Department of MBA
Semester – III
STRATEGIC MANAGEMENT – BA4301
Question Bank
Unit – II
2 Marks
1. What is meant by the 'external environment' in strategic management?
The 'external environment' in strategic management refers to all the outside factors
and forces that can affect an organization's performance. These factors include economic
conditions, political and legal influences, technological advancements, social and cultural
changes, and competitive dynamics.
2. Why is analysing the external environment important for businesses?
Analysing the external environment is important because it helps businesses:
Identify opportunities and threats.
Understand market trends and customer needs.
Anticipate and respond to changes in the business landscape.
3. List the five forces in Porter’s Five Forces Model.
1. Threat of new entrants.
2. Bargaining power of suppliers.
3. Bargaining power of buyers.
4. Threat of substitute products or services.
5. Industry rivalry among existing competitors.
4. How does the threat of new entrants affect industry competition?
The threat of new entrants affects industry competition by:
Increasing the number of competitors.
Reducing market share for existing firms.
Driving down prices and profitability.
5. Define the term 'strategic group.'
A strategic group is a set of firms within an industry that follow similar strategies or
business models. These firms compete more directly with each other than with firms in other
strategic groups.
6. What is the significance of identifying strategic groups within an industry?
Identifying strategic groups within an industry is significant because it helps:
Understand competitive dynamics and market positioning.
Identify direct competitors and their strategies.
Analyse the potential for market opportunities and threats.
7. What are competitive changes in industry evolution?
Competitive changes in industry evolution refer to shifts in the industry’s competitive
landscape over time. These changes can be driven by factors such as technological
advancements, changes in consumer preferences, regulatory shifts, and new market entrants.
8. How does technological advancement drive industry evolution?
Technological advancement drives industry evolution by:
Creating new products and services.
Enhancing production processes and efficiency.
Reducing costs and increasing profitability.
9. How does globalization impact industry structure?
Globalization impacts industry structure by:
Increasing market competition and global reach.
Facilitating the flow of goods, services, and capital across borders.
Encouraging the standardization of products and services.
10. What are some challenges globalization poses to industry structure?
Challenges globalization poses to industry structure include:
Increased competition from foreign firms.
Pressure to reduce costs and improve efficiency.
Need for regulatory compliance across multiple countries.
11. Explain the concept of 'national context' in competitive advantage.
The 'national context' in competitive advantage refers to the influence of a country’s
economic, political, cultural, and institutional environment on the competitiveness of its
firms. It includes factors such as government policies, infrastructure, education systems, and
market conditions that shape a firm's ability to compete globally.
12. How does government policy influence national competitive advantage?
Government policy influences national competitive advantage by:
Providing infrastructure and support for business development.
Offering incentives and subsidies for innovation and investment.
Regulating industries to ensure fair competition and consumer protection.
13. What is the difference between resources and capabilities?
Resources: Tangible and intangible assets a company owns, such as capital,
equipment, patents, and brand reputation.
Capabilities: The ability to utilize resources effectively to achieve desired outcomes.
Capabilities are developed through the organization’s processes, skills, and
knowledge.
14. Define 'competencies' in the context of strategic management.
In the context of strategic management, competencies refer to the skills, knowledge,
and abilities that an organization possesses, which enable it to perform activities and
processes effectively. Competencies are critical to achieving strategic objectives and gaining
competitive advantage.
15. What are core competencies?
Core competencies are unique strengths and abilities that give an organization a
competitive advantage. They are difficult for competitors to imitate and are central to the
company's operations and long-term success.
16. How do core competencies provide competitive advantage?
Core competencies provide competitive advantage by:
Differentiating the company’s products and services.
Enabling innovation and value creation.
Enhancing efficiency and productivity.
17. What is the low-cost strategy in business?
A low-cost strategy in business aims to become the lowest-cost producer in the
industry. This strategy involves minimizing production and operational costs to offer products
or services at a lower price than competitors, thereby attracting price-sensitive customers and
increasing market share.
18. How does a differentiation strategy work?
A differentiation strategy works by offering unique products or services that provide
superior value to customers. This strategy involves innovation, quality, branding, and
customer service to create a distinct market position and justify a premium price.
19. Name two generic building blocks of competitive advantage.
Two generic building blocks of competitive advantage are:
1. Efficiency: Ability to produce goods or services at a lower cost.
2. Quality: Providing superior products or services that meet or exceed customer
expectations.
20. How do quality and innovation contribute to competitive advantage?
Quality: Enhances customer satisfaction, loyalty, and reduces costs associated with
defects and returns.
Innovation: Drives product and process improvements, differentiates the company
from competitors, and meets changing customer needs.
21. What are distinctive competencies?
Distinctive competencies are unique capabilities and strengths that allow a company
to achieve superior performance. These competencies are rare, valuable, and difficult for
competitors to imitate, providing a sustained competitive advantage.
22. Why are distinctive competencies crucial for business success?
Distinctive competencies are crucial for business success because they:
Differentiate the company from competitors.
Enable superior performance and profitability.
Build customer loyalty and brand reputation.
23. What factors contribute to the durability of competitive advantage?
Factors contributing to the durability of competitive advantage include:
Resource uniqueness and scarcity.
High barriers to imitation.
Continual innovation and improvement.
24. How can companies sustain their competitive advantage over time?
Companies can sustain their competitive advantage over time by:
Continuously innovating and improving products and processes.
Investing in research and development.
Adapting to market changes and customer preferences.
25. Name one common reason for business failure.
One common reason for business failure is poor strategic planning and execution.
This includes inadequate market research, failure to adapt to changes, and misalignment of
resources and capabilities with strategic goals.
26. Name one common reason for business failure.
Another common reason for business failure is insufficient cash flow management.
This involves not having enough liquidity to meet operational expenses, leading to financial
instability and eventual closure.
13 Marks
1. Analyse the components of the external environment and their impact on strategic
management. Discuss how organizations can effectively respond to changes in their
external environment.
2. Explain Porter’s Five Forces Model in detail. Provide examples of how each force
affects industry competition and how businesses can use this model to develop
strategic plans.
3. Discuss the concept of strategic groups within an industry. How can identifying
strategic groups help companies understand their competitive position and formulate
strategies?
4. Describe the stages of industry evolution and the competitive changes that occur
during each stage. How can companies adapt their strategies to remain competitive
throughout the industry life cycle?
5. Evaluate the impact of globalization on industry structure. Discuss how globalization
can create both opportunities and challenges for businesses and how they can
strategize to leverage globalization.
6. Analyse the role of national context in shaping competitive advantage. Discuss how
factors such as government policy, culture, and infrastructure contribute to a nation’s
competitive position in the global market.
7. Define and differentiate between resources, capabilities, and competencies. Discuss
how these elements contribute to an organization's strategic advantage and provide
examples.
8. Explain the concept of core competencies and their significance in strategic
management. Discuss how companies can identify, develop, and leverage their core
competencies to achieve sustainable competitive advantage.
9. Compare and contrast the low-cost strategy and differentiation strategy. Discuss the
advantages and disadvantages of each and provide examples of companies that have
successfully implemented these strategies.
10. Discuss the generic building blocks of competitive advantage, including efficiency,
quality, innovation, and customer responsiveness. Explain how businesses can
integrate these elements into their strategic planning to achieve and sustain
competitive advantage.
11. Define distinctive competencies and discuss their importance in achieving
competitive advantage. Provide examples of how companies have developed and
utilized distinctive competencies to succeed in their industries.
12. Analyse the factors that contribute to the durability of competitive advantage. Discuss
strategies that companies can implement to maintain their competitive position in the
long term despite changing market conditions.
13. Identify common reasons for business failures and discuss strategies for avoiding
them. Explain how companies can sustain their competitive advantage through
continuous improvement, innovation, and strategic flexibility.