Strategy: Business, Corporate, and IT Strategy
Domain scope
The Strategy domain tests how well you connect IT investment to business goals: corporate and business strategy frameworks, marketing and accounting basics, operations research models, and the legal and standardization environment in which systems are built. FE items tend to be definition matching or single-formula calculations, so know the purpose of each framework and the exact variable in each formula.
Core rules to know
- Corporate strategy: growth, stability, and retrenchment; portfolio tools such as the BCG matrix (stars, cash cows, question marks, dogs).
- Business strategy: Porter's five forces (rivalry, new entrants, substitutes, buyer power, supplier power); three generic strategies (cost leadership, differentiation, focus); SWOT; value chain.
- Marketing: 4P (product, price, place, promotion); customer lifetime value and RFM analysis.
- Accounting: balance sheet equation assets = liabilities + equity; income statement; break-even analysis; contribution margin.
- OR/IE: linear programming, economic order quantity, queuing theory, and PERT/CPM.
- Legal and standards: copyright, patent, trademark, trade secret, personal data protection, and ISO/IEC standards.
Worked example
A product sells for 900 pesos; variable cost is 400 pesos per unit; fixed cost is 1,000,000 pesos. Contribution per unit = 900 - 400 = 500 pesos. Break-even point = fixed cost / contribution = 1,000,000 / 500 = 2,000 units. At 2,000 units, total contribution is 1,000,000 pesos, exactly covering fixed cost and producing zero profit. To earn 200,000 pesos profit, required volume = (1,000,000 + 200,000) / 500 = 2,400 units.
Traps
- Dividing fixed cost by selling price instead of contribution margin.
- Treating fixed cost as a per-unit cost when volume changes.
- Confusing a patent (invention) with a trademark (brand identifier) or copyright (expression).
- Applying a generic strategy without checking whether the market segment supports it.