Вы находитесь на странице: 1из 7

Student Name: PRATIBHA KUMARI Registration Number: 1205030111 Subject Name: Strategic Management and Business Policy

Course: MBA LC Code: 02835 Subject Code: MB0052

Q.1) What is strategy? Explain some of the major reasons for lack of strategic management in some companies? Ans: The word strategy comes from Greek strategies, which refers to a military general and combines stratus (the army) and ago (to lead). The concept and practice of strategy and planning started in the military, and, over time, it entered business and management. The key or common objective of both business strategy and military strategy is the same, i.e., to secure competitive advantage over the rivals or opponents. 1. Poor reward structure: When an organization achieves success, it often fails to reward its managers or planners. But when failure occurs, the company may punish the managers concerned. In such a situation, it is better for individual managers to do nothing than to risk trying to achieve something, fail and be punished. 2. Content with success: If an organization is generally successful, the top management or individual managers may feel that there is no need to plan and strategize because everything is fine. However, they forget that success today does not guarantee success tomorrow. 3. Overconfidence: Overconfidence or overestimating experience leads to complacency and ultimately can bring downfall. Forethought and planning are the right virtues and are signs of professionalism. 4. Fire-fighting: An organization may be so deeply engrossed in crisis management and fire fighting that it may not have time to plan and strategize. 5. Too expensive: Some organizations are culturally opposed to spending resources on matters like planning which do not produce instant or immediate results. They feel that spending on planning is a wasteful expenditure. 6. Previous bad experience: Managers may have had previous bad experience with planning, that is, cases in which plans have been cumbersome, impractical or inflexible. There could be experience of failures also. They would like to avoid recurrence of this. 7. Honest difference of opinion: Different people in different jobs in the same organization may have different perceptions of the same situation, and this may lead to difference of opinions among them and eventually to lack of planning due to lack of consensus. 8. Fear of the unknown: Managers may not be sure of their abilities to learn new skills or take on new roles or adapt to new system. This is basically inertia against change or fear for change. 9. Fear of failure: Whenever something new or different is attempted, there is a chance of success, but, there is also some risk of failure. 10. Suspicion: Employees may not trust management, or, the management may not have enough confidence in the managers. This gives rise to mutual suspicion.

Q.2) Explain the following: (a) Core competence (b) Value chain analysis Ans: Core competence: of a company is one of its special or unique internal competences. Core competence is not just a single strength or skill or capability of a company; it is interwoven resources, technology and skill or synergy culminating into a special or core competen ce. Core competence gives company a clear competitive advantage over its competitors. Sony has a core competence in miniaturization; Xeroxs core competence is in photocopying; Canons core competence lies in optics; Hondas core competence is in engines; To achieve core competence, a company should satisfy three criteria: It should relate to an activity or process that inherently underlies the value in the product or service as perceived by the customer. It should lead to a level of performance in a product or process which is significantly better than those of competitors. It should be robust, i.e., difficult for competitors to imitate. In a fast changing world, many advantages gained in different ways are not robust and are likely to be short lived. Value chain analysis: Various competences and resources of an organization can be integrated into a chain of activities which an organization performs to meet customer demand. Since each of these activities is expected to create value when it is performed, the chain can appropriately be called a value chain. Michael Porter (1985) introduced the concept of value chain analysis. Value chain analysis helps in understanding how value is created in organizations through various activities. These activities can be divided into two broad categories: primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service or customer value and can be divided into five major areas: Inbound logistics: These are activities concerned with receiving, storing and distributing raw materials Operations: These are activities involved in transforming various inputs into final product or service. Outbound logistics: These include collecting, storing and distributing or delivering final products to customers. Marketing and sales: These comprise activities such as advertising, sales promotion, selling, etc. Service: These include activities which maintain or enhance value of a product. Support activities support the primary activities and can be divided into four categories: Procurement: This relates to the processes for acquiring or purchasing various resource inputs like raw materials, equipment, machinery, etc. Technology development: Technology is involved in all value creations. Key technologies are concerned directly with the product. Human resource management: HRM is concerned with recruiting, managing, training and developing people within the organization.

etc.

Infrastructure: This is the organizational system including finance, MIS, general management,

Q.3) Describe in brief the following environmental factors which a business strategist considers: (a) Political factors (b) Technology Ans: Political Factors can have significant impact on industry, business and the corporates. Political stability improves business environment and encourages economic and business activities. Political instability produces the opposite effects. Political factors do not refer to only national political conditions or relations, but also to international relations. Improved political relations between the US and China in the mid-70s resulted in trade agreement between the two countries. The trade agreement provided opportunities to US electronics manufacturers to commence operations in China. Rubock (1971) has developed an analytical framework for identifying and assessing political risks which may affect business conditions. Major risk factors identified by Rubock are: electoral majority of the party in power; internal dissensions within the ruling party; strengths of the parliamentary opposition parties; conflicting political ideologies; insurgencies in border areas, international power alignments and alliances, etc. Given below is contrasting Indian examples of the impact of political environment on business. The Ayodhya-Babri Masjid episode became a political issue and provoked violence in different parts of the country, and caused serious law and order problems during December, 1992 and January 1993. Apart from the apprehensions of political instability, the events disrupted transport, slowed down industrial production and growth of exports, and, also reduced government revenue. Technology, as an environmental factor, influences strategic planning and management in a number of ways. Technological changes lead to the shortening of product life cycles and create new sets of consumer expectations. Electronic products are a good example. This sector is experiencing the most rapid changes today. Companies in the pharmaceutical industry, for example, are continuously aware of developments in new formulations and drugs in the world through medical journals and periodicals. Developments in information technology are greatly affecting the competitive position of companies. Technological development also provides an opportunity to companies to develop new products. On the other hand, companies which ignore these developments face a crisis and eventually may even face extinction. The Indian automobile industry gives a good illustration. With the introduction of Maruti 800 which caught the imagination of consumers, Hindustan Motors (Ambassador) and Premier Automobiles (Padmini) had to improve their vehicle performances in terms of fuel efficiency, driving comfort, aesthetic appeal, etc. But what they did was to bring in peripheral changes only and those were not enough. The result: Padmini is extinct today with Ambassador

following suit (some extension of life has been given to Ambassador by the government and the public sector).

Q.4) Write a brief note on Turnaround strategy. Ans: Corporate turnaround may be defined as organizational recovery from business decline or crisis. Business decline for a company means continuous fall in turnover or revenue, eroding profit, or accrual or accumulation of losses. So, business or organizational decline, like business performance, is understood in relative a term that is, compared with the past. Turnaround strategies are usually required for crisis situations. If organizational decline is not continuous or severe, corporate restructuring can provide the solutions. That is why turnaround strategy may be said to be an extension of restructuring strategy. When restructuring is very comprehensive and leads to corporate recovery, it almost becomes a turnaround strategy as mentioned above in the case of Voltas. Corporate or business decline manifests itself in many forms or symptoms, including profitability. These symptoms are actually different performance criteria of companies. Major symptoms or criteria or situations which signal towards the need for a turnaround strategy are: Steadily declining market share; Continuous negative cash flow; Negative profit or accumulating losses; Accumulation of debt; Falling share price in a steady market; Mismanagement and low morale. With some or all these symptoms becoming clearly visible for a company, a turnaround or recovery becomes highly imperative. Slatter (1984) contends that there are four recovery situations in terms of feasibility or success. These situations are: (a) Realistically non-recoverable situation; (b) Temporary recovery situation; (c) Sustained survival situation; (d) Sustained recovery situation. Realistically non-recoverable situation is one in which chances of survival are very little, because the company is not competitive, and demand for the Companys product is in decline stage. In such a situation, divestment or liquidation may be a better option. Temporary recovery situation exists when there can be initial successful recovery, but, sustained turnaround is not possible. This can happen because repositioning of the product is possible. Some cost reduction programmes may be successful, and revenue generation is also possible at least for some time.

Sustained survival situation means that recovery is possible but potential for future growth does not exist. This may happen primarily because the industry is in a declining phase. A company in such an industry or situation can either go for divestment or turnaround. Sustained recovery situation is one in which successful turnaround is possible for sustained growth. In such cases, business decline might have been caused by internal organizational factors or external or environmental conditions which the company is able to deal with effectively. Q.5) Define the term strategic alliance. What are its characteristics and objectives? Ans: Strategic alliance may be defined as cooperation between two or more organizations with a common objective, shared control and contributions by the partners for mutual benefit. A typical strategic alliance exhibits five essential features or characteristics: (a) Two or more organizations join together to pursue a defined objective or goal during a specified period, but, remain organizationally independent entities; (b) The organizations pool their resources and investments and also share risks for their mutual (and not individual) interest/benefit; (c) The alliance partners contribute, on a continuing basis, in one or more strategic areas like technology, process, product, design, etc; (d) The relationship among the partners is reciprocal with partners sharing specific individual strengths or capabilities to render power to the alliance; (e) The partners jointly exercise control over the performance or progress of the arrangement with regard to the defined goal or objective and share the benefits or results collectively. Objectives and Forms of Strategic Alliance The basic objective behind all strategic alliances is to secure competitive or strategic advantage in the market. Six objectives or purposes are more commonly observed: 1. Development of a new product: In the pharmaceutical industry, new product development takes place on a continuous basis, and, in this, many strategic alliances are formed between pharmaceutical companies and research laboratories and institutions for R&D. 2. Development of a new technology: Development of technology is a long-term process, and, also, many times, involves considerable cost. Collaboration leverages the resources and technical expertise of two or more companies. 3. Reducing manufacturing cost: Co-production, common in the pharmaceutical industry, is a good form of strategic alliance to reduce manufacturing cost through economies of scale. 4. Entering new markets: Many foreign companies enter into strategic alliances with some local companies (host country) to enter into and establish themselves in that country. Some of the Japanese electronic manufacturing companies like Matsushita Electricals, during their initial years, had entered into strategic alliances with some US electrical or electronic manufacturers for entering into the US market.

5. Marketing and Sales: This is common in both national and international business. Many manufacturers in India have marketing and sales arrangements with companies like MMTC and Tata Exports for both domestic and international marketing. 6. Distribution: In pharmaceutical and other industries where distribution represents high fixed cost, potential competitors swap their products for distribution in the respective markets where they have well-established distribution systems. Many such alliances exist between the US and Japanese pharmaceutical companies.

Q.6) Write short notes on the following: a) Competitive advantage b) Porters Competitive threat model

Ans: Competitive advantage, also called strategic advantage, is essentially a position of superiority of an organization in relation to its competitors. A more formal definition of competitive advantage is: Competitive advantage exists when there is a match between the distinctive competences of a firm and the factors critical for success within its industry that permits the firms to outperform competitors. The definition shows that superiority of a company over its competitors exists because the company has developed some unique competencecore competence or distinctive competencewhich matches the environmental factors or success factors in the industry in a better way than the capabilities of competitors. South (1981) has given a definition of competitive advantage which also gives a good perspective: The process of strategic management is coming to be defined, in fact, as the management of competitive advantage, that is, a process of identifying, developing and taking advantage of enclaves in which a tangible and preservable business advantage can be achieved. Porters Competitive Threat Model The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works. The five forces model of analysis was developed to analyze the competitive environment in which a product or company works. These are: 1. Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are. 2. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you. 3. Competitive Rivalry: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most

likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. 4. Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. 5. Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position.

Вам также может понравиться