📘 STRATEGIC PLANNING — BULLET POINT NOTES (US CMA PART 1)
1. Analysis of External & Internal Factors Affecting Strategy
A. External Environment Analysis
These factors are outside the organization’s control but influence strategic direction.
1. PEST / PESTEL Analysis
- Political: regulations, taxes, trade policies, government stability.
- Economic: inflation, interest rates, GDP growth, exchange rates.
- Social: demographics, education levels, customer preferences, culture.
- Technological: automation, innovation rate, digital disruption.
- Environmental: sustainability, climate risk, resource shortages.
- Legal: labor laws, data protection laws, compliance requirements.
2. Industry & Competitive Forces (Porter’s Five Forces)
- Threat of new entrants — barriers to entry, capital needs, brand loyalty.
- Threat of substitutes — alternative products/services.
- Supplier power — availability of inputs, switching costs.
- Buyer power — customer concentration, price sensitivity.
- Competitive rivalry — industry growth rate, competitive intensity.
3. Market & Customer Analysis
- Market size and growth
- Customer segments
- Trends and future demand
- Competitor offerings
B. Internal Environment Analysis
Identifies the firm’s strengths & weaknesses.
1. Resource-Based View (RBV)
- Tangible resources: assets, equipment, cash, factories.
- Intangible resources: brand, patents, reputation, technology.
- Capabilities: processes, skills, culture, management systems.
2. VRIO Framework (Value, Rarity, Imitability, Organization)
A resource creates sustainable competitive advantage if:
- It is Valuable
- It is Rare
- It is Costly to Imitate
- The company is Organized to exploit it
3. Value Chain Analysis
- Primary activities: inbound logistics, operations, outbound logistics, marketing, service.
- Support activities: HR, technology, procurement, firm infrastructure.
- Helps detect cost drivers & areas to differentiate.
4. Internal Controls & Processes
- Efficiency of operations
- Cost structures
- Productivity and capacity
- Technology systems
- Governance and risk management
2. Long-Term Mission and Goals
Mission Statement
- Defines the organization’s core purpose, reason for existence, value to stakeholders.
- Should be clear, future-oriented, and inspirational.
Vision Statement
- Describes the desired future state (what the organization wants to become).
- Long-term direction for strategy.
Organizational Values
- Ethical principles
- Cultural priorities
- Behavior expectations
Long-Term Goals (Strategic Goals)
- Derived from mission and vision
- Set for 3–5 years or more
- Examples:
- Market share growth
- Cost leadership
- Innovation leadership
- Expanding into new markets
- Long-term financing or capital structure targets
SMART Framework for goal setting
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
3. Alignment of Tactics with Long-Term Strategic Goals
Hierarchy of Planning
- Mission & Vision (Top level)
- Long-term strategy (Corporate/Business strategy)
- Tactical plans (1–2 years)
- Operational plans (Daily/weekly/monthly)
How Alignment is Ensured
- Every department plan must support overall strategic objectives.
- KPIs should be linked to strategic goals through a Balanced Scorecard (BSC).
- Budgeting must reflect strategic priorities (e.g., capital budgeting).
- Resource allocation must favor strategic initiatives.
Examples of Alignment
- Strategic goal: market expansion → Tactical plan: launch new product line.
- Strategic goal: cost leadership → Tactical plan: implement lean production.
- Strategic goal: digital transformation → Tactical plan: upgrade ERP system.
4. Strategic Planning Models & Analytical Techniques
A. Common Planning Models
1. SWOT Analysis
- Strengths (internal)
- Weaknesses (internal)
- Opportunities (external)
- Threats (external)
2. Porter’s Generic Strategies
- Cost leadership
- Differentiation
- Focus (niche)
3. Balanced Scorecard (BSC)
Four perspectives:
- Financial
- Customer
- Internal Processes
- Learning & Growth
Used to align activities with long-term strategy.
4. Scenario Planning
- Creates optimistic, pessimistic, and expected scenarios.
- Helps in uncertainty and risk management.
5. Growth Strategies (Ansoff Matrix)
- Market penetration
- Market development
- Product development
- Diversification
B. Analytical Techniques
- Trend analysis
- Benchmarking
- Break-even analysis
- Sensitivity analysis
- Predictive analytics
- Ratio analysis
- Cost-benefit analysis
5. Characteristics of a Successful Strategic-Planning Process
Key Characteristics
- Top management commitment
- Clear mission and vision
- Data-driven decision making (internal + external analysis)
- Cross-functional participation
- Realistic and financially viable goals
- Effective communication throughout the organization
- Continuous monitoring and performance measurement
- Flexibility and adaptability to change
- Integration with budgeting and performance evaluation
- Alignment with risk management and internal controls
Outcome Indicators of Successful Planning
- Achievement of objectives
- Strong competitive position
- Sustainable profitability
- Improved operational efficiency
- Better resource allocation
- Employee engagement and strategic clarity
www.gmsisuccess.in
1. Meaning of Strategic Management
- Process of defining long-term direction and allocating resources to achieve organizational goals.
- Integrates analysis, formulation, implementation, and control.
- Focuses on sustainable competitive advantage.
2. Levels of Strategy
Corporate Level
- Decisions on overall scope, long-term growth, mergers, diversification.
Business Level
- How a business competes within a particular industry.
- Includes differentiation, cost leadership, focus strategies.
Functional Level
- Departmental strategies (marketing, HR, finance, production).
⭐ 3. External Environment Analysis (Macro) – PESTEL
- P – Political: regulations, taxes, government stability.
- E – Economic: inflation, interest rates, GDP, income levels.
- S – Social: demographics, lifestyle changes.
- T – Technological: innovation, automation, digital trends.
- E – Environmental: climate change, sustainability norms.
- L – Legal: labor laws, competition laws, compliance.
⭐ 4. Internal Environment Analysis
VRIO Framework
- V – Valuable resources create value.
- R – Rare resources not widely available.
- I – Inimitable resources difficult to copy.
- O – Organized to capture value.
Core Competencies
- Unique strengths that provide competitive advantage.
Value Chain Analysis (Porter)
- Primary Activities: inbound logistics, operations, outbound logistics, marketing & sales, service.
- Support Activities: HRM, procurement, tech development, infrastructure.
⭐ 5. Porter’s Five Forces Model
Used to analyze industry attractiveness & competitive intensity.
-
Threat of New Entrants
- High when barriers to entry are low (low capital, weak regulation).
-
Bargaining Power of Suppliers
- High when few suppliers or unique inputs.
-
Bargaining Power of Customers
- High when customers are concentrated, price-sensitive.
-
Threat of Substitute Products
- High when alternatives are affordable, easily available.
-
Industry Rivalry
- Intense when many competitors, slow growth, high fixed costs.
⭐ 6. Generic Competitive Strategies (Porter)
- Cost Leadership: lowest cost in industry.
- Differentiation: unique features to charge premium price.
- Focus/Niche: target narrow segment with cost or differentiation focus.
⭐ 7. Ansoff Growth Matrix
- Market Penetration: increase share in existing markets.
- Market Development: new markets for existing products.
- Product Development: new products for existing markets.
- Diversification: new products + new markets.
⭐ 8. BCG Matrix (Boston Consulting Group Matrix)
Used to manage a portfolio of business units based on market share and market growth.
| Category | Market Growth | Relative Market Share | Strategy |
|---|---|---|---|
| Stars | High | High | Invest for growth |
| Cash Cows | Low | High | Maintain, harvest profits |
| Question Marks | High | Low | Selective investment or divest |
| Dogs | Low | Low | Divest or reposition |
⭐ 9. GE McKinsey Matrix (9-Cell Matrix)
- Dimensions: Industry Attractiveness vs. Business Unit Strength.
- Strategies:
- Grow (high–high)
- Select/Invest selectively (medium zones)
- Harvest/Divest (low–low)
⭐ 10. SWOT Analysis
Internal:
- Strengths, Weaknesses
External:
- Opportunities, Threats
Basis for matching internal capabilities with external environment.
⭐ 11. Balanced Scorecard (BSC)
Performance measurement system with four perspectives:
- Financial
- Customer
- Internal Processes
- Learning & Growth
Aligns operations with long-term strategy.
⭐ 12. Strategic Planning Process
- Define vision, mission, values.
- Environmental scanning (external + internal).
- Set long-term goals.
- Formulate strategy.
- Resource allocation.
- Implementation.
- Strategic control & performance monitoring.
⭐ 13. Strategic Implementation Issues
- Resistance to change.
- Lack of leadership.
- Poor communication.
- Insufficient resources.
- Misaligned structure or culture.
⭐ 14. Competitive Advantage
- Ability to outperform rivals consistently.
- Focus on unique value, cost advantage, or innovation.
- Must be valuable, rare, inimitable, non-substitutable.
www.gmsisuccess.in
⭐ BCG MATRIX – COMPLETE NOTES (US CMA Part 1)
(Boston Consulting Group Growth-Share Matrix)
The BCG Matrix is a portfolio analysis tool used to evaluate Strategic Business Units (SBUs) or product lines based on:
- Market Growth Rate (Industry attractiveness) → HIGH / LOW
- Relative Market Share (Competitive strength) → HIGH / LOW
It helps managers decide:
✔ Where to invest
✔ Where to grow
✔ Where to divest
✔ How to allocate resources
⭐ BCG Matrix Structure
| BCG Quadrant | Market Growth | Market Share | Typical Strategy |
|---|---|---|---|
| Stars | High | High | Invest & grow |
| Cash Cows | Low | High | Maintain & harvest cash |
| Question Marks | High | Low | Selective investment or divest |
| Dogs | Low | Low | Harvest or divest |
⭐ DESCRIPTION OF EACH QUADRANT
1. ⭐ Stars (High Growth, High Market Share)
- Leaders in a fast-growing market
- Need high investment to maintain leadership
- Potential future cash cows
Strategy:
✔ Invest for growth
✔ Expand capacity
✔ Maintain competitive advantage
2. 💰 Cash Cows (Low Growth, High Market Share)
- Industry growth slow but SBU dominates
- Generates steady cash with low investment needs
- Funds Stars & Question Marks
Strategy:
✔ Maintain leadership
✔ Maximize cash flow
✔ Cost efficiency
3. ❓ Question Marks (High Growth, Low Market Share)
- High market potential but weak competitive position
- Uncertain future → can become Star or Dog
- Require high investment
Strategy:
✔ Invest selectively where chances of leadership exist
✔ Otherwise divest
4. 🐶 Dogs (Low Growth, Low Market Share)
- Weak competitive position in a stagnant or shrinking market
- Low cash generation
- Often over-aged products
Strategy:
✔ Harvest (reduce investment)
✔ Liquidate/divest
✔ Do not invest further
⭐ How Companies Use the BCG Matrix
- Resource allocation
- Deciding which SBUs to grow or cut
- Strategic planning (long-term)
- Capital budgeting priorities
- Monitoring product portfolio health
⭐ Critical Assumptions & Limitations of BCG Matrix
Assumptions
- Market share → profitability
- Market growth → investment need
Limitations
- Oversimplified (only 2 variables: market share & growth)
- Ignores synergies between SBUs
- Industry growth rate may not reflect attractiveness
- Relative market share may not always mean profitability
- Static snapshot – not dynamic
⭐ FORMULA USED (Important for CMA Exam)
Relative Market Share = (Firm’s Market Share) / (Largest Competitor’s Market Share)
If RMS > 1 → HIGH market share
If RMS < 1 → LOW market share
⭐ CASE STUDY 1 – SIMPLE (Easy to Understand)
Company: Nova Electronics Ltd.
It produces 4 product lines:
| Product | Market Growth | Market Share | Category |
|---|---|---|---|
| Smartphones | High | High | ? |
| Earbuds | High | Low | ? |
| TVs | Low | High | ? |
| MP3 Players | Low | Low | ? |
Classification Using BCG Matrix
- Smartphones
- High growth + High market share
→ ⭐ Star
- Earbuds
- High growth + Low market share
→ ❓ Question Mark
- TVs
- Low growth + High market share
→ 💰 Cash Cow
- MP3 Players
- Low growth + Low market share
→ 🐶 Dog
Strategic Recommendations
- Smartphones: Invest heavily to maintain leadership
- Earbuds: Evaluate potential → invest selectively
- TVs: Use profits to fund Stars and Question Marks
- MP3 Players: Stop investment & consider divestment
⭐ CASE STUDY 2 – ADVANCED (CMA-LEVEL)
Company: Global Foods Pvt. Ltd.
A diversified food company with the following SBUs:
| SBU | Market Growth Rate | Market Share | Notes |
|---|---|---|---|
| Frozen Meals | 15% | 35% | Leader in growing market |
| Instant Noodles | 2% | 50% | Mature industry |
| Energy Drinks | 18% | 5% | Competing against strong global brands |
| Biscuits | 1% | 4% | Highly competitive, saturated market |
| Plant-Based Meat | 20% | 10% | New market, rising demand |
BCG Analysis
1. Frozen Meals → ⭐ Star
- High market growth (15%)
- High relative market share (dominant at 35%)
Strategy:
✔ Continue investment
✔ Expand distribution
✔ Maintain competitive advantage
2. Instant Noodles → 💰 Cash Cow
- Low growth (2%)
- High market share (50%)
Strategy:
✔ Maximize profit
✔ Reduce unnecessary investment
✔ Use cash to fund growth markets
3. Energy Drinks → ❓ Question Mark
- High growth (18%)
- Low market share (only 5%)
- Competitors strong (Red Bull, Monster, etc.)
Strategy:
✔ Analyze feasibility of gaining share
✔ If branding or R&D can help → invest
✔ If gains unlikely → divest
4. Biscuits → 🐶 Dog
- Low growth (1%)
- Low market share (4%)
Strategy:
✔ Stop new investments
✔ Sell or discontinue product line
5. Plant-Based Meat → ❓ Question Mark (Potential Future Star)
- High growth (20%)
- Low share (10%)
- Market is emerging
Strategy:
✔ Invest more due to strong future potential
✔ Improve production efficiency
✔ Build brand loyalty early
⭐ Portfolio Strategy Based on BCG Matrix Outcome
- Heavy investment → Frozen Meals, Plant-based Meat
- Maintain & Harvest → Instant Noodles
- Selective investment → Energy Drinks
- Divest/Harvest → Biscuits
This allows optimal capital allocation and long-term profit maximization.
Below are 50 high-quality MCQs with answers and explanations covering Mission, Vision, Strategic Management Process, Organizational Values & Culture, BCG Matrix, Porter’s Five Forces, Product Differentiation & Cost Leadership, Cost Competitiveness, Core Competencies, SWOT, PESTEL, Balanced Scorecard, Stakeholder Analysis, aligned with US CMA Part 1 – Strategic Planning.
✅ MCQ QUESTIONS WITH ANSWERS (50 Questions)
(All answers are provided at the end of each question)
1. A mission statement primarily answers which question?
A. Where do we want to be in 10 years?
B. What is our purpose and reason for existence?
C. What are the strategic business units?
D. What are our future financial targets?
Answer: B
2. A vision statement primarily focuses on:
A. Long-term future aspirations
B. Current operations and purpose
C. Product design decisions
D. Departmental budgets
Answer: A
3. Which of the following is not part of the strategic management process?
A. Strategy formulation
B. Strategy implementation
C. Strategy evaluation
D. Operational troubleshooting
Answer: D
4. Organizational values serve to:
A. Establish moral principles and decision guidelines
B. Define market share targets
C. Allocate budgets
D. Create marketing slogans
Answer: A
5. A strong organizational culture usually results in:
A. Higher employee turnover
B. Better alignment with strategy
C. More bureaucratic barriers
D. Lower motivation levels
Answer: B
6. In the BCG Matrix, a business unit with high market growth and high market share is:
A. Dog
B. Question Mark
C. Cash Cow
D. Star
Answer: D
7. In the BCG Matrix, which unit generates excess cash but has low growth?
A. Star
B. Cash Cow
C. Dog
D. Question Mark
Answer: B
8. According to Porter’s Five Forces, the threat of substitutes increases when:
A. Switching costs are high
B. Customers are loyal
C. Alternatives are readily available
D. Products are unique
Answer: C
9. A cost leadership strategy focuses on:
A. Providing standard products at the lowest cost
B. Offering highly unique products
C. Charging premium prices
D. Reducing value chain activities
Answer: A
10. Product differentiation allows firms to:
A. Achieve the lowest cost
B. Increase prices due to unique value
C. Eliminate competition entirely
D. Remove need for marketing
Answer: B
11. Cost competitiveness refers to a firm’s ability to:
A. Offer the cheapest product in the market
B. Manage cost structure efficiently
C. Focus only on cost reduction
D. Ignore quality
Answer: B
12. Core competencies must be:
A. Easy to imitate
B. Central to competitive advantage
C. Unrelated to customers
D. Short-term skills
Answer: B
13. SWOT analysis classifies internal factors as:
A. Opportunities and threats
B. Strengths and weaknesses
C. Profit and loss
D. Vision and mission
Answer: B
14. PESTEL analysis includes all except:
A. Technological
B. Legal
C. Ethical
D. Political
Answer: C
(Ethical is not part of standard PESTEL: Political, Economic, Social, Technological, Environmental, Legal)
15. Balanced Scorecard financial perspective includes:
A. Customer retention
B. ROI and revenue growth
C. Employee skills
D. Process efficiency
Answer: B
16. Stakeholder analysis determines:
A. Product prices
B. Key stakeholders’ needs and influence
C. Employee salary levels
D. Marketing strategies only
Answer: B
17. A mission statement should NOT include:
A. Purpose
B. Core values
C. Detailed financial forecast
D. Products/services
Answer: C
18. Which best describes strategy evaluation?
A. Choosing new markets
B. Monitoring performance and taking corrective action
C. Hiring employees
D. Setting vision
Answer: B
19. In Porter’s Five Forces, supplier power increases when:
A. Many suppliers exist
B. Switching suppliers is easy
C. Inputs are unique
D. Customers are powerful
Answer: C
20. A “Dog” business unit should typically be:
A. Expanded
B. Harvested or divested
C. Increased in investment
D. Merged with stars
Answer: B
21. Which is a characteristic of low-cost leadership?
A. Superior design innovation
B. High economies of scale
C. Expensive materials
D. Custom solutions
Answer: B
22. A firm uses unique packaging and branding. It is pursuing:
A. Focus strategy
B. Differentiation strategy
C. Cost leadership
D. Market penetration
Answer: B
23. A core competency must contribute directly to:
A. Short-term sales
B. Customer value
C. Asset depreciation
D. IT budgets
Answer: B
24. Which element belongs to the internal environment?
A. Government regulation
B. Organizational culture
C. Economic inflation
D. Technological trends
Answer: B
25. A company’s values guide:
A. Ethical behavior and decision-making
B. Organizational structure
C. Supply chain design
D. Tax planning
Answer: A
26. PESTEL “Environmental” factor includes:
A. Company’s carbon emission policies
B. Hiring rules
C. Employee bonuses
D. Customer satisfaction
Answer: A
27. Balanced Scorecard’s customer perspective focuses on:
A. Return on assets
B. Market share and satisfaction
C. Learning capacity
D. Employee training
Answer: B
28. Competitive rivalry is intense when:
A. Industry growth is high
B. Exit barriers are low
C. Many equal-sized competitors exist
D. Products are highly differentiated
Answer: C
29. A company that competes in niche markets using cost strategy follows:
A. Broad differentiation
B. Focused cost leadership
C. Cost leadership
D. Hybrid strategy
Answer: B
30. Strategy formulation includes:
A. Setting goals and selecting strategies
B. Monitoring employee performance
C. Daily scheduling
D. Customer complaints handling
Answer: A
31. Industry attractiveness is part of which analysis tool?
A. SWOT
B. BCG
C. Porter’s Five Forces
D. Balanced Scorecard
Answer: C
32. Which BSC perspective captures innovation and employee education?
A. Financial
B. Customer
C. Internal process
D. Learning & growth
Answer: D
33. Vision statements should be:
A. Quantified and measurable
B. Inspirational and future-oriented
C. Focused on internal operations only
D. Limited to financial goals
Answer: B
34. A “Question Mark” in BCG requires:
A. No further investment
B. Careful investment decisions
C. Immediate divestment
D. Cost-cutting
Answer: B
35. In SWOT analysis, “Threat” example is:
A. Strong brand
B. Skilled workforce
C. New competitors
D. New product launch
Answer: C
36. High buyer power occurs when:
A. Products are unique
B. Switching costs are low
C. Few buyers exist
D. Buyers are dependent on the firm
Answer: B
37. Organizational culture is best described as:
A. Corporate accounting rules
B. Shared beliefs and norms
C. Marketing strategy
D. Outsourcing plans
Answer: B
38. Cost leadership risk includes:
A. Becoming too expensive
B. Obsolescence
C. Losing margins due to price wars
D. Over-innovation
Answer: C
39. Differentiation strategy risk is:
A. Product too standardized
B. Imitation by competitors
C. Low brand loyalty
D. Lower margins
Answer: B
40. Stakeholder with high power and high interest should be:
A. Ignored
B. Monitored
C. Closely managed
D. Kept satisfied only
Answer: C
41. In PESTEL, tax policies belong to:
A. Political
B. Economic
C. Legal
D. Social
Answer: A
42. Learning and growth BSC includes:
A. Employee skills & motivation
B. Net profit margin
C. Quality control
D. Customer churn
Answer: A
43. Which is a strength in SWOT?
A. Declining industry
B. Poor customer service
C. Strong distribution network
D. New tax laws
Answer: C
44. Strategic planning begins with:
A. Implementation
B. Mission and vision
C. Budgeting
D. KPI measurement
Answer: B
45. Which is an external factor?
A. Employee turnover
B. New government regulations
C. Machinery efficiency
D. Company culture
Answer: B
46. High market share & low growth indicates:
A. Dog
B. Star
C. Cash Cow
D. Question Mark
Answer: C
47. Strategic control includes:
A. Monitoring environment changes
B. Selecting suppliers
C. Organizing staff schedules
D. Setting manufacturing plans
Answer: A
48. Core competency example:
A. Temporary price discount
B. Efficient supply chain
C. High turnover
D. Changing supplier contracts
Answer: B
49. Which force increases when customers can switch easily?
A. Threat of new entrants
B. Buyer bargaining power
C. Supplier power
D. Industry competition
Answer: B
50. Balanced Scorecard converts strategy into:
A. Financial statements
B. Operational metrics and performance measures
C. Legal compliance rules
D. HR policies
Answer B
