Strategic Management: Analysis, Choice and Control
What this domain tests
Strategic Management is theory-heavy: questions ask you to define concepts precisely, apply them to a short company scenario, and justify a recommendation. Marks come from correct terminology plus explicit links to the facts given in the case.
Core rules and concepts
- Hierarchy: vision (what we want to become) → mission (why we exist, our scope) → SMART objectives → strategy → tactics.
- External analysis: PESTLE (political, economic, social, technological, legal, environmental) and Porter's five forces - rivalry, new entrants, substitutes, buyer power, supplier power.
- Internal analysis: resources → capabilities → core competence (valuable, rare, hard to imitate); value chain split into primary and support activities; SWOT summarises but does not itself analyse.
- Choice frameworks: Ansoff (penetration, market development, product development, diversification); Porter's generic strategies (cost leadership, differentiation, focus); BCG matrix for portfolio balance.
- Implementation and control: structure, systems and culture via McKinsey 7S; strategic control tests whether the strategy is still valid, operational control tests efficiency.
Worked example
A conglomerate reports four SBUs: A - relative market share 1.6, market growth 14%; B - 1.4, 6%; C - 0.5, 13%; D - 0.3, 3%. Reasoning: BCG uses relative share (high ≥ 1) and market growth (high ≥ 10%). So A = star (invest to hold share); B = cash cow (harvest to fund A and C); C = question mark (build selectively or divest); D = dog (divest unless it supports another SBU). The answer must name the cash-flow logic, not just the labels.
Traps that cost marks
- Using absolute market share instead of share relative to the largest rival.
- Confusing mission (why we exist) with vision (what we want to become).
- Calling a price-led niche player 'differentiation' - that is focus.
- Naming a framework without applying it to the scenario facts, which earns little credit.