NAME- AISHWARYA MONU

SEMESTER- IV

ENROLLMENT NO- 20180401008

SUBJECT- STRATERGIC MANAGEMENT

 Q1. Define the term strategy and explain its scope and importance?

A1. Strategy is an action that managers take to attain one or more of the organization’s goals. Strategy
can also be defined as “A general direction set for the company and its various components to achieve a
desired state in the future. Strategy results from the detailed strategic planning process”.

A strategy is all about integrating organizational activities and utilizing and allocating the scarce
resources within the organizational environment so as to meet the present objectives. While planning a
strategy it is essential to consider that decisions are not taken in a vacuum and that any act taken by a firm
is likely to be met by a reaction from those affected, competitors, customers, employees or suppliers.

A company’s concept of Strategy consists of the competitive moves and business approaches that
managers employ to attract and please customers, compete successfully, grow the business, conduct
operations and achieve targeted objectives.

Strategy is a well defined roadmap of an organization. It defines the overall mission, vision and direction
of an organization. The objective of a strategy is to maximize an organization’s strengths and to minimize
the strengths of the competitors. Strategy, in short, bridges the gap between “where we are” and “where
we want to be”.

Scope

 Strategy is the combination of actions aimed to meet a particular condition, to solve certain
problems or to achieve a desirable end. The actions are different for different situations.
 Due to its dependence on environmental variables, strategy may involve a contradictory action.
An organization may take contradictory actions either simultaneously or with a gap of time. For example,
a firm is engaged in closing down of some of its business and at the same time expanding some.
 Strategy is future oriented. Strategic actions are required for new situations which have not arisen
before in the past.
 Strategy requires some systems and norms for its efficient adoption in any organization.
 Strategy provides overall framework for guiding enterprise thinking and action .

Importance

1. Provides Direction and Action Plans

It establishes in a clear, concise and strategically sound way the direction for the organization how this
will be achieved, including detailed action plans.
2. Prioritizes and Aligns Activities

Strategic planning is about making choices, establishing priorities, allocating resources to strategic
initiatives and coordinating to achieve desired results.

3. Defines Accountabilities

It defines clear lines of accountability and timelines for achieving expected results on the agreed strategic
initiatives.

4. Enhances Communication and Commitment

In clarifying the vision and accountabilities, the strategic plan increases the alignment of all
organizational activities and fosters commitment at all levels.

5. Provides a Framework for Ongoing Decision Making

Since all decisions should support the strategy, the strategy and the strategic initiatives are the reference
point for decision-making.

Q2. Write a short note on Role of Strategist?

Strategists are individuals or groups who are primarily involved in the formulation, implementation, and
evaluation of strategy. In a limited sense, all managers are strategists. There are persons outside the
organization who are also involved in various aspects of strategic man-agreement. They too are referred
to as strategists. We can identify nine strategists who, as individuals or in groups, are concerned with and
play a role in strategic management.

1. Consultants
2. Entrepreneurs
3. Board of Directors
4. Chief Executive Officer
5. Senior management
6. Corporate planning staff
7. Strategic business unit (SBU) level executives
8. Middle level managers
9. Executive Assistant
1. Consultants: Many organizations which do not have a corporate planning
department owing to reasons like small size, infrequent require-ments, financial
constraints.
2. Entrepreneurs : They are promoters who conceive the idea of starting a business
enterprise for getting maximum returns on their investment. They are waiting for
an environment change and thereby for an opportu-nity to exploit the situation in
their best interest. Thus they start playing their role right from the promotion of
the proposed venture. So, their strategic role to make the venture a success is
very conspicuous in a new business enterprise. Therefore, it is expected of an
entrepreneur that he should posses foresight, sense of responsibility, desire to
work hard and dashing spirit to bear any future contingencies.
3. Board of Directors: They are professionals elected on the Board of Di-rectors
(BOD) by the shareholders of the company as per rules and regulations of the
Companies Act, 1956. They are responsible for the general administration of the
organization. They are supposed to guide the top management in framing
business strategies for accomplishing predetermined objectives. It is also the
responsibility of the Board to review and evaluate organizational performance
whether it is as per the strategy laid down or not.
4. Chief Executive Officer: In the management circle, the chief executive is the top
man, next to the directors of the Board. He occupies the most sensitive post,
being held responsible for all aspects of strategic management right from
formulation to evaluation of strategy. He is designated in some companies as the
managing director, executive director or as a general manager.
5. Senior Management: Starting from the chief executive to the lev-el of functional
or profit-centre heads, these managers are involved in various aspects of strategic
management. Some of the members of the senior management act as directors on
the board usually on a rotational basis.
6. SBU level executives: “SBU” stands for strategic business unit. Under this
approach, the main business unit is divided into different independent units and is
allowed to form their own respective strategies. In fact, the business is diversified
and thus the departmental heads are supposed to act as the main strategist,
keeping an eye on optimum benefit for their departments.
7. Corporate-planning staff plays a supporting role in strategic management. It
assists the management in all aspects of strategy formulation, implementation
 and evaluation. Besides this, they are responsible for the preparation and
communication of strategic plans, and for conducting special studies and research
pertaining to strategic management.
8. Middle level managers: They are basically operational planners they may, at best,
be involved as ‘sounding boards’ for departmental plans, as implementers of the
decisions taken above, followers of policy guidelines, and passive receivers of
communication about functional strategic plans.
9. Executive Assistant: An executive assistant is a person who assists the chief
executive in the performance of his duties in various ways. These could be : to
assist the chief executive in data collection and analysis, suggesting alternatives
where decisions are required, preparing briefs of various proposals, projects and
reports, helping in public relations and liaison functions, coordinating activities
with the internal staff and outsiders, and acting as a filter for the information
coming from different sources.

Q3. A mission statement defines the company’s business, its objectives and its approach to attain
the objectives. Explain this statement.

A3. Mission statement is a description of what an organization actually does – what its business is – and
why it does it. There are many authors and jurist who defined “mission statement”. These are few of
them.

 Thompson: defines Mission as “the essential purpose of the organisation, concerning particularly,
why it is in existence, the nature of businesses it is in, and the customers it seeks to serve and
satisfy”
 Hunger and Wheelen: “mission is the purpose and reason for the organisation’s existence”
Mission statements could be formulated on the basis of vision that an entrepreneur decides on in
the initial stages.

Mission statement: A mission statement defines what line of business a company is in, and why it
exists or what purpose it serves. Every company should have a precise statement of purpose that gets
people excited about what the company does and motivates them to become part of the organization.
 A mission statement should also define the company’s corporate strategy and is generally a couple of
sentences in length.

A company’s mission statement defines its culture, values, ethics, fundamental goals, and agenda.
Furthermore, it defines how each of these applies to the company's stakeholders—its employees,
distributors, suppliers, shareholders, and the community at large—use this statement to align their
goals with that of the company.The statement reveals what the company does, how it does it, and why
it does it. Prospective investors may also refer to the mission statement to see if the values of the
company align with theirs.

For example, an ethical investor against tobacco products would probably not invest in a company
whose mission is to be the largest global manufacturer of cigarettes.

It is not uncommon for the largest companies to spend many years and millions of dollars to develop
and refine their mission statements. In some cases, many mission statements eventually become
household phrases.

A mission statement, therefore, provides the basis for judging the success of an organization and its
programs. It helps the organization verify if it is on the right track and making the right decisions. It
provides direction when the organization is tempted by distractions and forced to adapt to new demands.
Attention to mission helps the organization to its primary purpose and serves as a touchstone for decision-
making during times of conflict.

With a strong mission statement in place, it is very easy to identify your goals, objectives, strategies and
tactics.

A mission statement can also be used as a tool for resource allocation for staff, donors, volunteers, and
community involvement.

Q4. Write a short note on BCG Matrix.

A4. Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed by BCG,
USA. It is the most renowned corporate portfolio analysis tool. It provides a graphic representation for an
organization to examine different businesses in it’s portfolio on the basis of their related market share and
industry growth rates. It is a two dimensional analysis on management of SBU’s (Strategic Business
Units). In other words, it is a comparative analysis of business potential and the evaluation of
environment.
According to this matrix, business could be classified as high or low according to their industry growth
rate and relative market share.

Relative Market Share = SBU Sales this year leading competitors sales this year.

Market Growth Rate = Industry sales this year - Industry Sales last year.

The analysis requires that both measures be calculated for each SBU. The dimension of business strength,
relative market share, will measure comparative advantage indicated by market dominance. The key
theory underlying this is existence of an experience curve and that market share is achieved due to overall
cost leadership.

BCG matrix has four cells, with the horizontal axis representing relative market share and the vertical axis
denoting market growth rate. The mid-point of relative market share is set at 1.0. if all the SBU’s are in
same industry, the average growth rate of the industry is used. While, if all the SBU’s are located in
different industries, then the mid-point is set at the growth rate for the economy.

Resources are allocated to the business units according to their situation on the grid. The four cells of this
matrix have been called as stars, cash cows, question marks and dogs. Each of these cells represents a
particular type of business.

1. Stars- Stars represent business units having large market share in a fast growing industry.
They may generate cash but because of fast growing market, stars require huge
investments to maintain their lead. Net cash flow is usually modest. SBU’s located in this
cell are attractive as they are located in a robust industry and these business units are
highly competitive in the industry. If successful, a star will become a cash cow when the
industry matures.

2. Cash Cows- Cash Cows represents business units having a large market share in a
mature, slow growing industry. Cash cows require little investment and generate cash that
can be utilized for investment in other business units. These SBU’s are the corporation’s
key source of cash, and are specifically the core business. They are the base of an
organization. These businesses usually follow stability strategies. When cash cows loose
their appeal and move towards deterioration, then a retrenchment policy may be pursued.
 3. Question Marks- Question marks represent business units having low relative market
share and located in a high growth industry. They require huge amount of cash to
maintain or gain market share. They require attention to determine if the venture can be
viable. Question marks are generally new goods and services which have a good
commercial prospective. There is no specific strategy which can be adopted. If the firm
thinks it has dominant market share, then it can adopt expansion strategy, else
retrenchment strategy can be adopted. Most businesses start as question marks as the
company tries to enter a high growth market in which there is already a market-share. If
ignored, then question marks may become dogs, while if huge investment is made, then
they have potential of becoming stars.

4. Dogs- Dogs represent businesses having weak market shares in low-growth markets.
They neither generate cash nor require huge amount of cash. Due to low market share,
these business units face cost disadvantages. Generally retrenchment strategies are
adopted because these firms can gain market share only at the expense of
competitor’s/rival firms. These business firms have weak market share because of high
costs, poor quality, ineffective marketing, etc. Unless a dog has some other strategic aim,
it should be liquidated if there is fewer prospects for it to gain market share. Number of
dogs should be avoided and minimized in an organization.

Limitations of BCG Matrix

The BCG Matrix produces a framework for allocating resources among different business units and
makes it possible to compare many business units at a glance. But BCG Matrix is not free from
limitations, such as-

1. BCG matrix classifies businesses as low and high, but generally businesses can be medium also.
Thus, the true nature of business may not be reflected.
2. Market is not clearly defined in this model.
3. High market share does not always leads to high profits. There are high costs also involved with
high market share.
 4. Growth rate and relative market share are not the only indicators of profitability. This model
ignores and overlooks other indicators of profitability.
5. At times, dogs may help other businesses in gaining competitive advantage. They can earn even
more than cash cows sometimes.

Q5. Dr. Kumar owned a pharma lab in Navi Mumbai for the last 20 years, he kept on expanding is
business all over Maharashtra with around 50 labs. The other existing Labs in competition where
not meeting the quality standards which his labs had along with all necessary accreditation. There
is a huge scope for the home collection and reporting services. He also has a good repo with the
different hospitals he does not want to go for mergers and acquisition for the sake of expansion.

Please suggest what business strategy has to be adopted by Dr. Kumar also, in your opinion what
are the opportunities and threats to doctor Kumar’s business.

A5. There are many business stratergies which Dr. Kumar can adopt.

DIVERSIFICATION STRATERGY

A diversification strategy is the strategy that an organization adopts for the development of its business.
This strategy involves widening the scope of the organization across different products and market
sectors. The strategy is to enter into a new market or industry which the organization is not currently in,
whilst also creating a new product for the new market.

Diversification strategy is a form of growth strategy which helps the organizational business to grow. It
opens up new possibilities for the organization. By adopting this strategy, the organization not only
diversifies its products offerings in the target markets but also expands its business horizons. The strategy
helps the organization to increase sales volume and revenues while keeping costs to minimum.

The other three strategies in this matrix are market penetration, product development, and market
development. Ansoff pointed out that a diversification strategy stands apart from the other three
strategies. These other three strategies are usually pursued with the same technical, financial, and
merchandising resources used for the original product line, whereas diversification usually requires an
organization to acquire new skills, new techniques and new facilities

Diversion strategy is associated with higher risks as it requires the organization to take on new experience
and knowledge outside its existing markets and products. The organization may come across issues that it
has never faced before. It may need additional investment or skills. On the other hand, however, it
provides the opportunities to explore new avenues of business. This can spread the risk allowing the
organization to move into new and potentially profitable areas of operation. Enterprise’s values help to
define what the organization stands for. They also identify its capabilities and competencies. Its core
values of ‘brand, honesty, service, fun, hard work, listening, inclusion and community’ are transferable.
This means that the skills from the main business can be applied to other business opportunities through
diversification, potentially reducing the risks associated with this strategy.

COST LEADERSHIP STRATERGY

Cost leadership is a strategy companies use to increase efficiencies and reduce production costs below the
industry average or their closest competitor. It’s a method to reduce costs and produce the least expensive
goods in a market or industry in an effort to gain market share.

The modern business environment is a very complex and sophisticated one with consumers being aware
of the choices available to them. One way firms differentiate themselves is through competitive pricing.
Businesses who have the least production costs are able to offer the same level of product quality
compared to their competitor for a much lower price.

Consumers are constantly looking to increase their purchasing power and if that cannot be achieved
through an income increment, then buying more at a lower price is the next best alternative. Businesses
who seek to be cost leaders tap into this opportunity to offer the average consumers great products at
great prices.

Oppourtunity And Threats

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths and
weaknesses of an organization, its initiatives, or an industry. The organization needs to keep the analysis
accurate by avoiding pre-conceived beliefs or gray areas and instead focusing on real-life contexts.
Companies should use it as a guide and not necessarily as a prescription.

Strengths describe what an organization excels at and what separates it from the competition: a strong
brand, loyal customer base, a strong balance sheet, unique technology, and so on. For example, a hedge
fund may have developed a proprietary trading strategy that returns market-beating results. It must then
decide how to use those results to attract new investors.

Weaknesses stop an organization from performing at its optimum level. They are areas where the
business needs to improve to remain competitive: a weak brand, higher-than-average turnover, high levels
of debt, an inadequate supply chain, or lack of capital.
Opportunities refer to favorable external factors that could give an organization a competitive advantage.
For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing
sales and market share.

Threats refer to factors that have the potential to harm an organization. For example, a drought is a threat
to a wheat-producing company, as it may destroy or reduce the crop yield. Other common threats include
things like rising costs for materials, increasing competition, tight labor supply and so on.

A company can use a SWOT for overall business strategy sessions or for a specific segment such as
marketing, production or sales. This way, you can see how the overall strategy developed from the SWOT
analysis will filter down to the segments below before committing to it. You can also work in reverse
with a segment-specific SWOT analysis that feeds into an overall SWOT analysis.