USN

INTERNAL ASSESSMENT TEST

Subject: Strategic Management Subject code:19MBA25
Sem: II Date: 09-05-2020 Max marks: 50
Faculty: Prof. Purnajit Chatterjee & Dr. Praveenasri Time: 90 minutes
Instructions: Answer any 2 full sets out of 1, 2 & 3 and 4th & 5th are compulsory.
Bloom’s
Marks COs
level
a) What is meant by competitive advantage?

Competitive advantage is the leverage a business has over its

competitors. This can be gained by offering clients better and greater
value. Advertising products or services with lower prices or higher
quality piques the interest of consumers. Target markets recognize
these unique products or services. This is the reason behind brand
loyalty, or why customers prefer one particular product or service
over another.
Value proposition is important when understanding competitive
advantage. If the value proposition is effective, that is, if the value
3 2 1
proposition offers clients better and greater value, it can produce a
competitive advantage in either the product or service. The value
Q1 proposition can increase customer expectations and choices.
Michael Porter defined the two ways in which an organization can
achieve competitive advantage over its rivals: cost advantage and
differentiation advantage. Cost advantage is when a business provides
the same products and services as its competitors, albeit at a lesser
cost. Differentiation advantage is when a business provides better
products and services as its competitors. In Porter's view, strategic
management should be concerned with building and sustaining
competitive advantage
b) Discuss the various strategic factors necessary for a company Macro
7 3 1
Environment?
c) Explain elaborately about Michael Porter‘s Five Force Model?
10 2 2

Q2 a) What do you mean by the term Value Chain in an organization? 3 1 2

 A company’s business consists of all activities undertaken in

designing, producing, marketing, delivering, and supporting its
product or service
 All these activities that a company performs internally combine
to form a value chain—so-called because the underlying intent
of a company’s activities is to do things that ultimately create
value for buyers
 The value chain contains two types of activities
 Primary activities (where most of
the value for customers is created)
 Support activities that facilitate
performance of the primary activities
 b) Why do companies form strategic alliances and partnerships?
Several firms think that the most effective way to get ahead is to
expand business boundaries through mergers and acquisitions (M&A).
Mergers produce synergies and economies of scale, increasing
operations and cutting prices. Investors will take comfort within the
idea that a merger can deliver increased market power.
 To collaborate on technology development or new product
development
 To fill gaps in technical or manufacturing expertise
 Master new technologies and build new expertise faster than
would be possible internally
 Access valuable skills and competencies concentrated in
particular geographic locations
 To improve supply chain efficiency 7 3 2
 To gain economies of scale in
production and/or marketing
 To acquire or improve market access
via joint marketing agreements
 Get into critical country markets quickly to accelerate process
of building a global presence
 Gain inside knowledge about unfamiliar markets and cultures
 Establish a beachhead to participate in target industry
 Open up expanded opportunities in target industry by
combining firm’s capabilities with resources of partners

c) What are the Five Generic competitive strategies, explain with an 10 3 1

industry example?
Porter's generic strategies describe how a company pursues
competitive advantage across its chosen market scope. There are
three/four generic strategies, either lower cost, differentiated, or focus.
A company chooses to pursue one of two types of competitive
advantage, either via lower costs than its competition or by
differentiating itself along dimensions valued by customers to
command a higher price. A company also chooses one of two types of
scope, either focus (offering its products to selected segments of the
market) or industry-wide, offering its product across many market
segments. The generic strategy reflects the choices made regarding
both the type of competitive advantage and the scope. The concept was
described by Michael Porter in 1980
 Three potentially successful strategic approaches to
outperforming rivals
o Overall cost leadership
o Differentiation
o Focus
 Could follow more than one or a combination
 Structure, Value chain, market positioning and approach etc
are all different in each case

Cost Leadership strategy involves the firm winning market share by

appealing to cost-conscious or price-sensitive customers. This is
achieved by having the lowest prices in the target market segment, or at
least the lowest price to value ratio (price compared to what customers
receive). To succeed at offering the lowest price while still achieving
profitability and a high return on investment, the firm must be able to
operate at a lower cost than its rivals. There are three main ways to
achieve this.
Differentiation Strategy: Differentiate the products/services in some
way in order to compete successfully. Examples of the successful use
of a differentiation strategy are Hero, Asian Paints, HUL, Nike
athletic shoes (image and brand mark), BMW Group Automobiles,
Perstorp BioProducts, Apple Computer (product's design), Mercedes-
Benz automobiles.
A differentiation strategy is appropriate where the target customer
segment is not price-sensitive, the market is competitive or saturated,
customers have very specific needs which are possibly under-served,
and the firm has unique resources and capabilities which enable it to
satisfy these needs in ways that are difficult to copy.
Focus Strategy: This dimension is not a separate strategy for big
companies due to small market conditions. Big companies which chose
applying differentiation strategies may also choose to apply in
conjunction with focus strategies (either cost or differentiation). On
the other hand, this is definitely an appropriate strategy for small
companies especially for those wanting to avoid competition with big
one.
In adopting a narrow focus, the company ideally focuses on a few
target markets (also called a segmentation strategy or niche strategy).
These should be distinct groups with specialised needs. The choice of
offering low prices or differentiated products/services should depend
on the needs of the selected segment and the resources and
capabilities of the firm. It is hoped that by focusing your marketing
efforts on one or two narrow market segments and tailoring your
marketing mix to these specialized markets, you can better meet the
 needs of that target market.
Q 3 a) What is benchmarking and how does it help build competitive
advantage?
Benchmarking is the practice of comparing business processes and
performance metrics to industry bests and best practices from other
companies. Dimensions typically measured are quality, time and cost.
Benchmarking is used to measure performance using a specific
indicator (cost per unit of measure, productivity per unit of measure,
cycle time of x per unit of measure or defects per unit of measure)
resulting in a metric of performance that is then compared to others.
[1]
Also referred to as "best practice benchmarking" or "process
benchmarking", this process is used in management in which
organizations evaluate various aspects of their processes in relation to
best-practice companies' processes, usually within a peer group
defined for the purposes of comparison. This then allows organizations
to develop plans on how to make improvements or adapt specific best 3 1 2
practices, usually with the aim of increasing some aspect of
performance. Benchmarking may be a one-off event, but is often
treated as a continuous process in which organizations continually
seek to improve their practices.
 Identify best and most efficient means of performing various
value chain activities
 Learn what is the “best” way to perform a particular activity
from those companies who have demonstrated that they are
“best-in-industry” or “best-in-world” at performing the
activity
 Learn what other firms do to perform
an activity at lower cost
 Figure out what actions to take to improve a company’s
own cost competitiveness

b) Explain the role of SWOT in crafting a better strategy? Do a brief 7 3 1

SWOT analysis of Samsung Mobiles in India

SWOT analysis (or SWOT matrix) is a strategic planning technique

used to help a person or organization identify strengths, weaknesses,
opportunities, and threats related to business competition or project
planning. It is designed for use in the preliminary stages of decision-
making processes and can be used as a tool for evaluation of the
strategic position of a city or organization. It is intended to specify the
objectives of the business venture or project and identify the internal
and external factors that are favorable and unfavorable to achieving
those objectives. Users of a SWOT analysis often ask and answer
questions to generate meaningful information for each category to
make the tool useful and identify their competitive advantage. SWOT
has been described as the tried-and-true tool of strategic analysis, but
it has also been criticized for its limitations
 S W O T analysis involves more than just developing the 4
lists of strengths, weaknesses, opportunities, and threats
 The most important part of S W O T analysis is
o Using the 4 lists to draw conclusions
about a company’s overall situation
o Acting on the conclusions to
  Better match a company’s strategy to its
resource strengths and market opportunities
 Correct the important weaknesses
 Defend against external threats

c) Evaluate the Strategic Implications of Five Competitive forces with

special emphasis on Strategic Mapping? 10 2

Case Study
JetBlue Airlines' Success Story
The case describes the reasons for the success of JetBlue, a three-year-old, low-cost airline, operating in the
USA. JetBlue was set up by David Neeleman, who earlier founded a very successful discount airline called
Morris Air in Utah. He also helped found West Jet, another discount airline in Canada. Neeleman set up
JetBlue in 2000 and modelled it on the lines of the most well-known of discounters- Southwest Airlines.
JetBlue adopted a strategy for effective cost control by identifying and eliminating all unnecessary expenses
and concentrating on providing high quality services to its passengers. Towards this end, it adopted a
number of innovative measures on the planes such as: not serving food, point-to-point flights, and quick
turnarounds. It also made effective use of advertising to position itself as a fun airline. JetBlue's innovative
operational model helped it succeed at a time when the major players of the airline industry were crumbling.
What is the generic competitive strategy that Jet Blue is following,
please justify your answer?
Q4 5 4 4
Best Cost Provider since the company focuses on providing good
quality services without the additional frills at a low price
Analyse the measures adopted by a firm effectively cutting costs and at
the same time maintaining a high standard of service
Q5 5 4 4