Strategic Management Exam Notes
Case Briefs
1. Nestlé SA Case
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Key Issue: Why does an established firm like Nestlé need a strategic shift?
Background:
o Nestlé, one of the world’s largest food and beverage companies, has a vast
portfolio of products across various categories.
o Market trends are shifting due to changing consumer preferences, digital
transformation, and regulatory challenges.
Core Analysis:
o Nestlé has historically relied on strong brand equity and global reach.
o Increasing health consciousness among consumers has forced the company to
innovate towards healthier products.
o Competitive pressures from smaller, agile firms offering organic and healthconscious alternatives.
o Sustainability concerns and regulatory changes requiring Nestlé to rethink
supply chains and sourcing strategies.
Strategic Decision:
o Investing in R&D for healthier food options.
o Strengthening digital presence to enhance direct-to-consumer sales.
o Shifting towards more sustainable and ethical sourcing strategies.
Key Takeaways:
o Even legacy firms must evolve continuously to maintain market leadership.
o Digital transformation and sustainability are critical components of modern
strategic planning.
2. Matching Dell Case
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Key Issue: How did Dell create a sustainable business model in a low-profit industry?
Background:
o The personal computer (PC) industry faced significant challenges, including
intense competition, price wars, and commoditization.
o Traditional players relied on indirect distribution channels, leading to higher
costs and inventory risks.
Core Analysis:
o Dell disrupted the market with a direct-to-consumer model, eliminating
middlemen and reducing costs.
o Just-in-time (JIT) manufacturing minimized inventory costs and improved
working capital efficiency.
o Customization allowed Dell to offer unique value propositions to customers.
o Competitors like HP and Compaq struggled to replicate Dell’s model due to
supply chain rigidity and legacy distribution networks.
Strategic Decision:
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Expansion into new product lines while maintaining lean operations.
Emphasis on enterprise solutions to reduce dependence on the volatile
consumer PC market.
Key Takeaways:
o Business model innovation can be a key differentiator in a crowded market.
o Efficient supply chain management can lead to significant cost advantages.
o Competitors must adapt rapidly to disruptive business models to remain
relevant.
3. Wal-Mart Stores’ Discount Operations
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Key Issue: What was Wal-Mart’s competitive advantage in discount retailing?
Background:
o Retail industry in the 1980s was fragmented, with small stores dominating
local markets.
o High operational costs and inefficient supply chains affected profitability.
Core Analysis:
o Wal-Mart introduced everyday low pricing (EDLP) to attract price-sensitive
customers.
o Developed an advanced logistics and supply chain system, ensuring cost
efficiency.
o Strong supplier relationships enabled bulk purchasing and cost savings.
o Store expansion focused on suburban and rural markets, avoiding direct
competition with established urban retailers.
Strategic Decision:
o Expansion of Sam’s Wholesale Clubs to target a different segment.
o Use of technology (e.g., RFID tracking, data analytics) to optimize inventory
management.
Key Takeaways:
o Cost leadership strategy can be highly effective in price-sensitive markets.
o Supply chain efficiency is a key enabler of sustainable competitive advantage.
o Expansion strategies must be aligned with core competencies to avoid dilution
of brand value.
4. Starbucks Case
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Key Issue: How does Starbucks sustain its competitive advantage?
Background:
o The coffee industry was historically dominated by lower-cost brands with
minimal differentiation.
o Starbucks introduced a premium coffee experience, creating a “third place”
between home and work.
Core Analysis:
o Brand differentiation through superior customer experience and store
ambiance.
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Vertical integration in sourcing high-quality coffee beans ensured product
consistency.
o Strong digital strategy, including the Starbucks Rewards program, increased
customer loyalty.
o Global expansion with localized adaptations helped penetrate new markets
effectively.
Strategic Decision:
o Continued investment in technology (mobile ordering, AI-driven
recommendations).
o Expansion into new product lines (e.g., plant-based beverages, ready-to-drink
options).
Key Takeaways:
o Brand loyalty can be a powerful moat in competitive industries.
o Customer experience is as crucial as product quality in premium market
segments.
o Digital transformation is essential for long-term success.
5. Samsung vs. Chinese Entrants (DRAM Market)
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Key Issue: How should Samsung respond to Chinese competition in DRAM chips?
Background:
o The DRAM industry has high capital investment and economies of scale are
critical.
o Chinese firms, supported by government subsidies, are entering the market
with aggressive pricing.
Core Analysis:
o Samsung has a cost advantage due to advanced manufacturing efficiencies.
o Strong R&D investment ensures cutting-edge technology and differentiation.
o Chinese firms aim to undercut Samsung by offering lower prices at similar
performance levels.
Strategic Decision:
o Continued investment in next-gen memory technologies to stay ahead of cost
competition.
o Strategic alliances and partnerships to reinforce supply chain resilience.
o Potential price adjustments or diversification to protect market share.
Key Takeaways:
o A dual strategy of cost leadership and differentiation can be sustainable if
managed effectively.
o Continuous innovation is essential to staying ahead of low-cost competitors.
o Government policies and trade regulations play a crucial role in global
competitive dynamics.
Strategic Management Frameworks Summary
Expanded Details for Each Framework:
1. Porter’s Five Forces:
o A framework to analyze industry structure and competitive forces.
o Five Forces:
▪ Threat of New Entrants: Barriers like capital requirements, brand
loyalty, and regulations affect the ease of entry.
▪ Bargaining Power of Suppliers: When suppliers have high influence,
they can dictate prices and terms.
▪ Bargaining Power of Buyers: High buyer power forces firms to lower
prices or improve quality.
▪ Threat of Substitutes: Alternative products can reduce industry
profitability.
▪ Industry Rivalry: Intensity of competition affects pricing and
profitability.
o Application: Helps businesses strategize for long-term success.
2. PESTEL Analysis:
o Evaluates external macro-environmental factors:
▪ Political: Government policies, regulations, taxation.
▪ Economic: Inflation, exchange rates, economic growth.
▪ Social: Cultural trends, demographics, consumer behavior.
▪ Technological: Innovation, automation, R&D trends.
▪ Environmental: Sustainability, climate change regulations.
▪ Legal: Employment laws, intellectual property rights.
o Application: Used for market analysis and strategic planning.
3. BCG Matrix:
o A tool for analyzing a company’s portfolio of products/business units.
o Four Quadrants:
▪ Stars: High growth, high market share (invest heavily).
▪ Cash Cows: Low growth, high market share (generate stable cash
flow).
▪ Question Marks: High growth, low market share (potential future
investments or divestment decisions).
▪ Dogs: Low growth, low market share (divestment candidates).
o Application: Helps allocate resources efficiently.
4. Ansoff Matrix:
o Growth strategy framework focusing on:
▪ Market Penetration: Selling more existing products to current
markets.
▪ Market Development: Entering new markets with existing products.
▪ Product Development: Innovating new products for current markets.
▪ Diversification: Entering new markets with new products (high risk).
o Application: Guides expansion strategies.
5. Customer Lifetime Value (CLV):
o Measures total revenue a business can earn from a customer over time.
o Formula: CLV = (Average Purchase Value × Purchase Frequency ×
Customer Lifespan) - Acquisition Cost.
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Application: Helps businesses optimize marketing spend and customer
retention.
Customer Value Proposition (CVP):
o Defines the unique value a product/service offers to customers.
o Key Elements:
▪ Functional Value: Efficiency, performance.
▪ Emotional Value: Connection, brand affinity.
▪ Economic Value: Price vs. benefits.
▪ Symbolic Value: Prestige, social status.
o Application: Guides brand positioning and differentiation.
VRIO Framework:
o Analyzes resources to determine sustainable competitive advantage:
▪ Valuable: Does it create value for customers?
▪ Rare: Is it unique in the market?
▪ Inimitable: Can competitors easily replicate it?
▪ Organized: Is the firm structured to exploit it?
o Application: Helps firms focus on core competencies.
Blue Ocean Strategy:
o Focuses on creating uncontested market space rather than competing in
existing markets.
o Key Concepts:
▪ Value Innovation: Balancing cost reduction with differentiation.
▪ Eliminate-Reduce-Raise-Create (ERRC) Grid: Framework to
rethink business strategy.
o Application: Helps businesses find new growth opportunities.
Balanced Scorecard:
o Performance measurement tool integrating financial and non-financial metrics.
o Four Perspectives:
▪ Financial: Profitability, revenue growth.
▪ Customer: Customer satisfaction, loyalty.
▪ Internal Business Processes: Efficiency, innovation.
▪ Learning & Growth: Employee development, corporate culture.
o Application: Aligns organizational activities with strategy.