MGT 30220 Study Guide - Final Guide: Diminishing Returns
Strategic Management Study Guide
• Rediscovering Strategy
o Growth Trap:
▪ One of the primary reasons that companies do not branch out and do
something to create strategic advantage
• safer route that still makes money so most companies get caught in
this trap
▪ Focusing on incremental gains = seductive and safe way to build growth with
little risk
• example =
o focusing on product line extensions rather than completely
new product lines
▪ Result of this focus on incremental change = companies shift emphasis
toward beig etter tha its opetitors ad away fro eig differet
• Causes a downward spiral of diminishing returns
▪ Focus should be doing things DIFFERENTLY in order to create strategic
advantage, but companies are too focused on being BETTER rather than
DIFFERENT, thus leading to this growth trap
o At geeral aageet’s ore is strategy: defiig a opay’s positio, akig
trade-offs, and forging fit among activities
• The Godfather Example:
o Think about the example from The Godfather
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