1. a. What is strategy? Explain the strategy making process.

Strategy is a plan of action designed to achieve a particular goal. It is a large scale future oriented plans

for interacting with competitive environment to achieve company objectives. A strategy is implemented

to create a competitive advantage over other companies. Hence it is a set of actions that managers take

to increase their company’s performance relative to industry rivals.

Strategy formulation process

Strategy formulation is the process of determining appropriate courses of action for achieving

organisational objectives and thereby accomplishing organisational purpose. Strategy formulation is vital

to the well-being of a company or organisation. It produces a clear set of recommendations, with

supporting justification, that revise as necessary the mission and objectives of the organisation, and

supply the strategies for accomplishing them. In formulation, we are trying to modify the current

objectives and strategies in ways to make the organisation more successful.

1. Select the corporate mission statement and major goals

2. Analyze the external competitive environment to identify strategic opportunities and threats in

the operating environment

3. Analyze the internal competitive environment to pinpoint the strengths and weaknesses of the

organization

4. Select the strategy- contingent upon findings in steps 1, 2, 3

5. Implement the strategy at every level of the company

6. The feedback loop helps managers evaluate the success of the strategy. Strategic planning is

ongoing.

b. How do you explain the success of business that does not use a formal

environmental analysis process?

Environmental analysis is a strategic tool. It is a process to identify all the external and internal

elements, which can affect the organization’s performance. The analysis entails assessing the level of

threat or opportunity the factors might present. These evaluations are later translated into the

decision-making process. The analysis helps align strategies with the firm’s environment.

Our market is facing changes every day. Many new things develop over time and the whole scenario

can alter in only a few seconds. There are some factors that are beyond your control. But, you can

control a lot of these things.

Businesses are greatly influenced by their environment. All the situational factors which determine

day to day circumstances impact firms. So, businesses must constantly analyze the trade environment

and the market. To analyze the environment, the business firm can go through following process:

1. Understand all the environmental factors before moving to the next step.

2. Collect all the relevant information.

3. Identify the opportunities for your organization.

4. Recognize the threats your company faces.

5. The final step is to take action.

It is true that industry factors have an impact on the company performance. Environmental analysis

is essential to determine what role certain factors play in your business. PEST or PESTLE analysis allows

businesses to take a look at the external factors. Many organizations use these tools to project the

growth of their company effectively. The analyses provide a good look at factors like revenue,

profitability, and corporate success. Some of the benefits of environmental analysis are enlisted

below:

1. It helps to identify business strengths, weaknesses, opportunities and threats.

2. It leads to the optimum use of resources.

3. It is necessary for the survival and growth of the business firm.

4. It helps to plan long-term business strategy.

In conclusion, without environmental analysis no business organization can survive and compete in

this competitive environment.

2. a. what key considerations would you keep in your mind while making the

strategic alliance with foreign partner?

As domestic markets continue to mature, international markets are now attractive growth targets for

many firms that previously had not considered overseas opportunities. There are various entry

strategies in foreign market such as exporting, licensing, franchising, joint venture, strategic alliance

etc. strategic alliance is a type of entry strategy in which more than one firms make contract to work

together for mutual benefits. It is a type of cooperative agreements between different firms, such as

shared research, formal joint ventures, or minority equity participation for certain period of time.

They share their technology, human resource and so on to achieve common purpose. Strategic

Alliances are non-equity based agreements i.e. companies remain independent and separate.

Key considerations that should keep in mind while making strategic alliance with foreign partner:

Strategic compatibility

The partners need to have same general goal and understanding for strategic alliance. The differences

in strategy produces more conflicts of interest in the later partnership.

Complementary skills and resources

Another important criterion is that the partners need to contribute more than just money to the

venture. Each partner must contribute some skills and resources that complement for another.

Relative company size

Different size of companies may cause domination of one firm or unequal agreement, which is not

favorable for long term running.

Financial capability

The partners can generate sufficient financial resources to maintain the venture’s efforts, which is

also important for long term partnership.

Other consideration such as compatibility between operating policies, trust and commitment,

compatible management styles, mutual dependency, communications barriers and avoid anchor

partners are also important for partner selection.

b. Discuss the contribution of the portfolio approach to strategic analysis and

choice in a multi business company?

The portfolio approach is a historical starting point for strategic analysis and choice in multi-business

firms. The portfolio approach helps allocate resources in multi-business companies.

Contributions of Portfolio Approaches

Convey large amounts of information about diverse businesses and corporate plans in a simplified

format

Illuminate similarities and differences among businesses, conveying the logic behind corporate

strategies for each business

Simplify priorities for sharing corporate resources across diverse businesses

Provide a simple prescription of what should be accomplished – a balanced portfolio of businesses

3. b. What is competitive advantage? How a business can gain competitive

advantage? Explain.

Competitive advantage:

A competitive advantage is an advantage that a firm has over its competitors, allowing it to generate

greater sales or margins and/or retain more customers than its competitors. It is simply a factor that

distinguishes your business from others, and makes customers more likely to choose your product

over the competitors. It is a way you can create value for your customers which your competitors

cannot. There can be many types of competitive advantages including the firm's cost structure,

product offerings, distribution network and customer support. Without a competitive advantage, your

business has no unique method of drawing in customers

Ways of gaining competitive advantage:

Every business, large or small, needs a competitive advantage to distinguish itself from the

competition. In the aggressive business world, especially in today’s economy, every advantage counts

to establish your business in the top of your industry. Gaining a competitive advantage takes strategic

planning, extensive research and an investment in marketing.

Three ways to gain competitive advantage

1. Locating activities among nations to lower costs or achieve greater product differentiation

2. Efficient/effective transfer of competitively valuable competencies and capabilities from

domestic to foreign markets

Transferring competencies, capabilities, and resource strengths across borders contributes to

development of broader competencies & capabilities and achievement of dominating depth in some

competitively valuable area. Dominating depth in a competitively valuable capability is a strong basis

for sustainable competitive advantage over other multinational or global competitors and small

domestic competitors in host countries.

3. Coordinating Cross-Border Activities to Build a Global Competitive Advantage

Aligning activities located in different countries contributes to competitive advantage in several ways.

The company can shift production from one location to another to take advantage of most favorable

cost or trade conditions or exchange rates. It can also enhance brand reputation by incorporating

same differentiating attributes in its products in all markets where it competes.

2009 “Spring”

1. a. A good strategy has to be well matched to industry and competitive

conditions; market opportunities and threats; and other aspects of the

enterprise’s external environment. How is it so? Explain.

Strategy refers to the long term plans for achieving the firm’s objectives. Before formulating strategy, the

business firm must have to analyze its strengths and weaknesses, opportunities and threats. Business firm

also has to analyze the competitors’ strengths and weaknesses, competition in the market and so on. It is

because all these factors can affect in the implementation of strategy and the achievement of objectives.

Due to which you have to bear financial and nonfinancial loss. Therefore, strategy has to be matched with

the industry and competitive conditions, market opportunities and threats, and other aspects of the

enterprise’s external environment.

Some of the factors that could have an impact on your business are political, economic, social and

technical factors. You have to examine each one of these components individually, and then see how it

could affect the success of your business. For example, if the government has many restrictions in place,

it could negatively impact your ability to do business. Therefore, when developing a strategic plan, you

have to look at the outside environmental factors that can have an impact on your business. For instance,

if the economy is weak when you launch your business, you may need to spend more on advertising or

offer more sales to get people in the door. To analyze internal and external business environment you can

use the SWOT analysis, five force analysis, PESTL analysis etc.

2. b. How do the manager’s attitude toward risk and competitive reaction

affect in strategic choice? Discuss.

Strategy refers to the long term plans for achieving the firm’s objectives. There are various strategies the

business firm can choose to achieve their objectives and compete in the market. The choice of strategy

depends on various internal and external factors such as manager’s attitude towards risk, role of current

strategy, degree of firm’s external dependence, competitive reactions etc.

How do manager’s attitudes toward risk affect in strategic choice?

If the attitude of management towards risk is positive, the range of strategic choice expands and highly

risk strategies are supposed to be selected. Conversely, if management is not optimistic toward risk

bearing, it limits the strategic choices. Similarly, industry’s volatility also influences the attitudes of top

management towards. Top management of highly volatile industries may accept the greater amount of

risk. Conversely, management of stable industry may not be positive toward risk. Industry life cycle is

another determinant of managerial attitudes toward risk. In the early stage of industry life cycle, managers

may have to face greater risk and uncertainty and they may tolerate high risk. Hence, risk-oriented

managers prefer offensive, opportunistic strategies whereas risk-averse managers prefer defensive,

conservative strategies.

How do competitive reaction affect in the strategic choice?

Probable impact of competitor response must be considered during strategy design process. Competitor

response can alter the success of strategy. While selecting the strategies, top management should

consider the probable impact of the strategy to the competitors. For e.g.: if a company chooses an

aggressive strategy directly challenges a key competitors that competitors may also react aggressively by

implementing counter strategy.

Hence, top management must consider the impact of such reaction on the success of the chosen strategy.

For example, if a company chooses to cut in the price of its products to become cost leader, meanwhile,

its competitors can choose counter strategy to offset that strategy.

7. b. Employee Empowerment for operationalizing strategy.

Empowerment is the process of enabling or authorizing an individual to think, behave, take action,

and control work and decision-making in autonomous ways.

1. a. Why strategic management become so important to today’s corporation?

Discuss.

Strategic Management can be described as the identification of the purpose of the organisation and

the plans and actions to achieve that purpose. It is that set of managerial decisions and actions that

determine the long-term performance of a business enterprise. It involves formulating and

implementing strategies that will help in aligning the organisation and its environment to achieve

organisational goals.

No business firm can afford to travel in a haphazard manner. It has to travel with the support of some

route map. Strategic management provides the route map for the firm. It makes it possible for the

firm to take decisions concerning the future with a greater awareness of their implications. It provides

direction to the company; it indicates how growth could be achieved.

The external environment influences the management practices within any organisation. Strategy

links the organisation to this external world. Changes in these external forces create both

opportunities and threats to an organisation’s position – but above all, they create uncertainty.

Strategic planning offers a systematic means of coping with uncertainty and adapting to change. It

enables managers to consider how to grasp opportunities and avoid problems, to establish and

coordinate appropriate courses of action and to set targets for achievement.

Thirdly, strategic management helps to formulate better strategies through the use of a more

systematic, logical and rational approach. Through involvement in the process, managers and

employees become committed to supporting the organisation. The process is a learning, helping,

educating and supporting activity. Strategic management become so important for today’s

corporations due to following reasons:

1. It helps the firm to be more proactive than reactive in shaping its own future.

2. It provides the roadmap for the firm. It helps the firm utilize its resources in the best possible

manner.

3. It allows the firm to anticipate change and be prepared to manage it.

4. It helps the firm to respond to environmental changes in a better way.

5. It minimizes the chances of mistakes and unpleasant surprises.

6. It provides clear objectives and direction for employees.

7. Write short notes on (Any Two)

a) Employee empowerment

In simple words, empowerment is giving power. In the Webster’s English Dictionary, the verb

empowers means to give the means, ability and authority. Viewed from this angle employee

empowerment in an organizational setting giving employees the means, ability and authority to

enable them to do some work.

According to Richard Kathnelson, “empowerment is the process coming to feel and behave as if one

is in power and to feel as if they owned the firm”. And according to Bowen and Lawler, “employee

empowerment refers to the management strategies for sharing decision-making power”.

The common sense or theme flowing from the two definitions is that they refer to employee

involvement in their works. On the whole, Empowerment is the process of enabling or authorizing an

individual to think, behave, take action, and control work and decision-making in autonomous ways.

Empowerment has become necessary due to the following reasons:

1. Time to respond has become much shorter.

2. First-line employees must make many decisions.

3. An employee feels much more control in their life since authority is given to individual decision-

making.

4. There is great untapped potential among employees, which can be revealed through

empowerment.

b) Organizational leadership

1. a. Define strategic management. Discuss how does market differ from country

to country and how do they affect strategy formulation.

Definition of Strategic Management

Strategic Management is exciting and challenging. It makes fundamental decisions about the

future direction of a firm – its purpose, its resources and how it interacts with the environment in

which it operates. Every aspect of the organisation plays a role in strategy – its people, its finances,

its production methods, its customers and so on.

Strategic Management can be described as the identification of the purpose of the organisation

and the plans and actions to achieve that purpose. It is that set of managerial decisions and actions

that determine the long-term performance of a business enterprise. It involves formulating and

implementing strategies that will help in aligning the organisation and its environment to achieve

organisational goals.

Market differ from country to country due to following reasons

Consumer tastes and preferences

Consumer buying habits

Market size and growth potential

Distribution channels

Driving forces

Competitive pressures

One of the biggest concerns of companies competing in foreign markets is whether to customize

their product offerings in each different country market to match the tastes and preferences of

local buyers or whether to offer a mostly standardized product worldwide.

2015 “Fall”

Q.No.-1

What do you mean by industry analysis? What roles does it play in SM?

Industry analysis can be defined as the process of reviewing of the current business environment of an

organization to know about the firm’s competitive market position, firm’s strengths, and its weaknesses

etc. Industry analysis involves reviewing the economic, political and market factors that influence the way

the industry develops. Major factors that influence in the operation of an organization are the bargaining

power wielded by suppliers and buyers, the condition of competitors, the likelihood of new market

entrants and the threat of substitution product. Therefore, Business owners must understand the

industries in which they operate to prepare for change and to ensure continued success.

Benefits of industry analysis:

Conducting a very detailed and intense industry analysis can provide business owners with specific

knowledge regarding the economic marketplace.

Business owners may discover a market niche not currently being met by other companies.

Business owners can also conduct consumer surveys to learn about new goods or services that could have

high demand in the marketplace.

This information can provide new business owners with a significant benefit over existing companies in a

business.

Roles played by industry analysis in Strategic Management are enlisted below:

- Industry analysis helps to predicting the performance of a firm in that industry. For example, if

the price of steel drops significantly, a steel products manufacturer may be able to get cheaper

materials and enjoy higher profit margins. Being able to predict changes such as these allows

companies to react strategically.

- Industry analysis helps planners to position their companies in the market for their products or

services, allowing them to determine how they can differentiate from other companies in the

same industry. Without an industry analysis, a business might enter a market that's too

competitive or one that's already saturated with similar products and services.

- It helps firms identify potential opportunities for the business to develop, as well as threats that

could prevent company growth.

- It can help determine whether there's a fit between internal management preferences and the

business environment. If there is a gap, the business may not survive as managers resist the forces

that shape an industry.

- A industry analysis may be combined with a SWOT (Strengths, Weaknesses, Opportunities and

Threats) analysis, which looks at both internal and external factors to help analyze a company's

potential for success in a given market.

Q.No.-2

Define business environment. What method should be used to identify an

organization’s competitive position?

Business establishes, grows or operates and dies in environment. It cannot operate in vacuum. It collects

inputs i.e. Man money, materials, machines etc. and provides output i.e. Goods and services in the

environment. Environment means surrounding. Business environment can be defined as a forces or

conditions that affect on organizational performance. It is the sum total of all external and internal factors

that influence a business. External factors include political, economic, socio-cultural, technological and

legal factors which are uncontrollable in nature. And internal factors include employees, shareholders,

organization structure, organization culture, organization’s objective etc which are available within an

organization that affect on organization and business. It provides both opportunities and threats to the

business organization.

Method should be used to identify an organization’s competitive position:

The business organization can use SWOT analysis and Five-force analysis to identify its competitive

position.

1. SWOT Analysis:

SWOT stand for strengths, weaknesses, opportunities and threats. And the analysis of organization’s

strengths, weaknesses, opportunities and threats is simply known as SWOT analysis. In broad sense, the

SWOT analysis is the deep analysis and assessment of internal and external environmental factors to know

about the organization’s strengths, weaknesses, opportunities and threats. Business strengths and

weaknesses can be assessed by analyzing internal environment and opportunities and threats can be

assessed by analyzing external environment.

Strengths:

Strengths refers to those factors of an organization which helps it to gain competitive advantage or

increase competitive capabilities. Being highly skilled human resource, advanced technologies, highly

committed employees etc. are the strength of business firm.

Weaknesses:

Weaknesses are those factors due to which the firm cannot compete in the market that hinders in the

achievement of organizational goals. Not being the highly skilled human resource, capital constraint, out

dated technology etc. are the example of business weaknesses.

Opportunities:

Opportunities are those factors which support in the growth of business firm. Increase in product demand,

increase in customers’ income level, reduction in tax etc. are the example of business opportunities.

Threats:

Threats are those factors which hinders in the development and growth of business firm. Some of the

example of business threats are imposing heavy tax, decrease in demand of products or services,

increasing competition, increase in the raw materials cost etc.

2. Five-force analysis:

The Five Forces model developed by Michnal E. Porter has been the most commonly used analytical tool

for examining competitive environment. According to this model, the intensity of competition in an

industry depends on five basic forces. These five forces are:

1. Threat of new entrants

2. Intensity of rivalry among industry competitors

3. Bargaining power of buyers

4. Bargaining power of suppliers

5. Threat of substitute products and services.

Each of these forces affects a firm’s ability to compete in a given market. Together, they determine the

profit potential for a particular industry. To understand industry competition and profitability, one must

analyze the industry’s underlying structure in terms of the five forces. Porter argues that the stronger

each of these forces are, the more limited is the ability of established companies to raise prices and earn

greater profits.

1. The Threat of New Entrants:

The first of Porter’s Five Forces model is the threat of new entrants. New entrants bring new capacity and

often substantial resources to an industry with a desire to gain market share. Established companies

already operating in an industry often attempt to discourage new entrants from entering the industry to

protect their share of the market and profits. Particularly when big new entrants are diversifying from

other markets into the industry, they can leverage existing capabilities and cash flows to shake up

competition. Pepsi did this when it entered the bottled water industry, Microsoft did when it began to

offer internet browsers, and Apple did when it entered the music distribution business.

2. Intensity of Rivalry among Competitors:

The second of Porter’s Five-Forces model is the intensity of rivalry among established companies within

an industry. Rivalry means the competitive struggle between companies in an industry to gain market

share from each other. Firms use tactics like price discounting, advertising campaigns, new product

introductions and increased customer service or warranties. Intense rivalry lowers prices and raises costs.

It squeezes profits out of an industry. Thus, intense rivalry among established companies constitutes a

strong threat to profitability. Alternatively, if rivalry is less intense, companies may have the opportunity

to raise prices or reduce spending on advertising etc. which leads to higher level of industry profits.

3. Bargaining power of buyers:

The third of Porter’s five competitive forces is the bargaining power of buyers. Bargaining power of buyers

refers to the ability of buyers to bargain down prices charged by firms in the industry or driving up the

costs of the firm by demanding better product quality and service. By forcing lower prices and raising

costs, powerful buyers can squeeze profits out of an industry. Thus, powerful buyers should be viewed as

a threat. Alternatively, if buyers are in a weak bargaining position, the firm can raise prices, cut costs on

quality and services and increase their profit levels.

4. Bargaining power of suppliers:

The fourth of Porter’s Five Forces model is the bargaining power of suppliers. Suppliers are companies

that supply raw materials, components, equipment, machinery and associated products. Powerful

suppliers make more profits by charging higher prices, limiting quality or services or shifting the costs to

industry participants. Powerful suppliers squeeze profits out of an industry and thus, they are a threat.

For example, Microsoft has contributed to the erosion of profitability among PC makers by raising prices

on operating systems. PC makers, competing fiercely for customers, have limited freedom to raise their

prices accordingly.

5. Threat of substitute products:

The fifth of Porter’s Five Forces model is the threat of substitute products. A substitute performs the same

or a similar function as an industry’s product. Video conferences are a substitute for travel. Plastic is a

substitute for aluminum. E-mail is a substitute for a mail. All firms within an industry compete with

industries producing substitute products. For example, companies in the coffee industry compete

indirectly with those in the tea and soft drink industries because all these serve the same need of the

customer for refreshment. The existence of close substitutes is a strong competitive threat because this

limits the price that companies in one industry can charge for their product.

Q.No.-3

Define strategic leadership and explain the roles of strategic leadership in

managing firm’s resources.

Strategic leadership refers to a manager’s potential to express a strategic vision for the organization, or a

part of the organization, and to motivate and persuade others to acquire that vision. Strategic leadership

can also be defined as utilizing strategy in the management of employees. It is the potential to influence

organizational members and to execute organizational change. Strategic leaders create organizational

structure, allocate resources and express strategic vision. Strategic leaders work in an ambiguous

environment on very difficult issues that influence and are influenced by occasions and organizations

external to their own.

Roles of strategic leadership in managing firm’s resources:

Probably the most important task for strategic leaders is effectively managing the firm’s portfolio of

resources. Firms may have multiple resources that can be categorized into the following categories:

financial capital

human capital

social capital

organizational capital

Strategic leaders manage the firm’s portfolio of resources by

organizing them into capabilities

structuring the firm to use the capabilities

developing and implementing a strategy to leverage those resources to achieve a competitive

advantage

In particular, strategic leaders must exploit and maintain the firm’s core competencies and develop and

retain the firm’s human and social capital.

Q.No.-4

Suppose employees’ moral and commitment level is very low at the organization

where you are working as a responsible manager. You also agreed that this

situation adversely affect in the implementation process. You are responsible to

motivate them to work, get their commitment and increase moral. What key

consideration would you keep in your mind?

To increase moral of employees I will do following things:

- I will treat employees as a friend not as a machine.

- I will communicate often with my employees regarding their feeling, challenges they are facing

and so on and ask whether they need help or not.

- I will solicit feedback from the employees work on the front-lines and generate innovative ideas.

- I will create an Effective Incentive Program that will help them evolve personally and

professionally.

I will follow strategies to increase employee commitment:

1. Clearly define responsibilities:

Each position should have a formal job description. Employees should know up front to whom they report,

what kinds of decisions they are allowed to make, and what is expected each day.

2. Properly train supervisors, administrators, and managers:

Managers and supervisors should receive appropriate training in management and people skills. Most

employees leave a company because of a poor relationship with their boss, not because of the company.

3. Map out career plans:

When employees feel there is a career plan for them, they will be more likely to stay with a company.

Regular performance reviews should be a part of the plan to provide feedback to the employee and to

reinforce their career goals.

4. Ask employees for feedback:

Don’t wait until it’s too late – conduct employee satisfaction surveys often. Ask employees what they want

more in their positions, and what they want less. Then, do what you can to show them you were listening.

5. Provide fair and competitive salaries:

While fair and competitive wages do not guarantee employee loyalty, you can be certain that below

market wages will guarantee that employees will look elsewhere for employment. Stay informed on what

other companies are paying for similar work.

6. Have an effective orientation program:

Make sure you have a formal and consistent orientation program for all new employees. An employee

will feel more like a part of the team if there is interest demonstrated in their success from the onset.

7. Communicate, communicate, communicate:

Employees want to know what is going on with their employer. Make an effort to keep them informed of

any changes being made. Let them hear it from their managers first, and it will create a sense of loyalty

and trust.

8. Create learning opportunities:

Employees interested in advancement will want to learn new things and create value in their position.

Provide those opportunities either with internal or outside education, sponsored by the company. Make

their professional development a part of their review process, goals and objectives.

9. Don’t forget the benefits:

Many employees will tell you they are more concerned and focused on benefits than on wages. With this

in mind, be sure you are offering equal or better benefits than your competitors.

10. Make sure your employees know they are valued:

Take some extra time and resources to recognize your employees publicly for their achievements. A little

recognition can go a long way to retaining an employee who might otherwise have been on the fence.