YEAR III SEMESTER I – INTAKE II (GROUP A)

END SEMESTER EXAMINATION – JANUARY 2017

Question No. 02
You are the Chief Strategic Consultant for an investor who intended to invest in a high-end fashion
showroom in Colombo area. Using Five Forces Model, discuss the level of attractiveness of high-end
fashion business in Sri Lanka
(Total 20 Marks)
Five forces defined by Porter can be said to be a framework for analyzing the nature of the competition
within an industry. It also helps in understanding and assessing the industry profitability or in simple words,
how attractive an industry is.
Threat of New Entrants
New entrants in an industry increase the level of
competition as existing players try to defend their market
share against them. The higher the threat of new entrants,
the lower the attractiveness of an industry. Highly
profitable markets tend to attract many new players.
However, for new entrants to an industry where established
players are taking advantage of economies of scale and high
product differentiation, several additional obstacles make
entering the industry unattractive, including high upfront
investment requirements and the time and cost of establishing distribution channels. According to this
scenario high end fashion business in Sri Lanka has high barriers to entry because there are huge firms
which have economies scale dominating the market such as Bodyline(pvt)ltd, Brandix Apparel, Mas,
Hidramani and also the initial investment in this industry also very much high this makes this industry
unattractive.
Threat of Substitutes
Substitutes are those products or service that meet the same need as another product but which belong to
different industries or product categories. If substitutes offer equal or greater benefits at a lower cost, they
can make an entire industry obsolete. Conversely, factors such as high conversion costs and low value
perception result in a low buyer willingness to convert, and consequently a low threat of substitutes.
When considering this industry, high end fashion showroom have less substitutes comparing to the other
industry. This mean the industry is attractive in relation with less threat of substitutes in this industry.
Bargaining Power of Customers
Customers generally demand high product quality, low costs, quick delivery, and personalized customer
support, among other things. As a result, competition is created in the industry as players in the market try to
satisfy these demands. Customers use this competition to obtain the best value. On the other hand, a number
of factors can reduce the bargaining power of customers, for example, high cost of switching to another
supplier, low number of suppliers, fragmented customer segments, and lack of substitute products.
In high end fashion business in Sri Lanka have high amount of bargaining power of customer because one
customer can switch from buying from one fashion outlet to another fashion outlet of competitive business
because there is less cost of switching the supplier to the customer. This makes this high end fashion
business market less attractive.
 Bargaining Power of Suppliers
Suppliers can impact the cost of production by changing the prices of raw materials or intermediate goods. A
significant increase in raw material prices can force smaller businesses or less profitable firms to exit the
market, as they are not as well positioned as larger more established and more profitable firms to absorb
such drastic price changes. In addition, a number of factors can result in low bargaining power of suppliers,
for example, availability of low-cost substitutes, low cost of switching to another supplier, low threat of
forward integration that is a situation in which a supplier directly reaches out to the end customer, and a low
necessity for the supplier’s product in the organization’s final product.
Comparing this industry with other industries, this high end fashion business in Sri Lanka have low amount
of bargaining power of suppler because there are plenty of suppler who are supplying high end fashion
materials for clothing outlets this makes this industry more attractive.
Competitive Rivalry
This concept refers to the intensity of competition among existing organizations in an industry. A high
degree of competition reduces industry profitability, thereby making the industry less attractive for potential
new entrants. There are some factors that can result in a low level of competition, for example, high fixed
costs, and high level of product differentiation, high customer conversion costs, and the existence of a
monopoly, duopoly, or oligopoly
In this high end fashion business industry in Sri Lanka has some power full competitive firms sharing the
market share this makes the industry less attractive.
Question No. 03
Advise what the most suitable organizational structure type is, for a given Audit firm operates in Sri
Lanka. Discuss what are the advantages and disadvantages, the proposed organization structure has?
(Total 20 Marks)
Question No. 04
Strategist’s role is to identify types of required strategic change and assess the different styles of
leading and managing strategic change. Interpret available Styles of managing change in Strategic
Management.
(Total 20 Marks)

 Education and delegation-

Small group briefings to discuss and explain things. The aim is to gain support for change by generating
understanding and commitment. This methods will spread the support to change and ensures a wide base of
understanding. The main disadvantage of this method is it takes long time for this process. And for an
essential and drastic change its not enough convince people of the need for change.

 Collaboration-
A collaborative approach to change means involving the people affected, creating the change with them
rather than doing the change to them. This works by creating pull and gaining commitment through getting
people to invest in the change. This methods will spread the support to change and also ownership of change
by increasing levels of involvement. The problem with collaboration is that it takes time and effort,
 which relatively few organizations are either willing or able to give. When speed is important and resources
are thin on the ground, then investing in collaborative efforts can seem wasteful.

 Participation-
This is where involvement of employees in how to deliver the desired changes. May include limited
collaboration over aspects of ‘how’ to change as well as ‘what’ to change. This methods will spread
ownership the support to change but within a more controlled framework. The main problem with this
method is it can be perceived as manipulation.

 Direction-
In a directive approach, there may still be a high level of communication, but it is now largely one-way. The
organization is told how it will change. This is thus using the principle of push to drive through change.
With the control of what happens in relatively few hands, the risk of variation in the plan is essentially
removed.
The main advantage of this method is its less time-consuming and provides a clear change of direction and
focus. The main disadvantage is potentially less support and commitment, and therefore proposed changes
may be resisted.

 Coercion-
A coercive approach pays little attention to the people, their ideas or their needs and the management uses
its power to impose change. Not all coercive approaches are unethical and some are simply born of the need
for urgency. Ethics lie in the values of the people who are planning and implementing the change, rather
than the fact that a coercive approach is being used.

Question No. 05
Write 05 short notes from below topics
1. Strategy Lenses-
Strategic lenses are a concept of strategic management. The Strategy lenses are ways of looking at strategic
issues differently in order to generate many insights. Looking at the problem in different ways will raise new
issues and new solutions. They are the four angles from which strategy can be viewed and implemented on a
corporate level.
 Strategy As Design - This lens views Strategy development as a process of logical process of
analysis and evaluation. Through careful evaluation of the firm's industry, environment and available
resources, the optimal strategy and clear direction can be determined.
 Strategy As Experience- this model views, strategic development is the continuous adaptation of past
strategies based on experience, assumptions and taken for granted ways of doing things
 Strategy As Idea - This approach to strategy emphasis innovation and the need for diversity of ideas
in the organisations.
 Strategy As Discourse- Strategy as discourse sees strategy development in terms of language as a
"resource" for managers by which strategy is communicated, explained and sustained and through
which managers gain influence, power and establish their legitimacy as strategists.
2. Value chains and value systems
Value Chain framework is a model that views firms by sets of activities that firms use to create value and
competitive advantage. It Models the firm as a chain of value-creating activities. Its ultimate goal is to
maximize value creation while minimizing costs. The value chain framework is a powerful analysis tool for
strategic planning.
A value system is the network of organizations and the value producing activities involved in the production
and delivery of an offering. The major business processes are the value producing activities. Specifically,
 Porter called the value producing activities of one organization a value chain and the network organizations
involved in the production and delivery of an offering to the end customer a value system.
3. No frills and Low price strategy
A no frills strategy combines a low price with low perceived product/ Service benefit. A no Frills strategy
is appropriate for commodity like products or for markets where customers are very price conscious. It is
also suitable in markets where there is little opportunity for competition on product features. Car fuel may
be an example. A no frills strategy may be used for market entry, to gain experience and build volume.

A firm pursuing a low price strategy aims to offer value than its competitors .It seeks to do this by offering
the same product or service benefits as its competitors, but at lower price. However, a potential drawback
with such strategy is that it could lead to price war, if competitors lower their prices as well.

4. ‘Hard’ and ‘Soft’ HR management

Hard HRM - a very instrumental, practical approach, people seen as a passive resources to be used, deployed
and if necessary disposed. Hard HRM leads to one-way communication and supports a more autocratic
leadership style. Managers are often more likely to achieve their short term goals if they use Hard HRM
because there is no delay in conveying of information and the employee is unlikely to ask questions. The
managers tend to quickly get rid of employees who lower their performance, before it harms the
organization. It is almost like replacing one machine with another if first one gets a defect!
On the other hand, is the Soft HRM. In organizations where it is used, managers allow workers to consult
and ask questions about orders. There is almost always 2-way communication, which maybe slow, leads to
innovative ideas. Being on the opposite pole to Hard HRM, in Soft HRM long term goals are more likely to
be fulfilled. With a motivated workforce, the need to replace workers is rare, but even if the worker needs to
be replaced it will take too long because of the nature of this approach.

5. Styles of managing change – already given above

6. Situational Leadership
Situational approaches to leadership theory propose that the most effective approach to leadership depends
on the work situation. There is no one right way to lead that will fill the situation. The ability of a mangers to
be an effective leader depends on the particular situation (which can vary) and the leadership styles they use.
Models for situational leadership approach are – Fiedler’s contingency theory of leadership, Adair: action –
centered leadership, Hersey and Blanchard: Situational Leadership theory.

7. Strategy Development Routes

When an organization’s environment is stable and

predictable, strategic planning can provide enough of a
strategy for the organization to gain and maintain success.
But todays dynamic business world, the environment is
unpredictable and changing, understanding the strategy
development routes such as intended, emergent, and
realized strategies is important.
An intended strategy is the strategy that an organization
hopes to execute. Intended strategies are usually
described in detail within an organization’s strategic plan.
When a strategic plan is created for a new venture, it is called a business plan.
 An emergent strategy is an unplanned strategy that arises in response to unexpected opportunities and
challenges. Sometimes emergent strategies result in disasters and sometimes Emergent strategies can also
lead to tremendous success.
A realized strategy is the strategy that an organization actually follows. Realized strategies are a product of
a firm’s intended strategy (i.e., what the firm planned to do), the firm’s deliberate strategy (i.e., the parts of
the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the
firm did in reaction to unexpected opportunities and challenges). Realized strategy has been shaped greatly
by both its intended and emergent strategies
A nonrealized strategy refers to the abandoned parts of the intended strategy.

8. Strategic planner
Strategic Planner is a person who define company’s direction and develop plans to realize business
objectives. Strategic planner will help to maintain businesses competitive advantage and allocate resources
appropriately.
His responsibilities should be to, understand and shape the company’s strategy and mission, Research
competition to identify threats and opportunities, Assess the company’s operational and strategic
performance,
Monitor and analyze industry trends and market changes.

Question No. 06
School of Accounting and Business, The Institute of Chartered Accountants of Sri Lanka (CA)
planned to launch BSc. (Entrepreneurship) Special Degree. As the Strategic Planner, write a report to
the CA management including proposed business strategy for the program.
(Total 20 Marks)
Business strategy for the BSc. (Entrepreneurship) Special Degree program
Abstarct
This report provides the proposed strategy to follow for the planned to launch BSc. (Entrepreneurship)
Special Degree program in our Institute. It gives the direction to develop plans for this degree program to
realize business objectives and it also explains about our competitive advantage, our strengths and
weaknesses and our opportunities and weaknesses and allocate resources appropriately.
Introduction
The School of Accounting and Business has been established by CA Sri Lanka for the purpose of
conducting the BSc. (Entrepreneurship) Special Degree, which is approved by the University Grants
Commission (UGC). The SAB functions under the overall responsibility of the Council of CA Sri Lanka and
consists of two academic departments namely the Department of Accounting and Finance and the
Department of Business Studies.
Body
Strategic Position of the degree program
Environment and strategic capabilities–
Opportunities and threats
Our proposed degree program has the opportunity of providing the first and only degree program on the
entrepreneurship in first time in Sri Lanka. This degree program is not conducted anywhere else in Sri Lanka
which means there is no competition for this degree program but the only threat we face is the competition
of foreign campuses which might see the attractiveness of this opportunity in the market and starting a
similar
Degree program here.
Strengths and Weakness
The brand name of the Institute of Chartered Accountants of Sri Lanka is most powerful than any other
private degree program in Sri Lanka. And the reputation it has will increase the demand for the degree
program. The major weakness of this program is in finding best lecturer panel for this degree program since
this degree is not conducted anywhere in Sri Lanka.
Goals and objective –
The main objective of the B.Sc. (Entrepreneurship) Degree program is to create employable graduates with
the required skills, competencies and industry knowledge to fulfill a successful Entrepreneurs. Upon
completion, the student will gain extensive knowledge and required skills in business world, as this is the
only degree program in Sri Lanka that enables students to gain knowledge in the field of ‘Entrepreneurship’.

Strategic choise of the degree program

How to compete (using porters’ generic strategies)

Since our degree program is the only degree program providing the entrepreneurship degree in Sri Lanka our
generic strategy is to go with the focus differentiated strategy because cost leadership cannot be achieved in
our differentiated program. We used this focus differentiated strategy because we focusing on the market
segment who has successfully completed their A/L ad got three simple passes.
Direction of growth (using Ansoff matrix)
We are using the same existing market and introducing the new product to the market that is our BSc.
(Entrepreneurship) Special Degree program. We should understand our current market fully and try to
innovate our degree program according to the industry need.

Strategic Action of the degree program

We have planned to put in action our degree program from upcoming march. For that we need recruit a
motivated skilled full staffs for our daily office functions and purchase necessary equipment’s and
infrastructure to conduct classes and we also have to find best lecturing panel for this degree program.

Conclusion.
As a conclusion this degree program will become a success because of the proper planning and proper
implementation of the program as our intended strategy .but if we have new opportunity and threats in the
following years we will face them with our emergent strategies.