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Business Policy and Strategic Management

2 marks( points and concepts only)

1. What are business objectives ?

Any thing that the business organization wants to achieve over a specified period of
time is called business objective.

2. What are the objectives of business ?

a. Economic Objectives – profit earning, creating customers, best use of


resources

b. Social Objectives – quality goods, fair trade practices, general society welfare

c. Human Objectives – economic, social well being , development of employees

d. National Objectives – employment, production according to national priority,


GDP, exports self sufficiency

e. Global Objectives – raise global standards, reduce global disparities, globally


competitive products

3. What are the macro environment factors ?

Socio economic
Technology
Government- political and regulatory
Cultural
International
Demographic
natural

( Expect questions in each of the above environment sectors . learn points with
examples for each )
4. What are the micro environment factors ?

Customer
Supplier
Competitor
Public
Marketing intermediaries

( Expect questions in each of the above environment sectors . learn points with
examples for each )

5. What are the external and internal sectors of the environment ?

External = Macro + Micro ( see above points )


Internal = Factors inside the company such as culture, climate, leadership, systems..

6. What is Business ethics ?

Morality in business environment, based on society norms, involves goodness or


badness of an act . Goes beyond legal issues.

7. Mention some unethical practices ?

Giving or taking bribe


Information in exchange of money..
Kick backs for contracts
Promotions, transfers
Hoarding and blackmarketing
Poor product quality

8. What is CSR ?

• Corporate Social Responsibility


• Fulfilling the obligations towards the society and improving its economic
and social conditions by all possible means

9. What are the areas of CSR ?

Environment –pollution, noise, water,..


Consumerism- quality, warranty, harmful..
Community- health, water, education
Avoiding Lobbying- with Government
Giving- scholarships,education, orphanages,
Disadvantaged- handicapped, unskilled..
Labour – health, safety, partcipation
Transparency- financial disclosures
Avoiding monopolistic activities- unfair trade practices
10. What is Social Audit ?

• Systematic Monitoring, Appraising and measuring the social performance of


business

11. What are various approaches to Social Audit ?

1. Inventory approach – list of social activities


2. Outlay(cost) approach-amount spent on each activity is disclosed
3. Programme management approach- above + whether or not company met its
objective for each activity
4. Cost-benefit approach- benefit of each expenditure is indicated

12. What are Economic systems ?

Economic systems are the basic arrangements made by societies to solve the
economic problem.

• Capitalistic
• Socialism
• Mixed economic system

13. What is Capitalistic economic system ?

• All resources are privately owned


• Market based economy
• Coordination of economic activity is based on the prices generated in free,
competitive markets
• Any income derived from selling resources goes exclusively to each resource
owner
14. What is a socialist economy ?

• All resources government-owned


• Production coordinated by the central plans of government
• Sometimes called communism

15. What is the advantage of a mixed economic system ?

Minimize market inefficiencies


Provide public goods
Redistribute income
Stabilize the macroeconomy:
Promote low levels of unemployment
Promote low levels of inflation
16. What is business policy ?

• Policy is a guide to action .


• It provides broad guidelines as to how objectives of business are to be
achieved

16. What are the chief features of policies ?

1. Guidelines For the attainment of obj


2. Hierarchy
3. Delimit decision making area
4. Ensure consistency in decision making
5. Help delegation
6. All functional areas and all levels
7. Avoid confusion , help clear cut

17. How are policies classified ?

Classificationof po
Policiesclassification

18. How are policies classified based on level of management ?


Basisof le
Basis
B
L
eve
lofM
ana
geme
nt Basis
Basisof S
Basisof ma
19. How are policies classified based on functional areas

Functional Areas

20. How are policies classified based on expression ?

Expression

Expressed – policies which are openly expressed either orally or in written


Implied - Policies are not expressed but it is implied by the behaviour or
physical evidence. Eg dress code, status based on size of cabin, etc.

21. How are policies classified based on origin ?


Nature of origin

Originated policies are initiated by the top management and transmitted to


subordinates.
Appealed are based on the suggestions or complaints of the subordinates . eg
staff welfare , etc
Imposed – by external influences like consumer groups, trade union or
Government policies, new laws.
Appended – Derived from major originated policies. Eg a retailer promotion
policy as a derivative of marketing policy.

22. How are policies classified based on scope ?

Deriva

Scopeof organisation

B
23. How are policies classified based on management functions ?

Natureof management functions

24. what is the difference between policies and strategies ?

Policies Strat
• G uidelinestoreach
goals
25. What are programmes ?
• T h o u g h t o r ie n t e
single use , steps for achieving specific objective, sequential
d
• G uidelines
Eg Training programmes, new product development programme, etc

26. What are procedures ?


• G eneral
Step by step guide to action to accomplish a specific task
Recurrent ( unlike programmes which are single use )

27. what are tactics ?


• Action plan to implement strategies
• Very detailed
• Lower level

28. What is the difference between strategies and tactics ?

Strategies Tactics
• Toplevel • L
• Irregular
29. What are rules ?
• R
• L
• Standard oro ngofter
norm m
conduct/behaviour in business in a particular • S
situation eg ‘no spitting’.
• O riginof tactics • R
30. What are the characteristics of objectives ?
• Fewdetails • V
• M
• Measurability o reim portant
- quantifiable • L
• Hierarchy
• Network
• Multiplicity- to cover all performance areas-
• Periodicity – L.T , M.T, S.T
• Verifiability – basis on which met or not
• Reality – official and operative –
• Quality- good vs bad

31. What is MBO ?

Described as a process whereby the superior and subordinate manager of an


organisation
jointly identify its common goals
define each individual’s result expected of him and
use these measures as guides for monitoring the results

32. What is the process of MBO ?


1. Setting of objectives ( mutually agreed )
2. Developing of action plans-(work schedule, time schedule , resource
schedule)
3. Conducting periodic reviews( progress)
4. Appraising annual performance( results

33. What are the benefits of MBO ?

1. Commitment of subordinates
2. Effective planning
3. Effective controls
4. Means/end chain
5. Reduces conflict/ambiguity
6. Develops Managers
7. Motivation

34. what are the weakness of MBO ?

• Management support in participation


• Framing precise objectives is complex and time consuming
• Focus on short term – one year
• High level of interpersonal skills required
• Non quantifiable goals
• Goal conflicts

35. What is MBE ?

Management by Exception is a concept where normal performance that falls within


the acceptable limits is ignored and only exceptional variance is reported to the
superiors or top management.

36. What is SWOT (or TOWS or SO WHAT) ?


SWOT analysis was developed by the middle of the 1960s for large organisations to
determine the strategic fit between an organisation's internal, distinctive capabilities
and external possibilities and to prioritize actions

37. What is the Impact –Likelihood matrix ?

Impact – likelihood forms part of the SWOT analysis. The key strategic issues or
factors outside the organisation that significantly impact the long-term competitive
position of the company are chosen for the opportunity and threat analysis . Factors
which have high impact and high likelihood are major opportunities and threats
depending on whether they are positive or negative.

38. What are the steps in SWOT ?

1. Detect Strategic issues ( Strengths, Weaknesses, opportunity, threats)


2. Determine the Strategy given its internal capabilities and external
environment.
3. Implement and monitor the strategy.

39. Give examples of SWOT factors ?

• Strength - A strong brand name,Market share,Good reputation,Expertise


and skill.

• Weakness - Low or no market share,No brand loyalty,Lack of experience.

• Opportunity - A growing market,Increased consumer spending,Selling


internationally,Changes in society beneficial to your company

• Threat –Competitors,Government policy eg taxation, laws,Changes in society


not beneficial to your company

40. What is leverage ?


Meagre resource base can be stretched to meet the aspirations that an organisation
dares to have

41. What is vision ?

 The position a firm would like to attain in the distant future. forward
looking view of what an organisation wishes to become

42. What is mission ?

What an organisation is and why it exists. Defines the role that an organisation
plays in a society

43. What are the characteristics of mission

Feasable, precise, clear, motivating, distinctive, should indicate strategy, and means
to the end.

44.What are goals ?

 What the organisation hopes to accomplish in a future period of time


 Broader sense than objectives
 Qualitative

44. What are objectives ?

 Objectives state specifically how the goals can be achieved


 Concrete and specific
 Make goals operational
 Quantitative , measurable, comparable

45. Give some examples of objectives ?

 Profit- ROI, Return on shareholder capital, net profit as % of sale , oper


margin.
 Marketing- sales volume, new product development, reducing marketing
costs, increasing customer service
 Growth – output, sales, investment, employees
 Employees- attrition rate, learning
 Social responsibility- community service, rural development, family welfare

46. What is CSF ?


 Critical Success Factors
 What do we need to do to be successful?
 Factors which are crucial for success
 Result of long years of managerial experience
 Pinpoints KRAs, determine objectives, devising measures of performance for
the objectives

47. Give examples of CSF ?

 Toothpaste – Form , flavor, foam and freshness


 Shoes- Cost , Quality, retailing, flexible product mix, image
 Courier service- speedy dispatch, reliability, and price
 Shipping – financial management, well diversified fleet, mix of long term
charters and spot, route planning

48. What are economic systems ?

 Economic systems are the basic arrangements made by societies to solve the
economic problem.The three types of economic systems :
 Capitalistic economy
 Socialistic economy
 mixed economy

49. What is capitalistic economic system ?

 All resources are privately owned


 Coordination of economic activity is based on the prices generated in free,
competitive markets
 Any income derived from selling resources goes exclusively to each resource
owner
50. What are socialistic economic system ?

 All resources government-owned


 Production coordinated by the central plans of government
 Sometimes called communism
 Use visible central planners

51. What are the advantages of mixed economic system ?

Since markets are not perfect, governments intervene and often play a major role in
the economy. Some of the goals of government are to:
 Minimize market inefficiencies
 Provide public goods
 Redistribute income
 Stabilize the macroeconomy:
 Promote low levels of unemployment
 Promote low levels of inflation

52. Mention significant HR policies ?

Absenteeism
Disciplinary action
Bonus options ( performance, attendance, longevity, profit)
Pension benefits
Dress code
Staff welfare ( food, pets, concierge, holidays, free clothes, transit, relocation ,
housing, game rooms)
Internet and email policy

53. What are the steps in policy development ?

1. Identify the need for the policy


2. What is the goal of the policy
3. Gather information
4. Develop and write the policy
5. Review the policy
6. Obtain Management support for the policy
7. Obtain legal review of the policy
8. Implement the policy
9. Communicate the policy
10. Interpret and integrate the policy

54. What are the principles of financial policies ?


1. Custodianship
2. Accountability
3. Transparency
4. Consistency
5. Integrity
6. Non deficit financing
7. Standard documentation

54. what are the significant finance policies which impact corporate strategies ?

Major policies :

1. cash receipts and revenues


2. cash payments and expenditures
3. raising of funds
4. management of receivables and payables
Derived policies :

1.legal and financial framework


2. Plans and budgets
3. Investments
4. Transactions
5. Banking and cash management
6. Accounting Practices
7. Asset Management
8. Amortization
9. Reporting and control systems
10. Year end accounting
11. Payroll management
12. Responsisbilities of finanace department employees

55. What are the strategic areas in production where policies need to be framed ?
1.Capacity ( how much, how to add )
2. Process ( batch, job shop, continuous ..)
3. Centralisation
4. Location ( near markets, near materials, near labour)
5. layout ( fixed, process, product, cellular ..)
6. Make or buy
7. Workforce management( selection, training, bonus, layoffs..)
8. Quality management ( safety, durability, serviceability, reliability,
conformance )
9. Work scheduling and control

56. What are the issues in framing marketing policies ?

Policies are framed in the area of product , price, place and promotion.
Examples : Advertising, Internet marketing, public relations, trade shows, direct
mail, lead management, customer lifecycle management, sales management,
leads,service, supplies, hiring, sales training, lifecycle management.

57. What is the Strategic Management Process ?

1. Strategic Intent ( Mission, Vision, Goal and Objective)


2. Formulation of Strategies (Environment and Organisation appraisal,
corporate and business level strategies, strategic analysis and choice,
formulating strategies and preparing a strategic plan)
3. Implementation of Strategies(Activating Strategies, Structural
Implementation, behavioural implementation, functional and operational
implementation)
4. Strategic Evaluation and Control
58. How are strategies formulated ?

 Environmental Appraisal
 Organisation Appraisal
 Corporate level strategies
 Business level strategies
 Strategic analysis
 Strategic choice
 Formulating strategies
Preparing a strategic plan

59. What is ETOP ?

Environment threat and opportunity profile.


Suggested Glueck Environmental Sector Nature Impact of each sector
eg of
Impact
Regulatory/Government Bicycle thrust area for exports

60. What is Organisation Appraisal ?

Organisation resources + Organisation Behaviour


S&W
Synergistic Effects
Competencies
Organisational Capability
Strategic Advantage

61. What are organizational resources ?

Physical ( technology, plant)


Human( Training , Experience)
Organisational( Systems, Structures)
Can be classified as tangible and intangible

62. What are Synergies ?


2 + 2 = 5 . Phenomenon in which two or more discrete influences or agents acting
together create an effect greater than that predicted by knowing only the separate effects
of the individual agents.
A mutually advantageous conjunction where the whole is greater than the sum of the
parts.

63. What is core competency ?


A core competency is something that a firm can do well and that meets the following
three conditions:
1. It provides consumer benefits
2. It is not easy for competitors to imitate
3. It can be leveraged widely to many products and markets.

64. What is organization capability


Capacity or potential of an organisation to use its strengths and overcome
weaknesses in order to exploit opportunities and face threats

65. What is Strategic Advantage ?

 Outcome of organisation capabilities.


 Measured by parameters like Profits , Market Share, Brand Image as compared to
other cos

65. Give examples of capabilities which result in strategic advantage ?

Bajaj –High profits, good WC, good cash flows


Murugappa group, Tatas -conservative, ability to raise finances, reliable
LG – Good market planning, good distribution, good USP
Bridgestone tyres- access to best technology
HUL – good training and development
O & M – nurtures creativity

66. What are the techniques used for Organisation appraisal ?

1. Internal – Value Chain, Quantitative,qualitative


2. Comparative- Historical, Industry norms, Benchmarking
3. Comprehensive- Balanced Score Card, Key Factor Rating

67. What is the value chain analysis ?

Value Chain analysis-


 Porter – 1985 introduced the value chain framework.
 Set of interlinked value creating activities performed
 Procurement of basic Raw material to ultimate consumer
 Primary and support activities

Inbound Operations Outbound Marketing Service


Logistics Logistcs and Sales
Warehousing, Manufacturing ,Transport, Place, After
Inventory, PackagingMaintenance WH,Order Pricing, sales
Vendor Processing, Promotion,
selection Scheduling

68. Give some examples of quantitative analysis in Organisation Appraisal ?

1. Ratio anlaysis
2. EVA (profit-cost of capital)
3. ABC( costs of activities in value chain)
4. employee turnover
5. Ad Recall
6. No of patents registered..

69. What is Bench marking ?


Find the best practices and best performers so that one could match one’s own
performance with them or surpass them

70. What are the types of Bench marking ?

1. Performance
2. Process
3. Strategic
1.Internal – comparison between departments within company
2.Competitive – Between other competing companies
3.Functional - Between other non competitive companies
4.Generic – Between world class companies

71. What is Balanced Score card ?

Technique of Organisation Appraisal

Proposed by Robert S Kaplan and David Norton-Set of measures that give top
Management a comprehensive view of business
4 key performance measures in Balanced Scorecard
1. Customer Perspective- How do customers see us
2. Internal Business Perspective- What must we excel in ?
3. Innovation and learning perspective-Can we continue to create value ?
4. Financial perspective – How do we look at shareholders ?
72. What is OCP ( Organisation Capability Profile ) ?

 The chart helps strategists to assess the S &W of the organisation in each
functional area

Factor Weakness Normal Strength


-5 0 +5
Source of
fund…

73. What is SAP ( Strategic Advantage Profile ) ?


Used for Organisation Appraisal .
Gets input from OCP
Picture of more critical factors affecting Strategic Posture

Capability S or W Competitive
Factor S or W
Finance High cost of
capital
HR Comparable to
competitors

 The Organisation Appraisal can be done by a detailed OCP or a summarised


SAP

74. What are the 4 Grand Corporate Strategy Alternatives ?

1. Stability
2. Expansion
3. Retrenchment
4. Combination

75. What is stability strategy


Type of Grand Corporate strategy
Companies do not go beyond what they are doing now- same markets, same
products.
Incremental Improvement
Marginal change- customer group,customer functions, alternate technologies
Types of stability strategies :
No change,Pause/proceed with caution,Profit
76. What is Expansion strategy ?

Type of Grand Corporate Strategy where rapid growth is involved.


Types of Expansion strategies :
1. Concentration
2. Integration
3. Diversification
4. Cooperation
5. Internationalisation

77. What is Concentration Strategy ?

Type of Expansion Strategy .


 Simple, first level, first preference
 Doing more of what it is already doing
 Investing more in known industry rather than unknown
 Converging resources
 Stick to the knitting(Peters and Waterman- In Search of Excellence)
 Rely on doing what you are best at
 Industry should possess high growth potential/attractive
 Firm should have adequate funds

78. What is Integration strategy

Type of Expansion Strategy.


 Combining activities related to the present activity
 Committing to adjacent businesses
 Extending value chain from the basic raw materials to ultimate consumer
 Two types- Vertical and Horizontal

Vertical :
 New products/services to serve own needs
 Supplying inputs or serving as a customer for outputs
 Backward –Upstream-Going back to source of raw material
 Forward –Downstream- Moving closer to consumer

Horizontal :

 The acquisition of additional business activities ( same type of products)at


the same level of the value chain is referred to as horizontal integration.
 Eg suitcase company takes over its rival suitcase company…
 Buying competitor’s business to expand geographically,

79. Explain Diversification strategy .


A type of Expansion strategy.
 R Involves all strategic alternatives
Two types – concentric and conglomerate
a Concentric :
 Related to existing business in some way- market, technology ….
t  3 types –
1. Marketing related – to same customer group – printers and stationary
2. Technology related-Workstations to large Cos and PCs to small customers
3. Marketing and technology related- Books, maps, calendars sold in same
shops

Conglomerate :

 Unrelated to existing business definition


 Eg ITC- Hotels, shampoo(fiama), biscuits(sun feast);Hinduja,
WIPRO,Tatas…

80. What is Cooperation Strategy ?

Type of expansion strategy


 Principle- Competition could exist with cooperation.
Types :
1. Mergers
2. Takeovers
3. Joint Ventures
4. Strategic Alliances

81. What is a merger ?

Type of cooperation strategy( which is an expansion strategy ).


 Voluntary Combination of two or more organisations
 Exchange of cash or shares of one for the assets and liabilities of
another( merger)
 Or each dissolves to create a new entitiy..( consolidation)
Examples :
 Air India and Indian Airlines
 Air Sahara and Jet
 Kingfisher and Air Deccan

82. How are takeovers different from mergers ?


Type of Cooperation strategy( which is an Expansion Strategy). Takeover has a
stronger motivation of the buyer than the seller. a takeover is the purchase of one
company (the target) by another (the acquirer, or bidder).

83. What is the takeover code ?

The procedure for Takeovers is enshrined in the Securities Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997 (“Regulations”) as amended in 2002
known as Takeover code. When an acquirer, acquires substantial quantity of shares or voting
rights of the target company, it results in thhe Substantial acquisition of Shares or takeover.

84. What are the key issues in mergers and takeovers ?

Stock values, tax concessions, synergy, acquisition of resources quickly, growth, diversification,
integration, reducing competition, asset valuation, managerial issues( leadership, culture,…),
compatability, good will .

85. What are Joint Ventures ?


Type of Cooperation strategy ( which is an expansion strategy )

A joint venture (often abbreviated JV) is an entity formed between two or more parties
to undertake economic activity together. The parties agree to create a new entity by both
contributing equity, and they then share in the revenues, expenses, and control of the
enterprise. The venture can be for one specific project only, or a continuing business
relationship such as the Sony Ericsson joint venture. This is in contrast to a strategic
alliance, which involves no equity stake by the participants, and is a much less rigid
arrangement.

86. What is a Strategic Alliance ?

Type of cooperation strategy ( which is in turn an expansion strategy )

A Strategic Alliance is a formal relationship formed between two or more parties to


pursue a set of agreed upon goals or to meet a critical business need while remaining
independent organizations.

Partners may provide the strategic alliance with resources such as products, distribution
channels, manufacturing capability, project funding, capital equipment, knowledge,
expertise, or intellectual property. The alliance is a cooperation or collaboration which
aims for a synergy where each partner hopes that the benefits from the alliance will be
greater than those from individual efforts. The alliance often involves technology transfer
(access to knowledge and expertise), economic specialization [1], shared expenses and
shared risk.

87. What is the difference between International , Transnational , Global and


Multidomestic strategies ?
All are Expansion strategies beyond domestic or national boundaries.
International – Standard product to different countries
Multidomestic – customized product to different countries
Global – low cost standard product
Transnational – low cost customized product

88. What are retrenchment strategies ?

Type of Grand Corporate strategy ( others are Stability, Expansion and


combination )

Retrenchment is a corporate-level strategy that seeks to reduce the size or diversity of an


organization's operations. Retrenchment is also a reduction of expenditures in order to
become financially stable.

Retrenchment is a pullback or a withdrawal from offering some current products or


serving some markets.

In a military situation a retrenchment provides a second line of defense.

 Types of Retrenchment strategies :


1. Turnaround – reverse the decline
2. Divestment – cuts loss making units
3. Liquidation – close down the company totally

89. what is a turnaround strategy ?

Restore money-losing businesses to profitability rather than divest them

Get whole firm back in the black by curing problems of those businesses in portfolio
responsible for pulling down overall performance

There are three stages of a turnaround strategy:

I – Pre-turnaround

II – Period of Crisis

III – Period of Recovery

The first stage is the period just before the profitability begins to decline. The company is
still considered profitable at this point, but losing ground. The second period is known as
the period of crisis. At this point the company needs to turnaround. This stage is marked
by a decline in profits (even negatives), a fall in market share and the company's poor
cash situation.

The third stage is the period of recovery or the turning point. This is the stage where
serious action is taken to turnaround the company. Important decisions like scaling back
production or returning to an aggressive growth stage are taken. At this point, the
company's strategy is clear. The company can choose to rely on a centralised and low
cost system and continue profitably. Alternatively, it might decide to combine these
benefits with a growth strategy. This is the longest period and may last for years.

Steps in turnaround strategy

• Changing the leadership: A change in leadership ensures that those techniques,


which resulted in the company’s failure, are not used. The new leader has to
motivate employees, listen to their views and delegate powers.
• Redefining strategic focus: This involves re-evaluating the company's business
and deciding which ones to change and which to retain. Diversified companies
need to review their portfolio on the basis of long-term profitability and growth
prospects.
• Selling or divesting unnecessary assets: Sometimes, although the assets are
profitable, they must be liquidated to contribute to the strategic focus. The cash
received from the sale of such assets should be used to repay debts. Self-
sustaining businesses are ideal candidates to do so.
• Improving Profitability: To do this the company has to take drastic steps like:-

1. Assigning profit responsibility to individual divisions


2. Tightening finance controls and reducing unnecessary overheads.
3. Laying off workers wherever necessary
4. Investing in labour saving equipment
5. Building a new inventory management system and manage debt efficiently
through negotiating long-term loans.

90. What is Divestment ?

Divestment is a form of retrenchment strategy

used by businesses when they downsize the scope of their business activities. Divestment
usually involves eliminating a portion of a business. Firms may elect to sell, close, or
spin-off a strategic business unit, major operating division, or product line. This move
often is the final decision to eliminate unrelated, unprofitable, or unmanageable
operations.
Divestment is commonly the consequence of a growth strategy. Much of the corporate
downsizing of the 1990s has been the result of acquisitions and takeovers that were the
rage in the 1970s and early 80s. Firms often acquired other businesses with operations in
areas with which the acquiring firm had little experience. After trying for a number of
years to integrate the new activities into the existing organization, many firms have
elected to divest themselves of portions of the business in order to concentrate on those
active ties in which they had a competitive advantage.

REASONS TO DIVEST

Portfolio models such as the Boston Consulting Group (BCG) Model or General
Electric's Business Screen can be used to identify operations in need of divestment. For
example, products or business operations identified as "dogs" in the BCG Model are
prime candidates for divestment.

Decisions to divest may be made for a number of reasons:

Market Share Too Small.

Availability Of Better Alternatives.

Need For Increased Investment.

Lack Of Strategic Fit.

Legal Pressures To Divest.

91. what is liquidation

A type of retrenchment strategy.

• Most painful option


• Involves terminating firm’s existence
92. What are the business level strategies ?

1. Cost Leadership -
 Cost based competition
 Standard product
 Low loyalty
2. Differentiation
• Large market requiring differentiated product resulting in increased
sales
• Diversified need
• Customer will pay premium for a valued differentiation
• Brand loyalt

3. Focus

• Niche strategies
• Either lower cost or differentiation

93. What is Gap Analysis ?

A technique of Strategic analysis .

 Gap analysis:
93. What is BCG ?
A technique of Strategic analysis and choice . Desired per

Present
Performance

Perform ance
Corporate Portfolio An
technique - BCG
High

 Stars- Expansion
 Question marks- Expansion, Retrenchment
 Cash cows – stable growth
Industry growth rate

 Dogs- Retrenchment

94. What is GE model ?


A technique of strategic analysis STARS

GENineCell matrix
EXPAND EXPAND
HIGH

CASH COWS
95. What is business level strategic analysis ?

1. Experience curve analysis


EXPAND STABILITY
2. M low
EDIUM
Lifecycle analysis
3. Industry analysis
4. Strategic group analysis
High Relative mark
96. What is experience curve analysis ?
LO
Unit W
cost
STABILITY RETRENCH
declines as a firm accumulated experience in terms of a cumulative
volume of production.
Indu
Larger MENT
strytend to have lower unit cost as compared to those of smaller firms
firms
Results in competitive cost advantage
attractiveness

STRONG AVERAGE W
Occurs due to learning effects, economies of scale, product redesign, production
process redesign, technology improvements

97. What is an industry ?

• Group of companies offering products or services that are close substitutes of


each other.
• Eg Airtel ,and vodafone, coke and pepsi, colgate and closeup
• Michael E Porter- five forces model of competition in an industry
• published in the Harvard Business Review called "How Competitive Forces
Shape Strategy" circa 1979.
• Provides a framework for strategy development

98. What is Porter’s five forces model ?

Porter's Five F

P
e

99. What is a strategic group ?

• A strategic group is a group of firms in an industry following the same or


similar strategy

• Bargaining power
Internal competition between strategic group firms is greater
Analyzing the attractiveness of each group by performing a Porter five force Industry
on each group
of suppliers
100.What is resource allocation ? What are the approaches to resource
Suppliers
allocation ?

Procurement and commitment of financial , physical and human resources to


strategic tasks for the achievement of objectives . Riva
exis
1. Strategic Budgeting
2. BCG based budgeting
3. PLC based budgeting
4. Capital Budgeting
5. Zero based budgeting
6. Parta system

101.What is a Strategic Budget ?

Steps in preparing a Strategic Budget :

1. Position Papers(ETOP and SAP)


2. Corporate Policy guidelines
3. Minimise gap between long term goals and operational plans
4. Proposal
5. Check resource availability
6. Strategic Budget
7. Approval and Sanction
8. Implementation

102 . What is ZBB ?

Zero Based Budgeting :


• Budgeting process that requires each SBU to justify resource allocation
demand , not on the basis of the previous year’s budget, but on ‘ground
zero’.
• Fresh calculation of costs each time a plan is implemented
• ZBB can be used for effective resource allocation among competing units on
the basis of strategic priority since costs are related to benefits of strategies

102.What is Structure ? How does it influence Strategy ?

• Structure is the way in which the tasks, subtasks required to implement a


strategy are arranged

• Forward linkage = Structure follows Strategy


• Backward linkage= Strategy follows Structure

103.What are the types of Structures ?

1. Entrepreneurial/ Simple
2. Functional
3. Divisional –Product, Customer, market
4. Matrix -
5. Network-
6. Product Team
7. Geographic

104.What is operational implementation

Refers to any number of practices that allow a company to better utilise its
inputs by, for example reducing defects in products , making products faster….
Areas of operational implementation :
1. Productivity- Relative amount of input needed to secure a given amount of
output.
2. Processes - Sequential steps in chronological order-
3. People – Employees,Suppliers,Investors
4. Pace - Amount of work done per unit of time

105.What are the techniques of operational implementation ?

Productivity
• JIT
• Cycle time reduction
• Group technology
• Mass customisation
• Flexible manufacturing system
• Cellular manufacturing
• Total productive maintenance
• Lean manufacturing

Processes

• TQM
• Six sigma
• Value chain
• Business process reengineering
• ERP
• Bench marking
• Supply chain management
• outsourcing

People

• Strategic recruitment
• Performance management
• Training and development
• Separation management
Pace
• Time based management
• Information management

106.what is Strategic evaluation and control

• Final phase of Strategic management process


• Defined as the process of determining the effectiveness of a given strategy in
achieving the organisational objectives and taking corrective action wherever
required.

107.What are the 4 types of strategic control ?

• Premise control
• Implementation control
• Strategic surveillance
• Special alert control

108.What are planning premises

• Planning premises are assumptions based on which the strategy is


formulated. Some have great impact on strategy. Eg patent regulations….In
Premise control Corporate planning staff regularly scan for change in
premises

109.What is implementation control

• When resource allocated to a plan, program or project does not benefit the
organisation as envisaged ,it has to be revised .
• Eg a new product launch - Is it part of strategy ?
• Milestone review is and example of implementation control when a project is
evaluated at critical junctures – eg Govt approval, plant purchase…-to see
whether it is worth going on with the project

110.What is Strategic surveillance

• General Scanning for those events both inside and outside the organisation
which can affect the strategy
111.What is Special alert control ?

• Trigger mechanism for rapid response to sudden events , immediate change


of strategy.
• Contingency strategies
• Crisis management teams
• Eg in the event of Earthquake, tsunami, govt declares emergency, war,US
recession … sudden change in strategy is required

112.What are the steps in operational control ?

1. Strategic Objectives
2. Standards of performance
3. Actual performance
4. Measurement of performance
5. Analysing variance
6. Feedback
7. Reformulate

113.Compare Strategic control and operational control .


• StrategicC ontrol •
1.Arew em ovinginright 1.H
direction
114.Describe Variance chart for operational control ? What are the indicators of
2.Steering
performance
2. A
3
V .aErxiate
n rncae l fo
ch causrtforperform ance 3. I
4.Longterm evaluation 4. S
5. D onebytopM gt 5. D
Indicator Standard Actual
Other indicators :
Capacity 85 90
• Dividend %u tilisation
• No of customer complaints
• %
Manhours per unit
• Training costs divided by average no of employees
• Maintenance cost as % of capital investments
Profit over 12 10
sales%
115.What is Strategic Momentum control ?

A technique of Strategic control

• Maintaining existing strategic momentum


1. Responsibility control centres- Revenue, Costs, profits
2. Use CSF as guideline to control
3. Compare own strategy to strategy of other firms in the strategy group

116.What is Strategic leap control ?

A technique of strategic control


• Drastic changes ( leap) to make a great impact .
1.Strategic issues,- forthcoming change internal or external which will have a
impact
2.Strategic field- generate synergies
3. Systems modelling - simulate internal and external
4. Scenarios – Build future scenarios and formulate strategies to suit the possible
scenario

117.what are the techniques of operational control ?

1. Internal analysis – Value chain( Porter), quantitative , qualitative


2. Comparative- Historical, industry norms, benchmarking
3. Comprehensive – Balanced score card, key factor rating
( see Organisation appraisal slide 25 to 39 for above points )
1. Parta system
2. PERT and CPM
3. MBO
4. MOU

118.What is the role of organizations in control ?

Information system- Data warehousing, mining


2. Control system- sets standards, measures actual and analyses the variance
3. Appraisal system-
4. Motivation system-ensures that deviations are not negative
5. Development system-
6. Planning system-for the evaluation – who will do what, when, how ?