Strategic Management Theory, Seventh Edition
Hill, C. W. L. & Jones, G. R.
Chapter Outline for Exam
MGMT 490 - - Spring 2007
Dr. Dennis R. Briscoe
Chapter 1: Strategic Leadership: Managing the Strategy-Making Process for
Competitive Advantage
1. Define strategy
2. Strategy versus strategy implementation
3. Shareholder value
4. Define profitability
5. Drivers of shareholder value
6. Define competitive advantage; susatained competitive advantage
7. Business model
8. Strategic managers: General managers, functional managers, corporate-level
managers
9. Define business function
10. Steps of the strategic planning process
11. Define “mission”
12. Three components of a Business Definition
13. Define Vision and company Values
14. SWOT
15. Functional-level versus business-level versus global versus corporate-level
strategies
16. Strategy as an emergent process: intended versus emergent
17. Scenario planning
18. Strategic intent
19. Cognitive biases: prior hypothesis, escalating commitment, reasoning by analogy,
representativeness, illusion of control
20. Groupthink
21. Devil’s advocacy, dialectic inquiry, outside view
22. Effective strategic leadership
Chapter 2: External Analysis: The Identification of Opportunities and Threats
1. Define the industry: industry versus sector versus segment
2. Analyze the industry
a. Opportinities versus threats
b. Porter’s Five Forces Model
i. Potential competitors; barriers to entry
1. economies of scale
2. brand loyalty
3. absolute cost advaantages
4. customer switching costs
5. government regulation
ii. Rivalry among established companies
1. industry competitive structure
a. fragmented industry
b. consolidated industry
i. oligopoly
ii. monopoly
2. industry demand
3. cost conditions
4. exit barriers
iii. Bargaining power of buyers
iv. Bargaining power of suppliers
v. Substitute products
c. A sixth force: complementors
d. Strategic Groups within an industry
i. Mobility barriers
e. Industry Life Cycle (5 stages)
i. Embryonic
ii. Growth
iii. Shakeout
iv. Maturity
v. Decline
f. Limitations of Models
i. Life cycle stages as a generalization of reality
ii. Impact of innovation and change
1. punctuated equilibrium
2. hypercompetitive industries
3. importance of company differences
3. Macro Environment
a. Macro forces
i. Political and legal
ii. Demographic forces
iii. Global forces
iv. Social forces
v. Technological forces
vi. Macro-economic
Chapter 3: Internal Anaysis: Distinctive Competencies, Competitive Advantage, and
Profitability
1. Repeat: definition of competitive advantage and sustained competitive advantage
2. Distinctive competencies
a. Resources: intangible versus tangible
b. Capabilities
3. Profitability a function of three factors
4. Differentiation versus lower cost structure
5. The Value Chain
a. Primary activities
b. Support Activities
6. The Building Blocks of Competitive Advantage
a. Efficiency
b. Quality
i. Excellence
ii. Reliability
c. Innovation
i. Product
ii. Process
d. Customer responsiveness
7. ROIC: definition; how it is figured
8. Durability of competitive advantage
a. Barriers to innovation
i. Imitating resources
ii. Imitating capabilities
b. Capability of competitors
c. Industry dynamism
9. Avoiding failure
a. Why companies fail
i. Inertia
ii. Prior strategic commitment
iii. The Icarus paradox
10. Steps to avoid failure
a. Focus on building blocks of competitive advantage
b. Institute continuous improvement and learning
c. Track best industry practice and use benchmarking
d. Overcome intertia
Chapter 4: Building Competitive Advantage through Functional-Level Strategy
1. Achieving superior efficiency
a. Economies (versus diseconomies) of scale
b. Learning effects
c. The experience curve
d. Flexible manufacturing; mass customization
e. Marketing and the role of customer defection rates (churn)
f. Materials management, just-in-time inventory
g. Human resource strategy
i. Hiring
ii. Training
iii. Self-managing teams
iv. Pay for performance
h. Information systems
i. Company infrastructure
2. Achieving superior quality
a. Superior reliability
b. Implementing reliability improvement
i. Build organizational commitment to quality
ii. Create quality leaders
iii. Focus on the customer
iv. Identify processes and the sources of defects
v. Find ways to measure quality
vi. Set goals and create incentives
vii. Solicit input from employees
viii. Build long-term relationships with suppliers
ix. Design for ease of manufacture
x. Break down barriers between functions
c. Improving quality as excellence
3. Achieving superior innovation
a. The high failure rate of innovation
i. Uncertainty
1. quantum innovation
2. incremental innovation
ii. Poor commercialization
iii. Poor positioning strategy
iv. Technological myopia
v. Being slow to market
b. Building competencies in innovation
i. Skills in basic and applied research
ii. Project selection and management
iii. Cross-functional integration
iv. Product-development teams
v. Partly parallel development processes (versus sequential
development process)
4. Achieving superior responsiveness to customers
a. Focusing on the customer
i. Demonstrating customer-focus leadership
ii. Shaping employee attitudes
iii. Bringing customers into the company
b. Satisfying customer needs
i. Customization
ii. Improving Response time
c. Primary roles of different fucntions in achieving superior responsiveness
to customers (Table 4.5)
Chapter 5: Building competitive advantage through business-level strategy
1. Competitive positioning and the business model
a. Defining the business
i. Customer needs ( what does the customer want, satisfied through)
1. differentiated products
2. price of the product
ii. Customer groups (which customers to go after)
2.
3.
4.
5.
6.
7.
iii. Company distinctive competencies (how the firm is going to meet
the needs of the customers)
b. Formulating the business model
i. Customer groups
ii. Market segmentation
Generic approaches to market segmentation
a. No segmentation: compete on price targeted to average customer
b. High market segmentation: differentiate the product to each market
segment
c. Focused market segmentation: offer prodfuct to one or a few market
segments
Building distinctive competencies
Competitive positioning at the business level (choosing a premium pricing
option that compensates for the extra costs of product differentiation but is not
so high it chokes off the increase in expected demand)
Generic business-level strategies
a. Cost leadership
i. Strategic choices
ii. Advantages and disadvantages
b. Focused cost leadership
c. Differentiation
i. Strategic choices
ii. Advantages and disadvantages
d. Focused differentiation
Competitive positioning for superior performance
a. Broad differentiators
b. Strategic groups
Failures in competitive positioning
Chapter 6: Business-level strategy and the industry environment
1. Fragmented industries
a. Chaining
b. Franchising
c. Horizontal merger
d. Using IT and the internet
2. Strategies in Embryonic and Growth industries
a. Nature of embryonic industry
b. Movement from embryonic to growth stage
4. Development of market demand
a. innovators
b. early adopters
c. early majority
d. late majority
e. laggards
5. Crossing the chasm: differences between innovators/early adopters and early
majority
6. Strategic implications of market growth rates
7. Factors affecting market growth rates
a. Relative advantage
b. Compatibility
c. Complexity
d. Trialability
e. Observability
8. Investment strategies at the various stages of the life cycle
a. Embryonic strategies: share-building strategy
b. Growth strategies and market concentration
c. Shakeout strategies
i. Share-increasing
ii. Harvest strategy
d. Maturity strategies: hold and maintain strategy
i. Deter entry
1. product proliferation
2. price cutting
3. maintaining excess capacity
ii. manage rivalry
1. price signaling
2. tit-for-tat
3. price leadership
4. non-price competition
a. market penetration
b. market development
c. product development
d. product proliferation
5. capacity control
e. Stratgegies in Declining industries
i. Factors that determine the intensity of competition in declining
industries
ii. Choosing a strategy (depending on company strengths relative to
the remaining pockets of demand and the intensity of competition
1. leadership (or niche)
2. harvest (or divest)
3. divest
4. niche (or harvest)
Chapter 7: Strategy in high-technology industries
1. Define technology
2. Define high-technology industry
3. Define technical standards
4. Define format wars
5. Benefits of standards
a. compatibility
b. reduce confusion in consumers
c. reduce production costs
d. reduce the risks associated with supplying complementary products
6. Establishment of standards
a. government mandated
b. set through cooperation of businesses in industry
c. set through customer purchasing patterns and preferences
7.Strategies for winning a format war
a. ensure a supply of complements
b. leverage killer applications
c. aggressively price and market: razor-and-razor-blades strategy
d. cooperate with competitors
e. license the format
8. Costs in high technology industries
a. Fixed costs
b. Marginal costs
9. Managing intellectual property rights
a. Define intellectual property
b. Digitalization
c. Piracy
10. Capturing first-mover advantages
a. First mover definition
b. Define first-mover advantages
c. First-mover advantages
i. Exploit network effects
ii. Brand loyalty
iii. Scale economies
iv. Learning effects
v. Sitching costs
vi. Accumulation of valuable knowledge
d. First-mover disadvantages
i. Pioneering costs
ii. Free-ride by later entrants
iii. Make mistakes
iv. Building the wrong resources and capabilities
v. Inferior or obsolete technology
e. Exploiting first-mover advantages
i. Complementary assets
ii. High Barriers to imitation
iii. Dealing with capable competitors
f. Profiting from innovation
i. Going it alone
ii. Entering into an alliance
iii. Licensing the innovation
11. Technological paradigm shifts
a. Define
b. The decline of established companies
c. The natural limits of technology
i. The technology S-curve
1. Increasing returns
2. Inflection point
3. Diminishing returns
ii. Established and successor technologies; discontinuity
iii. Disruptive technology
iv. Strategic implications for established companies
v. Strategic implications for new entrants
Chapter 8: Strategy in the Global Environment