Chartered Global Management Accountant (CGMA) Strategic Management and Competitive Strategy Flashcards

24 sample cards from the Strategic Management and Competitive Strategy deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What are network effects and why do they matter for digital/platform strategy?

   Network effects occur when a product's or platform's value to each user increases as more users join (direct) or as complementary users/products grow (indirect, two-sided). They drive 'winner-takes-most' dynamics, create high switching costs, and can produce dominant platforms.

2. Define disruptive innovation as distinct from sustaining innovation (Christensen).

   Sustaining innovation improves existing products for existing mainstream customers. Disruptive innovation introduces a simpler, cheaper, or more accessible offering that initially serves low-end or new customers, then improves over time to displace established incumbents who focused upmarket.

3. Briefly describe how Artificial Intelligence (AI) and machine learning can impact business strategy.

   AI/ML enable automation of cognitive tasks, predictive analytics, personalisation, improved decision-making, new products/services, and cost reduction. Strategically they can create competitive advantage, reshape value chains and business models, but raise risks around data quality, bias, ethics, governance and skills.

4. What is blockchain (distributed ledger technology) and one strategic use case?

   Blockchain is a decentralised, immutable, distributed ledger where transactions are validated by consensus and cryptographically linked, removing the need for a central trusted intermediary. Strategic uses include supply-chain traceability, smart contracts, secure payments, and tamper-evident audit trails.

5. Define the Internet of Things (IoT) and its strategic significance.

   IoT is the network of physical objects embedded with sensors and connectivity that collect and exchange data. Strategically it enables real-time monitoring, predictive maintenance, servitisation (selling outcomes), new data-driven revenue streams, and richer customer insight.

6. What is big data, commonly characterised by the 'V's? Name the core four.

   Big data is data sets too large/complex for traditional processing. The four core Vs are: Volume (scale), Velocity (speed of generation/processing), Variety (structured and unstructured types), and Veracity (accuracy/trustworthiness). Some frameworks add Value as a fifth.

7. What is a business model, and what three components does Osterwalder's logic essentially capture?

   A business model describes how an organisation creates, delivers, and captures value. Essentially it covers value creation (what value, for whom), value delivery (how it reaches customers — channels, relationships, activities, resources), and value capture (revenue streams versus cost structure).

8. List the nine building blocks of the Business Model Canvas.

   1) Customer Segments; 2) Value Propositions; 3) Channels; 4) Customer Relationships; 5) Revenue Streams; 6) Key Resources; 7) Key Activities; 8) Key Partnerships; 9) Cost Structure.

9. What is business model innovation and why is it strategically important?

   Business model innovation reconfigures how value is created, delivered, or captured (e.g., shifting from product sales to subscription, freemium, platform, or as-a-service models). It is important because it can create new competitive advantage and growth that competitors find hard to imitate, even without new technology.

10. Distinguish a data strategy from data governance.

    A data strategy is the high-level plan for how an organisation collects, manages, and exploits data to support its business strategy (the 'what and why'). Data governance is the framework of policies, roles, standards, and controls ensuring data quality, security, privacy, and compliance (the 'how it is controlled').

11. What are the three pillars of information security (the CIA triad)?

    Confidentiality (information accessible only to authorised parties), Integrity (information accurate and unaltered), and Availability (information accessible when needed by authorised users).

12. Why is cybersecurity a strategic (board-level) issue rather than purely an IT matter?

    Cyber breaches threaten core assets — data, reputation, customer trust, intellectual property, operational continuity and regulatory compliance — with potentially existential financial and legal consequences. Strategy increasingly depends on digital assets, so cyber risk must be owned, resourced and overseen at board level as part of enterprise risk management.

13. State Chandler's principle on the relationship between structure and strategy.

    Chandler argued that 'structure follows strategy' — organisations first choose a strategy and then adapt their organisational structure (e.g., from functional to divisional) to implement it effectively. In practice the relationship is reciprocal: structure can also constrain or enable strategy.

14. List the seven elements of the McKinsey 7S framework and the two groups they fall into.

    Hard elements: Strategy, Structure, Systems. Soft elements: Shared values (centre), Skills, Staff, Style. The model stresses that all seven must be aligned and mutually reinforcing for effective strategy implementation.

15. Name and briefly distinguish three common organisational structures for executing strategy.

    Functional (grouped by specialism — efficient but siloed); Divisional/Multidivisional (grouped by product, market, or geography — responsive but duplicative); Matrix (dual reporting across function and project/product — flexible but creates conflicting authority and complexity).

16. What are the four perspectives of Kaplan and Norton's Balanced Scorecard?

    1) Financial; 2) Customer; 3) Internal business process; 4) Learning and growth (innovation and people). It links performance measurement to strategy across leading and lagging indicators rather than financials alone.

17. What is a strategy map in the Balanced Scorecard methodology?

    A strategy map is a visual diagram showing cause-and-effect linkages between objectives across the four perspectives — typically learning and growth enables better processes, which improve customer outcomes, which drive financial results — making the strategy explicit and testable.

18. Distinguish a Critical Success Factor (CSF) from a Key Performance Indicator (KPI).

    A CSF is an area where the organisation must excel to achieve its objectives (e.g., 'reliable on-time delivery'). A KPI is a specific quantified measure tracking performance on a CSF (e.g., '% of orders delivered on time'). CSFs define what matters; KPIs measure it.

19. What qualities should good performance measures have (e.g., SMART)? List the SMART criteria.

    Specific, Measurable, Achievable (attainable), Relevant, and Time-bound. Good measures should also balance financial and non-financial, leading and lagging, and avoid encouraging dysfunctional behaviour (e.g., gaming).

20. In strategic risk management, distinguish risk appetite from risk tolerance.

    Risk appetite is the amount and type of risk an organisation is willing to pursue or accept in pursuit of its objectives (a strategic, board-set position). Risk tolerance is the acceptable variation or specific boundary around a particular objective or risk — narrower and more operational than appetite.

21. Name the four generic risk response strategies (the '4 Ts' / TARA).

    Treat (reduce likelihood/impact via controls), Terminate/Avoid (stop the activity), Transfer (share via insurance, hedging, outsourcing), and Tolerate/Accept (retain the risk). The choice depends on likelihood, impact, and risk appetite.

22. How is a risk map (heat map) used to prioritise strategic risks?

    Risks are plotted on a grid of likelihood (probability) against impact (consequence/severity). High-likelihood/high-impact risks are top priority for treatment or termination; low/low risks may be tolerated. It visualises relative significance and guides response selection. Expected value $= \text{probability} \times \text{impact}$.

23. Outline Kotter's eight-step model for leading organisational change.

    1) Create urgency; 2) Build a guiding coalition; 3) Form a strategic vision/initiatives; 4) Communicate the vision (enlist a volunteer army); 5) Empower action by removing barriers; 6) Generate short-term wins; 7) Sustain acceleration (build on the change); 8) Institute/anchor the change in the culture.

24. Describe Lewin's three-stage model of change and his force-field analysis.

    Lewin's model: Unfreeze (create readiness, challenge the status quo), Change/Move (implement the new ways), Refreeze (embed and stabilise the new state). Force-field analysis identifies driving forces pushing change and restraining forces resisting it; change succeeds by strengthening drivers and weakening restrainers.

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