Strategic Management Flashcards

The 'innovator's dilemma,' as described by Clayton Christensen, explains why established firms often fail to adopt disruptive technologies because:

Answer: Serving existing profitable customers prevents investment in lower-margin disruptive innovations

Incumbents rationally focus on their best customers, ignoring initially inferior disruptive technologies that eventually overtake the market.

When an engineering company evaluates a potential acquisition using a 'synergy analysis,' it is primarily assessing:

Answer: Whether the combined entity will create more value than the two firms operating independently

Synergy analysis quantifies the additional value—cost savings, revenue growth, capability gains—created by combining two organizations.

In strategic management, 'co-opetition' refers to a situation where firms:

Answer: Simultaneously cooperate and compete with one another

Co-opetition, coined by Brandenburger and Nalebuff, describes firms that cooperate to grow the overall pie (e.g., setting standards) while competing for their individual share.

Which of the following is an example of a 'real option' in engineering strategy?

Answer: Phased investment in a new manufacturing plant that can be scaled up if demand grows

Real options give firms the right—but not the obligation—to make future investments, analogous to financial options, allowing staged commitment under uncertainty.

A 'turnaround strategy' for a struggling engineering division would most likely begin with:

Answer: Stabilizing cash flow by cutting costs and divesting non-core assets

Turnaround strategies first stabilize the firm by stopping cash hemorrhage before pursuing growth, since survival is the prerequisite for any longer-term strategic move.

In the context of MEM, 'technology roadmapping' serves as a strategic tool by:

Answer: Aligning technology development timelines with market needs and business strategy

Technology roadmaps visually connect market drivers, product requirements, and technology development milestones to coordinate R&D investment with strategic objectives.

The concept of 'strategic fit' in acquisitions means that the target company:

Answer: Complements the acquirer's strategy, capabilities, or market position in a meaningful way

Strategic fit ensures the acquired firm strengthens the buyer's competitive position, fills capability gaps, or extends market reach in ways aligned with the overall strategy.