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1. a. What is strategy? Explain the strategy making process.

Strategy is a plan of action designed to achieve a particular goal. It is a large scale future oriented plans
for interacting with competitive environment to achieve company objectives. A strategy is implemented
to create a competitive advantage over other companies. Hence it is a set of actions that managers take
to increase their companys performance relative to industry rivals.
Strategy formulation process
Strategy formulation is the process of determining appropriate courses of action for achieving
organisational objectives and thereby accomplishing organisational purpose. Strategy formulation is vital
to the well-being of a company or organisation. It produces a clear set of recommendations, with
supporting justification, that revise as necessary the mission and objectives of the organisation, and
supply the strategies for accomplishing them. In formulation, we are trying to modify the current
objectives and strategies in ways to make the organisation more successful.
1. Select the corporate mission statement and major goals
2. Analyze the external competitive environment to identify strategic opportunities and threats in
the operating environment
3. Analyze the internal competitive environment to pinpoint the strengths and weaknesses of the
4. Select the strategy- contingent upon findings in steps 1, 2, 3
5. Implement the strategy at every level of the company
6. The feedback loop helps managers evaluate the success of the strategy. Strategic planning is

b. How do you explain the success of business that does not use a formal
environmental analysis process?
Environmental analysis is a strategic tool. It is a process to identify all the external and internal
elements, which can affect the organizations performance. The analysis entails assessing the level of
threat or opportunity the factors might present. These evaluations are later translated into the
decision-making process. The analysis helps align strategies with the firms environment.
Our market is facing changes every day. Many new things develop over time and the whole scenario
can alter in only a few seconds. There are some factors that are beyond your control. But, you can
control a lot of these things.
Businesses are greatly influenced by their environment. All the situational factors which determine
day to day circumstances impact firms. So, businesses must constantly analyze the trade environment
and the market. To analyze the environment, the business firm can go through following process:
1. Understand all the environmental factors before moving to the next step.

2. Collect all the relevant information.

3. Identify the opportunities for your organization.
4. Recognize the threats your company faces.
5. The final step is to take action.
It is true that industry factors have an impact on the company performance. Environmental analysis
is essential to determine what role certain factors play in your business. PEST or PESTLE analysis allows
businesses to take a look at the external factors. Many organizations use these tools to project the
growth of their company effectively. The analyses provide a good look at factors like revenue,
profitability, and corporate success. Some of the benefits of environmental analysis are enlisted
1. It helps to identify business strengths, weaknesses, opportunities and threats.
2. It leads to the optimum use of resources.
3. It is necessary for the survival and growth of the business firm.
4. It helps to plan long-term business strategy.
In conclusion, without environmental analysis no business organization can survive and compete in
this competitive environment.

2. a. what key considerations would you keep in your mind while making the
strategic alliance with foreign partner?
As domestic markets continue to mature, international markets are now attractive growth targets for
many firms that previously had not considered overseas opportunities. There are various entry
strategies in foreign market such as exporting, licensing, franchising, joint venture, strategic alliance
etc. strategic alliance is a type of entry strategy in which more than one firms make contract to work
together for mutual benefits. It is a type of cooperative agreements between different firms, such as
shared research, formal joint ventures, or minority equity participation for certain period of time.
They share their technology, human resource and so on to achieve common purpose. Strategic
Alliances are non-equity based agreements i.e. companies remain independent and separate.
Key considerations that should keep in mind while making strategic alliance with foreign partner:
Strategic compatibility
The partners need to have same general goal and understanding for strategic alliance. The differences
in strategy produces more conflicts of interest in the later partnership.
Complementary skills and resources
Another important criterion is that the partners need to contribute more than just money to the
venture. Each partner must contribute some skills and resources that complement for another.
Relative company size

Different size of companies may cause domination of one firm or unequal agreement, which is not
favorable for long term running.
Financial capability
The partners can generate sufficient financial resources to maintain the ventures efforts, which is
also important for long term partnership.
Other consideration such as compatibility between operating policies, trust and commitment,
compatible management styles, mutual dependency, communications barriers and avoid anchor
partners are also important for partner selection.

b. Discuss the contribution of the portfolio approach to strategic analysis and

choice in a multi business company?
The portfolio approach is a historical starting point for strategic analysis and choice in multi-business
firms. The portfolio approach helps allocate resources in multi-business companies.
Contributions of Portfolio Approaches
Convey large amounts of information about diverse businesses and corporate plans in a simplified
Illuminate similarities and differences among businesses, conveying the logic behind corporate
strategies for each business
Simplify priorities for sharing corporate resources across diverse businesses
Provide a simple prescription of what should be accomplished a balanced portfolio of businesses

3. b. What is competitive advantage? How a business can gain competitive

advantage? Explain.
Competitive advantage:
A competitive advantage is an advantage that a firm has over its competitors, allowing it to generate
greater sales or margins and/or retain more customers than its competitors. It is simply a factor that
distinguishes your business from others, and makes customers more likely to choose your product
over the competitors. It is a way you can create value for your customers which your competitors
cannot. There can be many types of competitive advantages including the firm's cost structure,
product offerings, distribution network and customer support. Without a competitive advantage, your
business has no unique method of drawing in customers
Ways of gaining competitive advantage:
Every business, large or small, needs a competitive advantage to distinguish itself from the
competition. In the aggressive business world, especially in todays economy, every advantage counts

to establish your business in the top of your industry. Gaining a competitive advantage takes strategic
planning, extensive research and an investment in marketing.
Three ways to gain competitive advantage
1. Locating activities among nations to lower costs or achieve greater product differentiation

2. Efficient/effective transfer of competitively valuable competencies and capabilities from

domestic to foreign markets
Transferring competencies, capabilities, and resource strengths across borders contributes to
development of broader competencies & capabilities and achievement of dominating depth in some
competitively valuable area. Dominating depth in a competitively valuable capability is a strong basis
for sustainable competitive advantage over other multinational or global competitors and small
domestic competitors in host countries.
3. Coordinating Cross-Border Activities to Build a Global Competitive Advantage
Aligning activities located in different countries contributes to competitive advantage in several ways.
The company can shift production from one location to another to take advantage of most favorable
cost or trade conditions or exchange rates. It can also enhance brand reputation by incorporating
same differentiating attributes in its products in all markets where it competes.

2009 Spring
1. a. A good strategy has to be well matched to industry and competitive
conditions; market opportunities and threats; and other aspects of the
enterprises external environment. How is it so? Explain.
Strategy refers to the long term plans for achieving the firms objectives. Before formulating strategy, the
business firm must have to analyze its strengths and weaknesses, opportunities and threats. Business firm
also has to analyze the competitors strengths and weaknesses, competition in the market and so on. It is
because all these factors can affect in the implementation of strategy and the achievement of objectives.
Due to which you have to bear financial and nonfinancial loss. Therefore, strategy has to be matched with
the industry and competitive conditions, market opportunities and threats, and other aspects of the
enterprises external environment.
Some of the factors that could have an impact on your business are political, economic, social and
technical factors. You have to examine each one of these components individually, and then see how it
could affect the success of your business. For example, if the government has many restrictions in place,
it could negatively impact your ability to do business. Therefore, when developing a strategic plan, you
have to look at the outside environmental factors that can have an impact on your business. For instance,
if the economy is weak when you launch your business, you may need to spend more on advertising or
offer more sales to get people in the door. To analyze internal and external business environment you can
use the SWOT analysis, five force analysis, PESTL analysis etc.

2. b. How do the managers attitude toward risk and competitive reaction

affect in strategic choice? Discuss.
Strategy refers to the long term plans for achieving the firms objectives. There are various strategies the
business firm can choose to achieve their objectives and compete in the market. The choice of strategy
depends on various internal and external factors such as managers attitude towards risk, role of current
strategy, degree of firms external dependence, competitive reactions etc.
How do managers attitudes toward risk affect in strategic choice?
If the attitude of management towards risk is positive, the range of strategic choice expands and highly
risk strategies are supposed to be selected. Conversely, if management is not optimistic toward risk
bearing, it limits the strategic choices. Similarly, industrys volatility also influences the attitudes of top
management towards. Top management of highly volatile industries may accept the greater amount of
risk. Conversely, management of stable industry may not be positive toward risk. Industry life cycle is
another determinant of managerial attitudes toward risk. In the early stage of industry life cycle, managers
may have to face greater risk and uncertainty and they may tolerate high risk. Hence, risk-oriented
managers prefer offensive, opportunistic strategies whereas risk-averse managers prefer defensive,
conservative strategies.

How do competitive reaction affect in the strategic choice?

Probable impact of competitor response must be considered during strategy design process. Competitor
response can alter the success of strategy. While selecting the strategies, top management should
consider the probable impact of the strategy to the competitors. For e.g.: if a company chooses an
aggressive strategy directly challenges a key competitors that competitors may also react aggressively by
implementing counter strategy.
Hence, top management must consider the impact of such reaction on the success of the chosen strategy.
For example, if a company chooses to cut in the price of its products to become cost leader, meanwhile,
its competitors can choose counter strategy to offset that strategy.

7. b. Employee Empowerment for operationalizing strategy.

Empowerment is the process of enabling or authorizing an individual to think, behave, take action,
and control work and decision-making in autonomous ways.

1. a. Why strategic management become so important to todays corporation?


Strategic Management can be described as the identification of the purpose of the organisation and
the plans and actions to achieve that purpose. It is that set of managerial decisions and actions that
determine the long-term performance of a business enterprise. It involves formulating and
implementing strategies that will help in aligning the organisation and its environment to achieve
organisational goals.
No business firm can afford to travel in a haphazard manner. It has to travel with the support of some
route map. Strategic management provides the route map for the firm. It makes it possible for the
firm to take decisions concerning the future with a greater awareness of their implications. It provides
direction to the company; it indicates how growth could be achieved.
The external environment influences the management practices within any organisation. Strategy
links the organisation to this external world. Changes in these external forces create both
opportunities and threats to an organisations position but above all, they create uncertainty.
Strategic planning offers a systematic means of coping with uncertainty and adapting to change. It
enables managers to consider how to grasp opportunities and avoid problems, to establish and
coordinate appropriate courses of action and to set targets for achievement.
Thirdly, strategic management helps to formulate better strategies through the use of a more
systematic, logical and rational approach. Through involvement in the process, managers and
employees become committed to supporting the organisation. The process is a learning, helping,
educating and supporting activity. Strategic management become so important for todays
corporations due to following reasons:
1. It helps the firm to be more proactive than reactive in shaping its own future.
2. It provides the roadmap for the firm. It helps the firm utilize its resources in the best possible
3. It allows the firm to anticipate change and be prepared to manage it.
4. It helps the firm to respond to environmental changes in a better way.
5. It minimizes the chances of mistakes and unpleasant surprises.
6. It provides clear objectives and direction for employees.

7. Write short notes on (Any Two)

a) Employee empowerment
In simple words, empowerment is giving power. In the Websters English Dictionary, the verb
empowers means to give the means, ability and authority. Viewed from this angle employee
empowerment in an organizational setting giving employees the means, ability and authority to
enable them to do some work.
According to Richard Kathnelson, empowerment is the process coming to feel and behave as if one
is in power and to feel as if they owned the firm. And according to Bowen and Lawler, employee
empowerment refers to the management strategies for sharing decision-making power.

The common sense or theme flowing from the two definitions is that they refer to employee
involvement in their works. On the whole, Empowerment is the process of enabling or authorizing an
individual to think, behave, take action, and control work and decision-making in autonomous ways.
Empowerment has become necessary due to the following reasons:
1. Time to respond has become much shorter.
2. First-line employees must make many decisions.
3. An employee feels much more control in their life since authority is given to individual decisionmaking.
4. There is great untapped potential among employees, which can be revealed through

b) Organizational leadership
1. a. Define strategic management. Discuss how does market differ from country
to country and how do they affect strategy formulation.
Definition of Strategic Management
Strategic Management is exciting and challenging. It makes fundamental decisions about the
future direction of a firm its purpose, its resources and how it interacts with the environment in
which it operates. Every aspect of the organisation plays a role in strategy its people, its finances,
its production methods, its customers and so on.
Strategic Management can be described as the identification of the purpose of the organisation
and the plans and actions to achieve that purpose. It is that set of managerial decisions and actions
that determine the long-term performance of a business enterprise. It involves formulating and
implementing strategies that will help in aligning the organisation and its environment to achieve
organisational goals.
Market differ from country to country due to following reasons
Consumer tastes and preferences
Consumer buying habits
Market size and growth potential
Distribution channels
Driving forces
Competitive pressures

One of the biggest concerns of companies competing in foreign markets is whether to customize
their product offerings in each different country market to match the tastes and preferences of
local buyers or whether to offer a mostly standardized product worldwide.

2015 Fall
What do you mean by industry analysis? What roles does it play in SM?
Industry analysis can be defined as the process of reviewing of the current business environment of an
organization to know about the firms competitive market position, firms strengths, and its weaknesses
etc. Industry analysis involves reviewing the economic, political and market factors that influence the way
the industry develops. Major factors that influence in the operation of an organization are the bargaining
power wielded by suppliers and buyers, the condition of competitors, the likelihood of new market
entrants and the threat of substitution product. Therefore, Business owners must understand the
industries in which they operate to prepare for change and to ensure continued success.
Benefits of industry analysis:
Conducting a very detailed and intense industry analysis can provide business owners with specific
knowledge regarding the economic marketplace.
Business owners may discover a market niche not currently being met by other companies.
Business owners can also conduct consumer surveys to learn about new goods or services that could have
high demand in the marketplace.
This information can provide new business owners with a significant benefit over existing companies in a
Roles played by industry analysis in Strategic Management are enlisted below:

Industry analysis helps to predicting the performance of a firm in that industry. For example, if
the price of steel drops significantly, a steel products manufacturer may be able to get cheaper
materials and enjoy higher profit margins. Being able to predict changes such as these allows
companies to react strategically.
Industry analysis helps planners to position their companies in the market for their products or
services, allowing them to determine how they can differentiate from other companies in the
same industry. Without an industry analysis, a business might enter a market that's too
competitive or one that's already saturated with similar products and services.
It helps firms identify potential opportunities for the business to develop, as well as threats that
could prevent company growth.
It can help determine whether there's a fit between internal management preferences and the
business environment. If there is a gap, the business may not survive as managers resist the forces
that shape an industry.

A industry analysis may be combined with a SWOT (Strengths, Weaknesses, Opportunities and
Threats) analysis, which looks at both internal and external factors to help analyze a company's
potential for success in a given market.

Define business environment. What method should be used to identify an
organizations competitive position?
Business establishes, grows or operates and dies in environment. It cannot operate in vacuum. It collects
inputs i.e. Man money, materials, machines etc. and provides output i.e. Goods and services in the
environment. Environment means surrounding. Business environment can be defined as a forces or
conditions that affect on organizational performance. It is the sum total of all external and internal factors
that influence a business. External factors include political, economic, socio-cultural, technological and
legal factors which are uncontrollable in nature. And internal factors include employees, shareholders,
organization structure, organization culture, organizations objective etc which are available within an
organization that affect on organization and business. It provides both opportunities and threats to the
business organization.
Method should be used to identify an organizations competitive position:
The business organization can use SWOT analysis and Five-force analysis to identify its competitive
1. SWOT Analysis:
SWOT stand for strengths, weaknesses, opportunities and threats. And the analysis of organizations
strengths, weaknesses, opportunities and threats is simply known as SWOT analysis. In broad sense, the
SWOT analysis is the deep analysis and assessment of internal and external environmental factors to know
about the organizations strengths, weaknesses, opportunities and threats. Business strengths and
weaknesses can be assessed by analyzing internal environment and opportunities and threats can be
assessed by analyzing external environment.
Strengths refers to those factors of an organization which helps it to gain competitive advantage or
increase competitive capabilities. Being highly skilled human resource, advanced technologies, highly
committed employees etc. are the strength of business firm.
Weaknesses are those factors due to which the firm cannot compete in the market that hinders in the
achievement of organizational goals. Not being the highly skilled human resource, capital constraint, out
dated technology etc. are the example of business weaknesses.
Opportunities are those factors which support in the growth of business firm. Increase in product demand,
increase in customers income level, reduction in tax etc. are the example of business opportunities.

Threats are those factors which hinders in the development and growth of business firm. Some of the
example of business threats are imposing heavy tax, decrease in demand of products or services,
increasing competition, increase in the raw materials cost etc.
2. Five-force analysis:
The Five Forces model developed by Michnal E. Porter has been the most commonly used analytical tool
for examining competitive environment. According to this model, the intensity of competition in an
industry depends on five basic forces. These five forces are:
1. Threat of new entrants
2. Intensity of rivalry among industry competitors
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Threat of substitute products and services.
Each of these forces affects a firms ability to compete in a given market. Together, they determine the
profit potential for a particular industry. To understand industry competition and profitability, one must
analyze the industrys underlying structure in terms of the five forces. Porter argues that the stronger
each of these forces are, the more limited is the ability of established companies to raise prices and earn
greater profits.
1. The Threat of New Entrants:
The first of Porters Five Forces model is the threat of new entrants. New entrants bring new capacity and
often substantial resources to an industry with a desire to gain market share. Established companies
already operating in an industry often attempt to discourage new entrants from entering the industry to
protect their share of the market and profits. Particularly when big new entrants are diversifying from
other markets into the industry, they can leverage existing capabilities and cash flows to shake up
competition. Pepsi did this when it entered the bottled water industry, Microsoft did when it began to
offer internet browsers, and Apple did when it entered the music distribution business.
2. Intensity of Rivalry among Competitors:
The second of Porters Five-Forces model is the intensity of rivalry among established companies within
an industry. Rivalry means the competitive struggle between companies in an industry to gain market
share from each other. Firms use tactics like price discounting, advertising campaigns, new product
introductions and increased customer service or warranties. Intense rivalry lowers prices and raises costs.
It squeezes profits out of an industry. Thus, intense rivalry among established companies constitutes a
strong threat to profitability. Alternatively, if rivalry is less intense, companies may have the opportunity
to raise prices or reduce spending on advertising etc. which leads to higher level of industry profits.
3. Bargaining power of buyers:

The third of Porters five competitive forces is the bargaining power of buyers. Bargaining power of buyers
refers to the ability of buyers to bargain down prices charged by firms in the industry or driving up the
costs of the firm by demanding better product quality and service. By forcing lower prices and raising
costs, powerful buyers can squeeze profits out of an industry. Thus, powerful buyers should be viewed as
a threat. Alternatively, if buyers are in a weak bargaining position, the firm can raise prices, cut costs on
quality and services and increase their profit levels.
4. Bargaining power of suppliers:
The fourth of Porters Five Forces model is the bargaining power of suppliers. Suppliers are companies
that supply raw materials, components, equipment, machinery and associated products. Powerful
suppliers make more profits by charging higher prices, limiting quality or services or shifting the costs to
industry participants. Powerful suppliers squeeze profits out of an industry and thus, they are a threat.
For example, Microsoft has contributed to the erosion of profitability among PC makers by raising prices
on operating systems. PC makers, competing fiercely for customers, have limited freedom to raise their
prices accordingly.
5. Threat of substitute products:
The fifth of Porters Five Forces model is the threat of substitute products. A substitute performs the same
or a similar function as an industrys product. Video conferences are a substitute for travel. Plastic is a
substitute for aluminum. E-mail is a substitute for a mail. All firms within an industry compete with
industries producing substitute products. For example, companies in the coffee industry compete
indirectly with those in the tea and soft drink industries because all these serve the same need of the
customer for refreshment. The existence of close substitutes is a strong competitive threat because this
limits the price that companies in one industry can charge for their product.

Define strategic leadership and explain the roles of strategic leadership in
managing firms resources.
Strategic leadership refers to a managers potential to express a strategic vision for the organization, or a
part of the organization, and to motivate and persuade others to acquire that vision. Strategic leadership
can also be defined as utilizing strategy in the management of employees. It is the potential to influence
organizational members and to execute organizational change. Strategic leaders create organizational
structure, allocate resources and express strategic vision. Strategic leaders work in an ambiguous
environment on very difficult issues that influence and are influenced by occasions and organizations
external to their own.
Roles of strategic leadership in managing firms resources:
Probably the most important task for strategic leaders is effectively managing the firms portfolio of
resources. Firms may have multiple resources that can be categorized into the following categories:

financial capital

human capital

social capital

organizational capital

Strategic leaders manage the firms portfolio of resources by

organizing them into capabilities

structuring the firm to use the capabilities

developing and implementing a strategy to leverage those resources to achieve a competitive


In particular, strategic leaders must exploit and maintain the firms core competencies and develop and
retain the firms human and social capital.

Suppose employees moral and commitment level is very low at the organization
where you are working as a responsible manager. You also agreed that this
situation adversely affect in the implementation process. You are responsible to
motivate them to work, get their commitment and increase moral. What key
consideration would you keep in your mind?
To increase moral of employees I will do following things:

I will treat employees as a friend not as a machine.

I will communicate often with my employees regarding their feeling, challenges they are facing
and so on and ask whether they need help or not.
I will solicit feedback from the employees work on the front-lines and generate innovative ideas.
I will create an Effective Incentive Program that will help them evolve personally and

I will follow strategies to increase employee commitment:

1. Clearly define responsibilities:
Each position should have a formal job description. Employees should know up front to whom they report,
what kinds of decisions they are allowed to make, and what is expected each day.
2. Properly train supervisors, administrators, and managers:
Managers and supervisors should receive appropriate training in management and people skills. Most
employees leave a company because of a poor relationship with their boss, not because of the company.
3. Map out career plans:
When employees feel there is a career plan for them, they will be more likely to stay with a company.
Regular performance reviews should be a part of the plan to provide feedback to the employee and to
reinforce their career goals.

4. Ask employees for feedback:

Dont wait until its too late conduct employee satisfaction surveys often. Ask employees what they want
more in their positions, and what they want less. Then, do what you can to show them you were listening.
5. Provide fair and competitive salaries:
While fair and competitive wages do not guarantee employee loyalty, you can be certain that below
market wages will guarantee that employees will look elsewhere for employment. Stay informed on what
other companies are paying for similar work.
6. Have an effective orientation program:
Make sure you have a formal and consistent orientation program for all new employees. An employee
will feel more like a part of the team if there is interest demonstrated in their success from the onset.
7. Communicate, communicate, communicate:
Employees want to know what is going on with their employer. Make an effort to keep them informed of
any changes being made. Let them hear it from their managers first, and it will create a sense of loyalty
and trust.
8. Create learning opportunities:
Employees interested in advancement will want to learn new things and create value in their position.
Provide those opportunities either with internal or outside education, sponsored by the company. Make
their professional development a part of their review process, goals and objectives.
9. Dont forget the benefits:
Many employees will tell you they are more concerned and focused on benefits than on wages. With this
in mind, be sure you are offering equal or better benefits than your competitors.
10. Make sure your employees know they are valued:
Take some extra time and resources to recognize your employees publicly for their achievements. A little
recognition can go a long way to retaining an employee who might otherwise have been on the fence.