Master of Business Management Semester IV MB0052 – Strategic Management and Business Policy - 4Credits (Book ID: B1314) Assignment Set

- 1 (60 Marks)
Note: Each Question carries 10 marks. Answer all the questions.
1. What is meant by ‘Strategy’? Differentiate between goals and objectives. Answer: Strategy Strategy is the method by which an organisation systematically achieves its future objectives. A business cannot progress for a long term without a reliable strategy. In this unit, you will learn meaning of business strategies, its conceptual evolution, scope and its importance, distinction between goals and objectives, analysing strategic intent through vision and mission statements and finding out the significance of core competencies of business and critical success factors. Difference between Goals and Objectives of Business Goals Are long term Are general intentions with broad outcome Cannot be validated Are intangible can be qualitative as well as quantitative Are abstract Objectives Are usually meant for short term Are precise statements with specific outcome Can be validated Are tangible are usually quantitative and measurable Are concrete

2. Define the term “Strategic Management”. What are the types of strategies? Answer: Strategic Management Strategic management is a systematic approach of analysing, planning and implementing the strategy in an organisation to ensure a continued success. Strategic management is a long term procedure which helps the organisation in achieving a long term goal and its overall responsibility lies with the general management team.

Corporate level strategies are innovative. Porter has identified five competitive forces that influence every industry and market. . Operational level Operational level is concerned with successful implementation of strategic decisions made at corporate and business level. finance and personnel (employees).4 describes forces driving industry competitions. Types of Strategies Corporate level The board of directors and chief executive officers are involved in developing strategies at corporate level.It focuses on building a solid foundation that will be subsequently achieved by the combined efforts of each and every employee of the organisation. Decisions at functional level are often described as tactical decisions. Answer: Porters Five Force model Michael E. Figure 3. Business level strategy is more specific and action oriented. Describe Porter’s five forces Model. pervasive and futuristic in nature Business level Business level strategy relates to a unit within an organisation. Competitive Strategy. Mainly strategic business unit (SBU) managers are involved in this level. The level of these forces determines the intensity of competition in an industry. marketing. 3. Tactical of functional level The functional strategy mainly includes the strategies related to specific functional area in the organisation such as production. It mainly relates to how a strategy functions rather than what a strategy is in corporate level. The basic function of this level is translating the strategic decisions into strategic actions. Porter developed the Five Force Model in his book. The objective of corporate strategy should be to revise these competitive forces in a way that improves the position of the organisation. It is the process of formulating the objectives of the organisation and allocating the resources among various functional areas.

desire to gain market share and substantial resources. Rivalry among existing firms In most industries. Other stakeholders . Threat of substitute products and services Substitute products appear different but satisfy the same needs as the original product. Buyers Buyers affect an industry through their ability to reduce prices. The importance of stakeholders varies according to the industry.Figure 3. organisations are mutually dependent. 4. Therefore. they are threats to an established organisation. It is used for the effective management of environmental opportunities and for the threats which weaken . A competitive move by one organisation may result in a noticeable effect on its competitors and thus cause retaliation or counter efforts. Suppliers Suppliers affect the industry by raising prices or reducing the quality of purchased goods and services.A sixth force should be included to Porters list to include a variety of stakeholder groups. local communities. bargain for higher quality or more services. An entry barrier is a hindrance that makes it difficult for a company to enter an industry. trade association unions. and shareholders. What is strategic formulation and what are its processes? Answer: Strategy Formulation Strategy formulation is the development of long term plans. Some of these groups include governments. Substitute products curb the potential returns of an industry by placing a ceiling on the prices firms can profitably charge. The threat of an entry depends on the presence of entry barriers and the reactions can be expected from existing competitors.4 Forces Driving Industry Competitions Forces driving industry competitions are: Threat of new entrants New entrants to an industry generally bring new capacity.

A number of questions arising during utilisation and transfer of information have to be solved The questions that arise during utilisation and transfer of information are the following: Who has the requested information? What is the relationship between the partners who holds the requested information? What is the nature of the requested information? How can we transfer the information? 5. Answer: Strategy Evaluation The core aim of strategic management succeeds only if it generates a positive outcome. Its objective is to express strategical information to achieve a definite goal.Identifying useful information like planning for strategic management. Utilisation and transfer of useful information as per the business strategies . . Improper analysis.corporate management.1. The top management needs to be updated about the performance to take corrective actions for controlling the undesired performance. The main processes involved in strategy formulation are as follows: Stimulate the identification . Strategic evaluation and control consists of data and reports about the performance of the organisation. The five step process of strategic evaluation and control is illustrated in figure 5. Explain strategic evaluation and its significance. objectives to achieve the goals of the employees and the stakeholders. planning or implementation of the strategies will result in negative performance of the organisation.

Successful strategists combine patience with a willingness to take corrective actions promptly. . The process of evaluating the implemented strategy is explained in Figure 5. Strategy evaluation is vital to an organisations well-being as timely evaluations can alert the management about potential problems before the situation becomes critical.Importance of effective strategic evaluation The strategic-evaluation process with constantly updated corrective actions results in significant and long-lasting consequences. when necessary.2.

6. Business policy analyses roles and responsibilities of top level management and the decisions affecting the organisation in the long-run. It is a mechanism adopted by the top management to ensure that the activities are performed in the desired way. Policies serve as a guidance to administer activities that are repetitive in nature. It authorises the lower level management to resolve their issues and take decisions without consulting the top level management repeatedly. Business Policies Business policies are the instructions laid by an organisation to manage its activities. The complete process of management is organised by business policies. Business policies are important due to the following reasons: . both internally and externally when the policies are established. Explain its importance. The policies are articulated by the management. It channels the thinking and action in decision making. It deals with the constraints of real-life business. It identifies the range within which the subordinates can take decisions in an organisation. It is important to formulate policies to achieve the organisational objectives. It also deals with the major issues that affect the success of the organisation. Importance of Business Policies A company operates consistently. Business policy involves the acquirement of resources through which the organisational goals can be achieved. Define the term “Business policy”. The limits within which the decisions are made are well defined. Business policies should be set up before hiring the first employee in the organisation.

It prevents divergence from the planned course of action. Effective control Policies provide logical basis for assessing performance. Policies are derived objectives and provide the outline for procedures. Every policy is a guide to activities that should be followed in a particular situation. Decentralisation Well defined policies help in decentralisation as the executive roles and responsibility are clearly identified. The required managerial procedures can be derived from the given policies. Policies contribute in building coordination in larger organisations. It saves time by predicting frequent problems and providing ways to solve them. They ensure that the activities are synchronised with the objectives of the organisation. The management tends to deviate from the objective if policies are not defined precisely. This affects the overall efficiency of the organisation. .Coordination Reliable policies coordinate the purpose by focusing on organisational activities. Policies provide guidelines to the executives to help them in determining the suitable actions which are within the limits of the stated policies. Policies encourage cooperation and promote initiative. They demarcate the section within which decisions are to be taken. Quick decisions Policies help subordinates to take prompt action and quick decisions. They help subordinates to take decisions with confidence without consulting their superiors every time. This helps in ensuring uniformity of action throughout the organisation. Authority is delegated to the executives who refer the policies to work efficiently.

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