Solved Business Policy Paper 2018

Solved Paper-Business Policy & Strategy2018, BBA 302
Jagannath International Management School

Vasant Kunj, New Delhi - 110070
(Affiliated to Guru Gobind Singh Indraprastha University, Delhi)
NAAC Accredited and ISO 9001:2008 Quality Certified
SOLVED END TERM EXAMINATION

SIXTH SEMESTER BBA Mav-June 2018
Paper Code: BBA302
Subject: Business Policy &Strategy
Time: 3 Hours Maximum Marks: 75
Note: Attempt any fiue questions including Q.no.1 which is compulsory
Ans (a) Strategic advantage analysis: It is the process by which strategists/managers examine a firm’s
resources & capabilities in the various functional areas to determine where all the firm has STRENGTHS &
WEAKNESSES so that it can exploit the opportunities & meet the threats in the environment. Strategic
advantage analysis/functional analysis, also known as the Factors of common concern of organisational
capability lists the factors & attributes which are of common concern to managers in firms operating in a
competitive environment that act as capabilities in various functional areas.
Capability factors in 6 functional areas are:
1. Financial capability
2. Marketing capability
3. Operations capability
4. Personnel capability
Solved by Ms. Smriti Dua, Assistant Professor, JIMS Vasant Kunj Page 1
5. R& D capability
6. General management capability
Strategic advantage profile(SAP)
• The internal functional areas are recorded in Strategic Advantages Profile (SAP). SAP is used to report
& evaluate the important internal strategic advantage factors.
Preparing SAP
• It is a summary statement that shows CORPORATE CAPABILITIES (Strengths and weakness) of an
organization in key, critical areas that can affect future operations of the firm.
• There are generally five critical functional areas in most of the organizations. These areas are
Production/Operation, Finance/Accounting, Marketing, H R, Corporate Planning, and R & D. Then the
relative strength and weakness in different functional areas is identified
• Just like in ETOP, positive, neutral, and negative signs are denoted and a brief description is written in
SAP profile.
• Each functional area is very broad having many components inside. Thus, a SAP helps to identify
resource gaps & Invest in upgrading weaknesses.
• Eg: if the firm’s strength lies in its technically qualified personnel, every attempt must b made to see
that its production facilities are not outdated creating a gap.
Ans: Diversification involves a substantial change in the business definition-in terms of customer
functions, customer groups, or technologies of a firm’s businesses.
The advantages that diversification strategy would bring to the Company are :
• Minimize risk by spreading it over several businesses & diversified portfolios.
• To capitalize on organizational strengths & minimize weaknesses.
• Move firm into attractive industries
• Prolong “life” of firm i.e. growth.
• Improve long-term performance & profitability
• Capture synergies & cost savings b’cauz of sharing/transferring of resources & capabilities between
different businesses. This is called ECONOMIES OF SCOPE.
Eg: resources like distribution networks, IT systems, R& D labs, manufacturing plants, sales force,
legal services, customer service centers, etc can be used in different businesses of the same firm as a
single shared facility.
Ans: Strategic alliances are partnerships/co-operation in which two or more companies work together to achieve
common/agreed upon long-term business objectives that are mutually beneficial through sharing resources,
information, capabilities and risks to achieve this. In Strategic Alliances, two or more firms unite to share
resources, capabilities or competencies to pursue some business purpose & secure a strategic advantage in the
market.
The following are the advantages that the strategic alliance would offer to the Company:
1. Often pursued so that partners share the benefits of expanded operations.
2. S. Alliances are generally entered into when Companies realize that they do not possess adequate
resources to pursue an innovation or a new technology & thus look towards other organisations to
supplement their resources & capabilities for fulfilling their objectives.
3. The alliance often involves technology transfer (access to knowledge and expertise), economic

specialization, shared expenses and shared risk.
Ans: Business policy is the old name for strategic management.The development of business policy & strategic
as a field of study closely followed the demands of real life business. The evolution of this subject can be
studied in terms of four phases:
Ist Phase(till1930’s) Phase of ad-hoc policy/forecasting
IInd Phase(1930’s & 1940’s) Phase of planned policy/ Long-Range Planning
IIIrd Phase(1960’s) Phase of strategic planning/externally oriented planning:
IVth Phase(1980’s & later) Phase of strategic management
1. Phase of ad-hoc policy/forecasting
The need for Ad-hoc policy making arose due to the expansion of American firms in terms of product
market(single to multiple product lines) & customers( from selling in 1 geographic area to expanding to
other locations). Managers initiated basic financial planning when they proposed next year’s
budget(budget planning) & minimal analysis was done with most information coming from within the
firm only & very less amount of environmental information. Time horizon was usually 1 year for all the
project planning. It was a simplistic, operational planning & was quite time consuming.
2. Phase of planned policy/ Long-Range Planning
Due to the increasing environmental changes in 1930’s & 40’s in the US, planned policy formulation
replaced ad-hoc policy making. In a static environment, planning works successfully but in a
dynamic/changing environment, planning rarely works. Thus, there was the need for replacing informal
controls & coordination by framing “integrated functional policies” i.e. integration of functional
areas in a rapidly changing environment. In addition to internal information, environmental data is
collected. Managers proposed 5 yr plans (instead of 1 year projects)to put long-term planning in place &
gathering of available environmental data in addition to internal information.
3. Phase of strategic planning/externally oriented planning:
Increasing complexity of business functions & rapid environmental changes made the earlier “planned
policy” paradigm irrelevant since the needs of business could no longer be served by policy making.
Thus, strategic or externally oriented planning was introduced at placing a firm in an advantageous
relationship with its environment. The Companies had to respond to changing markets & competition by
thinking strategically & forecasting the future trends. Hence the need for strategy was felt. Planning is
taken out of the hands of lower level managers & concentrated in a planning staff.(top down planning).
Lower level handle the implementation issues only, they do nothing related to planning.
4. Phase of strategic management
This is the current thinking that emerged in the 80’s & 90’s.Realizing that even d best plans r worthless without
d input & commitment of lower level mgrs, top mgt formed “STRATEGIC PLANNING TEAM” with mgrs
from various depts. They developed & integrate a series of strategic plans to achieve Co’s primary objective.
Strategic plans at this point detail the implementation, evaluation & control issues.Rather than attempting to
perfectly forecast future, the strategic plans emphasize probable scenarios & contingency strategies by
developing strategic thinking at all levels of the organisation throughout the year. Strategic Mgmt. at this time
also included positioning Companies in relation to competitors i.e. positioning for leadership.
Difference between Policy and Strategy
• Policy is a blueprint of the organizational activities which are repetitive/routine in nature. While
strategy is concerned with those organizational decisions which have not been dealt/faced before in
same form.
• Policy formulation is responsibility of top level management. While strategy formulation is basically
done by both in consultation with each other: top level as well as middle level management.
• Policy deals with routine/daily activities essential for effective and efficient running of an organization.
While strategy deals with strategic decisions.
• A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target
as prescribed by a policy.
• A policy is more general & is in the form of guidelines or principles. But strategy is more specific
with reference to a particular situation, target or objective.
• Policy generally comes first but strategy comes later.
Eg: A Co.’s objective is to achieve greater cost efficiency. The Co. also has a policy of not retrenching any of
its existing employee. So a strategy will be worked out, which is consistent with this HR policy like working out
methods to increase productivity or eliminating the wasteful expenditures.
Thus, a strategy is much more broader than a Business policy & that is the reason the nomenclature of
Business policy has been changed to Strategic management…..
Over a period of time, b’cauz of pressures of business & growing competition, BUSINESS POLICIES of
many Companies evolved into STRATEGIC MANAGEMENT as we have seen in the EVOLUTION OF
THE SUBJECT
Answer: The starting point for the formulation of any strategy is establishing the Vision & Mission statements
of a Company.
Vision Statements and Mission Statements are the inspiring words chosen by successful leaders to clearly and
concisely convey the direction of the organization. By crafting a clear mission statement and vision statement,
you can powerfully communicate your intentions and motivate your team or organization to realize an attractive
and inspiring common vision of the future. These statements create a sense of direction and opportunity. They
both are an essential part of the strategy-making process.
"Mission Statements" and "Vision Statements" do two distinctly different jobs.
• A Mission statement tells you the fundamental purpose of the organization. It defines the customer and
the critical processes. It informs you of the desired level of performance.
• A Vision statement outlines what the organization wants to be, or how it wants the world in which it
operates to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-
making criteria.
Importance of Vision & Mission statements in the strategic management process
• An organization's vision is all about what is possible, all about that potential.
• The mission is what it takes to make that vision come true.
• Great benefits can be achieved if an organization
– Systematically revisits its vision and mission statement
– Treats them as living documents
– Considers them to be an integral part of the firm’s culture.

• Mission equals the action; vision is the ultimate result of the action.
• Vision statement describes how the future will look if the organization achieves its mission.
• Mission is the path to achieve that vision.
• That's why businesses need both mission statements and vision statements, the first to inform the public
and the latter to inspire themselves.
• Mission Statement will turn your vision into practice.
In the process of strategy making, corporate management must look forward to the orgn’s future in the long-
term, by making a VISION & MISSION STATEMENT to answer the question as to “what kind of an enterprise
is it going to be?”
It is an ambitious, bold & obsessive target that the firm seeks to achieve by taking a big, quantum leap. The
firm needs to think beyond the obvious.
This is the direction setting idea/roadmap for the Co’s future. It offers a sense of purpose to organisational
members & keep their sights focused always on the firm’s future.
Answer: Major strategy options available to a firm, also known as GRAND STRATEGIES or GENERIC OR
BASIC STRATEGIES/MASTER STRATEGIES are as follows:
1. Stability strategy
2. Growth/Expansion strategy(where substantial growth is aimed at)
3. Retrenchment/DIVESTMENT strategy
4. Combination/Mixed strategy
1. STABILITY STRATEGY: The nomenclature “STABILITY STRATEGY” often creates confusion

among managers. It does not mean “static/do-nothing strategy”. It is also called “STABLE GROWTH
STRATEGY” or “growth with stability” i.e. when a firm looks at a moderate improvement/steady
growth in its performance by marginally changing its businesses in terms of its customer groups or
customer functions, etc.In STABILITY STRATEGY, the Companies do not change their basic
business definition & do not go beyond what they are doing currently i.e. not much change in its
customer groups, customer functions or alternative technologies.The basic approach in STABILITY
STRATEGY is to maintain present course with steady growth. Thus, STABILITY STRATEGY is to
be used:
 where Co’s do not wish to go beyond what they are presently doing i.e. the Co. will continue
in the similar business with the similar objectives;
 they serve the same markets with the present products i.e. no major change in the product
line, markets or customer functions;
 They are using the existing technology.
 Eg: Paper manufacturing Companies for which the basic technology has not changed for
almost a century.
 Eg: the steel industry, cement industry & coal industry in India have overcapacity. Thus, Co’s
like SAIL, ACC Ltd. &Coal India are adopting the stability strategy. Such Co’s cannot go
for expansion, instead they concentrate on improving their present operational efficiency.
 Eg: Cigarette & alcoholic beverages Companies are subject to regulatory restrictions & there
is strict control over expansion of these industries. So, Co’s like ITC have thus gone for
growth & diversification in other businesses like hospitality, agribusiness, etc.
 Eg: Co’s in public sector like BHEL, BPCL, IOC, STC, MMTC, etc. are forced to adopt
stability strategy b’cauz of Govt’s policy of curtailing budgetary support for any expansion
programme & unwilling to take risks, slowness to change.
2. Growth/Expansion strategy: Growth or Expansion may be defined as a distinct/EXPONENTIAL

increase/growth in sales revenue or profit or market share that is higher than what it has achieved in the
immediate past.
 The EXPANSION STRATEGY thus alters the Company’s present “business definition”
& are more risky than a stability strategy.
 Eg: Microsoft, once a supplier of operating systems, expanded into application and
networking software, information services, entertainment systems, and video games
consoles(XBOX 360).
 Companies like NOKIA have completely transformed their businesses. Nokia, once a
supplier of paper and rubber goods, emerged as the world’s biggest manufacturer of mobile
phones during the mid-1990s.(GROWTH BY ADDING NEW PRODUCTS TO THE
EXISTING PRODUCT LINE)
 Eg: Tata Steel’s acquisition of Corus is consistent with Tata Steel’s stated objective of
growth & globalization.(EXPANSION OF BUSINESS THROUGH ACQUISITIONS).
3. Retrenchment strategy: 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. Thus,

Retrenchment strategy is used to reverse organizational decline & put the firm back on a more
appropriate path to successfully achieve its strategic goals.
 Retrenchment = the organization goes through a period of forced decline by either

shrinking current business units or selling off or liquidating entire businesses.
Retrenchment involves:
a. Stabilizing operations
b. Replenish & revitalize organizational resources & capabilities
Eg: Citigroup(Parent Co.) divested one of its business “Citi Capital” & sold it to GE Capital Fleet Services.
Eg: Voltas(Parent Co.) divested its refrigerators business & sold it to Electrolux.
Eg. Tatas divested Lakme & sold it to HUL.
4. Mixed Strategy: also known as the combination strategy. Corporate planning is aimed at achieving two or
more goals (such as consolidation, growth, stability) simultaneously. A combination strategy is a resource used
by corporations or businesses to further their identified business goals at the same time. Usually, businesses
pursue goals like growth, consolidation or other interests that include stability, with the aim of improving their
overall performance. Some strategies that may be combined include differentiation, cost and the system by
which a company focuses on an identified market niche. All of these strategies are geared toward increasing or
improving the competitive advantage of a business.
One of the components of combination strategy is the differentiation strategy. This strategy involves a
targeted effort by a business to make its product or service to be perceived as unique and innovative in a market
that is full of similar products or services. Companies use various methods to confer this feeling or perception of
uniqueness upon their own brand of a product, which already exists in different forms. Such methods include
unique packaging, mystery ingredients, or clever promotions. The uniqueness of the product or service is the
differentiating factor.
.
Answer: When a boat is sailing on a sea of uncertainty, it needs 2 things: a star to steer the ship &a radar to
signal the existence of rocks & reefs. Similarly, a business firm operating in an uncertain environment must
have a VISION OF THE BUSINESS(a guiding star) & a SYSTEM OF ENVIRONMENTAL ANALYSIS(the
radar). Although to assess the future is a difficult task & all eventualities cannot b anticipated, but to some
extent future events can be predicted by systematic scanning & monitoring of the environment. Environmental
analysis It is a continuous process which includes:
– Scanning/Diagnosing for early signals of potential changes and trends in the general
environment i.e. which env. factors present O & T’s for better accomplishment of objectives.
This can be done by market research & information processing.
– Monitoring changes to see if a trend emerges from among those spotted by scanning.
Monitoring focuses more closely on the track of previously identified trends which are found
to b of particular importance to d firm.
– Forecasting projections of outcomes based on monitored changes and trends is required to

grow & innovate.
– Assessing the timing and significance of changes and trends on the strategic management of
the firm.
The various environmental influences can be classified into 8 sectors:
i) Market environment/Competitive env.
ii) Technological environment
iii) Supplier environment
iv) Economic environment
v) Legal/Regulatory environment
vi) Political environment
vii) Socio-cultural environment
viii) International environment
The various approaches to the Environmental scanning process are:
• ETOP
• PEST/PESTEL analysis
• Structural Analysis of Competitive Environment or Porter’s 5 Forces model
1. PEST analysis has been suggested by Johnson & Scholes. It can be used as a starting point to
enquire which environmental influences have been particularly important in past & which ones may
become more significant in future for the organisation & its competitors. PEST Analysis may
contribute to environmental analysis in 3 ways:
a. It enables identification of a smaller no of IMP. ENVIRONMENTAL INFLUENCES
b. It is helpful in identifying long term drivers of change in environment.
c. It helps to examine the differential impact of external influences on organisations either historically
or in terms of likely future impact.
2. Porter’s 5 Forces model is one of the approaches to the Environmental scanning process. The
Porter’s 5 forces model of industry analysis is a structured approach to examine the competitive
environment of an organisation.
• This historic model (suggested by Michael Porter of Harvard University in 1979) has made an
immense contribution for understanding the competitive environment in an industry. This is a
critical ingredient of a successful strategy.
• According to this approach, the COMPETITIVE FORCES are the most important environmental
influences as these are the most immediate external influences which firms can overcome directly by
their own actions & is thus CONTROLLABLE to some extent.
• The Porter’s model suggests that the COMPETITIVE ADVANTAGE enhances & ensures long term
profit potential for most organizations.
• If such a structural analysis of the competitive environment in an industry is made, the firm is in a
better position to identify its S, W, O &T.
• This model thus gives a more holistic & broader overview of the competitive environment in an
industry.
Porter identified 5 basic competitive forces which determine the intensity & state of competition
in an industry:
• Degree of competitive rivalry
• Threat of new entrants
• Threat of substitutes
• Bargaining power of suppliers
• Bargaining power of customers
• “The stronger each of these 5 forces, the firms become unable to raise prices & it drives down the
overall profitability.” Hence the stronger these 5 forces, the more unattractive the industry
becomes. We can analyze any industry by using the Porter’s model.
Example: the athletic shoe industry.
a)Rivalry is high among existing competing firms(Nike, Adidas, Puma, etc are strong competitors
worldwide. Also Adidas acquired Reebok in 2006 to compete with Nike for the No.1 position)
b) Threat of new entrants is low (as the industry has reached maturity, sales growth rate has slowed)
c) Threat of substitutes is low (as other shoes don’t provide support for sports activities)
d) Bargaining power of suppliers is medium but rising (the suppliers from Asian countries like China, India
are coming up)
e) Bargaining power of buyers is medium but increasing (athletic shoes r dropping in popularity as other
shoes categories gain)
Based on the above, we can say that the athletic shoes industry appears to be growing in its level of
competitive intensity, meaning profit margins will be falling for the industry as a whole & it is becoming
less profitable. On the other hand, Pharmaceutical industry is becoming more profitable as compared to it as it
produces differentiated products with price insensitive consumers.
3. ETOP- a diagnosis tool. It stands for Environmental Threat and Opportunity Profile. It was
suggested by Glueck(1984). ETOP is a commonly used profile related for assessing the external
business environment. Every organisation must know threat and opportunity before they enter in
the business. If an organization is able to analyse its threats and opportunities, it can enjoy favourable
results. Effective DIAGNOSIS of the environment involves assessment/detailed analysis of the O
& T’s identified in d process of E.A. This means sorting out the more important information from
the less important one as the information collected is very voluminous & diverse.
Answer: The recent environmental trends that significantly affect mobile handset industry are:
Political trends: These refer to government policy in areas like the degree of intervention in the economy,
monopolies legislation, Environmental protection laws, Taxation policy, Foreign trade regulations, Govt
stability, etc.
• What goods and services does a government want to provide?
• To what extent does it believe in subsidising firms?
• What are its priorities in terms of business support?
Political decisions can impact on many vital areas for business such as the education of the workforce, the health
of the nation and the quality of the infrastructure of the economy such as the road and rail system.
Economic factors: It includes all the macro level factors related to the means of production & distribution of
wealth. It includes factors like:
– Economic stage/eco. growth of the country
– Economic system(capitalist or socialist or mixed economy)
– Inflation rates
– Interest rates
– Exchange rates
– Economic policies(industrial policy, monetary, fiscal policy)
– Economic planning(5yr plans, annual budgets, etc)
– Business cycles
– National Income trends & its distribution
– Money supply
– Savings & investments rate
– Stock market,
– Unemployment
– LPG
– Disinvestments
– Rate & growth of Gross domestic product, GNP, Per capita Income ,etc.
– Value of imports & exports
– Infrastructural factors like financial institutions, banks, modes of transportation,

communication, etc.
Social factors. Changes in social trends can impact on the demand for a firm's products and the availability and
willingness of individuals to work.
Imp Socio-Cultural factors are:
• Population demographics
• Income distribution
• Social mobility
• Lifestyle changes
• Attitude to work & leisure
• Consumerism
• Levels of education,etc.
• In the Japan, for example, the population has been ageing. This has increased the costs for firms who
are committed to pension payments for their employees because their staff are living longer. It also
means some firms have started to recruit older employees to tap into this growing labour pool. The
ageing population also has impact on demand: for example, demand for sheltered accommodation and
medicines has increased whereas demand for toys is falling.
Tecnological factors: These are factors related to d knowledge applied & materials, machines used in
prodn of G&S . These imp factors are:
1. Sources & cost of technology acquisition(external/foreign technical collaborations/technology

transfer).Eg: Maruti Udyog collaborated with Suzuki of Japan; Swaraj Vehicles & Mazda of Japan in
collaboration for manufacturing Swaraj Mazda commercial vehicles; collaboration of Kinetic & Honda
motor Co )
2. Rapid changes in technological devt/R& D/new Inventions & Innovations/ NPD like MP3 Players,
LED’s &hi definition TV’s, computer games, etc are all new markets created by technological
advancements.
3. The amount of Govt spending on research
Technology defines the biz of d orgns & hence strategists cannot afford to ignore the technological env. in the
hypercompetition env.
Eg: rising petrol prices have forced car Companies to make Car engines which have fuel efficiency & save fuel
consumption like in Ford Fiesta & VW Polo or diesel variants.
Eg: technological advancements in the IT Industry has enabled corporates to develop IT tools like Database
marketing, Micro marketing, ERP,etc.
a) Strategic control: Strategic control is a term used to describe the process used by organizations to
control the formation and execution of strategic plans; it is a specialised form of management control,
and differs from other forms of management control (in particular from operational control) in respects
of its need to handle uncertainty and ambiguity at various points in the control process. Strategic
control is also focused on the achievement of future goals, rather than the evaluation of past
performance. The purpose of control at the strategic level is not to answer the question:' 'Have we
made the right strategic choices at some time in the past?" but rather "How well are we doing now and
how well will we be doing in the immediate future for which reliable information is available?" The
point is not to bring to light past errors but to identify needed corrections to steer the corporation in the
desired direction. And this determination must be made with respect to currently desirable long-range
goals and not against the goals or plans that were established at some time in the past.
b) Leadership issues in strategy implementation: The employment of successful strategies defines your
business and displays your abilities as a leader. Strategic implementation of your company's best
concepts requires a dedicated manager familiar with the systems and processes involved. It also
depends on the ability of a supervisor to successfully motivate her team of worker. It involves:
i) Communicating plans: Strategic implementation begins with setting goals and communicating
these to workers. Prioritize your objectives, put resources at employees' disposal, explain the
processes and, above all, transmit your vision to your team. Communicating well means your
listeners comprehend your words and are able to put them into action.
ii) Giving out assignments: Proper delegation helps guarantee a smooth implementation of business
strategy. The manager charged with strategic implementation must be able to pick out the people
and teams best able to move the project forward. Leading the implementation requires taking pains
to discover and test the abilities gifts of her staff.
iii) Monitoring execution: Participate in all avenues of the strategic implementation. Ask questions
while observing what your employees do in order to understand all the processes involved. Ask
your group leaders for weekly progress updates. Keep abreast of the problems that arise and handle
them expeditiously. Document the process carefully so you and others can refer to the literature for
future ventures.
c) Core Competencies
The Strategic competitive advantage is built around a firm’s capabilities or core competencies that are a
firm’s area of expertise that give it a differentiation & advantage over its competitors i.e. a firm’s USP.
A few egs. of distinctive competencies can be:
1. For an electronic equipment manufacturer like Havell’s, key areas of expertise could be in the design of
the electronic components and circuits.
2. Core competency of INFOSYS is in the overall simplicity and utility of the software program for users
or alternatively in the high quality of software code writing they have achieved.
3. For an online retailer like Flipkart, its core competency lies in implementing reliable and efficient
delivery infrastructure systems & its ability to design and deliver an efficient "customer interface" that
personalises online shopping.
4. For a Company like Dell that have such a strong position in the personal computer market, Core
competencies that are difficult for the competition to imitate are Online customisation of each
computer built, Minimisation of working capital in the production process & High manufacturing and
distribution quality - reliable products at competitive prices
5. For a Company like Honda Motor Company, creation of a superior product quality of 2 wheelers &
automobiles, which is more fuel efficient than its competitor products is a distinctive competency. I ts
strategy has been built around its expertise in the development and manufacture of superior engines.

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Solved Paper-Business Policy & Strategy2018, BBA 302

Jagannath International Management School

SOLVED END TERM EXAMINATION

Note: Attempt any fiue questions including Q.no.1 which is compulsory

Capability factors in 6 functional areas are:

6. General management capability

Strategic advantage profile(SAP)

1. Often pursued so that partners share the benefits of expanded operations.

3. The alliance often involves technology transfer (access to knowledge and expertise), economic

Ist Phase(till1930’s) Phase of ad-hoc policy/forecasting

IInd Phase(1930’s & 1940’s) Phase of planned policy/ Long-Range Planning

IIIrd Phase(1960’s) Phase of strategic planning/externally oriented planning:

IVth Phase(1980’s & later) Phase of strategic management

1. Phase of ad-hoc policy/forecasting

2. Phase of planned policy/ Long-Range Planning

3. Phase of strategic planning/externally oriented planning:

4. Phase of strategic management

Difference between Policy and Strategy

• Policy generally comes first but strategy comes later.

"Mission Statements" and "Vision Statements" do two distinctly different jobs.

Importance of Vision & Mission statements in the strategic management process

– Considers them to be an integral part of the firm’s culture.

1. STABILITY STRATEGY: The nomenclature “STABILITY STRATEGY” often creates confusion

 They are using the existing technology.

2. Growth/Expansion strategy: Growth or Expansion may be defined as a distinct/EXPONENTIAL

 Retrenchment is a pullback or a withdrawal from offering some current products. Thus,

 Retrenchment = the organization goes through a period of forced decline by either

b. Replenish & revitalize organizational resources & capabilities

Eg. Tatas divested Lakme & sold it to HUL.

– Forecasting projections of outcomes based on monitored changes and trends is required to

The various environmental influences can be classified into 8 sectors:

i) Market environment/Competitive env.

ii) Technological environment

iii) Supplier environment

iv) Economic environment

vi) Political environment

vii) Socio-cultural environment

viii) International environment

The various approaches to the Environmental scanning process are:

• Structural Analysis of Competitive Environment or Porter’s 5 Forces model

a. It enables identification of a smaller no of IMP. ENVIRONMENTAL INFLUENCES

b. It is helpful in identifying long term drivers of change in environment.

• Degree of competitive rivalry

• Threat of new entrants

• Bargaining power of suppliers

• Bargaining power of customers

Example: the athletic shoe industry.

• What goods and services does a government want to provide?

• To what extent does it believe in subsidising firms?

• What are its priorities in terms of business support?

– Economic stage/eco. growth of the country

– Economic system(capitalist or socialist or mixed economy)

– Economic policies(industrial policy, monetary, fiscal policy)

– Economic planning(5yr plans, annual budgets, etc)

– National Income trends & its distribution

– Savings & investments rate

– Value of imports & exports

– Infrastructural factors like financial institutions, banks, modes of transportation,

Imp Socio-Cultural factors are:

• Attitude to work & leisure

1. Sources & cost of technology acquisition(external/foreign technical collaborations/technology

3. The amount of Govt spending on research

A few egs. of distinctive competencies can be: