this combination of value and cost through strategic positioning. That is, they stake out a unique
position within an industry that allows the firm to provide value to customers, while controlling costs.
The greater the difference between value creation and cost, the greater the firm’s economic
contribution and the more likely it will gain competitive advantage.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
97.
Award: 1.00 point
98.
Award: 1.00 point
Why is it important for firms in the same industry to choose distinct but different strategic positions?
In strategic positioning, firms stake out a unique position within an industry that allows the firm to
provide value to customers, while controlling costs. Competition focuses on creating value for
customers (through lower prices or better service and selection) rather than destroying rivals. Even
though two firms compete in the same industry, both can win if they have a distinct and well-
executed competitive strategy.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
Describe the three broad tasks of the AFI strategy framework and provide examples of the topics
and questions that managers address in relation to each task.
Student examples will vary. A sample answer follows:
The three broad tasks of the AFI strategy framework are: (1) strategy analysis, (2) strategy
formulation, and (3) strategy implementations. During strategy analysis, managers consider both the
internal and external environment and how the firm’s performance can produce a sustainable
competitive advantage. During strategy formulation, managers devise a functional, business, and
corporate strategy, determining how and where the firm should compete. During strategy
implementation, managers consider how the firm should be organized to turn the formulated
strategy into action, as well as how the firm’s corporate governance and ethical values affect
strategy implementation.
References
Short Answer Difficulty: 1 Easy Learning Objective: 01-05 Explain the
Analysis, Formulation, Implementation
(AFI) Strategy Framework.
99.
Award: 1.00 point
You probably have a firm understanding of how to define “strategy” and what it fully entails. Now
briefly discuss the common pitfalls associated with how not to define strategy and the main
mistakes that managers make when creating their strategy.
Student answers may vary.
Strategy is not just communicating grandiose statements like, “We are going to be the best in the
industry.” Audacious statements, on their own, are not linked to the AFI framework nor do they
provide any managerial guidance on how a firm can achieve a competitive advantage.
Operational effectiveness, competitive benchmarking and other tactics are also not strategies.
While these elements may be necessary to main efficient and effective processes, they are not
sufficient in achieving competitive advantage.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-02 Define
competitive advantage, sustainable
competitive advantage, competitive
disadvantage, and competitive parity.
100.
Award: 1.00 point
Discuss the importance of creating an overall stakeholder strategy opposed to just catering to
stockholders.
Student answers may vary.
Stakeholders include both internal groups (employees, executives, managers, stockholders, board
members) and external groups (customers, suppliers, alliance partners, creditors, unions,
communities, governments at various levels, and the media). It’s important to create alignment
between all stakeholders because of the web of exchange relationships; all of these groups have a
vested interest in the success of the firm and by sacrificing their needs over the needs of only
stockholders, firms may not be able to achieve competitive advantage. Stakeholder strategy allows
firms to manage how both external and internal stakeholders interact to jointly create value.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-03 Assess the
relationship between stakeholder
strategy and sustainable competitive
advantage.
101.
Award: 1.00 point
102.
Award: 1.00 point
Does a sustainable competitive advantage last forever? If not, then how long does a sustainable
competitive advantage last?
A firm that is able to outperform their competitors for an extended period of time is said to have a