This file contains all the important terminologies of strategic management.

1. Strategic Management
Q: Resource Based model and I/O Model
Resources
Resources are the inputs into a firm’s production process: such as
o Physical
o Organizational
o Capital
According to resource based model,
Differences in the firms’ performances are due to their unique resources rather than
their structural characteristics.
◦ The I/O Model of Above Average Returns
From 1960-80, it was believed that the external environment plays the vital role in
determining the strategy
Thus, the Industrial Organization (I/O) model focuses on external environment’s
influence on a firm’s strategic actions.
Key factors to decide the firm’s performance as per I/O model
o Economies of scale
o Barriers to market entry
o Diversification
o Product differentiation
◦ What Are the Stakeholders of a Business?
Any person or entity interested in a particular business is called a stakeholder.
Asst. Professor Jay Padh- MBA dept.

2. They are affected by the business activity, and they may be part of the core decision-
making team.
Internal and external stakeholders may have different interests and priorities, possibly
leading to conflicts of interest.
◦ Kinds of Stakeholders
Internal stakeholders are owners, managers, and workers.
External stakeholders are the customers and the suppliers. The community in which
the organization does business also is a stakeholder.
All the stakeholders are not equal, and different stakeholders will have varying
considerations. These stakeholders can have direct or indirect stake in the
organization and in policy-making.
Q:Value Chain Analysis
 A value chain is a chain of activities for a firm operating in a specific industry.
Products pass through all activities of the chain in order, and at each activity the
product gains some value.
The chain of activities gives the products more added value
 starting with raw materials and ending with the delivered product
 It is based on the notion of value-added at the link level. The sum total of link-level
value-added yields total value.
Six business functions of the Value Chain:
 Research and Development
 Design of Products, Services, or Processes
 Production
 Marketing & Sales
 Distribution
 Customer Service
Asst. Professor Jay Padh- MBA dept.

3.  Primary activities
 Inbound Logistics
 Operations
 Outbound Logistics
 Marketing and Sales
 Service
 Support activities
 Procurement
 Human Resource Management
 Technology Development
 General Administration
Q: SWOT analysis:
 Internal factors:
Strengths
Weaknesses
 External Factors:
Opportunities
Threats
Q:Vision vs. Mission
 The vision is more broad and future oriented – the goal on the horizon
 The mission is more focused – how you will get to the horizon
Asst. Professor Jay Padh- MBA dept.

4. Q: PEST Analysis: it is the list of external factors affecting the business
Political
Environmental
Social
Economic
Q: Resources, Capacities, core competencies:
Resources
◦ How a firm procures the resources
Capacities
◦ How effectively a firm uses its resources
Competencies
◦ How uniquely the firm positions itself in terms of performance of its
product/service.
 The collective strength of these three factors puts the firm a step ahead of its
competitors and gives the competitive advantage.
Q: Common types of Industry Key Success factors
Technology related KSFs
Expertise in particular technology (apple, Sony)
Expertise in scientific research (pharmaceuticals)
Ability to improve production process (ford motors)
Manufacturing related KSFs
High utilization of fixed assets
Access to attractive supplies of skilled labor
Asst. Professor Jay Padh- MBA dept.

5. High labor productivity
Ability to manufacture or assemble products
Distribution related KSFs
A strong network of wholesale/dealers (amway)
Strong direct sales capabilities via internet
Marketing related KSFs
A well known respected brand name (reebok, Nike)
Courteous, personalized customer services
Customer guarantee and warranties
Clever advertising (pepsi, coke)
Skills and capability related KSFs
National or global distribution capabilities
Design expertise
Short delivery time capability
 Other types of KSFs
Overall low cost
Convenient location
Ability to provide fast, convenient after sale services
patents
Q: Strategic group mapping
The technique for displaying the different market or competitive positions that rival
firms occupy in the industry.
Step 1: Analyze industry structure
Step 2: Map the strategic groups
Asst. Professor Jay Padh- MBA dept.

6. Step 3:Measure the strength of barriers between groups
Step 4: Understand companies strategy with reference to groups’ interaction
Q: Six ways to achieve sustainable competitive advantage
1. Intellectual property
2. A dynamic product line, rather than a single product
3. Dramatic cost improvement for cause
4. Proven team with inside relationships
5.Lock on the market or customer base
6. Strong focus and differentiation
Q: Strategic and tactical actions
 Strategic action:
◦ When a firm acts
 Tactical action:
◦ When a firm responds to a strategic action.
Q: Likelihood of attack
First mover incentives
Second movers
Late movers
Asst. Professor Jay Padh- MBA dept.

7. Q: Market Segmentation
 Consumer Markets
◦ Demographic factors
◦ Socioeconomic factors
◦ Geographic factors
◦ Psychological factors
◦ Consumption patterns
◦ Perceptual factors
 Industrial Markets
◦ End-use segments
◦ Product segments
◦ Geographic segments
◦ Common buying factor segments
◦ Customer size segments
Asst. Professor Jay Padh- MBA dept.

8. Value-Creating Diversification
• Economies of scope (related diversification)
• Sharing activities
• Transferring core competencies
• Market power (related diversification)
• Blocking competitors through multipoint competition
• Vertical integration
• Financial economies (unrelated diversification)
• Efficient internal capital allocation
• Business restructuring
Asst. Professor Jay Padh- MBA dept.

9. Value-Neutral Diversification
• Antitrust regulation
• Tax laws
• Low performance
• Uncertain future cash flows
• Risk reduction for firm
• Tangible resources
• Intangible resources
Value-Reducing Diversification
• Diversifying managerial employment risk
• Increasing managerial compensation
Q: Vertical Integration
• Backward integration—a firm produces its own inputs.
• Forward integration—a firm operates its own distribution system for delivering its
outputs.
Q: Operational Relatedness of diversification strategy:
Asst. Professor Jay Padh- MBA dept.

10. Q. Three Types of Strategic Alliances
 Joint Venture
 Equity Strategic Alliance
 Nonequity Strategic Alliance
Q: Reasons for Strategic Alliance:
Q: Business-Level Cooperative Strategies
Asst. Professor Jay Padh- MBA dept.

11. Q:Corporate-Level Cooperative Strategies
Asst. Professor Jay Padh- MBA dept.