Mid Term ExaminationMaster of Business Administration

MBA-S-BBA-FRMGT604

Strategic ManagementTime: 2 hours, Full Marks: 30

1. Answer the following questions (Any Two) 2*7.5=15

a. What is strategic management? Discuss the different tasks of strategic management process.The term strategic management refers to the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy and then over time initiating whatever corrective adjustments in the vision, objectives, strategy, and execution are deemed appropriate.Thus, it is the process through which managers undertake efforts to ensure long-term adaptation of their organization to its environment.

Developing a strategic vision and business mission; Setting objectives; Creating a strategy to achieve the objectives; Implementing and Executing the Strategy; Evaluating Performance, Monitoring New Developments and

Initiating Corrective Adjustments.

b. What is company’s external environment? Explain how a company can analyze the competitive pressures and strength of its external forces. All relevant forces outsides a company’s boundaries called External Environment.

c. How value chain analysis can help a firm? Explain the ‘company value chain’ and ‘value chain for an entire industry’ with figures.

Value chain analysis can help organisations to gain better understanding of key capabilities and identify areas for improvement. It can help them to understand how competitors create value; and help organisations to decide whether to extend or outsource particular activities.

The Five Forces Model of Competition

Fig. 4.3: RepresentativeCompany Value Chain

2. Answer the following questions in brief (Any Five) 5*3=15

a. Explain the strategies that are initiated in diversified enterprises.

Fig. 4.4: Representative Value Chain for an Entire Industry

Corporate Strategy is the overall managerial game plan for a diversified company.Corporate strategy consists of the moves made to establish business portions in different industries and approaches used to manage the company’s group of businesses.

Business strategy refers to the managerial game plan for single business. It is mirrored in the pattern of approaches and moves crafted by management to produce successful performance in one specific line of business.For a single business company, corporate strategy and business strategy are one and the same.

Functional strategy refers to the managerial game plan for a particular functional activity, business process, or key department within a business.

A company’s marketing strategy, for example, represents the managerial game for running the marketing part of business. A company needs a functional strategy for every major business activity and organizational unit.

Levels of Strategy-Makingin a Diversified CompanyLevels of Strategy-Makingin a Diversified Company

Corporate Strategy

Business Strategies

Functional Strategies

Operating Strategies

Two-Way Influence

Two-Way Influence

Two-Way Influence

Corporate-Level Managers

Business-Level Managers

Functional ManagersOperating

Managers

Operating Strategy concerns the even narrower strategic initiatives and approaches for managing key operating units (plants, distribution centers) and handling daily operating tasks. Operating level strategies

b. What is the purpose of strategy making? Please mention four strategic issues that stand in the way of company’s success in the years ahead.

Positioning your company to be different from your competitors: either by performing different activities or else by performing similar activities differently. Strategy tells you what not to do so that you can prioritize effort to set your product or organization apart.

• How to stave off market challenges from new foreign competitors?• How to combat price discounting of rivals?• How to reduce a company’s high costs?• How to sustain a company’s present growth

in light of slowing buyer demand?• Whether to expand a company’s product line?• Whether to acquire a rival firm?• Whether to expand into foreign markets rapidly or cautiously?• What to do about aging demographics of a company’s customer base?

c. What is low-cost provider strategy? Explain the reasons for the failure of the low-cost strategy.A company’s strategy of selling its products at a price lower than its competitors is known as low cost strategy;

It may invite aggressive cutting by competitors. It may lead to price-war that may lead to lower profitability;

Cost advantages may not sustain if competitors can easily imitate the strategy. When competitors are able to copy the cost advantages, low cost strategy will fail;

If the low-cost product does not contain enough attributes to be attractive to prospective buyers, the strategy may fail. Low price is not always appealing to buyers;

Attractiveness may be lost if the product is featured-poor or quality deficient;

Cost saving technological breakthroughs by the competitors or the emergence of lower cost value chain models can nullify a low cost strategy.

d. Why is company situation analysis necessary? Name the questions mentioned by Thompson and Strickland that are considered in performing company situation analysis. Company’s situation analysis prepares the groundwork for matching the company’s strategy both its external and to its internal resources and competitive capabilities.

Question 1: How Well Is the Company’s Present Strategy Working?Question 2: What Are the Company’s Resource Strengths and Weaknesses and Its External Opportunities and Threats?Question 3: Are the Company’s Prices and Costs Competitive?Question 4: Is the Company Competitively Stronger or Weaker than Key Rivals?Question 5: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

e. What is ‘Differentiation Strategy’? Name the common pitfalls and mistakes done in pursuing differentiation.

Differentiation strategies seek to produce a competitive edge by incorporating attributes and features into a company’s product/service offering that rivals don’t have;Anything a firm can do to create buyer value represents a potential basis for differentiation;

If buyers see little value in unique attributes or capabilities a company stresses, then its differentiation strategy will get a ho-hum market reception.

Common pitfalls and mistakes in pursuing differentiation include: Appealing product features are easily copied by rivals; Differentiating on a feature buyers do not perceive as lowering

their cost or enhancing their well-being; Over-differentiating such that product features exceed buyers’

needs; Charging a price premium buyers perceive is too high;

Not understanding or identifying what buyers consider as value.

f. What is SWOT analysis? Explain the steps in SWOT analysis.S W O T represents the first letter in

S trengths W eaknesses O pportunities T hreats

For a company’s strategy to be well-conceived, it must be Matched to its resource strengths and weaknesses Aimed at capturing its best market opportunities and

erecting defenses against external threats to its well-being

g. How ‘focused low cost strategy’ differs from ‘focused differentiation strategy’?

Fig. 4.2: The Three Stepsof SWOT Analysis

A focused (or market niche) strategy based on lower cost: concentrating on a narrow buyer segment and outcompeting rivals by serving niche members at a lower cost than rivals;

A focused (or market niche) strategy based on differentiation: concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rival’s product.

Mid Term ExaminationMaster of Business Administration

MBA-S-BBA-FRMGT604

Strategic ManagementTime: 2 hours, Full Marks: 30

1. Answer the following questions (Any Two) 2*7.5=15

d. What are the factors that shape a company’s strategy? Discuss the strategies which are initiated at different levels in a diversified company?

e. Explain the value chain of a firm as an analytical tool of strategic cost analysis. Why a firm should use value chain technique for situation analysis?The primary analytical tool of strategic cost analysis is a value chain identifying the separate activities, functions, and business process that are performed in designing, producing, marketing, delivering, and supporting a product or service. A company’s value chain shows the linked set of

A Company’s Strategy-Making Hierarchy

A Company’s Strategy-Making Hierarchy

activities and functions internally. The value chain includes a profit margin because a markup over the cost of performing the firm’s value creating activities is customarily part of the price borne by buyers---creating value that exceeds the cost of doing so is a fundamental objective of business.

f. What is competitive strategy? Discuss the generic competitive strategies used to achieve or defend competitive advantage of a company. Competitive strategy consists of business approaches and initiatives it undertakes to attract customers and fulfill their expectations, to withstand competitive pressures, and to strengthen its market position;Competitive strategy has a narrower scope than business strategy. It deals exclusively with management action for competing successfully and providing superior value to customers.

2. Answer the following questions in brief (Any Five) 5*3=15

h. State the advantages of strategic management in a business organization.

Providing better guidance to the entire organization on the crucial point of “ what it is we are trying to do;

Making managers and organizational members more alert to the winds of change, new opportunity and threatening developments;

Helping to unify the organization; Creating a more proactive management posture; Promoting the development of a constantly evolving business

model that will produce sustained bottom-line success for the enterprise and ;

Providing managers with rationale for evaluating competing budget requests-a rationale that argues strongly for steering resources into strategy-supportive, results-producing areas.

i. What is Driving Forces that tend to change competitive condition in the industry? Give some examples of most common Driving Forces.Industries change because forcesare driving industry participantsto alter their actions

Driving forces are themajor underlying causesof changing industry andcompetitive conditions

j. Name the questions mentioned by Thompson and Stricklandthat answers build an understanding of a firm’s surrounding environment and form the basis for matching its strategy.

Question 1: What Are the Industry’s Dominant Economic Features?

Question 2: What Kinds of Competitive Forces Are Industry Members Facing?

Question 3: What Factors Are Driving Industry Change and What Impacts Will They Have?

Question 4: What Market Positions Do Rivals Occupy—Who Is Strongly Positioned and Who Is Not?

Question 5: What Strategic Moves Are Rivals Likely to Make Next?

Question 6: What Are the Key Factors for Future Competitive Success?

Question 7: Does the Outlook for the Industry Present an Attractive Opportunity?

k. Thinking Strategically About a Company’s Industry and Competitive Environment

l. Explain the steps needed in conducting SWOT analysis in a business organization.

State the situation where the ‘Differentiation Strategies’ works well.

Where there are many ways to differentiate a product that have value and please customers;

Where buyer needs and uses are diverse; Where few rivals are following a similar differentiation approach; Where technological change and

product innovation are fast-paced .

m. What is Strategic Group in an industry? Why Strategic Group Mapping technique is used by a company?Firms in same strategic group have two or more competitive characteristics in common###

n. Define core competence of a company? Please put some examples of core competence of a business organization.

A core competence is something that a company does well relative to other internal activities. Most often a company’s core competence resides in its

people and in its intellectual capital.A core competence gives a company competitive capability and thus qualifies as a genuine company strength and resource. Some examples are expertise in building networks and systems that enable e-commerce, speeding new or next generation product to the market, skills in manufacturing high quality product, innovativeness in developing popular product features, agility in responding to new market trends and changing competitive conditions, expertise in integrating multiple technologies to create families of new products etc.

o. State the issues that are considered in appraising company’s competitive position.

IDENTIFYING THE STRATEGIC ISSUES

How to stave off market challenges from new foreign competitors? How to combat price discounting of rivals? How to reduce a company’s high costs? How to sustain a company’s present growth in light of slowing buyer

demand? Whether to expand a company’s product line? Whether to acquire a rival firm? Whether to expand into foreign markets rapidly or cautiously? What to do about aging demographics of a company’s customer base?