ASSIGNMENT

Course Code : MS-11

Course Title : Strategic Management

Assignment No. : MS-11/TMA/SEM-II/2020

Coverage : All Blocks

Note: Attempt all the questions and submit this assignment to the Coordinator of your
Study Centre on or before 31st October, 2020.

1. Explain with the help of examples as to how the top management takes strategic
decisions in the company and in what sense it does not take the strategic decisions
alone.

2. What is the difference between goals and objectives for an organization? Illustrate
with the help of examples. Also explain why it is essential for the objectives of an
organization to be verifiable.

3. Identify two companies that have merged recently. Read the published information
on the two companies and based on your research identify the problems the two
companies are currently facing in combining their respective organizational
cultures.

4. What is the relationship between level of operations of a business and its market
share goals in terms of the macroenvironment? Discuss with the help of examples.

5. What is the role of strategic control in balancing the interaction between the
internal and the external environment of a business? Explain with the help of
examples.
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ASSIGNMENT REFERENCE MATERIAL (July20 to Dec20)

MS-11

Strategic Management

Q1. Explain with the help of examples as to how the top management takes strategic
decisions in the company and in what sense it does not take the strategic decisions alone.

Ans. Strategy is the direction and scope of an organization over the long-term; which

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achieves advantage for the organization through its configuration of resources within a
challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.

Strategies exist at several levels in any organization - ranging from the overall business (or
group of businesses) through to individuals working in it.

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1) Corporate Strategy:-Is concerned with the overall purpose and scope of the business to
meet stakeholder expectations. This is a crucial level since it is heavily influenced by
investors in the business and acts to guide strategic decision-making throughout the business.
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Corporate strategy is often stated explicitly as a “mission statement”.

2) Business Unit Strategy:- Is concerned more with how a business competes successfully in
a particular market. It concerns strategic decisions about choice of products, meeting needs of

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customers, gaining advantage over competitors, exploiting or creating new opportunities etc.
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3) Operational Strategy:-Is concerned with how each part of the business is organized to
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deliver the corporate and business-unit level strategic direction. Operational strategy
therefore focuses on issues of resources, processes, people etc.
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The various strategic decisions taken at different levels are :-

Dimensions Levels
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Corporate Business Functional

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Impact Significant Major Insignificant

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Risk involved High Medium Low

Profit potential High Medium Low
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Time horizon Long Medium Short

Flexibility High Medium Low
Adaptability Insignificant Medium Significant

The results of strategic management are not directly measurable as there are several factors
that influence the performance of an organization. However the benefits are :-

1. Management process becomes flexible to allow for nonanticipated future changes.

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2. The organization is prepared for several future scenarios and is better equipped to face
changes.

3. Due to formulation of strategy there is consistency in all the firms’ actions as objectives
become defined. Provides direction to all activities of the organization.

4. All parts of organization work in coordination to achieve organizational purposes and

objectives.

5. Without strategic management, departments tend to drift towards departmental goals.

Corporate communication, allocation of resources and short range planning also are greatly
improved.

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Q2. What is the difference between goals and objectives for an organization? Illustrate
with the help of examples. Also explain why it is essential for the objectives of an
organization to be verifiable.

Ans:- Objectives refer to the ultimate end results which are to be accomplished by the overall
plan over a specified period of time. The vision, mission and business definition determine

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the business philosophy to be adopted in the long run. The goals and objectives are set to
achieve them.
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Meaning

• Objectives are openended attributes denoting a future state or out come and are stated

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in general terms.
•
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When the objectives are stated in specific terms, they become goals to be attained.
• In strategic management, sometimes, a different viewpoint is taken.
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• Goals denote a broad category of financial and non-financial issues that a firm sets for
itself.
• Objectives are the ends that state specifically how the goals shall be achieved.
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• It is to be noted that objectives are the manifestation of goals whether specifically

stated or not.
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Difference between objectives and goals

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The points of difference between the two are as follows:

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• The goals are broad while objectives are specific.

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• The goals are set for a relatively longer period of time.

• Goals are more influenced by external environment.
• Goals are not quantified while objectives are quantified.

Broadly, it is more convenient to use one term rather than both. The difference between the
two is simply a matter of degree and it may vary widely.

Need for Establishing Objectives

The following points specifically emphasize the need for establishing objectives:

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• Objectives provide yardstick to measure performance of a department or SBU or

organization.
• Objectives serve as a motivating force. All people work to achieve the objectives.
• Objectives help the organization to pursue its vision and mission. Long term
perspective is translated in short-term goals.
• Objectives define the relationship of organization with internal and external
environment.
• Objectives provide a basis for decision-making. All decisions taken at all levels of
management are oriented towards accomplishment of objectives.

What Objectives should be set?

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According to Peter Druker, objectives should be set in the area of market standing, innovation
productivity, physical and financial resources, profitability, manager performance and
development, worker performance and attitude and public responsibility. Researchers have
identified the following areas for setting objectives:

Profit Objective: It is the most important objective for any business enterprise. In order to

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earn a profit, an enterprise has to set multiple objectives in key result areas such as market
share, new product development, quality of service etc. Ack off calls them performance
objectives.
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Marketing Objective may be expressed as: “to increase market share to 20 percent within
five years” or “to increase total sales by 10 percent annually”. They are related to a functional
area.

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Productivity Objective may be expressed in terms of ratio of input to output. This objective
may also be stated in terms of cost per unit of production.
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Product Objective may be expressed in terms of product development, product
diversification, branding etc.
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Q3. Identify two companies that have merged recently. Read the published information
on the two companies and based on your research identify the problems the two
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companies are currently facing in combining their respective organizational cultures.

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Ans. Two companies that have recently merged

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Organisation are Air Deccan and Kingfisher Airlines

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Air Deccan was operated by Deccan Aviation. It was started by Captain G. R. Gopinath and
its first flight took off on 23 August 2003 from Hyderabad to Vijayawada. It was known
popularly as the common man’s airline, with is logo showing two palms joined together to
signify a bird flying. The tagline of the airline was “Simpli-fly,” signifying that it was now
possible for the common man to fly. The dream of Captain Gopinath was to enable “every
Indian to fly at least once in his lifetime.” Air Deccan was the first airline in India to fly to
second tier cities like Hubli, Mangalore, Madurai and Visakhapatnam from metropolitan
areas like Bangalore and Chennai. On 25 January 2006, Deccan went public by filing a red
herring prospectus with the Securities and Exchange Board of India. Deccan planned to
offload 25 percent of its stake in the initial public offering (IPO) that opened on 18 May.

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However, due to the stock market downturn at that time, Air Deccan’s IPO barely managed
to scrape through, even after extending the issue closing date and reducing the price band.

Kingfisher Airlines was established in 2003. It is owned by the Bengaluru based United
Breweries Group. The airline started commercial operations in 9 May 2005 with a fleet of
four new Airbus A320-200s operating a flight from Mumbai to Delhi. It started its
international operations on 3 September 2008 by connecting Bengaluru with London.

Less than expected growth in the Indian aviation sector coupled with overcrowding and the
resultant severe competition between airlines resulted in almost all the Indian carriers,
including Air Deccan, running into heavy losses. After initially trying to get in fresh capital
for running the airline, Captain Gopinath eventually succumbed to pressures for
consolidation. On 19 December 2007, it was announced that Air Deccan would merge with

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Kingfisher Airlines. Since Indian aviation regulations prohibited domestic airlines from
flying on international routes until they had operated in the domestic market for five years, it
was decided to instead merge Kingfisher Airlines into Deccan Aviation, following which
Deccan Aviation would be renamed Kingfisher Airlines. This was because Air Deccan was
the older of the two airlines, and therefore would be the first to qualify for flying on
international routes. The merger became effective April 2008, with Vijay Mallya becoming

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the Chairman and CEO of the new company, while G. R. Gopinath became its Vice-
Chairman.
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Air Deccan began its operations with one aircraft and with one flight but after the alignment
with Kingfisher Airlines, has a total fleet of seventy-one aircrafts-41 Airbus and 30 ATR
aircraft. It operates 537 flights and covers 70 destinations. It offers point-to-point service.

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Before Air Deccan arrived on the scene in 2003, a flight from Bangalore to Delhi cost Rs
12,000. The arrival of Deccan led to this falling to Rs 2,500. As LCCs like SpiceJet, Indigo
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and others sprouted and followed Air Deccan’s lead, even full service airlines were forced to
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cut fares to stay in the business. Result: domestic air travel really took off; the number of
passengers flying within the country jumped from 29.2 million in 2003 to 44.38 million in
2006.
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Q4. What is the relationship between level of operations of a business and its market
share goals in terms of the macroenvironment? Discuss with the help of examples.
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Ans:- Operations managers control ordering supplies, scheduling labor and the use of
facilities, which create what the company sells. Controlling costs and using labor and
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materials efficiently is imperative to keep the costs of goods sold (COGS) to a minimum.
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For example, a company that manufacturers wallets has a department led by the operations
manager, who is the one that oversees the wallet manufacturing plant. Administrative, sales
and distribution departments might be located at a completely different facility, and with
different leadership. The COGS requires using textile materials such as leather and thread.
Workers must operate the machines that sew the wallets together. There are utility costs and
maintenance costs that go into running the manufacturing plant. Operations managers control
the budget for all operations expenditures. If manufacturing is deemed inefficient, operations
costs are highly scrutinized.

Operational management seeks to keep those costs down by constantly evaluating where
money is going in producing the goods. With the wallet manufacturing plant, the operations

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manager could use bulk purchases of textile materials to get a discount on pricing. He might
change traditional light bulbs for energy-efficient LED bulbs, which would reduce energy
costs or he might use part-time labor for certain tasks, so as to reduce payroll costs.

Every one of these options is a strategy that feeds into the overall goal of keeping the COGS
low. With all of the other expenses in the company remaining the same, if the COGS are
reduced, the company makes more money. Making more money is the ultimate goal of every
for-profit company, so being successful in creating efficient systems means that a significant
goal has been achieved.

Market Share Goals:- Increasing market share is the ultimate goal of any small business
marketing plan. Small businesses enter their industries as the underdogs, taking any
competitive advantages they can to gain customers from their established competitors. Many

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of the techniques used to gain market share can be found in marketing plans, making market
share growth an unavoidable objective of a comprehensive marketing plan. Tracking the
company's rate of new customer acquisition is an effective way to gauge a marketing plan's
contribution to growing market share.

Put a simple system in place to ascertain whether each customer you serve during your

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marketing campaign is a new or existing customer and compare the new customer numbers
each day during the campaign to gauge progress toward your goal.
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New Technology:- Innovation is one method by which a company may increase market
share. When a firm brings to market a new technology its competitors have yet to offer,
consumers wishing to own the technology buy it from that company, even if they previously

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did business with a competitor. Many of those consumers become loyal customers, which
adds to the company's market share and decreases market share for the company from which
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they switched.
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Q5. What is the role of strategic control in balancing the interaction between the
internal and the external environment of a business? Explain with the help of examples.
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Ans:- Strategic control is a way to manage the execution of your strategic plan. As a
management process, it’s unique in that it’s built to handle unknowns and ambiguity as it
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tracks a strategy’s implementation and subsequent results. It is primarily concerned with

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finding and helping you adapt to internal or external factors that affect your strategy, whether
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they were initially included in your strategic planning or not.

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The various components of the strategic control process generate answers to these two
questions:

• Has the strategy been implemented as planned?

• Based on the observed results, does the strategy need to be changed or adjusted?

In many senses, strategic control is an evaluation exercise focused on ensuring the

achievement of your goals. The process bridges gaps and allows you to adapt your strategy as
needed during implementation.

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The difference between operational and strategic control processes.

In contrast to the large amount of data and extended time frame required for strategic controls
to take effect, operational controls monitor and evaluate day-to-day functions to correct any
problems as soon as possible. Operational controls may be either manual or automated, and
can involve people, processes, and technology. When successful, they flag potential risks,
identify misalignments between plans and actions, and effectively implement changes to stay
on course with your strategy.

Strategic control, on the other hand, might then evaluate whether your hiring criteria and
employee onboarding processes need adjustment in order to achieve your strategy.

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Strategic Control Techniques

There are four primary types of strategic control:

Premise Control:- Every organization creates a strategy based on certain assumptions, or

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premises. As such, premise control is designed to continually and systematically verify
whether those assumptions, which are foundational to your strategy, are still true. These are
typically environmental (e.g. economic or political shifts) or industry-specific (e.g. new
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competitors) variables.

Implementation Control:- This type of control is a step-by-step assessment of

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implementation activities. It focuses on the incremental actions and phases of strategic
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implementation, and monitors events and results as they unfold. Is each action or project
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happening as planned? Are the proper resources and funds being allocated for each step? This
process continually questions the basic direction of your strategy to ensure it’s the right one.
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Special Alert Control:- When something unexpected happens, a special alert control is
mobilized. This is a reactive process, designed to execute a fast and thorough strategy
assessment in the wake of an extreme event that impacts an organization. The event could be
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anything from a natural disaster or product recall to a competitor acquisition. In some cases, a
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special alert control calls for the formation of a crisis team—usually comprising members of
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the strategic planning and leadership teams—and in others, it merely means activating a
predetermined contingency plan.
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Strategic Surveillance Control:- Strategic surveillance is a broader information scan. Its

purpose is to identify overlooked factors both inside and outside the company that might
impact your strategy. This process ideally covers any “ground” that might be missed by the
more focused tactics of premise and implementation control. Your surveillance could
encompass industry publications, online or social mentions, industry trends, conference
activities, etc.

This graph clearly depicts the application of the four techniques for strategic control and how
they function alongside each other:

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