Amity Campus

Uttar Pradesh

India 201303

ASSIGNMENTS

PROGRAM: BFIA

SEMESTER-IV

Subject Name : Business Policy and Strategic Management

Study COUNTRY : Malawi

Roll Number (Reg. No.) :BFIA01172009-2012041

Student Name :FRANCIS ODALA MTAMBO

Signature :

Date : 19TH

APRIL 2011

Assignment ‘A’

√√√√

Assignment ‘B’

√√√√

Assignment ‘C’

√√√√

BUSINESS POLICY & STRATEGIC MANAGEMENT

Assignment A

Q1. What are the benefits of the concept of strategy ? What are its pitfalls?

Answer:

BENEFITS OF THE CONCEPT OF STRATEGY

The following are the benefits of the concept of strategy:

i) It rationalizes allocation of scarce resources.

ii) It motivates employees to shape their work in the context of shared corporate goals.

iii) It assists management to meet unanticipated future changes.

iv) It ensures organizational effectiveness through implementation and evaluation of the strategy.

v) It is a powerful tool to management to deal with the future which is uncertain and hazy in all

respects.

vi) It improves the capability of management in coping with the volatile external environmental

forces.

vii) It encourages the management to choose the best course of action to realize the objectives.

viii) Strategy planning system provides an objective basis for measuring performance.

PITFALLS OF THE CONCEPT OF STRATEGY

The concept of strategy has the following pitfalls:

i) It is a complex, cumbersome and complicated to formulate corporate strategy.

ii) Corporate strategies are useful for long range problems. They are not effective to overcome

current exigencies.

iii) The corporate strategy formulation process calls for considerable time, money and effort.

Developing appropriate corporate strategy is not a simple and economical proposition. For

financially weak companies, cost becomes a great hindrance.

iv) As future is uncertain and cannot be predicted accurately, the strategic planning system based

on hazy and uncertain estimates are not exact.

v) Implementation of corporate strategy is influenced by organizational factors, behavioral

factors and motivational factors. The gap between formulation and implementation of

corporate strategy does not give desired results to the organization.

Q2Explain the three dimensions of a business definition.

Answer:

THE THREE DIMENSIONS ALONG WHICH A BUSINESS IS DEFINED

Abell came up with the concept of the three dimensions along which a business is defined to

enable a decision-maker' to think in a structured manner and systematically move in one or more

dimensions generating a number of feasible alternatives. The three dimensions along which a

business is defined are customer groups, customer functions and alternate technology.

Business definition is at the core of business strategies. By defining the ‘who, what, and how’ of

a business, a business definition seeks to provide the direction in action has to be taken.

The ‘who’ of the business definition refers to the ‘customer groups’ that are targeted by a

business. Customer groups are identified based on the needs that they seek to satisfy. The bases

for identification popularly used are demographic characteristics, geographic segmentation or

lifestyles. Businesses must continuously focus on the needs of the ‘customer group’ they identify

for targeting.

The ‘what’ of a business definition deals with customer needs. The basic needs of food, clothing

are examples of customer needs. There could be higher older need of entertainment, education,

securityand social status. Businesses aim at the satisfaction of these needs. Companies must

dedicate the necessary time and resources to define customer needs. Products and services are

then designed to satisfy these needs. A business earn its revenues from providing customer

satisfaction through products and services. Beyond customer satisfaction is the idea of customer

delight that aims at providing even more value than what a customer would normally expect.

Businesses seek to enhance their competitive advantage by providing customer value in the form

of products and services.

The ‘how’ of the business definition refers to the alternative technologies used to provide

services and products that satisfy the perceived needs of the customer groups identified. Besides

technical knowledge, alternative technology refers to the skills and competencies that a business

utilizes to provide products and services. The core competencies of a business dwell in its skills

base and this is used to provide value to the customer.

As can be concluded from above, business definition lays down the framework within which

businesses can operate. It can also provide direction in which businesses can expand or retrench.

Q3 What role do incentives play in strategy implementation?

Answer:

THE ROLE OF INCENTIVES IN STRATEGY IMPLEMENTATION

Incentives motivate employees and determine the way they approach their jobs and even life in

general. If organisational culture is geared towards achievement, incentives help to motivate and

put their utmost energies for the work. In its absence, high achievement-oriented people develop

frustration and desert the organisation Therefore, for implementing strategies, incentives play a

very important role and enhances achievement- oriented organisational culture.

Q4. What is meant by aligning social responsiveness to strategic management?

Answer:

SOCIAL GOAL SETTING –ALIGNING SOCIAL RESPONSIVENESS TO STRATEGIC MANAGEMENT

Social goal setting approach emphasizes on incorporating social concern in the objectives of an

organization on a perpetual or periodic basis. A combination of both can also be followed in

which some social concerns can be undertaken on perpetual basis while others can be taken on

project basis for specific period. Aspects like consumer satisfaction and environmental protection

can be taken on perpetual basis whereas special projects for certain specific social causes like

eliminating the impact of destruction caused by certain natural calamities can be taken on

periodic basis. In attempting to align social responsiveness to strategic management, an

organization can identify the social concerns to be served on the basis of its own environmental

analysis and choose those areas in which it believes it can contribute effectively by reducing the

social costs or enhancing social benefits.

This approach is helps the organization in defining its social objectives according to the needs

and requirements while considering its capability to meet those goals. Thus, it can well be

integrated into the strategic management process.

Q5 Explain the basic approach used in strategic control.

Answer:

When putting the control process in operation, two basic issues are involved: what to control and

how to control.

The first issue, ‘what to control’ is related to the identification of those factors on the basis of

which degree of business success is determined.

The second issue,’how to control’, involves the use of various control techniques.

Thus the basic approach used in strategic control formulates systems aimed at setting targets

(what to control), and carrying out measurements and providing feedback (how to control) to

senior management regarding organizational operations and activities in line with its objectives.

Q6 What do corporate- level strategies deal with?

Answer:

Corporate-level strategic analysis treats a corporate entity as constitutmg a portfolio of businesses

under a corporate umbrella. The analysis focuses on the question of what should a corporate entity do

regarding the several businesses that are there in its portfolio. The strategic alternatives here are

basically the grand strategies of stability, expansion, retrenchment, and combination strategies.

Since it considers a corporate entity as constituting a portfolio of businesses, corporate-level strategic

analysis is relevant to diversified corporations which have several businesses.

Assignment B Q1. “Congruence and coordination among strategies should take place through vertical

and horizontal fit.” Explain and discuss this statement.

Answer:

CONGRUENCE AND COORDINATION AMONG STRATEGIES SHOULD TAKE PLACE THROUGH VERTICAL

AND HORIZONTAL FIT

A key task of strategy implementation is to align or fit the activities and capabilities of an

organization with its strategies. Strategies operate at different levels and there has to be

congruence and coordination among these levels. Congruence and coordination of strategies

among different levels is the vertical fit. There also has to be congruence and coordination

among the different activities taking place at the same level. This is called the horizontal fit.

The consideration of vertical fit leads us to define functional strategies in terms of their

capability to contribute to the creation of a strategic advantage for the organization. Strategic

marketing management, for example, focuses on the alignment of marketing management within

an organization with its corporate and business strategies to gain a strategic advantage. Strategic

operation management focuses on the alignment of operation management within an

organization with its corporate and business strategies to gain competitive advantage.

The consideration of the horizontal fit means that there has to be an integration of the operational

activities undertaken to provide a product or service to a customer. These have to take place in

the course of operational implementation. Operational implementation is the approach adopted

by an organization to achieve operational effectiveness. When an organization performs value-

creating activities optimally and in a way which is better than its competitors, it results in

operational effectiveness.

Q2. How can SWOT analysis help in short listing strategic alternatives at the corporate level?

Answer:

SWOT analysis can be applied to generate feasible strategic alternatives at the corporate level.

The socioeconomic factors are found to be supportive; while market opportunities both in the

domestic and export markets are also significant. Based on a fortuitous match between the

technological and supplier environment on the one hand, and operations-related internal factors

on the other, the firm is most likely to be a high-quality producer. These strengths can stand the

firm in good stead in its local marketing and export efforts.

General management can take proactive steps in order to sustain marketing efforts. Good

personnel may prove to be of value in the various activities that the firm undertakes. Finance is

the only problem area and cannot be neglected at any cost. It is quite possible that major

investments have been made in plant, equipments, and facilities, and a pay-off may be expected

in the long run. In such a case, the financial problems can be assumed to be of transient nature.

Should it be true, the firm can hope to overcome its negative financial features, provided it

adopts prudent financial policies in the near future.

Expansion strategies, therefore, seem to offer a feasible approach to strategy formulation. Of

course, expansion itself could take place through various means. For instance, internal expansion

could be possible if the firm is in a position to garner additional financial resources. If this is

difficult, then external expansion may be the way out.

Depending on whether other units are available for acquisition, the firm could even contemplate

a takeover. But this would again require immediate resources. Expansion strategies could also be

preceded by a short period of stability and the financial position can improve in the meantime.

The analysis can be continued until the strategists are able to shortlist feasible strategic

alternatives. Of course, the line of thought adopted by others may be different from that followed

another team. But it can be safely assumed that since the SWOT profiles are the same, different

analysts are likely to reach more or less the same set of conclusions. Much would depend on

other factors, for instance, the willingness of the management to task risks. A good and

meaningful SWOT analysis is likely to bring out a few feasible strategic alternatives.

Q3. Discuss the manner in which an organization can discharge its responsibilities to its

businesses as a good corporate parent.

Answer:

A diversified corporation or a multi-business company is often viewed as consisting of a

corporate headquarter or centre with strategic business units acting as satellites.

The manner in which the centre manages and nurtures the individual businesses is known as

corporate parenting. The total corporation is viewed in terms of resources and capabilities that

can be used to build individual businesses as well as create synergies across these businesses. In

this manner, corporate parenting attempts to do away with the one major drawback of the

corporate portfolio techniques. While portfolio techniques consider the industry attractiveness of

various industries and focus on the cash contributions that individual businesses could make to

the overall portfolio businesses, corporate parenting views the organisation in its totality as a

diversified corporation and focuses on the value created from the relationship between the parent

and its businesses.

Campbell, Goold, and Alexander suggest that the diversified corporation must address these two

issues:

(a) What businesses should a diversified corporation own and why?

(b) What organisational structure, management processes, and philosophy will foster superior

performance from the corporation's individual business units?

A good corporate parent will therefore endeavor to the search for the appropriate corporate

strategy through the following three steps:

i. Examine each business in terms of its critical success factors.

ii. Examine each business unit in terms of those areas in which performance can be

improved.

iii. Analyse how well the parent corporation fits with the business unit.

All in all, corporate parenting focuses intensely on the role of the parent in adding value to the

individual businesses.

Reference:

M Alexander, A Campbell and M Goold, "A new model for reforming -e planning review" in

Planning Review, Jan-Feb 1995.

CASE STUDY

In a market dominated by behemoths like SAIL and TISCO, finding a niche is of crucial

importance for a small player. What could a Lloyds do with a meagre annual capacity of making

six lakh tonnes of HR coils while SAIL sold over 1,600 lakh tonnes in the same time? Should

Lloyds follow the market leader or adopt its own unique approach to its business strategy? It is in

the context of such questions that Lloyds' attention came to rest on the manufacturing process.

Almost all steel producers adopt the blast furnace technology. In this, the process starts with a

clear differentiation among the ultimate products to be manufactured. So, manufacturing batch

size has to be large enough to take up customised orders. The raw material, iron ore, has to pass

through several complex stages of manufacturing.

Lloyds looked for an alternative technology that could suit its requirements. The solution lay

in the Electric Arc Furnace technology where the unique feature was that initial manufacturing

stages need not differentiate among different products. Such a differentiation came at a much

later stage. Translated into a business proposition, what it meant was that Lloyds could operate

with a much smaller batch size of, say, 100 tonnes and deliver quickly. For instance, a 1,000-

tonnes small order of specialised product custom-made to buyer's specification could be

delivered in as little as 15 days. Such a quick delivery schedule would not be possible for a large,

integrated steel manufacturer. In this manner, analogous to small gunboats that could effectively

torpedo a large, slow-moving ship, Lloyds carved out a niche in the highly competitive steel

market.

Question:

Comment on the nature of the business strategy of Lloyds. What are the conditions in

which such a strategy would succeed? Could fail?

Answer:

NATURE OF THE BUSINESS STRATEGY OF LLOYDS

The business strategy for Lloyds is twofold. Firstly, as a small player in the industry, Lloyds has

created a competitive advantage for itself by employing electric arc furnace technology, it has

speeded up the manufacturing process such that customer orders could be met with in less than

15 days. This would increase customer satisfaction and give Lloyds a competitive edge.

With the introduction of the new technology, Lloyds will now be able to meet customer-specific

orders in a shorter period of time than the big companies. The manufacturing process has also

been made simpler because differentiation is coming in at a later stage. The reduction in the

length of the manufacturing process time has also led to the reduction of the work-in-process

inventory. This would mean than the company would have funds that would otherwise be tied up

in inventory, available for other purposes.

Lloyds looked for an alternative technology that could suit its requirements. The Electric Arc

Furnace technology worked well for Lloyds because of the unique feature that initial

manufacturing stages need not differentiate among different products. This speeded up the

manufacturing process such that Lloyds could now operate with a much smaller batch size of,

say, 100 tonnes and deliver quickly.

Referring to the business definition of Abell, that defines business in three dimensions of

customer groups, customer function and technology; the customer groups here are customers of

steel products who need various differentiated steel products. The case highlights that Lloyds

could deliver specified custom-made orders within 15 days thereby highly satisfying its customer

function, i.e. what customers need.

This is achieved through the electric arc furnace technology. Thus, Lloyds has redefined its

business, according to the three dimensional business definition.

This strategy works and succeeds where there is integrated manufacturing and there are few

competitors such as in monopolistic competition as in this case, and is capable of winning

customers from the larger companies.

But success in an integrated steel industry means re-organizing the whole value chain to make

it more efficient and meet the tight schedules of delivery. This means that extra costs would be

incurred which implies reduced unit profit.

Assignment C

Q.1 The marketing strategy emphasises price as the key to good value; operations runs with tight cost control;

development focuses on cost reduction.

Which of Porter's competitive strategies is illustrated here?

A. Divisionalisation B. Differentiation

C. Cost Leadership√ D. Differentiation focus

E. Cost Focus

Q.2 in the case where an organization acquires its supplier, this

is an example of:

A. Horizontal integration

B. Forwards horizontal integration

C. Backwards vertical integration√ D. Downstream vertical integration

Q.3 McDonalds is deciding whether to expand into

manufacturing kitchen equipment in China. At what level is this

decision likely to be made?

A. Business

B. Corporate√ C. Functional

D. International

Q.4 Diversification into many unrelated areas is an example of:

A. Risk Management√ B. Good Management

C. Uncertainty Reduction

D. Sustainability

Q.5 which of the following industries is least likely to follow the

conventional life-cycle model? A. Software development

B. Coal mining

C. Insurance broking

D. Hairdressing√

Q.6 In terms of the PESTLE analysis, the liberalizing of international trade and tariff regimes could go in which section

or sections?

A. Political

B. Legal

C. Political and economic and legal√ D. Political and environmental

Q.7 The value chain is subdivided into two main headings.

These are primary activities and:

A. Peripheral activities

B. Support activities√ C. Secondary activities D. Outsourced activities

Q.8 a joint venture can be defined as

A. Two firms collaborate together√ B. One firm licenses its intellectual property to another firm

C. Two firms merge together D. Two firms come together to form a third, legally separate

firm

Q.9 the three stages of strategic management are:

A. Strategy formulation, strategy assessment, strategy

execution

B. Strategy formulation, strategy execution, and strategy

assessment

C. Strategy formulation, strategy implementation, and

strategy evaluation√

D. Strategy formulation, strategy execution, and strategy

assessment

Q.10 which of the following requires a firm to establish annual

objectives, device policies, motivate employees, allocate

resources for the execution of strategies:

A. Strategy formulation

B. Strategy estimation

C. Strategy implementation√

A. Strategy estimation

Q.11 which type of trend can be exemplified by the increasing

numbers of two-income households in the society?

A. Social

B. Economic√

C. Political

A. Cultural

Q.12 Mr.Ghouri assigns a project to be completed by Khalid till

the end of the month and then hold periodic meetings with him to review his progress. Which of the management functions

Mr.Ghouri is performing?

A. Planning

B. Leading

C. Controlling√

D. Organizing

Q. 13 Value Chain analysis – Infrastructure, Human Resources, Technology

Development, Procurement are:

A. Primary activities

B. Secondary activities√

C. Tertiary activities

D. General activities

Q.14 _________ is the process by which a firm manages the

formulation and implementation of its strategy.

A. Total Quality Management

B. Strategic Management√

C. Micro-Management

D. Economic Logic

Q. 15 which of the following statements regarding strategy

formulation and strategy implementation is the most accurate?

A. Neither strategy formulation, nor strategy

implementation can succeed without the other. √

B. Strategy formulation is more important than strategy

implementation.

C. Strategy implementation is more important than strategy

formulation.

D. Strategy implementation is more important than strategy

formulation.

Q. 16 A firms’ ability to create value in a way that its rivals

can't is known as its ____________.

A. Business Strategy

B. Corporate Strategy

C. Competitive advantage√

D. Dynamic advantage

Q. 17 Business strategy refers to the ways in which a firm will

compete against present and future rivals within a particular business.

a) True√

b) False

Q. 18 Strategy formulation is the process of deciding what to

do while strategy implementation is the process of performing

all the activities necessary to do what has been planned.

a) True√

b) False

Q. 19 to be effective, strategies must result from rational and methodical planning processes based on analyses of both

internal resources and capabilities and the external

environment.

a) True

b) False√

Q. 20 Elements of strategic management model:

A . Environmental Scanning

B. Strategy Formulation

C. Strategy implementation

D. Evaluation and Control

21 In SWOT Analysis, Strengths and Weaknesses is

a) External Analysis

b) Internal Analysis√

c) Environmental analysis

d) Economic Analysis

22. A strategic vision describes the route a company

intends to take in developing and strengthening its business.

It lays out the company’s strategic course in preparing for the future.

a) True√

b) False

23. The vision statement of a firm focuses on its present

business purpose - “who we are and what we do”

a) True

b) False √

24. Strategic Financial Objectives are as given below. Cross out the ones which are not strategic objectives but are financial

objectives

a) Winning an X % market share

b) Achieving technological leadership

c) Profit margins of X %

d) Strong bond and credit ratings √

25 What are not the Industry’s Dominant Economic Traits?

a) Market size and growth rate√

b) Technology development

c) Economies of scale

d) Socio-cultural factors

26 Four Quadrants of BCG Matrix are

a) Stars b) Cash Cows c) Question Marks d) Dogs 27 X and Y axis of BCG Matrix are

a) Business Strength

b) Market Growth Rate√

c) Relative Market Position√ d) Market Attractiveness

28 X and Y axis of GE Model are:

a) Business Strength√ b) Market Growth Rate

c) Relative Market Position

d) Market Attractiveness√

29 Stars are net users of resources

a) True√ b) False

30 Cash Cows are net users of resources

a) True

b) False√

31 SWOT is an acronym to describe:

a) Strengths b) Weaknesses c) Opportunities d) Threats 32 The external environment consists of two variables:

a) Opportunities√

b) Threats√

33 The internal environment consists of two variables:

a) Strengths√

b) Weaknesses√ 34 The forces driving industry competition (Porter’s Five forces

are): a) Industry rivalry

b) Buyers

c) Purchasers√ d) Potential entrants

e) Substitutes

Cross out the wrong one or the one which does not belong to five forces

35 Primary activities in corporate value chain are:

a) Inbound Logistics√ b) Operations

c) Outbound Logistics√ d) Marketing and sales e) Services

Fill-in the blanks

36 Support activities in corporate value chain are:

a) Human Resource Management√ b) Firm infrastructure

c) Procurement√ d) Technology development

Fill-in the blanks

37 Primary activities in corporate value chain are:

a) Inbound Logistics

b) Operations

c) Technology Development Outbound Logistics√ d) Marketing and sales

e)Procurement Services√

Cross out the wrong ones and insert the right one

38 Four stages in product Life Cycle are:

a) Introduction b) Growth c) Maturity d) Decline 39 Four variables in marketing-mix are:

a) Product b) Price c) Place d) Promotion 40 Porter’s Competitive Strategies are:

a) Cost strategy b) Differentiation strategy