ICT 1

Course: MBA 623 A

Submitted by: Itti Singh (19125023), MBA IITK

Ans 1. The paper underlines the relationship between the personality of decision makers,
environment, and strategy making process. There are different concepts revolving around the
interaction of all three variables. There is also a suggestion that strategies and strategy making
process is influenced by the individual styles of managers as they are conceived by them in their
minds. Alternatively, it can be said that the strategic decision choices are made in groups and
thus a group’s cognitive diversity can affect performance. The paper explores the thought that
strategic decisions for large organizations are made in groups but for small businesses it is the
individual entrepreneur that conceives the strategy. Thus it can be said that for small firms the
cognitive style of entrepreneur has a strong emphasis on the strategy chosen by the firm.
Further, the four personality types proposed by Jung form the basis of understanding the
cognitive styles of entrepreneurs. Jung has classified four personality types, ST (sensing-
thinking), NT (intuition-thinking), sensation-feeling (SF), and intuition-feeling (NF). Among
people one of these four functions is dominant for a person most of the time. Each person is said
to have one preferred quality from each category. Coming to the strategy making process three
dimensions are suggested to it, which includes rationality, interaction and assertiveness. The
four personality types are further mapped onto the three strategy making processes. ST’s are
likely to make use of rational process of strategy making as they delve into details and use
logical step-by-step reasoning. SF’s would prefer the interaction process as they consider
people’s opinion and possess social desirability bias. NT’s preferred way of strategy making is
assertive process as they ignore specifics and work on the broad theme. NF’s use a very strong
assertive process.
Mapping process is also applied to the strategy making process and environmental factors, where
two propositions are made. Decision-makers would prefer a rational type of strategy making
when uncertainty is low, whereas when uncertainty is high a more interactive approach takes the
lead.
Therefore there is a strong relationship between the strategy making process and the personality
type of leaders. This is obvious in case of environmental factors affecting the strategy decisions
but not so obvious in case of relation between personality types.
Ans. 2 We can classify the three dimensions of structure in organizations. This includes
centralization, formalization, and complexity. As the level of centralization increases so does the
strategic decision process is influenced by a select few people, but as it decreases the onus lies on
the organization to take decisions as a unit and see them through till the goal.
When formalization increases so does the strategic decisions are made only in response to
problems or crises that appear in variables that are monitored by the formal system. The strategic
action will be the result of standardized organizational processes.

As the level of complexity increases we can see that the strategic actions will be the result of an
internal process of political bargaining.

The level of formalization determines the degree to which an association utilizes rules and
techniques to endorse conduct. Subsequently, formalization has critical ramifications for
authoritative individuals since it indicates how, where, and by whom assignments are to be
performed. An elevated level of formalization has the advantage of wiping out job
equivocalness; however, it likewise restricts individuals' dynamic caution. Along these lines, it
is, for the most part, contended that the degree of formalization must be coordinated with the
degree of polished methodology since formalization compromises proficient self-rule.
The most straightforward of associations is the entirety of the exercises constrained by one
person, accordingly, in light of the fact that it is hard to acquire and grasp everything of the data
that is required to settle on vital choices in an enormous association. Associations may manage
key choices by making teams, boards, and venture groups and by utilizing ostensible gathering.
The fundamental logic here is that the competitive possibilities of an enterprise are constrained
by the environment. Structure forms plan, in other words. The success of a business depends on
its strategy built by the complete system, which in turn depends on fundamental systemic
variables, such as the number of suppliers and customers and entry barriers, which comprises the
external environment for the organization. It is a deterministic worldview under which causality
leads towards business actions that aim towards manipulate certain circumstances from external
circumstances.
In addition, in view of the challenges facing the organization, the first role of the leadership of an
organization is to consider the best strategic strategy. To deliver sustainable results, executives
then need to ensure that their companies are united behind it. Most employees understand the
mechanics of working in the defined structure to deliver high and sustainable performances.
Ans 3.
Cost leadership excels towards cutting costs to as low as possible levels in order to provide
consumers with lower prices and thus boost their net savings. Cost strategy requires usually
relates to skilled technical capabilities and source to capital for the company to invest in R&D
and boosting economies of scale.
In most cases, this type of strategy for first-movers leads to a significant hold in market share and
capacity utilization, which drives down costs to a greater extent.
Building a strategy for minimizing costs requires a company to achieve:

 Lean production methods

 High productivity
 Effective production process
 High capacity utilization
 Effective distribution channels
 Use of bargaining power to negotiate the lowest prices for production inputs

Cost leadership strategies must focus on the price elasticity of the product, and there should be
only a few ways to achieve differentiation. The basic fundamental principle in cost leadership
strategy is to underprice the products with respect to the competitive products in order to gain
market share. The competitors must not find it easy to duplicate the strategy at a lower cost at a
later date; otherwise, the first-mover advantage is gone. It is important to note in order to achieve
a cost leadership strategy, the size of the market share should be huge. Apart from what has been
mentioned above, there are two ways to build a cost leadership strategy:
1. Build a low-cost value chain – This pertains to planning, inventory management,
marketing, and R&D.
2. Any cost taking process needs to be bypassed in the existing chain.
Differentiation strategy works well when there are not sufficient gaps filled between the
customer demands and the products available; it has to deal with the degree of differentiation. A
well-applied differentiation strategy can charge a higher price for its product, and it also helps in
establishing customer loyalty towards the brand and the product. There is a dangerous
proposition in creating a differentiation strategy, i.e., the customers should find some sense of
reasonability with the price and degree of differentiation. If the consumer behavior is not enough
understood by the company, the customers may restore to a low-cost product in place of
differentiation attributes. The strategy must also be protected from the copy-cats who can launch
the same differentiated product at a lower cost. Once a certain differentiated product or feature is
launched by the company, the competitors try their best at intimating the product or feature at a
lower cost. Usually, this threatens the first-mover advantage then.
The strategy can be achieved under the following conditions:
1. The buyer’s need and uses are diverse
2. Few competitors are intimating the strategy
3. There are a lot of ways to differentiate products, and the competitors are constantly in
pursuit of looking for newer avenues in terms of differentiation.
The leaders for differentiation must be having the following qualities:
 The leaders must have the vision to look at values which are beyond the cost-minimizing
strategies. They have prior experience in the relevant field to pin-point the exact
consumer demand, which has not been filled till yet.