MGT 20600 Study Guide - Final Guide: Network Effect, Pest Analysis, Information System
Page 1 of 10
Strategic Decision Making Final Exam Review Topics – Spring 2018
Overview of the field Porter; Hambrick & Fredrickson
• Formulation vs. implementation
o Formulation: planning and decision-making involved in developing organization’s
strategic goals and plans.
o Implementation: execution of the opted strategy, converts the chosen strategy into
action, for the realization of organizational goals and objectives
• Intended vs. realized strategy (deliberate vs. emergent)
o Intended: the strategy that an organization hopes to execute
o Realized: the strategy that an organization actually follows. Realized strategies are a
product of a firm’s intended strategy, the firm’s deliberate strategy, and its emergent
strategy
o Deliberate: the parts of the intended strategy that the firm continues to pursue over
time
o Emergent: an unplanned strategy that arises in response to unexpected
opportunities and challenges
• Business vs. corporate strategy
o Business: ways that a firm will go about achieving its objectives within a particular
industry or segment
o Corporate: the businesses a firm competes in, how a firm adds value, how
diversification or entry into a new industry will help the firm be competitive in other
industries
• The strategic management process (from H&F article)
find more resources at oneclass.com
find more resources at oneclass.com
Page 2 of 10
• Operational effectiveness vs. strategy
o Operational effectiveness: performing similar activities better than rivals perform
them
o Strategy: performing different activities from rivals’ or performing similar activities
in different ways
External analysis Magretta
• Macro environment
o PESTEL analysis
▪ Political
▪ Economic
▪ Social
▪ Technological
▪ Environmental
▪ Legal
• Industry environment
o Five forces analysis
▪ Threat of new entrants
• Entry barriers protect an industry from newcomers who would add
new capacity
• Factors that influence the threat:
o Customer switching costs
o Network effects
o Capital investment requirements
o Incumbency advantages independent of size
o Government policy
o Expected retaliation
▪ Bargaining power of suppliers
• Powerful suppliers will charge higher prices or insist on more
favorable terms, lowering industry profitability
• Supplier power increases when:
o Suppliers are large and few in numbers
o Suppliers’ products create high switching costs
o Suppliers offer products that are differentiated
o Suppliers can credibly threaten to integrate forward into an
industry
▪ Threat of substitutes
• Substitutes are products or services that meet the same need as the
industry’s product in a different way, and can put a cap on the
industry’s profits
• Threat of substitutes is high when:
o It offers an attractive price performance tradeoff to the
industry’s product
find more resources at oneclass.com
find more resources at oneclass.com
Page 3 of 10
o Buyers’ costs of switching to the substitute are low
▪ Bargaining power of buyers
• Powerful buyers will force prices down or demand more value in
the product, thus capturing more of the value for themselves
• Buyer power increases when:
o Buyers are large and few in number
o Buyers face new switching costs in changing vendors
o Industry’s products are undifferentiated or standardized
o Buyers can credibly threaten to integrate backward
▪ Rivalry among existing competitors
• If rivalry is intense, companies compete away the value they create,
passing it on to buyers in lower prices or dissipating it in higher costs
of competing
• Rivalry is most intense when:
o Competitors are numerous and equally sized
o Industry growth is slow
o Exit barriers are high
o Rivalries are highly committed to the business
• Price competition is most likely when:
o Rival’s products are similar and switching costs for buyers
are low
o Fixed costs are high and marginal costs are low
o Capacity must be expanded in large increments to be
efficient
o Product is perishable
• How industries change over time (industry life cycle)
o Intro, growth, maturity, decline
o
Internal analysis Rothaermel (1)
• Resources, capabilities, core competencies, and activities
o Tangible vs. intangible
▪ Tangible: have physical attributes and are visible
• Ex: capital, land, buildings, plant, equipment, and supplies
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Strategic decision making final exam review topics spring 2018. Intended vs. realized strategy (deliberate vs. emergent: intended: the strategy that an organization hopes to execute, realized: the strategy that an organization actually follows. Page 1 of 10: operational effectiveness vs. strategy, operational effectiveness: performing similar activities better than rivals perform them, strategy: performing different activities from rivals" or performing similar activities in different ways. Magretta: macro environment, pestel analysis, political, economic, social, technological, environmental, legal. Rothaermel (1: resources, capabilities, core competencies, and activities, tangible vs. intangible, tangible: have physical attributes and are visible, ex: capital, land, buildings, plant, equipment, and supplies. Insight: resource bundles of firms competing in the same industry are unique to some extent and differ from one another: resource immobility, resources don"t easily move from firm to firm. Page 4 of 10: final assembly/ manufacturing, marketing & sales, customer service, support: add value indirectly.
