CONFIDENTIAL

OPEN BOOK ASSESSMENT

DECEMBER SEMESTER 2020

STRATEGIC MANAGEMENT
(MGMT5710)

(TIME: 3 HOURS)

MATRIC NO. :
:
IC. / PASSPORT NO. :

LECTURER : SP BARNAWAL

GENERAL INSTRUCTIONS

1. This question booklet consists of 8 printed pages including this page.

2. Answer ALL questions in the ANSWER BOOKLET.
3. Please refer to following format while answering the Questions:
a. Answers should be in Font: Times New Roman and Font size: 12.
b. Write the Question number clearly.
c. Start new answer on a Fresh Page.

CONFIDENTIAL

Page 1 of 8
INSTRUCTIONS: TIME: 3 HOURS

SECTION A (30 MARKS)

There are THREE (3) questions in this section. Answer ALL Questions in the ANSWER
BOOKLET.

1. In reference with the strategic management imperative, explain the term strategic
management, goals and policies.
(10 marks)

2. Knowledge economy is dependent on the quantity, quality, and accessibility of the

information available, rather than the means of production. The new source of wealth is
knowledge, and not labour, land, or financial capital. It is the intangible, intellectual assets
that must be managed. Why organizations need knowledge management in order to achieve
success in the business world?
(10 marks)

3. An organizational structure consists of activities such as task allocation, coordination and

supervision, which are directed towards the achievement of organizational goal. It can also
be considered as the viewing glass or perspective through which individual see their
organization and its environment. Describe the four basic ways a divisionally structured
firm could be organized. Give an example for each way.
(10 marks)

MGMT5710/Dec.2020 Page 2 of 8
SECTION B (20 MARKS)

There are SEVEN (7) questions in this section. Answer ALL the Questions in the
ANSWER BOOKLET.

International Market Entry

AZZ Foods are manufactured by AZZ Food Industries Sdn Bhd (Private Limited Company) in
Malaysia. The company was formed in 1980 to produce a range of ready prepared meals for a
local market that was becoming more aware of, and favorably disposed towards, convenience
foods. All AZZ Foods then and today are of authentic Asian culture but with some major
differences.

a. They are pre-packed ready prepared meals which require no refrigeration.

b. They contain no preservative or artificial coloring.
c. They are conveniently packed in 180g sizes to serve one to two persons.
d. They require just three minutes ‘boil in the bag’ to be ready for serving.
e. They are presented, not in tins, but in a convenient packet with an airtight seal – offering
a long shelf life to storekeepers and customers.

For many companies, new products involve the full effort and cooperation of a total
management structure as well as a wide cross-section of the total work force. New products
can involve large-scale investment and a higher than normal risk than many other marketing
decisions. AZZ have been fortunate to provide a range of innovative food preparations that are
truly ‘new’ to the consumer, providing a real alternative to foods which are more traditionally
consumed in Asian markets.

To date consumer perception of, and rate of adoption for, AZZ Asian Foods has been most
encouraging. Distribution within West and East Malaysia has achieved national coverage with
retail sales made direct to supermarkets in major population centres.

Export markets have been pioneered with promising results and are targeted to outstrip the
domestic market in volume terms within 12 months. Next on the agenda for international
market expansion is Western Europe, with the United Kingdom as a number one priority. The
criteria for this development have yet to be fully appraised – but an experimental pilot launch
programme will require answers to three basic questions.

a. Is there ‘real’ consumer need?

b. Do AZZ have the resources and manufacturing capacity to sustain the development?
c. Is the designated market(s) large enough to generate profit?

These questions answered, the most appropriate method of market entry must be decided.

It is pertinent to observe, that even today the range of AZZ Foods in existing markets has
achieved just the early growth stage in the product life cycle, with competition only from close
substitute convenience foods. Yet full product development costs have been recovered and
AZZ enjoy a 25 per cent net profit to sales ration with forecasts of 29 per cent for the next year
end.

MGMT5710/Dec.2020 Page 3 of 8
Sales promotion in domestic and export markets have been directed at creating point of sale
product awareness, and to support the domestic-based and missionary sales force activity. To
date there has been no above-the-line advertising, but considerable benefit has been gained
from well-planned publicity.

It is expected that appointed distributors must independently fund local promotion for the range
of AZZ foods they carry in current domestic and overseas markets.

Pricing strategy has been based upon a simple cost-plus full-absorption costing model and until
real competition emerges net profit objectives will be achieved through this method of pricing.
Within this cost-plus approach, AZZ have aimed to skim the market on the rationale of product
innovation, convenience and the unique selling points mentioned previously. Until the market
becomes more elastic this policy will be retained. As new overseas markets are penetrated, it
is believed that this simple but effective means of pricing will be successful.

The ultimate goal, through marketing a wide range of foods, is to ensure long-term
profitability, but for their existing product offering, the subsequent stages of the product life
cycle must now be considered across the mix of markets both at home and overseas.
AZZ believe that the notion of market share acquisition is mostly irrelevant because it is
difficult to define ‘the market’ and yet the issue of product positioning must be addressed to
fulfill the requirements of an international product strategy.

A real issue to be tackled is that of product differentiation. To date all packaging carries the
AZZ brand name, the name of the authentic Asian cuisine dish and instructions in Malay and
English.

The European market may present different conditions. Policy on standardization must be
debated before market entry strategy is confirmed

On the Malaysian domestic market front the sales teams are driving hard to acquire stronger
distribution. The main trade promotional platform is 90 days’ credit for existing accounts and
‘sale or return’ for an experimental 30-day period for new accounts.

The perennial battle at the retail end is the pressure for profitable shelf space shelf space among
established competitors for other foods and foodstuffs. Supermarkets internationally will
usually allocate the linear selling space to a ‘hierarchy of brands’. AZZ have to fight hard to
get prime selling space in stores.

AZZ are fully aware that the domestic Malaysian market may mature before overseas markets,
but in any event are aware also for the need to plan ahead for a time when.

a. Sales will increase but at reduced rates.

b. More product lines will be needed to support the brand base.
c. Prices may soften owing to direct competitive demand.
d. More tactical promotion will be needed.
e. Retail store buyers become more discriminating about the rationalization of the brand and
the inventory kept.

MGMT5710/Dec.2020 Page 4 of 8
Being proactive for these eventualities is of particular concern. An underlying anxiety during
this exciting but turbulent time for the company is that of maintaining the working capital
balances of the company. The need for growth means that growth has to be effectively
financed. Tensions already exist within the company to maintain an effective cash cycle to
avoid the risk of AZZ running into a liquidity crisis as a result of their programme of rapid
overseas expansion.

Suppose you are the manager of the AZZ Food Industries Sdn Bhd (Private Limited Company)
in Malaysia. Answer these questions as an interviewee.

Questions:

1. What business is the company in now?

(2 marks)

2. What assumptions have you made about the future?

(3 marks)

3. Where should the company be, say, in five years’ time and why?
(3 marks)

4. What do you think will be the market reaction to your products?

(4 marks)

5. What future direction should the company take?

(3 marks)

6. What resources will be needed to achieve the intended direction over the next five years?
(3 marks)

7. What measures will you take to check progress towards company goals for the next five
years?
(2 marks)

MGMT5710/Dec.2020 Page 5 of 8
SECTION C (30 MARKS)

There are FOUR (4) questions in this section. Answer ALL the Questions in the
ANSWER BOOKLET.

Case Study-CISCO

CISCO is a multinational company based in the United States of America that majorly
specializes in designing and selling electronic commodities, networking devices, voice as well
as communication and technology services. CISCO was founded in the year 1984 by Leonard
Bosack and Sandra Lerner both computer scientists of Stanford university.

At that time, Stanford University had accumulated very many independent computer networks
each using different distinct computers and communication languages to communicate with
each other. The networks however could not communicate with each other. After keen analysis
of the problem Leonard and Sandra, being the managers of the two networks discovered that
the solution to their problem was a specialized machine called a router, which could link the
network together and facilitate communication.

They therefore developed the first router, which is a specialized microcomputer that sits
between two networks and allows them to see each other. They realized that the device could
be having commercial value so they formed the company. Routers continued to become an
integral part of rapidly expanding internet and this made CISCO to experience increased sales
(CISCO Brochure, 2008, p. 1).

As CISCO continues to grow, it is faced with important strategic decisions. The first in this
case is the issue of adopting the e-business infrastructure where customers could buy products
online as compared to using the other traditional infrastructure (CISCO Brochure, 2008, p. 3).
Although this poses some cost cutting advantage to the company, it should also be looked at
from the disadvantage point of view.

The major strategic question here is should CISCO continue with the e-business infrastructure?
What products need to be developed? Who should develop the products? By adopting e-
infrastructure, has CISCO realized any gained in terms of market reach and service provision?

The other strategic case is about the automated order processing system. Here we analyze
whether it has any advantage to CISCO and the strategic question we ask is has it simplified
the ordering process for the customer or is it complex to an extent that a customer may not be
willing to use it how does it compare with manual ordering procedure? What is the customer
satisfaction like?

Are the electronic orders safe such that they cannot be manipulated? Finally, is the issue putting
customer support functions online? Are there any advantages in terms of remaining
competitive? Is it cost effective and competitive as compared to setting up a call center to
manage customer needs?

MGMT5710/Dec.2020 Page 6 of 8
The alternative solution to the issue of e-business is opening sales outlets in different parts of
the globe. This would mean additional costs to reach various customers as well as more
concentration in distribution, which will result in less concentration in its core business.
With a one-product line, CISCO realized that it could not reach to the diverse needs of its
online customers. It had to come up with a range of word class products, which had the features
that customer, wanted satisfied. To solve the issue of product creation CISCO was faced by a
major strategic decision of whether to buy or make the products (CISCO Brochure, 2008, p.
2).

On automated order processing, the alternative to this is handling the orders manually. This
would mean employing more staff to handle the orders. Given the number of orders that CISCO
receives it might be hard for the company to do order processing manually. It should be noted
that because of CISCO’s continued growth that are very many sales orders to process and
handling all of them and ensuring delivery in the shortest time possible may be a challenge.

Despite the fact that the orders are received electronically there is a challenge in that CISCO
must get it right in terms of contractual commitments for the availability in time for repair parts
and repair time. The alternative solution to having an online support function is by setting up
a call center this would mean employing more staff to handle customer queries. This would
increase cost of employing staff as well as keeping customers waiting before they are
connected to the call center.

The solution to having a diversity of products in the diverse market is by having online sales,
that is e-business. This can be made by having an application where a customer can order for
goods pay for them and have after sales services online. This will call for innovative products.

The main solution to this is having the product developed by a team. The team should be
composed of people from various customer touch points this is in order to ensure that the
product meets the unique needs of the customers. We can have a product development team
comprising members from program management, product management, user experience etc.
who represent various customer needs.

Given the many orders that CISCO receive and given that it has to deliver these orders in time
in order to remain competitive it needs to adopt automated order processing.

By adopting this CISCO has reduced costs on the order processing this is because the number
of employees required is less as compared to manual order processing’s other advantage of
adopting automated order processing is time savings this time saving allows employees to be
productive. The third advantage is reduced cycle time that enables the firm to produce goods
at a faster pace hence being able to meet increased customer demand.

To deal with customer queries, all customer complains should be logged in and customers be
given online assistance in the shortest time possible. The online customer support function
should be simple for the customer as well as easy to user and a keen analysis need to be done
to ensure that all customer concerns are handled. Effective handling of customer concerns
would not only increase their satisfaction, but would also enhance customer loyalty.

MGMT5710/Dec.2020 Page 7 of 8
Questions:

1. What are the sources of CISCO’s competitive advantage? Evaluate the Security of
CISCO’s as a competitive advantage.
(8 marks)

2. How the implementation of an e-business infrastructure will help CISCO to create value?
(7 marks)

3. Compare and illustrate the ideas of CISCO’s in performance with that of rivals in 2000-
2002.
(4 marks)

4. Explain in brief strategic management process implemented by CISCO.

a. Strategic Analysis
(5 marks)

b. Strategic Mission
(3 marks)

c. Differentiators
(3 marks)

*** END OF QUESTIONS ***

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