Strategic Management

2nd Semester

Ans Ques 1.

INTRODUCTION
Concerning Indian markets, I'll go for all four of Porter's strategies of strategic management,
namely which are as follows:

● Cost Leadership (Cost Focus)

● Differentiation ( Differentiation Focus)

This is because the Indian market is very diverse. Due to such a high population of the country,
the Indian market is super diverse. People's income level varies a lot; some are rich, some are
poor, and many are middle class. So, by applying all strategies for strategic management in the
Indian market, we'll cover most parts of every segment. Not only is India a big market but a
fragmented one as well, so it would be a complex case to study it, but in the long run, it is one of
the best consumer markets in the World, with ever-rising market demand. 

CONCEPT AND APPLICATION

But for initially launching in India, I'll go the strategy:

● FOCUS DIFFERENTIATION

India is a market where people who can afford luxury do not mind paying a little extra. If your
product is differentiated properly and has something unique about it, the richer class will get
attracted to the same. Special features and differentiated features will make your product more
desirable, and hence, the rich high-income group people will get attracted to the product and buy
more of it. Also, by targeting the rich customers initially who wouldn't mind paying a little extra
for luxury, you'll be able to reach break-even early. 
REASONS FOR CHOOSING THIS STRATEGY FIRST:

1. It is relatively easier to influence the mind of rich consumers than the middle class or
poor consumers to try a new product. 
2. They have high disposable income, due to which they have more capacity to spend. 
3. They prefer distinctive goods and don't hesitate to buy them. 
4. They lurk in luxury hence, more chances of them buying our product. 
5. With increased consumerism and Internet growth, people might have an already
developed liking towards our brand. 
6. The exceptions of the law of demand might work in this case. 
7. Chances of achieving break-even soon and we'll start to earn profit soon. 
8. It would become something that even the middle class and poor would want to buy; hence,
changing their desire to want will ensure more chances of it getting changed into actual demand.
So, focus differentiation would be applied first

Once we have applied this strategy, we would move onto the next one soon so that our consumer
base increases and we become a brand that runs after luxury and is meant for the common person
as well, i.e., cost differentiation.

● COST DIFFERENTIATION 
To widen our consumer base and retain our customers, we'll focus on this next to reduce the cost
of production effectively and make our product available for all. 
Of course, this will affect the luxury audience, but what we have to focus on strategically is that
it makes the old product with modifications available at a lower cost to the other consumers and
creates something new for the luxury customers. 

This will ensure both parties are happy, and we have the following:
● More customers with different income groups 
● More market share 
● Wide customer base 
● Product differentiation will make our company wholesome 
 ● We'll be market leaders 
● Earning more profits 

So, we'll focus on these step by step, and our initial category of customers is the higher class. 
We'll serve the higher-class customers first. This can be explained as follows as per the price
point:

1. Customers having a higher income will spend more and won't hesitate to spend on
something new in the market to ensure surety of purchase. 
2. The exceptions to the demand case law might come true, and consumers will go for a
luxurious, expensive, and unique product. This would give them a sense of superiority or
status symbol in society. 
3. People of higher-income groups have high disposable income, so their demand is always
more than people of the lower-income group. They won't hesitate to spend and try on a
new product as they have more income to spend. 
4. With increased consumerism and Internet growth, people might already have a liking for
our brand in general, and our launching in India would give them a chance to buy the
same. So that would be a good sales booster too. 
5. Our product would be a symbol of luxury, so people of higher income groups would not
mind buying at a higher price. Hence, it would be the new symbol of luxury in society. 
6. So, as the price would be high and we'll have sales by the higher income group people,
this would ensure that we achieve break-even soon and start earning profit soon. 
CONCLUSION

Hence, we would use focus differentiation mainly to create such a product that caters to the need
of the higher income group people, and we can charge more price from them for our product. So,
focus differentiation is. 

Ans Ques 2.

INTRODUCTION
A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the Macro
environmental (external marketing environment) factors that have an impact on an organization.
This helps make highly informed decisions for the organizations that will ensure success in the
long run.

PESTEL stands for:

● P – Political
● E – Economic
● S – Social
● T -Technological
● L – Legal
● E – Environmental

CONCEPT AND APPLICATION

 
So, to know whether Kikkoman who wishes to enter the Indian market should be doing it or not
can be very easily understood after an analysis of the below-mentioned points:
 
1. Political Environment: These are all about how and to what degree a government
intervenes in the economy. This can include – government policy, political stability or
instability in overseas markets, foreign trade policy, tax policy, labour law, environmental
law, trade restrictions, etc. It is clear from the list above that political factors often impact
organizations and how they do business. Organizations need to respond to the current and
anticipated future legislation and adjust their marketing policy accordingly. In India's
scenario, the company can easily establish its plant in India and enter Indian because
Indian markets are highly favourable for foreign investors nowadays. There is a lot of tax
relaxation available, and various other benefits are given for FDI. So this is in favour. 

2. Economic Environment: Economic factors have a significant impact on how an

organization does business and its profitability. Factors include – economic growth,
interest rates, exchange rates, inflation, disposable income of consumers and businesses,
 etc. These factors can be further broken down into macroeconomic and microeconomic
factors. Macro-economical factors deal with the management of demand in any given
economy. Governments use interest rate control, taxation policy, and government
expenditure as the main mechanisms. Micro-economic factors are all about the way
people spend their incomes. India is a huge market for any brand to set up and sell its
product. With a diverse market, almost every product has a good market, but most people
are resistant to change and may not opt for a new soy sauce brand other than using their
usual one if they see no benefit. But the economic benefits outway the benefits. So this is
favourable.

3. Social Environment: Also known as socio-cultural factors that involves the population's

shared beliefs and attitudes. These factors include – population growth, age distribution,
health consciousness, career attitudes, etc. These factors are of particular interest as they
directly affect how marketers understand customers and what drives them. With the
"Made in India" initiative's growth, people might not welcome a foreign product. So, it is
unfavourable. 

4. Technological Environment: We all know how fast the technological landscape changes
and how this impacts the way we market our products. Technological factors affect
marketing and the management thereof in three distinct ways:

· New ways of producing goods and services

· New ways of distributing goods and services
· New ways of communicating with target markets
· Our technological capability is low in comparison to Japan. Thus, production in India might
induce a high fixed cost. Thus, this is an unfavourable point. 
 
● Legal Environment: Legal factors include - health and safety, equal opportunities,
advertising standards, consumer rights and laws, product labelling, and product safety.
Companies need to know what is and what is not legal to trade successfully. If an
organization trades globally, this becomes a tricky area to get right as each country has its
 own set of rules and regulations. All the rules and legal implications that one has to face
before and after entering an Indian market might prevent any such entry at first. The
product would have to pass food safety standards of the country as well, and Indian
courts take a long time to settle legal battles. So this is also an unfavourable condition. 

● Environmental factors: These factors have only really come to the forefront in the last
fifteen years or so. They have become important due to the increasing scarcity of raw
materials, pollution targets, doing business as an ethical and sustainable company, carbon
footprint targets set by governments (this is a good example where one factor could be
classed as the political and environmental at the same time). These are just some of the
issues marketers are facing within this factor. More and more consumers are demanding
that the products they buy are sourced ethically, and if possible, from a sustainable
source. It is very important to consider this factor at this time.

CONCLUSION

India is a country where natural resources are available in abundance; this makes it easier for
foreign companies to set up India's operations. No doubt, the labour is easily available here at the
most affordable rates. Still, with the growth of pollution in the country, the government and the
authorities are strict about environmental troubles. Thus, this is unfavourable as well. So, doing
business in India is not advised. 

Ans Ques3a.

INTRODUCTION

The Turnaround Strategy is a retrenchment strategy followed by an organization when it feels

that the decision made earlier is wrong and needs to be undone before it damages the company's
profitability. Simply, a turnaround strategy is backing out or retreating from the decision wrongly
made earlier and transforming from a loss-making company to a profit-making company.

CONCEPT AND APPLICATION

Now the question arises when the firm should adopt the turnaround strategy? Following are
certain indicators that make it mandatory for a firm to adopt this strategy for its survival. These
are:
● Continuous losses
● Poor management
● Wrong corporate strategies
● Persistent negative cash flows
● The high employee attrition rate
● Poor quality of functional management
● Declining market share
● Uncompetitive products and services

Also, the need for a turnaround strategy arises because of the changes in the external
environment Viz, change in the government policies, saturated demand for the product, a threat
from the substitute products, changes in the tastes and preferences of the customers, etc. 
Now namely there are the following types of turnaround strategies:

1. Cost efficiency strategies

2. Asset retrenchment strategies
3. Focus on a company's core activities
4. Change of leadership

These can be explained as follows:

1. Cost efficiency strategies: This means focusing on cost reduction and production while
incurring minimum losses. Cost efficiency is achieved when the production cost is
minimum, the resources are fully utilized, and we break even and profit. So, achieving
cost efficiency is necessary. Asset retrenchment strategies: Under the strategy, companies
evaluate underperforming areas to eliminate them or make them more efficient. It entirely
depends upon the company's ability to generate cash flow that how well does the task of
asset retrenchment goes.
 2. Please focus on the company's core activities: Companies also resort to focus on their
core activities as a turnaround recovery strategy. Under the increased focus, companies
identify markets, customers, and products that can generate high profits and adopt the
measures as the main focus of the athletic activities. For example, a company may
re-focus on loyal or less price-sensitive customer segments or product lines best known.
It may develop a clear competitive strategy through focus.
3. Change of leadership: Companies often replace incumbent CEOs as a turnaround
recovery strategy. During turnaround situations, most companies appoint new chief
executives from outside the company to inject a new way of thinking into the top
management.

CONCLUSION

To maintain good revenues and end the problem of declining revenues and profitability of our
company we should adapt the above-listed turnaround strategies for solving our problem. 
This would help us reduce costs, focus on what we are best at, get better leadership and manage
our assets well. Hence, this will help in increasing our revenues and profitability. 
 
Ans Ques 3b.

INTRODUCTION

Before understanding what strategies would be applied in Indian Market, let's discuss these
strategies. It can be explained as follows:

A strategic alliance is an arrangement between two companies to undertake a mutually beneficial

project while maintaining its independence. The agreement is less complex and less binding than
a joint venture, in which two businesses pool resources to create a separate business entity.

CONCEPT AND APPLICATION

A company may enter into a strategic alliance to expand into a new market, improve its product
line, or develop an edge over a competitor. The arrangement allows two businesses to work
toward a common goal that will benefit both. The relationship may be short- or long-term, and
the agreement may be formal or informal.

Advantages:

● Speed up the entry into the new market.

● Enhance sales
● Learn new skills and technologies
● Divides fixed cost and resources
● Innovative products and services
● Enhanced distribution channels
● Easy to get into International Market
● Builds brand image

Disadvantages

● Poor management of business alliances

● Poor communication
● Benefits are unequal
● Barriers to work culture and language
● The risk to the reputation
● Risks of conflicts
● Vulnerability
● Legal issues

A joint venture is a business preparation in which more than two organizations or parties share
the ownership, expense, return of investments, profit, governance, etc. To gain a positive synergy
from their competitors, various organizations expand either by infusing more capital or by the
medium of Joint Ventures with organizations.

Joint Ventures can be with a company of the same industry or can be of some other industry.
Still, they will generate a competitive advantage over other players in the market with a
combination of both. In short, when two or more organizations join hands together to create
synergy and gain a mutual competitive advantage, the new entity is called a Joint Venture. It can
be a private company, a public company or even a foreign company.

In India, many companies underwent joint ventures with various foreign companies, which were
either technologically more advanced or geographically more scattered. India's major joint
ventures were done in sectors like Insurance, Banking, Commercial Transport vehicle, etc.

Advantages

● New insights and expertise

● Better resources
● It is only temporary
● Both parties share the risk and cost
● Joint venture can be flexible
● There are always ways to exit
● You'll know what is yours and you'll be able to sell it
● You'll be more likely to succeed
● Builds relationship and networks

Disadvantages

● Vague objections
● Flexibility can be restricted
● There is no such thing as equal involvement
● Clash of cultures
● Limited outside possibilities

CONCLUSION

So, by looking at all these, we can say that the company should go for a Joint venture than a
strategic alliance as it offers more advantages and is more favourable for the company than the
latter. So Joint Venture it is.