Strategic Management and Business Policy
Strategic management links analysis, choice, and implementation. Candidates must know the classic tools: SWOT (internal strengths/weaknesses, external opportunities/threats), PESTLE for macro-environment, Porter's Five Forces (rivalry, new entrants, substitutes, supplier power, buyer power), and the value chain for locating where cost or differentiation advantage is created. Understand generic strategies (cost leadership, differentiation, focus) and why being "stuck in the middle" is a risk. Distinguish corporate-level strategy (diversification, vertical integration, portfolio tools such as BCG growth-share matrix) from business-level strategy (how to compete in one market). Know the Ansoff matrix: market penetration, product development, market development, diversification.
Common traps: confusing a strength with an opportunity (internal vs external); treating SWOT as a strategy rather than an input; assuming low cost always means low price; and mixing backward integration (toward suppliers) with forward integration (toward customers). Questions often describe a firm's move and ask which strategy it represents, so classify by direction, not by label.
Worked example: a retailer buys its own logistics provider. This is backward vertical integration only if the logistics provider was a supplier upstream; if it was a distributor to end customers, it is forward. Rule of thumb: identify the firm's position in the chain, then ask whether the acquired party sits closer to raw inputs (backward) or end users (forward).
Also be ready to distinguish deliberate from emergent strategy and to explain first-mover advantages and disadvantages.