Alter the forces which are driving down industry profitability
 Play loyalty cards
 Increase switching costs
 Backward/forward integration
 Establish standards
 Industry consolidation (e.g., M&A)
o Blue ocean strategy
 Create a new market by looking at non-customers
 Examples?

Internal analysis
• Definitions
o Resources, capabilities, and distinctive competencies
o Tangible v. intangible resources
 Examples
• VRINE: criteria for resources and capabilities to become sources of competitive
advantages
o Valuable
o Rare
o Inimitable
o Non-substitutable
o Exploitable
• Competency trap
o Definition
• Value chain management
o Primary activities
 R&D
 Production/Manufacturing
 Marketing and sales
 Customer services
o Support activities
 Information system
 Materials management
 Human resources

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MM4311 – Strategic Management Course Review Sheet
Dr. Shuping Li Spring 2018

Business Strategies
• Consumer surplus
o Definition
o Implication to firm competitive advantage
• Four types of business strategies
o The two dimensions that distinguish the strategies
 Competitive scope
 Strategic position
o Broad cost
 Definition and examples
 The conditions for this strategy to be variable
o Broad differentiation
 Definition and examples
 The conditions for this strategy to be variable
o Cost focus
 Definition and examples
 The conditions for this strategy to be variable
o Differentiation focus
 Definition and examples
 The conditions for this strategy to be variable

Corporate strategies
• Horizontal integration – definition & example
• Vertical integration – definition & example
o Forward vertical integration
 what is it
o Backward vertical integration
 what is it
• Levels of diversification
o Related
 what is it /why do it
o Unrelated
 what is it / why do it
• Diversification and firm performance
o Why does diversification create and destroy firm value?
 Reduce managerial employment risk—explain?
 Growth — explain?
 Risk spreading— explain?
 Financial economies—explain?
 Market power (multimarket competition) —explain?
 Economies of scope—explain?
• Entry modes: what are the three types?
• Alliances
o Joint venture
o Challenges to value creation in strategic alliances
 adverse selection– definition & example
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MM4311 – Strategic Management Course Review Sheet
Dr. Shuping Li Spring 2018

 moral hazard– definition & example

 holdup– definition & example
• Merger and Acquisitions (M&A)
o Challenges to value creation in M&A
 adverse selection– definition & example
 integration difficulty– definition & example
 transaction cost– definition & example

Global Strategy
• Globalization and MNCs
o Definitions
o What does globalization mean to strategic management?
• Global strategies
o The two dimensions that distinguish global strategies
o Four types and their definitions
 global standardization
 localization
 transnational
 international
• Entry modes
o The five common modes and their pros and cons
 Exporting
 Licensing
 Franchising
 Joint venture
 Wholly-owned subsidiary
• National competitive advantage model
o What is it?
 Factor conditions –definition, example
 Demand conditions–definition, example
 Competitive intensity–definition, example
 Related and supporting industry –definition, example
o How to use it?
 “home-country” advantages
 “host-country” attractiveness
 closest competitors

Strategic Implementation
• Organizational structure
o Grouping Tasks, Functions, and Divisions
 Functional structure–advantages and disadvantages
 Multidivisional (M-form) structure –advantages and disadvantages
• Corporate governance
o Principal-Agent Relations
o Two preconditions for agency problems
o Forms of agency problems
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MM4311 – Strategic Management Course Review Sheet
Dr. Shuping Li Spring 2018

 on-the-job consumption-definition?
 empire building-definition?
 underinvestment in risk/short-termism-definition?
 executive entrenchment-definition?
o The three fundamental principles underlying corporate governance design?
o Internal governance mechanisms
 Ownership structure–how can it reduce agency problems?
 Board of directors– how can it reduce agency problems?
 Executive compensation– how can it reduce agency problems?
o External governance mechanisms
• Strategic control system
o Definitions and examples
 Output control
 Behavior control
 Personal control

Supplemental Sessions
• Strategies in emerging markets
o Institutional voids
 Definition and aspects
 What do institutional voids imply to firm strategies in emerging markets?
• Non-market strategies
o Shared value
 Definition
o Strategic CSR
 What is it?
o CSR and firm competitive advantage
 How can CSR enhance firm competitive advantage?