STM Answers

Ans.1.Porter five forces analysis helps in determine the intensity of the competition in an
industry at its profitable level. Helps in evaluating the competitive position in an industry to
identify what strengths and weakness can be exploited and also helps in determining how
powerful each of the key five forces in a particular industry. So in case of consumer electric
automobile industry the porter five forces analysis is explained as follows :-

 Threat of New Entry (Very Weak) :-

1. In case of threat of entry in case of automobile industry is very weak because of new
entrants in the markets are high and there is no barrier of entrants in this industry.
2. High retaliation is possible for existing companies.
3. Products are mainly differentiated by design and engineering quality.
4. New entrants could easily access suppliers and distributors.
5. A firm has produced at least 5 million electronics to be cost competitive , therefore
very hard to achieve economies of scale.
6. Government often protect their home markets by introducing high import taxes.

 Supplier Power (Weak) :-

1. Large number of suppliers.
2. Some suppliers are large but most of them are pretty small.
3. Company used some other type of material but to some extent.
4. Suppliers do not pose any threat of forward integration.
5. Materials are widely accessible in the market.

 Buyer Power (Strong) :-

1. There are many buyers of this company in the market.
2. Most of the buyers are individual , but corporates and governments usually buy large
fleets and can bargain lower prices.
3. It does not cost much to the buyer to switch to another brand of electronic items
durables like Samsung, Sony in the market.
 4. Buyer does not threaten backward integration.
5. Buyer can easily choose alternative mobile brand.
6. Buyers are price sensitive in their decision and does depends on the cost of electronic
items.

 Threat of Substitutes (Weak) :-

1. There are many alternative type in this industry like fridge , mobiles , laptops.
2. Substitutes can rarely offer the same convenience.

 Competitive Rivalry (Very Strong) :-

1. Moderate number of competitors.
2. If a firm decide to leave in this industry can incur huge losses, either become
bankrupt.
3. Industry is very large but matured.
4. Size of competitor firm may vary and usually compete for different customer
segments.
5. Moderate threat of being acquired by competitor in this industry.

Strengths of each forces :-

1. Threat of new Entry:-

(a) High retaliation of existing companies. Because of excessive durability and retail
among customers in the market.
(b) Government protection an interference is major strengths of this industry.

2. Supplier Power :-
a) No threaten of forward integration
b) No of suppliers

3. Buyer Power :-
a) No threat of backward integration .
b) No of buyers.
 4. Threat of Substitutes :-
a) Many types of industries collection is the major strengths in this industry.
b) Evolving Industry.

5. Competitive Rivalry :-
a) Industry is large and matured.
b) Growth shifting to Asian markets
c) Moderate threat of acquired by competitor.

So the person should not need to invest in this industry due to threat of new competitors and
weak substitutes consumer should think invest in this industry due to its certain limits with high
weakness in this industry rather than strengths.

Ans . 2. 1. This matrix helps in evaluating the firms external factors and strategies and consider
on the aspects of external environment of competitor in the market. The major opportunity and
threats of this industry are as follows:-

Opportunity :-

a) No major competitor of fast food in this outlet so that company thinks of expanding its
scale and lines of operations in the industry in order to earn more profits as compared to
competitor in the market. The weight of this factor is highest and gives most importance.
Hence assessing all the weights of each opportunity the major opportunity of this industry
is no major competitor of fast food.

Threats :-

a) Major threat in this industry is the trends towards healthy eating of food and nourishment
for people increases and consumer are changing there more preference towards junk
foods rather than healthy eating foods which decline in profits earned in the food outlets.
Th weight of this factor is also highest in this industry among all the factors. So it is
considered as most important threat.
 2.2 . Most capitalized opportunity and threats are explained as follows :-
Opportunity :-
a) No major fast food competitor in close vicinity because it has given a highest
rating of 4 in opportunity of EFE matrix after defining all ratings and in terms
of certain food retail outlets there are no close competitors which helps in
increasing their chance of growth in the business.

b) Most capitalized opportunity is also the more middle class moving in the
neighbourhood because less rating is given in EFE matrix and it is the
opportunity which is almost used by every customer which face delays in
decision making of food outlet.

Threats :-

a) Most effectively threat in this industry is trend towards healthy eating

because it is given highest rating in EFE matrix after defining all the ratings
and due to changes in preference of consumer towards healthy diet so
competitors as well the firm lose their customers because of this major threats
and no increase in sale of their products for consumption to the customer.

b) Delivery time is more is also considered as most effective threat because of

less rating given in EFE matrix after giving all ratings and in todays scenario
most food retail outlets face the issue of delivery time which face threat to
consumer of not getting food on time.

Ans 3. Strategic leadership in todays society and firms play an important role in the society. It is
a practice in which an executive using the different styles of management develop a vision of
their organization in order to remain more competitive in a changing economic and technological
climate. Strategic leadership also helps in streamline processes, boost strategic productivity,
promote innovation and cultural environment and encourages employee to be productive ,
independent and push forward their ideas. Role played by leader in implementing strategy and
managing changes in the organizations of Hyundai motors group are explained as follows :-

 Helps in valuing business ethics and corporate governance :

Leader of Hyundai motors has to value its ethics of the business which is considered as
most prioritize for a leader in any organization and deciding that whether the ethics
valued according to customs or not for maintaining corporate governance.

 Helps in leadership development :-

There are very groomed leaders which sophisticated the development of leadership
qualities and leading social responsibilities also helps in leadership development
qualities.

 Helps in establishing effective ethics compliance and enforcement process :-

The leader has to provide mandatory ethics training programme for employees in order to
improve effective leadership styles and conducting annual audit of each manager efforts
require to provide integrate ethics in the business.

 Helps in leading Development of better competencies and capabilities of employees in

the organisation :-
Helps the leader in strengthening core competencies and competitive competencies and
capabilities to better helps in performing chain values of activities in the business.

 Helps in defining the types of leadership styles like laizzes faire , democratic style and
participative leadership styles.

 Helps in putting constructive pressure on the organization to achieving good results and
formulation of business.

 Helps in Leading the strategy execution process.

  Helps in transforming leadership scenario of business and rules and regulations provided
by leader in the organisation which transform the changes in leadership styles of the
business.

 Helps the leader in adapting to the cultural dimensions of the business.

 Helps to provide proper evidence of leadership styles formulation in the business.

Ans 4. 1 SWOT analysis is used to affect internal strategies and factors of the firm and identifies
the major strengths and weakness of the firm and helps the manager in creating quick overview
of the company’s strategic situation. Internal strengths and weakness identify internal strengths
while opportunities and threats focus the external factor advantage to the firm.

Strengths :-

1. All the labs are accredited nationally whereon even many large hospitals have not
thought of accreditation of these hospitals.
2. Helps to reach clients outside the india.
3. Bio- Chemistry and blood testing equipments are sanitized every day and bar coding of
registration of patients does not allow any identity mix ups and routine test are highly
sophisticated.
4. Their technicians work around the clock unlike the competitors and home service foe
collection and reporting is also available.

Weakness :-

1. There are 20,000 to 100,000 standalone labs engaged in routine pathological business in
india.
2. Not find many existing laboratories meeting the quality standards.

Opportunities:-

1. Huge unutilized capacity and providing service on advertisement of their acceptance and
accreditation to the potential customers.
2. Tapping more through a reference lab for many leading hospitals in india.
 Threats :-

1. Top 3 firms command for only 9% against 40-45% by their counterparts in USA.
2. Dey’s lab is highly sophisticated because of bounding in more expenses and price of the
test would be high for each test conducted in the hospitals because majority of customers
are of low to middle income groups which does not cater these tests and spend their
expenses on test which lead to biggest threat for Dey’s Lab.

Ans 4.2. BCG Matrix of Dey Lab :-

BCG matrix helps in identifying competition of external factors and strengths of the business.

The BCG Matrix is explained as follows :-

Dog :- It refers to high relative market share with low market growth rate. In this case Dey’s , lab
has low market growth of their medicines supplied all over the world.

Cash Cow :- It refers to low market share with low growth rate of the business. In this case cost
of test is considered high for consumers so it has low growth in the market of medical labs.

Star : - It refers to high market share with high growth in the market. In this case there is high
growth of blood testing equipments used in checking patients.

Question Mark :- It refers to providing high market growth with low relative share in the market.
In this case their growth was very high with 21 centres across the country projected to be 50 in
next 2 to 3 years and low market share of 2% Indian market of hospitals.

Now the grand strategies on the basis of BGC and SWOT are explained as follows :-

1. Cost Leadership :- In this strategy lab focus on economies of scale by investing more and
expanding the centres , having strong supplier relation to bring cost down and provide
affordable prices to match the buying power of consumer in the business.
2. Focus Business Strategy :- In this strategy lab has target premium hospitals which
requires high standard lab services and price is not considered issue for consumer.

3. Cost Differentiation :- Charging different rates to the customers on the basis of tests.
4. Cost integration :- Integrating the changes in the lab done by dey in the hospital.