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Course: Business Policy and Strategy (887) Semester: Spring 2010
Level: MBA Total Marks: 100
Pass Marks: 40
Note: Attempt all questions.
Q. 1 Develop your vision and mission statement for an organization of your choice from
broadcasting sector and compare your vision and mission statement with the original vision
and mission statement of that organization. (20)

Q. 2 (a) As a manager of any service organization, how would you identify and analyze
strategic gap? (10)
(b) Select any firm from manufacturing sector, discuss the general environment and
competitive environment of that firm. (10)
Q. 3 Suppose you are running a large scale business organization, how will you use the
technology to leverage human capital and knowledge? (20)
Q. 4 For any government organization in Pakistan, what will be the challenges and implications
for the strategy development of Human Resource Management? Discuss in detail. (20)
Q. 5 (a) How an international organization develops its different strategies? Explain the
factors affecting international strategies. (10)
(b) Describe the growth of any international business through related diversification and
through unrelated diversification. (10)

Globalization was the buzzword of the 1990s, and in the twenty first century, there is no
evidence that globalization will diminish. Essentially, globalization refers to growth of
trade and investment, accompanied by the growth in international businesses, and the
integration of economies around the world. According to Punnett (2004) the globalization
concept is based on a number of relatively simple premises:

• Technological developments have increased the ease and speed of international

communication and travel.

• Increased communication and travel have made the world smaller.

• A smaller world means that people are more aware of events outside of their
home country, and are more likely to travel to other countries.

• Increased awareness and travel result in a better understanding of foreign


• A better understanding of opportunities leads to increases in international trade

and investment, and the number of businesses operating across national borders.

• These increases mean that the economies around the world are more closely
Managers must be conscious that markets, supplies, investors, locations, partners, and
competitors can be anywhere in the world. Successful businesses will take advantage of
opportunities wherever they are and will be prepared for downfalls. Successful managers,
in this environment, need to understand the similarities and differences across national
boundaries, in order to utilize the opportunities and deal with the potential downfalls.
The globalization of business is easy to recognize in the spread of many brands and
services throughout the world. For example, Japanese electronics and automobiles are
common in Asia, Europe, and North America, while U.S. automobiles, entertainment,
and financial services are also common in Asia, Europe, and North America. Moreover,
companies have become transnational or multinational-that is, they are based in one
country but have operations in others. For example, Japan-based automaker Honda
operates the largest single factory in the United States, while U.S. based Coca-Cola
operates plants in other countries including France and Belgium—with about 80 percent
of that company's profits come from overseas sales.
During the early1990s, there were reasons to feel that globalization was working. The
economic success of Singapore, the rapid economic growth in the Asian Tigers (as the
Asian countries that grew rapidly were called), the industrializing of countries, such as
Brazil and Mexico, and a variety of other positive economic events around the world
suggested that the results of globalization were indeed good for development in poorer
countries, as well as in richer ones. During the 1990s, the United States experienced one
of its most sustained periods of growth as well, and there was much talk of a "new
economy", based on globalization, which was immune to economic shocks and recession.
Unfortunately, this rapid growth was not without consequences. The Seattle meetings of
the World Trade Organization turned into a fiasco, with anti-globalization groups
demonstrating against globalization on all fronts—from animal rights to environmental
concerns, poverty alleviation, and jobs for Americans. The anti-globalization forces have
not coalesced into a coherent whole because they represent such diverse and often
contradictory views. The vehemence of their protests, however, make it clear that
globalization is not a panacea for the world's problems. In addition, the Asian Tigers
suffered major economic setbacks in the late 1990s. In 2002, Argentina's economy, which
had been one of the stars of the 1990s, crashed, when the country could no longer
maintain its currency at par with the U.S. dollar.
Further problems occurred in the Triad economies. Japan, Europe, and the United States,
often referred to as the Triad, dominated international trade and investment for much of
the second half of the twentieth century. The Japanese economy went into a severe period
of recession and deflation in the late 1990s, and in 2001 both the European and the U.S.
economies took a downward turn as well. In turn, the rest of the world was negatively
affected by the economic situation in the Triad. The terrorist attacks in the United States
in September, 2001, exacerbated this already negative economic situation.
In developing appropriate global strategies, managers need to take the benefits and
drawbacks of globalization into account. A global strategy must be in the context of
events around the globe, as well as those at home.
International strategy is the continuous and comprehensive management technique
designed to help companies operate and compete effectively across national boundaries.
While companies' top managers typically develop global strategies, they rely on all levels
of management in order to implement these strategies successfully. The methods
companies use to accomplish the goals of these strategies take a host of forms. For
example, some companies form partnerships with companies in other countries, others
acquire companies in other countries, others still develop products, services, and
marketing campaigns designed to

Table 2
Differences Between Domestic and
International Strategy
Country GDP per Capita (2003 Estimate in US$)
Luxembourg 55,100
United States 37,800
Norway 37,700
Bermuda 36,000
Cayman Islands 35,000
San Marino 34,600
Switzerland 32,800
Denmark 31,200
Iceland 30,900
Austria 30,000
products or services. Managers also should consider the currency stability of the different
markets, which can be done by using documents from the home countries to determine
currency value and fluctuation over a period of years.
To select the best markets for entry, managers also should consider the degree of
competition within different markets and should anticipate future competition in them as
well. Determining the degree of competition involves the identification of all the
companies competing in the prospective markets as well as their sizes, market shares, and
prices. Managers then should evaluate a prospective market by considering the number of
competitors and their characteristics as well as the market conditions—that is, whether
the market is saturated with competition and cannot support any new entrants.
Next, managers should evaluate the regulatory environment of the prospective markets,
since knowing tax, trade, other related policies is essential for a successful international
business. This step entails determining the respective tariffs and trade barriers of
prospective markets. Different types of trade barriers may influence the kind of business
activity a company chooses for a particular market. For example, if a prospective market
has trade barriers that restrict the entry of foreign-made goods, a company might decide
to access the market through foreign direct investment and manufacture its products in
that country itself. Ownership restrictions also may limit a company's interest in a
particular market; some countries permit foreign companies to set up local operations
only if they establish a partnership with a local company. In addition, managers should
find out if prospective countries charge foreign companies higher taxes or if they offer
tax breaks and incentive to encourage economic development. A final consideration
companies must make concerning government is stability. Since some countries have
rough government transitions resulting from coups and uprisings, companies must
countenance the possibility of political turmoil that could substantially disrupt business.
The last step in international market evaluation is the assessment of cultural factors. To
avoid difficulties associated with cultural differences, some managers look for new
markets that have cultural similarities to their home market, especially for initial
international market penetration endeavors. Unlike market potential, competition, and
regulation, cultural differences are more difficult to evaluate. Nevertheless, managers
must try to determine the consumer needs and preferences in the prospective markets.
Managers must also account for cultural differences in labor relations such as worker
motivation, compensation, hours, etc. if planning foreign direct investment in an overseas
company. Moreover, a thorough understanding of a prospective country's culture will
greatly facilitate any kind of global business enterprise. This cultural knowledge should
include a basic understanding of a prospective country's beliefs and attitudes, language
and communication styles, dress, food preferences and customs, time and time
consciousness, relationships, values, and work ethic. This kind of cultural information is
essential for developing an effective and realistic global strategy.
Since conducting primary research is labor intensive and time consuming, managers may
obtain preliminary information on prospective markets from books such as Dun &
Bradstreet's Guide to Doing Business Around the World and Business Protocol: How to
Survive and Succeed in Business, or the Economist's "Doing Business in…" series, which
list potential trade opportunities, policies, etiquette, taxes, and so on for various countries.
After examining the prospective markets in this manner, managers are ready to evaluate
the advantages and disadvantages of each potential market. One way of doing so is the
determination of costs, advantages, and disadvantages of each prospective market. The
costs of each market include direct costs and opportunity costs. Direct costs are those a
company pays when establishing a business in a new market, such as costs associated
with purchasing property and equipment and producing and shipping goods. Opportunity
costs, on the other hand, refer to the costs associated with the loss of other opportunities,
since entering one market rules out or postpones entering another because of a company's
limited resources. Hence, the profits that could have been earned in the alternative market
constitute the opportunity costs.
Each prospective market usually has a variety of advantages, such as the possibility for
growth, which will lead to greater revenues and profits. Other advantages include
relatively low material and labor costs, new technology gaining strategic advantage over
competitors, and matching competitors' actions. However, each prospective market also
usually has a number of disadvantages, including opportunity costs, greater business
complexity, and potential losses stemming from unforeseen aspects of prospective
markets and from currency fluctuations. Other disadvantages might result from potential
losses associated with unstable political conditions.


In the late 1990s after a significant amount of globalization had taken place, business
analysts began to examine the success of various strategies for doing business in other
countries. This examination led to the distinction between various orientations of
international strategies. The main distinction was between multi-domestic (also called
multi-local) international strategies and global strategies. Multi-domestic international
strategies refer to those that address competition in each country or region on an
individual basis, whereas global strategy refers to addressing competition in an integrated
and holistic manner across country and regional boundaries. Hence, multi-domestic
international strategies attempt to appeal to the needs of customers in different countries
or regions, while global strategies attempt to standardize products and marketing to work
across boundaries. Instead of relying on one of these strategies, multinational companies
might adopt a different strategy for different products or services. For example, a
company might use a global strategy for its electronics and a multi-domestic strategy for
its appliances.
Critics of the standardization approach argue that it makes two questionable assumptions:
that consumers' needs are becoming more homogenous throughout the world and that
consumers prefer high quality and low prices over advanced features and functions.
Nevertheless, standardized global strategies have some significant benefits. Companies
can reduce their marketing expenditures, for example, if they use the same ads in all their
markets. PepsiCo, for example, uses the same televisions ads in all of its national
markets, saving an estimated $10 million a year. Besides marketing savings, global
strategies can lead to other kinds of benefits and advantages in areas such as design,
packaging, manufacturing, distribution, customer service, and software development.
Some people argue that companies must customize their products or services to meet the
needs of various international markets, and hence must use a multi-domestic strategy at
least in part. For example, KFC planned a standardized approach to its foray into the
Japanese market, but the company soon realized it had to change its strategy to meet the
needs of Japanese consumers and customize its operations in Japan. Consequently, KFC
introduced smaller pieces of foods to cater to a Japanese preference, and located
restaurants in crowded areas along with other restaurants, moving away from independent
sites. As a result of these changes, the fast-food restaurant experienced stronger demand
in Japan.
The development of regional trading blocs has promoted an emphasis regional strategies
as companies develop plans to take advantage of the conditions within various trading
blocs such as the North American Free Trade Agreement (NAFTA), the European Union,
the Asia-Pacific Economic Cooperation (APEC) and the Association of Southeast Asian
Nations (ASEAN). In addition, the United States has signed 16 different trade agreements
with South American countries, creating a foundation for a trading bloc consisting of all
North and South American countries. Consequently, companies have been establishing
regional strategies designed around these trading blocs. Nike, for example, established
central warehouses for its European distribution, just as it has a central warehouse for its
U.S. distribution. This strategy has enabled Nike to reduce its inventory, cut down on
redundancy, reduce costs, and enhance availability. In addition, News Corporation
originally relied on a global strategy with its STAR-TV satellite television network;
attempting to provide the same television shows across Asia in English. The company
quickly switched to a multi-domestic strategy, providing programming in local languages
after receiving low ratings and advertising dollars with its first approach.
A variety of corporate collapses, and the revelation of unethical and illegal practices in
many international companies, has led to a focus on Corporate Governance and Ethics in
the early twenty first century. Issues of what constitutes socially responsible behavior are
likely to be a major part of global strategy for the coming years.

Total Marks: 100

Pass Marks: 40

This assignment is a research activity. You are required to visit any business/ commercial
organization and prepare a research report of about 15 to 20 pages on one of the topics given
below. To avoid the duplication, a student is required to select the topic according to the last digit
of his/ her role number. For example if your roll number is
I-342718 then you will select topic # 8 from the given below list (last digit):

As there are four topics, you will select the topic according to the last digit mentioned as under:

Topics last digit of the role number

1, 2, 3
4, 5, 6

7, 8

9, 0


Strategic Analysis

Strategy Formulation

Strategy Implementation

Strategy Evaluation

The assignment should be developed on the following format.

Introduction 10 marks

Review of literature 30 marks

The data collection 10 marks

Data analysis 20 marks

Conclusions and recommendations 20 marks

References 10 marks


Guidelines for the submission of assignments

You are required to prepare two copies of 2nd assignment. Submit one copy to your tutor/ teacher
for evaluation and the second copy for presentations in the workshop in the presence of the
resource person and classmates, which will be held at the end of the semester prior to the final
Guidelines for workshop

The workshop is a compulsory component of this course to cover practical aspects of the
curriculum, which will be held at the end of the semester and your attendance is compulsory in all

There are two components in the workshop. The first part is a group activity. The students will be
divided into four groups and they would be assigned topics as under:

Group one: Strategic Analysis

Group two: Strategy Formulation

Group three: Strategy Implementation

Group four: Strategy Evaluation

Each group will select a group leader and discuss the topic within the group. The group members
will act as members of the top management team of a company and discuss aspects of
management by using models and theories covered in the course. The focus of the group activity
would be on theories, models, case studies and practical examples of real life situation of national
and international industries, business organizations, and products. The group discussion will
enable students to share their knowledge and experiences. This will also help them in getting
clarity of the concepts and discuss the issues faced by the management of different organizations
observed and studied by the group members.

All students will come with full preparation and this activity will be supervised by one of the
resource persons, who will act as a facilitator.

All groups will work simultaneously and complete this task on the first day of the workshop. The
group will prepare a presentation based on the findings of the discussion.

If a student does not participate in this activity he/she will be declared absent from the workshop
and will have to attend the workshop in the next semester or act according to the university rules.

Each group will perform the said activity and other groups will participate as observers. The tutor
will write a report on the strengths and weaknesses of each group member and will evaluate each

The tutors/teacher will keep record of his observations and submit the same to the RD who would
send it to the Quality Assurance Cell Department of Business Administration Allama Iqbal
Open University Sector H-8 Islamabad, within one week of the evaluation by the tutor.
The 2nd component of the workshop is an individual activity.

The guidelines for this activity are as under:

Each student will present his/her 2nd assignment in the class.

Students are advised to prepare the presentations based on their 2nd assignments.

Each student will be given 10 to 15 minutes for presentation and 5 minutes for class discussion.

The participants and tutor/ teacher will allow the presenter to make his/her presentation for 15
minutes to provide him/her an opportunity to gain confidence and improve his/her
communication skills. The questions to generate the discussion and evaluate the performance will
be asked in the last five minutes.

To maintain the discipline and for effective time management, each student is required to make
presentation according to the last digit of his/ her roll number. For example if your roll number is
I-342701 then you will be the first presenter (last digit).

Fifty percent marks will be assigned to group activity and the remaining fifty percent to the
individual presentation.

The resource person/ teacher/ tutor (academic Incharge of the workshop) will write a two page
report about the workshop activity as a whole and send it on the following address along with
individual report about each student’s performance in the group activity for quality assurance.

Quality Assurance Cell,

Department of Business Administration,

Allama Iqbal Open University,

Sector H-8 Islamabad.

Code No. 887

Course title: Business Policy and Strategy

Code No.: 887

Level: MBA

Prerequisite: Student should have good communication skills in English language and good
understanding of Management, Marketing and Finance.

Credits: Half credit (AIOU System) = 3 credits in formal system

Course objectives

Strategic Management is an integrative course designed to provide students the opportunity to

develop skills in identifying, analysing, and solving problems faced by top management in the
real business world. While doing this, you will gain experience and confidence that will prepare
you for the business world. The perspective will be that of top management concerns of the total
organization rather than any specific functional area. In addition to the use of books, lectures,
discussions in the class and workshops, use of articles from the business press is recommended to
focus on topics of current interest. Throughout the course, a strategic outlook will prevail.
Precisely, the objectives of this course are:

To build up an understanding of strategic management process, theories and research

To enhance the student’s understanding of the present and future environments within which
organizations function

To develop advanced analytical skills to identify and analyze strategic options and present well-
supported recommendations for future actions

To develop an advanced understanding about designing organizational structure, control system

and implementing strategic change.

To extend a critical awareness of contemporary and pervasive issues in corporate strategy

Brief Course Outlines

Unit 1 Introduction to Strategic Management

Unit 2 Strategic Environments

Unit 3 Strategic Resources and Capabilities Analysis

Unit 4 Strategy Development

Unit 5 Corporate Level Strategy

Unit 6 Business Level Strategy and Functional Strategy

Unit 7 Creating Effective Organizational Structure

Unit 8 Strategy Implementation

Unit 9 Strategy Evaluation and Managing Strategic Change


Unit 1 Introduction to Strategic Management

1.1 Nature and importance of strategic management and strategy

1.1.1 Attributes of strategic management

1.1.2 Evolution of strategic management

1.1.3 Strategic management process

1.1.4 Development the vision and mission

1.1.5 Characteristics of strategic decisions

1.1.6 Strategy hierarchy

1.1.7 Strategy triggering events

1.1.8 Organizational objectives and the strategic choices

1.2 Strategic management in different contexts

1.2.1 Small businesses

1.2.2 Global companies

1.2.3 Manufacturing and service organizations

1.2.4 Innovatory organizations

1.2.5 Public-sector organizations

1.2.6 Voluntary and not-for- profit organizations

1.3 Challenges of strategic management

Unit 2 Strategic environments

2.1 The strategic importance of understanding the environment

2.2 The general environment

2.3 The macro-environment analysis

2.3.1 PESTEL framework

2.3.2 Structural drivers of change

2.3.3 Impact of environmental influences

2.3.4 Scenarios
2.4 The competitive environment

2.5 Industries and sectors analysis

2.5.1 Sources of competition

2.5.2 The dynamics of competition and hyper-competition

2.5.3 Strategic groups

2.6 Organizational fields

2.7 Markets

2.7.1 Market segmentation

2.7.2 Understanding what customers value

2.8 Value chain analysis

2.9 SWOT analysis

2.10 Identifying and analysing strategic gap

2.11 Resource based view of the firm

Unit 3 Strategic Resources and Capabilities Analysis

3.1 The roots of strategic capabilities

3.2 Importance of knowledge in developing strategic capabilities

3.3 Human and social capital

3.4 Use of technology to leverage human capital and knowledge

3.5 Critical success factors

3.5.1 Available resources

3.5.2 Threshold resources

3.5.3 Unique resources

3.6 Competencies and core competencies

3.7 Delivering value for money

3.7.1 Sources of cost efficiency

3.7.2 Product features

3.8 Performing better than competitors

3.8.1 Historical comparison

3.8.2 Industry norms/standards

3.8.3 Benchmarking

3.9 Robustness

3.9.1 Rarity

3.9.2 Complexity

3.9.3 Causal ambiguity

3.9.4 Culture

3.9.5 Knowledge creation and integration

Unit 4 Strategy Development

4.1 The strategy lenses

4.1.1 Strategy as design

4.1.2 Strategy as experience

4.1.3 Strategy as ideas

4.2 Strategy development process

4.2.1 Strategic planning systems

4.2.2 Strategic leadership

4.2.3 Organizational politics

4.2.4 Logical incrementalism

4.2.5 Imposed strategy

4.2.6 Multiple processes of strategy development

4.3 Directions for strategy development

4.3.1 Protect and build on current position

4.3.2 Product development

4.3.3 Market development

4.3.4 Diversification

4.4 Methods of strategy development

4.4.1 Internal development

4.4.2 Mergers and acquisitions

4.4.3 Joint developments and strategic alliances

4.6 Challenges and implications for strategy development

4.6.1 Intended and realized strategies

4.6.2 Strategic drift

4.6.3 Uncertain and complex conditions

Unit 5 Corporate Level Strategy

5.1 Types of corporate strategy

5.2 Growth through related diversification

5.2.1 Leverage competencies

5.2.2 Sharing resources and activities

5.2.3 Vertical integration

5.3 Growth through unrelated diversification

5.4 Financial synergies and corporate parenting

5.4.1 Portfolio management

5.4.2 The restructure

5.4.3 The synergy manger

5.4.4 The parental developer

5.5 Means to achieve diversification

5.5.1 Mergers and acquisitions

5.5.2 Strategic alliances and joint ventures

5.5.3 Internal development

5.6 Managing corporate portfolio

5.6.1 The growth share matrix (or BCG box)

5.6.2 Balance in public sector portfolio

5.6.3 The directional policy matrix

5.6.4 The parenting matrix

5.6.5 Trends in portfolio management

5.7 Managerial motives to diversify

5.8 International strategy

5.8.1 Understanding global economy

5.8.2 Factors affecting a country’s competitiveness

5.8.3 Motivations of international expansion

5.8.4 Risks of international expansion

5.8.5 Achieving competitive advantage in global markets

5.8.6 Entry modes of international expansion

Unit 6 Business Level Strategy and Functional Strategy

6.1 Types of business strategy

6.2 Forces influencing business strategy

6.3 Bases of competitive advantage

6.3.1 Price base strategies

6.3.2 Differentiation strategies

6.3.3 Hybrid strategy

6.3.4 Focus strategies

6.4 Sustaining competitive advantage

6.5 Strategic implications of industry life cycle

6.6 Competition and collaboration

6.7 Game theory

6.7.1 Simultaneous game

6.7.2 Sequential game

6.7.3 Repeated games

6.7.4 Changing the rules of the game

6.8 Competitive advantage in hyper-competitive conditions

6.9 Digital business strategy

6.9.1 Role of technology in business competition

6.9.2 Impact of digitally based capabilities on competitive forces

6.9.3 Uses of Internet to add value and achieve unique advantage

6.9.4 Use of Internet-enabled business models

6.9.5 How digital strategies can improve competitive position
6.9.6 Pitfalls associated with using the Internet and digital technologies

Unit 7 Creating Effective Organizational Structure

7.1 Importance of organizational structure in implementing strategies
7.2 Patterns of growth of large companies
7.3 Elements of organizational structure
7.3.1 Work specialization
7.3.2 Departmentalization
7.3.3 Chain of command
7.3.4 Span of control
7.3.5 Centralization-decentralization
7.3.6 Formalization
7.4 Factors affecting organizational structure
7.4.1 Strategy
7.4.2 Size
7.4.3 Technology
7.4.4 Environmental uncertainty
7.5 Structural types
7.5.1 Traditional Simple Functional Divisional
7.5.2 Contemporary Team-based Matrix Project-based Boundaryless: Virtual, Network and Modular
7.6 Creating Ambidextrous Organizations
7.7 Challenges in organizational design
7.7.1 Keeping employees connected
7.7.2 Building a learning organization
7.7.3 Global structural issues

Unit 8 Strategy Implementation

8.1 Managing people
8.1.1 People as a resource
8.1.2 People as the cultural and political context
8.1.3 Organizing people
8.1.4 Competitive advantage through people
8.2 Managing information
8.2.1 Information and strategic capability
8.2.2 Information and changing business models
8.2.3 Information and structuring
8.3 Managing finance
8.3.1 Managing for value
8.3.2 Funding strategic development
8.3.3 Financial expectations of stakeholders
8.4 Managing technology
8.4.1 Technology and competitive situation
8.4.2 The diffusion of innovation
8.4.3 Technology and strategic capability
8.4.4 Organizing technology development
8.5 Integrating resources
Unit 9 Strategy Evaluation and Managing Strategic Change
9.1 Measures of corporate performance
9.2 Strategic information systems
9.3 Strategy evaluation process
9.4 Strategy evaluation criteria
9.4.1 Suitability
9.4.2 Acceptability
9.4.3 Feasibility
9.5 Strategy evaluation methods
9.6 Strategic control
9.7 Managing Strategic Change
9.7.1 Types of strategic change
9.7.2 Levels of change
9.7.3 Forces for change
9.7.4 Diagnosing the change situation
9.7.5 Levers for managing strategic change
9.7.6 Change process
Recommended Books:
David, R. F. (Strategic Management) 8th Ed. Islamabad, NBF
Dess, G. G., Lumpkin, G. T. and Eisner, A. B. (2007) Strategic management: text and cases, 3rd
Ed., Boston: McGraw-Hill/Irwin.

Dess, G. G., Lumpkin, G. T. and Eisner, A. B. (2007) Strategic management: creating

competitive advantages, 3rd Ed., Boston; London: McGraw-Hill/Irwin.
Johnson, G., Scholes, K. and Whittington, Richard (2006) Exploring corporate strategy, 7th Ed.,
Harlow: Prentice Hall.
FitzRoy, Peter and Hulbert, J. M. (2005) Strategic management: creating value in a turbulent
world, Chichester: Wiley.