6664438 Strategic Management

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Q.1 Explain the evolution, role and importance of business policy and strategic management. What wouldbe the role of manager in this age?IntroductionStrategic management is a dynamic process of aligning strategies, performance and business results; it is allabout people, leadership, technology and processes. Effective combination of these elements will help withstrategic direction and successful service delivery. It is a continuous activity of setting and maintaining thestrategic direction of the organization and its business, and making decisions on a day-to-day basis to deal withchanging circumstances and the challenges of the business environment

The term strategic management has been traditionally used. New title such as business policy, corporatestrategy and policy, corporate policies is essentially and extensively used which means more or less the sameconcept.Evolution of Strategic Management

1) In early 1920s and 1930s : The managers used day-to-day planning methods to perform any task.However afterwards to anticipate the future, they tried using tools like preparation of budgets andcontrol systems like capital budgeting and management by objectives. Even these techniques wereunable to emphasize the future adequately.

2) In mid 1930s (first phase of evolution of strategic management): As many businesses had just startedoperations and were mostly in a single product line, there arose a need for policy making. As companies

grew they expanded their products and they catered to more customers and which in turn increased their geographical coverage. Hence According to the nature of business the planning was done on Adhoc

basis.However in the second half of the 1930s, the expansion brought in complexity and lot of changes in theexternal environment. Hence there was a need to integrate functional areas; this integration was broughtabout by framing policies to guide managerial action. Policies helped to have pre-defined set of actions,which helped people to make decision. Policymaking was the owners prime responsibility. Thus Due toincrease in the environment changes, in 1930s and 40s policy formulation replaced ad-hoc policymaking, which led to emphasis shifted to the integration of functional areas in this rapidly changingenvironment.

3) After II World War: There was more complexity and significant changes in the environment.

Competition increased with many companies entering into the market. Business had grown much larger and companies were targeting larger market geographically, serving more types of products and varioustypes of customer. Policy making and functional area integration was not sufficient for the complexneeds of a business.

4) Due to increase in the competition, in 1960s there was a demand for critical look at the basic concept of business. The environment played an important role in the business. The relationship of business withthe environment leads to the concept of strategy which marks the third phase of the evolution of strategic environment. This helped the management to manage between the business and theenvironment.

5) In the early eighties the pattern changes with globalization, as many companies were globalised whichlead to the competition of the rivals access the world. Japanese companies along with other Asian

companies unleashed a force across the world and posed a threat for the US and European companies,which led to the current thinking. This led to the current thinking which emerges in the eighties.

Role Of Strategic Management: -1) Due to increase in the competition, in 1960s there was a demand for critical look at the bane corrupt of

business.2) The environment played an important role in the business.3) The relationship of business with the environment lead to the concept of strategy.4) In early sixties, this helped the management to manage between the business and the environment.

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5) In early eighties, as many companies were globalised which lead to the competition of the rivals accessthe world.

6) Japanese companies along with other Asian companies unleashed a force across the world and posed athreat for the US and European companies, which led to the current thinking.

7) Strategic management focused on 2 aspects: - Strategic process of business. Responsibilities of strategic management.

8) Unlike others, in this phase the role of senior management is vital and of utmostimportance. Their role was important in decision-making like -

Whether a company promotes a joint venture/new decision.Decides to go for an expansion.Takes other important actions.

9) All these actions and decision had a long-term impact on the company and its future operations, whichwas the result of senior management decision-making.

10) Strategic management is both about the present and future course of action, which was the primeresponsibility senior management.

Strategic Management isThe study of function and responsibilities of senior managementThe crucial problem that affects success in total enterprise.The decision that determine the direction of the organization and shape of its futureIdentity and molding of its character Mobilization and their allocation of the resources.

Hence as managers had variety of choices, decisions were based on the circumstances, which would take thecompany in specified directions.

Importance And Role Of Managers In Strategic Management: -Strategic management integrates the knowledge and experience gained in various functional areas.It helps to understand and make sense of complex interaction in various areas of management.

It helps in understanding how policies are formulated and in creating appreciation of complexities of environment that the senior management faces in policy formulation.Managers need to begin by gaining an understanding of the business environment and to in control.

Role of Indian managers in this age: -They should know to manage and understand information technology, which is changing the face of business.As public and common investors own and more companies managers need to acquire skills to maximizeshareholder value.To have/take a strategic perspective, managers should foresee the future and track changes in customer expectation. Intuitive, logic reasoning is required for proper decision-making.Successful companies depend on people. For people, management managers should create capability for imitating and manage things through leadership and should possess qualities like patience, commitment and

perseverance.Managers need to provide speed responses to environmental changes through informational systems andorganizational process.As corporates are becoming more integrated with the public life, corporate governance is becoming importantwhich manager may have to practice.Managers should learn to deal with confused and complex situations. They should know to deal with globalmanagers, business protocols and market conditions.In complex and certain situations, managers should have the courage in decision-making to makeunconventional decisions.

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Managers should possess high ethical standards in business and focus on social responsibility.Conclusion

Thus we can say the purpose of strategic management is manifold. To be successful in the business oneshould possess/have holistic approach and should know to integrate the knowledge gained in various functionalarea of management. By having generalist approach, a senior manager can understand the complex inter linkages operating within the organisation and should have systematic approach in decision-making in relationwith the changes which takes place in the environment.

Q. 2 What is strategy? At what levels is it formulated?Introduction: -The concept of strategy is central to understanding the process of strategic management. The term strategy isderived from the Greek word STRATEGOS, which means Generalship - the actual direction of military force,as distinct from governing its deployment. Therefore, the word strategy means THE ART OF GENERAL .Before making a decision managers have to look into the course of deciding sinceStrategy involves situations like: -

a) How to face the competition. b) Whether to undertake expansions/diversificationc) To be focused/ broad basedd) How to chart a turn around

e) Ensuring stability/should we go in for disinvestments etcFor a company strategy is one of the most significant concepts to emerge in the field of management, and alsoone of the most vital for survival and success.

Some definitions of strategy are as follows: -According to Alfred chandler the strategy is the determination of basic long-term goals and objectives of an enterprise and the adoption of the course of action and the allocation of resources for carrying outthese goals.

William Glueck defines strategy as a unified, comprehension and integrated plan designed to assure thatthe basic objectives of the enterprises are achieved.Michael Porters opinion is that the core of general management is strategy.

Managers must make companies flexible, respond rapidly, benchmark the best practices, outsourceaggressively, develop core competencies; infact should know how to play new roles everyday. Hyper competition is a common phenomenon that rivals copy very fast.

Companies can outperform rivals only if it can establish a difference it can preserve and deliver greater value ata reasonable cost. Strategy rests on unique activities The essence of strategy is in the activities choosing to perform things differently and to perform different activities than rivals.Strategy is long term. If company focus is only on operational effectiveness. It can become good and not better.Overemphasis on growth leads to the dilutions of strategy. Growth is achieved by deepening strategy.Strategy is basically: -

Strategy is the future plan of action, which relates to the companies activities and it depends on themission/vision of the company i.e. when it would like to reach from its current position.It is concerned with the resource available today and those that will be required for the future plan of action.It is about the trade off between its different activities and creating a fit among these activities.

A company will need strategy at various levels, as there is a different need at each level. A company may havedifferent business with a central corporate office. Thus will be multiple strategies at different levels.

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Levels Of StrategyMISSION / VISION LEVEL

CORPORATE LEVEL

FUNCTIONAL LEVEL STRTEGIES [CORPORATE]

SBU1 SBU2 SBU3 (SBU LEVEL)

FUNCTIONAL LEVEL STRATEGIES

OPERATIONAL LEVEL

Operational level strategies are derived from functional strategies.Functional strategies operate under the SBU level.SBU- level strategies are put into action under the corporate level strategy.Corporate level is derived from the societal-level strategy of a corporation.

1. Corporate level strategy: - It is the broad level strategy and all its plan of actions is at corporatelevel to achieve what the company as a whole. It covers the various strategies and functions performed bydifferent SBUs. The Strategies needs should be in line with the company objectives.2. SBU level (or business) strategy: - It will be line to achieve the objectives for SBUs, which arederived and in line with the corporate/company objectives. It would cover allocation of resources amongfunctional areas along with functional strategies, which again are in line to functional strategies of thecorporate level. Their needs to be coordination between the corporate and SBU level both in objectives andfunctional strategies for optimization.3. Functional strategy: - The functional strategy at the SBU level deals with a relatively smaller

area, providing objectives for a specific function in that SBU environment, like marketing, finance, production, operation, etc.These are the three levels at which strategic plans are made for most companies.

But larger companies may need to have strategies at some other levels too. Large companies or companies withmultiple business in different countries often need a larger level for the group as whole. Sometimes evenrelatively smaller companies may often need a set of strategies at a level higher than the corporate level. This isknown as societal strategies.

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4. Societal strategies: - A societal strategy is a generalized view or how the company perceives itself inits role towards the society or even a country or countries, in terms of a particular vision / mission statement, or even a need or a set of needs that it strives to fulfill corporate level strategies are then derived from the societalstrategy.

5. Operation level: - In the dynamic environment and due to the complexities of business,strategies are needed to be set at lower levels i.e. at one step down the functional level, known as operationlevel strategies. There are more specific & has a defined scope. E.g. Marketing Strategy could besubdivided into sales Strategies for different segments & markets, pricing, distribution, productdevelopment and communications and advertising strategies etc. Some of them may be common & someunique to the target markets. It should contribute to the functional objectives of marketing function. Theseare interlinked with other strategies at functional level like those of finance, production etc

Q. 3 What are the issues in Strategic Decision Making? Explain the role of various Strategist. What areissues in making decisions?

Issues in Strategic Decision Making1. While making a decision the company might have different people at different periods of time. Decision

requires judgments; a personal related factors are important in decision-making. Hence decision maydiffer as person change.

2. Decisions are not taken individually, but often there is a task in decisions which could be Individual VsGroup decision making. There will be a difference between the individual and group decision-making.

3. A company would need to decide on what Criteria it should make its decision, thus it needs a process of objective setting, which serve as benchmarks for evaluation of the efficiency and effectiveness of thedecision-making process.

4. There are three Major Criteria in decision Making: -a. The concept of Maximization.

b. The concept of satisfying.c. The concept of incrementalism.

Based on the concept chosen the strategic decisions will differ.5. Generally decision-making process is logical and there will be rationality in decision-making.

6. When it comes to Strategic decision making point of view there would be proper evaluation & thenexercising a choice from various available alternative resource, which leads to attain the objectives in a

best possible way.7. Creativity in decision-making is required when there is a complete situation & the Decision taken must

be original & different.8. There could be variability in decision-making based on the situation & Circumstances.

Various Roles of Strategists Management.

The senior management plays an important role in Strategic Management.Role of Board Of Directors: The Board of Directors is the supreme Authority in a company. They are the

owners/ shareholders/ lenders. They are the ones who direct and responsible for the governance of the company.The Company act and other laws blind them and their actions & they sometimes do get involved in operationalissues. Professionals on the B.O.D help to get new ideas, perspectives & provide guidance. They are the link

between the company and the environment.Role of C.E.O: The chief Executive Officer is the most important Strategist and responsible for all aspects fromformulations/Implementation to review of Strategic Management. He is the leader, motivator & Builder whoforms a link between company and the board of directors and responsible for managing the externalenvironment and its relationship.

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Role Of Entrepreneur: They are independent in thought and action and they set / start up a new business. ACompany can promote the entrepreneurial spirit and this can be internal attitude of an organization. They

provide a sense of direction and are active in implementation.Role of Senior Management: They would either look after strategic management as responsible for certainareas or as part of teams and are answerable to the B.O.Directors & the C.E.O.Role of SBU Level Executives: They Co-ordinate with other SBUs & with Senior Management. They aremore focused on their product / burners line. They are more on the implementation role.Role of Corporate Planning Staff: It provides administrative support, tools and techniques and is a Co-ordinate function.Role of Consultant: Often Consultants may be hired for a specialized new business or Expertise even to get anunbiased opinion on the business & the Strategy.Role of Middle Level Managers: They form an important link in strategizing & Implementation. They are notactively involved in formulation of Strategies and they are developed to be the future top management.

Q. 4 What is Strategic Management Process? Explain each step briefly.Answer:Strategic Management Process:In today's highly competitive business environment, budget-oriented planning or forecast-based planningmethods are insufficient for a large corporation to survive and prosper. The firm must engage in strategic

management process that clearly defines objectives and assesses both the internal and external situation toformulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay ontrack.Strategic Management is the process through which organization learn from their internal & externalenvironment, establish strategic decision create strategies that are intended to help achieve establish goals &execute there strategies achieve Establish goals and execute there Strategies all in an effort to satisfy keyorganizational stake holders.

According to Glueck its a stream of decisions and actions that lead to the development of an effective strategy/ Strategies to help achieve Corporate Strategies.Similarly Hofer defines strategic management process as its the process, which deals with fundamental

Organisational, renewal & growth with the development of strategies, Structures and Systems necessary toachieve such renewal and growth and with the organizational systems needed to effectively manage the strategy

formulation and implementation process.Strategic management is the application of strategic thinking to the job of leading an organization. Dr. JagdishSheth, a respected authority on marketing and strategic planning, provides the following framework for understanding strategic management: continually asking the question, "Are we doing the right thing?" It entailsattention to the "big picture" and the willingness to adapt to changing circumstances, and consists of thefollowing three elements:

Formulation of the organization's future mission in light of changing external factors such as regulation,competition, technology, and customers

Development of a competitive strategy to achieve the mission Creation of an organizational structure which will deploy resources to successfully carry out its

competitive strategy.

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Following is the simple strategic management process: -

From the above block diagram it states that Strategic Management is a process, which leads to theformulation of Strategy/ Set of Strategies & managing the Organisational System for the achievement of Vision, Mission Goals and Objectives.

Company Vision / MissionWhile a business must continually adapt to its competitive environment, there are certain core ideals that remainrelatively steady and provide guidance in the process of strategic decision-making. These unchanging idealsform the business vision and are expressed in the company mission statement .Company Vision is What a Company Wishes to become or aspire to be.The mission statement describes the company's business vision, including the unchanging values and purpose of

the firm and forward-looking visionary goals that guide the pursuit of future opportunities.

Guided by the business vision, the firm's leaders can define measurable financial and strategic objectives.Financial objectives involve measures such as sales targets and earnings growth. Strategic objectives are relatedto the firm's business position, and may include measures such as market share and reputation.

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COMPANY VISION &MISSION/ REQUIREMENTSOF MAJOR STACKHOLDERS STRATEGIC INTENT

EXTENAL & INTERNAL ANALYSIS /SWOT ENVIRONMENT ANALYSIS

DEFINE STRENGTHS/WEAKNESS/ CORECOMPENTENCIES

GENERATE STRATEGIC ALTENATIVES/EVALUATE & SELECT

IMPLEMENT/ FEEDBACK/CONTROL


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Core Ideology : Is the unchanging part of organization. It is the character of an organization, this would notchange for a longer time even it were disadvantage.Core Values: The core values are a few values (no more than five or so) that are central to the firm. Core

values reflect the deeply held values of the organization and are independent of the current industryenvironmentCore Purpose: The core purpose is the reason that the firm exists. This core purpose is expressed in a carefullyformulated mission statement. Like the core values, the core purpose is relatively unchanging and for manyfirms endures for decades or even centuries. This purpose sets the firm apart from other firms in its industry andsets the direction in which the firm will proceedEnvisioned Future: Are the goals to be reached. It is classified into:

Audacious Goals : These are the goals that the company would like to achieve. They are tough needsextraordinary commitment and effort.

Vivid Description: These Goals are put into words that evoke a picture of what it would be like to achieve theAudacious Goals.

Environmental ScanThe environmental scan includes the following components:

1. Internal analysis of the firm2. Analysis of the firm's industry (task environment)3. External macro environment (PEST analysis)

The internal analysis can identify the firm's strengths and weaknesses and the external analysis revealsopportunities and threats. A profile of the strengths, weaknesses, opportunities, and threats is generated bymeans of a SWOT analysis An industry analysis can be performed using a framework developed by MichaelPorter known as Porter's five forces. This framework evaluates entry barriers, suppliers, customers, substitute

products, and industry rivalry.

Strategy FormulationStrengths : its always in relation to the environment. Its an unborn capacity, which needs to fulfill twoconditions.

Requirement for success.1) It gives the Strategic Advantage.

It has strengths more than the competitor; it could gain more than the Competitor. E.g. Superior research wherenew products & Innovations are required.Weakness : Its something required for success is missing/inherent inadequacy. It gives strategic disadvantageto the Organisation. E.g. Over dependence on a single product line in a mature market.

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Vision /Mission

Core Ideology Envisioned

Future

Core Values Core Purpose Audacious Goals VividDescription


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Core Competencies : Is developed over a period of time, using these competencies exceeding well, it developsa fine art of Competition with its rules. This capacity of exercing turns them to core competencies Given theinformation from the environmental scan, the firm should match its strengths to the opportunities that it hasidentified, while addressing its weaknesses and external threats. To attain superior profitability, the firm seeksto develop a competitive advantage over its rivals. A competitive advantage can be based on cost or differentiation.Generate strategic alternatives/ evaluate & selectIt means that there is a proper evaluation and exercising a choice from various alternative available resources insuch a way it may lead to the achievement of companys objective.The selected strategy is implemented by means of programs, budgets, and procedures. Implementation involvesorganization of the firm's resources and motivation of the staff to achieve objectives.Implement/ feedback/controlThe way in which the strategy is implemented can have a significant impact on whether it will be successful. Ina large company, those who implement the strategy likely will be different people from those who formulated it.For this reason, care must be taken to communicate the strategy and the reasoning behind it. Otherwise, theimplementation might not succeed if the strategy is misunderstood or if lower-level managers resist itsimplementation because they do not understand why the particular strategy was selectedThe implementation of the strategy must be monitored and adjustments made as needed. Evaluation and controlconsists of the following steps:

1. Define parameters to be measured2. Define target values for those parameters3. Perform measurements4. Compare measured results to the pre-defined standard5. Make necessary changes

Q. 6 Write a detailed note on Goals and Objectives.Goals: -Goals are targets that an organization hopes to/wants to accomplish in a future period of time. Goals are clear and unambiguous and often an organization sets a combination of goals, financial and non-financial,quantitative and qualitative. Goals are more on organizational levels and thus in this sense they are broad innature, so an organization could set goals on turn over, profits, returns on assets/equity, it could also have

market share, customer satisfaction, employees satisfaction etc. as goals. The important thing to remember isthat too many goals can be confusing and can often lead to contradictions. So goals should be limited andmanageable, clear and consistent with each other.

Objectives: -Objectives are the ends that state specifically how the goals shall be achieved. They are concrete and specific incontrast to goals, which are generalized at t he company wide level. In this manner objectives make the goalsoperational. While goals may be qualitative, objectives tend to be more quantitative in specification. In this waythey are measurable and comparable.

a) Objectives are the ends that specify how the goals shall be achieved.b) They are concrete and specific and they are in contrast with the goals.

c) Objectives make the goals operational and tend to Quantitative in specifications.d) Objectives are set in a way that what the organization has to achieve for its employees, shareholders,

customers etc.,e) Objectives are in relation with the environment. They are the brains of Strategic Decision Making.f) They are framed in line with the vision/mission of the organization and it helps to pursue them.g) Objectives are invariably Quantitative and provide clear measures and standards for performance.h) It helps to see whether the Organization is in right track or not.i) Objectives should be concrete, specific, and understandable & should have clearly defined time frame. j) It must be measurable, actionable, challenging but controllable.

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k) There must be co-relation with other objectives.l) While setting objectives these are the factors to be evaluated. It should be specific at the level, which it

is being set. It should not be either too narrow or too broad.m) There need to be multiplicity of objectives.n) It should be formulated at different time frames like short term, medium term, and long term & should

be linked & consistent.o) Since its in relation with the environment it needs to check whether they are fulfilling the needs of

customers, share holders etc.,Roles of objectives:Objectives are set and in a way they define what the organization has to achieve for its employees, shareholders, customers etc. since objectives are set with the environment in mind they define its relationship with itsenvironment. Objectives are framed in line with the vision/mission of the organization. This consistency helpsthe organization to pursue its vision and mission. Objectives become the basis for strategic decision-making, asthe right strategies need to be formulated and implemented for achieving the objectives. Objectives areinvariably quantitative. They provide clear measures and standards for performance. So they help in appraisal,to see if the organization is on the right track or not.Objectives can be set at two levels:(1) Corporate level : These are objectives that concern the business or organisation as a wholeExamples of corporate objectives might include:

We aim for a return on investment of at least 15% We aim to achieve an operating profit of over 10 million on sales of at least 100 million We aim to increase earnings per share by at least 10% every year for the foreseeable future(2) Functional level e.g. specific objectives for marketing activitiesExamples of functional marketing objectives might include: We aim to build customer database of at least 250,000 households within the next 12 months We aim to achieve a market share of 10% We aim to achieve 75% customer awareness of our brand in our target markets

Characteristics of objectiveBoth corporate and functional objectives need to conform to the commonly used SMART criteria.

S pecific - the objective should state exactly what is to be achieved.M easurable - an objective should be capable of measurement so that it is possible to determine whether (or how far) it has been achievedAchievable - the objective should be realistic given the circumstances in which it is set and the resourcesavailable to the business.R elevant - objectives should be relevant to the people responsible for achieving themT ime Bound - objectives should be set with a time-frame in mind. These deadlines also need to be realistic.

Q. 7 What is Environment? How is it Changing? Explain the process of SWOT analysis. Elaboratewhat you would study in the environment.Answer:

EnvironmentThe Environment of an organization is the aggregate/total of all conditions, events and influences that

surrounds and affect it.Environment is complex there are many factors in the environment. Most are the factors have relationshipwith each other and the interrelationships with each other and the interrelationships are in many different ways.The factors in environment have effect on the company and the actions of the company in turn affects theenvironment and the effects are constantly changing . Thus it has a great and far-reaching impact on thecompany.

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Environment on abroad level can be classified as follows:1. External environment2. Internal environment

External environment is made up of all the factors, conditions and influences outside the organization. Thismay give rise to opportunity which can be exploited or it may give rise to the threat which can underline or cause the problem to the organization. Any organization has no or very little control over the externalenvironment. examples increased competition, increase demand, change in govt policy , globalization etc .Internal environment refers to all the factors with in the control of and inside the organization. these factorsmay impart strengths which can be utilized to exploit the opportunities or become a cause of weakness of astrategic nature. The examples strengths can be are superior R&D, IT, motivated HR etc and weakness can beover dependence on one product, lack of new product development capabilities.Change in environment:The three major forces that drives the changes in external environment of a company are

1. Customers2. Competition &3. Change.

Customers : Earlier days, Customers had little choice they used to buy the product that was offered to them.These days customers come with more specifications and they demand for customized products and they wantindividual attention. Hence customers have upper hands these days. Its difficult for an organization to survive

in the long run unless they satisfy customers needs so change in the customer preference is a major factor which influence the external environmentCompetition : As many companies emerge, the competition rises. They offer good quality of products at lesser

price and consumers prefer such products. Earlier the company could get into market with an acceptable product/service at the best price would go to sell. But these days customers prefer high quality at lowest price.The Company, which offers these at best price, goes high quality and best service, becomes standard of all thecompetitors.Changes: Changes has become both pervasive and persistent because companies face a greater competitorsand each one introduces a product and service innovation to the market with the globalization of the economy.Hence the companies need to move fast in pace with the changing environment otherwise its difficult to move.The change can be anything including political, economical / legal, environmental, social /cultural,

demographic etc.The internal environment:The internal environment also changes rapidly. Many times due to changes in the conditions the factors whichwere earlier the strength of the company becomes weakness now. For example In 1776 Adam Smith describedin his book, The Wealth of Nations. The Principle of division of labour for increasing the productivity andthere by reducing the cost of goods. American Companies became best in the world after applying the

principles. But in todays world, in many industry the manufacturer has to make its product as per the customer requirement and the rate of change of technology is quite high so specialized worker may become burden for acompany nothing is constant or predictable & these principles dont work.SWOT AnalysisSWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats

SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment.Environmental factors internal to the firm usually can be classified as strengths ( S) or weaknesses ( W ), andthose external to the firm can be classified as opportunities ( O ) or threats ( T ).SWOT analysis can be used in conjunction with other tools for audit and analysis, such as PEST analysis andPorter's Five-Forces analysis. It is also a very popular tool with business and marketing students because it isquick and easy to learn. The SWOT analysis provides information that is helpful in matching the firm'sresources and capabilities to the competitive environment in which it operates. As such, it is instrumental instrategy formulation and selection. The following diagram shows how a SWOT analysis fits into anenvironmental scan:

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StrengthsA firm's strengths are its resources and capabilities that can be used as a basis for developing a competitiveadvantage. It is an inherent capacity that is in relation to the environment. For an organization to be a success itrequires strength and it gives strategic advantage to gain more than the competition.Examples of such strengths include:

1. patents2. strong brand names3. good reputation among customers4. cost advantages from proprietary know-how5. exclusive access to high grade natural resources6. favorable access to distribution networks

WeaknessesThe absence of certain strengths may be viewed as a weakness. It is an inherent inadequacy that is again inrelation to the environment. It gives strategic disadvantage and something that required for success is missing. Itleads to competition where weakness can be used to gain more due to inherent limitation /constraint/inadequacy.

For example, each of the following may be considered weaknesses:lack of patent protectiona weak brand name

poor reputation among customershigh cost structurelack of access to the best natural resourceslack of access to key distribution channels

In some cases, a weakness may be the flip side of a strength. Take the case in which a firm has a large amountof manufacturing capacity. While this capacity may be considered a strength that competitors do not share, italso may be a considered a weakness if the large investment in manufacturing capacity prevents the firm fromreacting quickly to changes in the strategic environment.OpportunitiesThe external environmental analysis may reveal certain new opportunities for profit and growth.OPPORTUNITY: can be accomplished and can help to consolidate and strengthen the organization. Its afavorable condition for an organization in its environmentSome examples of such opportunities include:

1. an unfulfilled customer need2. arrival of new technologies3. loosening of regulations

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EnvironmentalScan

Internal Analysis External Analysis

Strengths Weaknesses Opportunities Threats


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4. removal of international trade barriersThreatsChanges in the external environmental also may present threats to the firm. Also when the opportunities are notutilized properly it can cause problem to the to the organization which causes threat. It is unfavorable conditionfor the organization. It causes risk/damage to an organization.Some examples of such threats include:

shifts in consumer tastes away from the firm's productsemergence of substitute productsnew regulationsincreased trade barriers

The SWOT MatrixA firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance atdeveloping a competitive advantage by identifying a fit between the firm's strengths and upcomingopportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compellingopportunity.To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. TheSWOT matrix (also known as a TOWS Matrix ) is shown below:

SWOT / TOWS Matrix Strengths Weaknesses

OpportunitiesS-O strategies W-O strategies

ThreatsS-T strategies W-T strategies

S-O strategies pursue opportunities that are a good fit to the companys strengths. W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external

threats. W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly

susceptible to external threats

Q. 10 Explain the various types of Expansion strategies.Answer: -Introduction : -Expansion strategies are the most popular and common corporate strategies. Companies aim for substantialgrowth. A growing economy, burgeoning markets, customer seeking new ways of need satisfaction, andemerging technologies offer ample opportunities for companies to seek expansion.When a company follows the expansion strategy, it aims at high growth. This can be done by a large increase in

one or more of its business. The scope of the business is broadened in terms of their respective customer groups,customer functions, and alternative technologies-singly or jointly in order to improve its overall performance.An expansion strategy has a significant and profound impact on a companys internal structure and processes,leading to changes in most of the aspects of internal functioning. Expansion strategies are thus more risky ascompared to stability strategies.

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Expansion strategies can be undertaken in a variety of ways:1. Expansion through concentration:

Here company tries to increase business by concentrating in the core jobs .For expansion, concentrationsoften the first preference strategy for a company. The simple reason for this is that a company that isfamiliar with an industry would naturally like to invest more in known business rather than unknown ones.Each industry is unique in the sense that there are established ways of doing things.

Concentration strategies have several advantages: -1) Concentration involves fewer organizational changes.2) It is less threatening and more comfortable staying with present business.3) It also enables the company to specialize by gaining an in-depth knowledge of this business and

thus master the knowledge.4) The decision-making has a high level of predictability.5) Past experience is valuable as it is replicable.

Limitation of concentration strategies: -1) Firstly, concentration strategies are heavily dependent on the industry, so adverse conditions in

an industry can also do affect companies if they are intensely concentrated.2) Secondly, factors such as product obsolescence, flick ness of markets, and emergence of newer

technologies can be threats3) Thirdly, doing too much of a known thing may create an organizational inertia; managers may

not be able to sustain interest and find the work less challenging and less challenging and lessstimulating.

4) Finally, concentration strategies may lead to cash flow problems that may pose a dilemma beforea company. For expansion through concentration large cash inflows are required for building upassets while the business are growing. But when these business mature, company often faces acash surplus with little scope for investing in the present business.

2. Expansion through Integration:Integration basically means combining activities on the basis of the value chain related to the present activity of

a company. Sets of interlinked activities performed by an organization right from the procurement of basic rawmaterials right down to the marketing of the finished products to the ultimate consumers is a value chain. So acompany may prove up or down the value chain and expand their business. This helps it to concentrate morecomprehensively on the customer groups and needs than it is already serving.Integration results in a widening of scope of the business definition of a company. Integration is also a part of diversification strategies as it involves doing something different from what the company has been doing

previously.There are certain conditions under which a company adopts integration strategies. Most common condition is amake or buy decision. Transaction cost economies, a branch of study in the economics of transaction and their costs helps to explain the situation where integration strategies are feasible.

Types of integration there are two types of integration- vertical and horizontal Vertical integration : this could be of two types: backward and forward integration. Backward

integration means retreating to the source of raw materials- in simple terms becoming your ownsupplier-while forward integration moves the organization nearer to the ultimate customer-in simpleterms becoming your own customer. When an organization starts making new products that areserve its own needs, vertical integration takes place.

Horizontal integration : when a company starts serving the same customers that it knows very wellwith additional products that are different from the earlier products in any of the terms of their respective customer needs. The simplest example is, a hardware manufacture starts supplyingsoftware also.

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3. Expansion through Diversification:Diversification is a much-debated strategy and involves all the dimensions of strategic alternatives.Diversification involves a drastic change in the business in terms of customer functions, customer groups, or alternatives technologies of one or more of a companys business in isolation or in combination.

Different types of diversification strategiesThere are basically two types of diversification strategies

1. Concentric diversification : when an organization takes up an activity in such a manner that it is relatedto the existing business, it is called concentric diversification.

2. Conglomerate diversification : When an organization undertakes a strategy which requires taking upthose activities which are unrelated to the existing business, it is called conglomerate diversification.

4. Expansion through cooperation:Cooperative strategies could be of the following types:Mergers: For a merger to take place two organizations are needed. One is the buyer organization and the other is the seller. Both these types of organizations have a set of reasons on the basis of which they merge.The buyers wishes to merge

to increase the value of the organizations stock-to increase the growth rate and make a goodinvestment- to improve stability of earning and sales to balance, complete, or diversify product line- toreduce competition and to take advantages of synergy.

The seller wishes to merge to increase the value of the owners stock and investment to increase the growth rate- to acquire

resources to stabilize operations- to benefit from tax concessions.

Joint Ventures Strategies : joint ventures conditions may be useful to gain access to a new business under thefollowing condition:

Activity is uneconomical for one organization alone. Risk of business has to be shared and, is reduced for the participation companies. Distinctive competence of two or more organizations can be brought together

Joint ventures are common within industries and in various countries. But they are especially useful for enteringinternational markets.

Q. 10 Write short notes on Integration & Diversification.Answer:Integration: Integration basically means combining activities on the basis of the value chain related to the

present activity of a company. Sets of interlinked activities performed by an organization right from the procurement of basic raw materials right down to the marketing of finished products to the ultimate consumersis a value chain. So a company may move up or down the value chain and expand their business. This helps itto concentrate more comprehensively on the customer groups and needs than it is already serving.

Integration results in a widening of the scope of the business definition of a company. Integration is also a partof diversification strategies as it involves doing something different from what the company has been doing

previously. Typically in process-based industries such as, petrochemicals, steel, textiles or hydrocarbons, wesee enough examples of integrated companies. These companies deal with products with a value chainextending from the basic raw material to be ultimate consumer. One of the best examples is the RelianceGroup. Companies operating at one end of the value chain attempt to move up or down in the process whileintegrating activities adjacent to their present activities.

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These are certain conditions under which a company adopts integration strategies. Most common condition is amake or buy decision. Transaction cost economics, a branch of study in the economics of transactions andtheir costs helps to explain the situation where integration strategies are feasible. The cost of making the itemsused in the manufacture of ones own products is to be evaluated against the cost of procuring them fromsuppliers. If the cost of making is less than the cost of procurement then the company moves up the value chainto make the items itself. Likewise, if the cost of selling the finished products is lesser than the price paid to thesellers to do the same thing then it is profitable for the company to move down on the value chain. In both thesecases the company adopts an integration strategy.

Types of Integration:1. Vertical Integration : Vertical integration could be of two types: backward and forward integration.

Backward integration means retreating to the source of raw material in simple terms becoming your own supplier- while forward integration moves the organization nearer to the ultimate customer insimple terms becoming your own customer. When an organization starts making new products thatserve its own needs, vertical integration taken place. In other words, any new activity undertaken withthe purpose of either supplying inputs (such as raw materials, an automobile company going in for asteel mill, this is backward integration) or serving as a customer for outputs (such as marketing of companys product, for example, Titan going into setting their own retail outlets this is forwardintegration) is vertical integration.

2. Horizontal Integration : When a company starts serving the same customers that it knows very wellwith additional products that are different from the earlier products in any of the terms of their respective customer needs, customer functions, or alternative technologies, either singly or jointly, it ishorizontal integration. An example, a hardware manufacturer starts supplying software also, a car manufacturer getting into vehicle insurance or selling fuel.

Diversification:

Diversification is a much-debated strategy and involves all the dimensions of strategic alternatives.Diversification involves a drastic change in the business in terms of customer functions, customer groups, or

alternative technologies of one or more of a companys businesses in isolation or in combination.

Types of Diversification:1. Concentric diversification: When an organization takes up an activity in such a manner that it is related

to the existing business, it is called concentric diversification.2. Conglomerate diversification: When an organization undertakes a strategy which requires taking up

those activities which are unrelated to the existing business, it is called conglomerate diversification.

Why are diversification strategies adopted?The three basic and important reasons are:

They minimize risk by spreading it over several businesses. Used to capitalize on organizational strengths or minimize weak nesses. This may be the only way out if growth in existing businesses is blocked due to environmental and

regulatory factors.

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Q. 14 What do you understand strategic evaluation and control?

Answer:Strategic evaluation :The purpose of strategic evaluation is to evaluate the effectiveness of strategy in achieving organizationalobjectives, thus it is process of determining the effectiveness of a given strategy in achieving the organizationalobjectives and taking corrective action wherever required.From this definition, we can infer that the nature of the strategic evaluation and control process is to test theeffectiveness of strategy.

Importance of strategic evaluation: - The importance of strategic evaluation lies in its ability to coordinate thetasks performed by individual managers, divisions or SBUs, through the control of performance. In the absenceof this, individual managers may pursue goals, which are inconsistent with the overall objectives. There is aneed of feedback, appraisal and reward; check on the validity of strategic choice; congruence between decisionand intended strategy; and creating inputs for new strategic planning.Strategic evaluation helps to keep a check on the validity of a strategic choice. An ongoing process of evaluation would, in fact, provide feedback on the continued relevance of the strategic choice made during theformulation phase. This is due to the efficacy of strategic evaluation to determine the effectiveness of strategy.

Participation in strategic evaluation: -The board of directors enacts the formal role of reviewing executive decisions in the light of their environment,

business and organizational implications.Chief executives are ultimately responsible for all the administrative aspects of strategic evaluation and control.The SBU or profit-center heads may be involved in performance evaluation at their levels and may facilitateevaluation by corporate level executives.Audit and executive comities may be changed with the responsibility of continuous screening of performances.The corporate planning staff or department may also be involved in strategic evaluation.

Barriers in Evaluation:

1. The limits of control,2. Difficulties in measurement,3. Resistance to evaluation,4. Tendency to rely on the short term assessment, and5. Relying on efficiency versus effectiveness.

Requirements for effective evaluation:1. Control should involve only the minimum amount of information. Too much information tends to clutter

up the control system and creates confusion.2. Control should monitor the managerial activities and results even if the evaluation is difficult to

problem.3. Long term and short term controls should be used so that a balanced approach to evaluation can be

adopted.4. Rewards for meeting or exceeding standards should be emphasized so that, managers are motivated to

perform. Unnecessary emphasis on penalties tends to pressurize the managers to rely on the efficiencyrather than effectiveness.

Premise Control: -Every strategy is based on certain assumptions about environment and organizational factors. Some of thesefactors are highly significant and lay change in them can affect the strategy to a large extent. Premise control isnecessary to identify the key assumptions, and keep track of any change in them so as to assess their impact onstrategy and its implementation. It enables the strategies to take the corrective action at the right time.

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Implementation control: -The implementation controls aimed at evaluating whether the plans, programs and projects are actually guidingthe organization towards it predetermined objectives or not.Implementation control may be put into practice through the identification and monitoring of strategic thrusts.Another method of implementation control is milestone review.

Strategic Surveillance: -The premises and implementation types of strategy controls are specific in nature. Strategy surveillance isdesigned to monitor a broad range of events inside and outside the company that are likely to threaten thecourse of a firms strategy.Broad based, general monitoring on the basis of selected information sources to uncover events that are likely toaffect the strategy of an organization.

Emergency alert control: -It is base on a trigger mechanism for rapid response and immediate reassessment of strategy in the light of sudden and unexpected events.Emergency alert control can be exercised through the formulation of contingency strategies and assigning theresponsibility of handling unforeseen events to crisis management teams.

The first step of signal detection can be performed by the emergency alert control systems.

Process of Evaluation:The process of evaluation basically deals with four steps:1) Setting standards of performance.2) Measurement of performance.3) Analyzing variances.4) Taking Corrective actions.

Measurement of performance: -

Standards of performance act as the benchmark against which the actual performance is to be compared.Understand how the measurement of performance can take place.The information system is the key element in any measurement exercise.Operationally, measuring is done through the accounting, reporting, and communication systems.Important to look at the difficulties, timing and periodically in measuring.

Difficulties in measurement: - It is not so difficult to measure effort as it is to assess departmental performance.Timing of measurement:Delay in measurement can defeat the purpose of evaluation itself.On the other hand measuring before time cannot serve the purpose either .

It is better to measure at critical points in a task schedule.

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Q.16 Write a note on social responsibilities of a business & ethics and values .

Answer: -Social responsibilities of a businessThe World Business Council for Sustainable Development in its publication "Making Good Business Sense" byLord Holme and Richard Watts, describe the social responsibility of the business as "Corporate Social

Responsibility is the continuing commitment by business to behave ethically and contribute to economicdevelopment while improving the quality of life of the workforce and their families as well as of the local

community and society at large"The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as "CSR is about capacity building for

sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government" from Ghana, through to "CSR is about business giving back to society" from the Philippines.CSR is about how companies manage the business processes to produce an overall positive impact onsociety.Social responsibility becomes an integral part of the wealth creation process - which if managed properlyshould enhance the competitiveness of business and maximise the value of wealth creation to society.Companies need to answer to two aspects of their operations.

1. The quality of their management - both in terms of people and processes (the inner circle)2. The nature of, and quantity of their impact on society in the various areas.Outside stakeholders are taking an increasing interest in the activity of the company. Most look to the outer circle - what the company has actually done, good or bad, in terms of its products and services, in terms of itsimpact on the environment and on local communities, or in how it treats and develops its workforce. But as withany process based on the collective activities of communities of human beings (as companies are) there is no"one size fits all". In different countries, there will be different priorities, and values that will shape how

business act.The pressure on business to play a role in social issues will continue to grow. Over the last ten years, thoseinstitutions which have grown in power and influence have been those which can operate effectively within aglobal sphere of operations. These are effectively the corporate and the NGOs.

The benefits of Corporate Social Responsibility1. Improved financial performance2. Better risk and crisis management3. Reduced operating costs4. Increased worker commitment5. Enhanced brand value and reputation6. Good relations with government and communities7. Long-term sustainability for your company and society8. A license to operate9. Long-term return on investments10. Increased productivity

The ethics and valuesEach of us has our own set of values and beliefs that we have evolved over the course of our lives through our education, experiences and upbringing. We all have our own ideas of what is right and what is wrong and theseideas can vary between individuals and cultures.As a employee one bring with himself his own concept of what is right and what is wrong. Every decision thatwe make, for better or for worse, is the application of these values to the question at hand. This is made moredifficult by the pressures of organizational life. There are the pressures of productivity, competition, and bosses.Sometimes managers make decisions which conflict with their own or society's values because of what they seeas the pressures of the business world.

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There are five factors which affect decisions made on ethical problems.1. The Law2. Government Regulations3. Industry and Company Ethical Codes4. Social Pressures5. Tension between personal standards and the goals of the organization

The fundamental ethical principle holds that every human being is entitled to be treated not merely as a meansto the achievement of the ends of others, but as a being valuable in his or her own right, as an end in himself or herself. But to respect someone as an end is to recognize that he or she is an autonomous moral agent with freewill and desires of his or her own. Thus, the principle of respect for persons requires respect for individualautonomy.Some of ethical best practices are as follows: -

1. Accept responsibility and be accountable for our actions2. Honor our agreements and commitments3. Respect and promote human rights in all our dealings4. Exercise corporate power fairly and in an even-handed manner 5. Treat everyone, with whom we deal, fairly, honestly, and with dignity and respect6. Conduct our business in an environmentally responsible manner and in accordance with the principles of

Sustainable Development

7. Make our decisions based on objective and appropriate criteria, free from improper influences andensure that we do not attempt to improperly influence the decisions of others

8. Obey all laws governing the conduct of our business9. Operate in all countries in accordance with the principles and standards we apply to our domestic

activities10. Manage our business for the benefit of all shareholders11. Take into account the effects of our actions on all stakeholders12. Communicate to all our stakeholders in an honest and straight-forward manner 13. Carry out our activities in a socially responsible manner which benefits the local communities in which

we operate14. Work with our employees to create work environments which are safe and healthy

15. Select and treat our employees in a fair and equitable manner 16. Establish a work environment that is free from discrimination, harassment, intimidation and hostility of

any kind17. Respect the privacy of our employees and their families18. Encourage our employees to take responsibility for their work, to be flexible and open-minded, to find

enjoyment and satisfaction in their work, and to be proud of our Company

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