Question 1

Strategic usually consists of a vision and a mission statement, a financial or operational objective, an

estimate of the resources required, and a summary of how the initiative fits in with the company’s
overall mission.

Strategic management is the annual cycle of strategic planning and plan implementation memorialized
into an organization’s culture. Now that you’ve got a mission statement, a financial or operational
objective, an estimate of the resources required, and a summary of how the initiative fits in with the
company’s overall mission, you can determine whether or not your strategic plan is working through
benchmarking against your KPIs or metrics. 

Question 2

Strategic management helps a decision-maker to get equipped with management tools or anticipating
changes and directing the organizational activities along the right path. Practice of strategic
management reduces the risk of operation by helping the enterprise to innovate in time and take an
early action.

Further, strategic management being objective oriented can provide all the employees with clear ideas
about what to do, when to do, where to do and how to do. Thus, an orientation towards strategic
management can assure better performance and greater unity in the enterprise.

Question 3

Characteristics of Strategy:

1. Strategy is a systematic phenomenon:

Strategy involves a series of action plans, no way contradictory to each other because a common theme
runs across them. It is not merely a good idea; it is making that idea happen too. Strategy is a unified,
comprehensive and integrated plan of action.

2. By its nature, it is multidisciplinary:

Strategy involves marketing, finance, human resource and operations to formulate and implement
strategy. Strategy takes a holistic view. It is multidisciplinary as a new strategy influences all the
functional areas, i.e., marketing, financial, human resource, and operations.

3. By its influence, it is multidimensional:

Strategy not only tells about vision and objectives, but also the way to achieve them. So, it implies that
the organization should possess the resources and competencies appropriate for implementation of
strategy as well as strong performance culture, with clear accountability and incentives linked to
performance.
 4. By its structure, it is hierarchical:

On the top come corporate strategies, then come business unit strategies, and finally functional
strategies. Corporate strategies are decided by the top management, Business Unit level strategies by
the top people of individual strategic business units, and the functional strategies are decided by the
functional heads.

Question 4

Strategy implementation is the translation of chosen strategy into organizational action so as to achieve
strategic goals and objectives. Strategy implementation is also defined as the manner in which an
organization should develop, utilize, and amalgamate organizational structure, control systems, and
culture to follow strategies that lead to competitive advantage and a better performance.

Strategy execution is the implementation of a strategic plan in an effort to reach organizational goals. It
comprises the daily structures, systems, and operational goals that set your team up for success.

Question 5

1.  Poor goal setting.

Strategic goals are often large and complex objectives that almost always require many resources
scattered across many departments and locations to accomplish them. Establishing clear goals across
teams will result in more clarity on priorities and responsibilities.

2. Lack of alignment.

Even with proper goal-setting, teams and people can be challenged with a lack of alignment that
typically causes prioritization issues and collaboration conflict that can derail the day-to-day work to
achieve the strategic goal. The biggest cause of strategic misalignment is the nonstrategic work that
people are so used to doing. Often nonstrategic objectives become the priority, as they are routine and
often the most easily attained.

3. Inability to track progress.

Many organizations are still using spreadsheets to track objectives. This can work between a manager
and employee, however, these systems do not make it easy to aggregate results or create transparency.
Worse, their use limits the ability to real-time manage the attainment of strategic goals. 

4. People not connected to the strategy.

People in general like order and routine, so we are more likely to fall into an operational tactical focus
where our efforts can result in immediate results. Unfortunately, strategic goals are rarely this easy and
small in scope, so how do we get people working differently? The best way is to connect people more
closely to strategy by aligning professional goals with personal interests. For example, learning new
skills, having more responsibility, working with different people and teams, working outside their
department on what we refer to as “strategy teams.”

5. No measurements or leading indicators.

The old proverb, “You manage what you measure,” is paramount to strategy execution. Without
measurement, how do you manage the people and issues that can derail a strategic goal? You must set
measurable goals, track them and manage them Having leading indicators like predictive analytics
stimulates the management discussions at all levels.  

Question 6

Strategic management process has following four steps:

Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and

providing information for strategic purposes. It helps in analyzing the internal and external factors
influencing an organization. After executing the environmental analysis process, management should
evaluate it on a continuous basis and strive to improve it.

Strategy Formulation- Strategy formulation is the process of deciding best course of action for
accomplishing organizational objectives and hence achieving organizational purpose. After conducting
environment scanning, managers formulate corporate, business and functional strategies.

Strategy Implementation- Strategy implementation implies making the strategy work as intended or

putting the organization’s chosen strategy into action. Strategy implementation includes designing the
organization’s structure, distributing resources, developing decision making process, and managing
human resources.

Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key
strategy evaluation activities are: appraising internal and external factors that are the root of present
strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that
the organizational strategy as well as it’s implementation meets the organizational objectives.

Question 7

Strategic Management Models

 Andrews' Models
 Glueck's Model
 The Schendel And Hofer Model
 The Thompson And Strickland Model
 Korey's Model
 Schematic Model

1. Andrews' Models
In 1965, Kenneth Andrews developed a simple model. This model includes the choice of a strategy, but
ignores implementation and control. In 1971, Andrews formulated a more complete model that included
implementation, but it still ignores a strategic control and evaluation.

2. Glueck's Model

William F. Glueck developed several models of strategic management based on the general decision-making
process.

The phases of this model are as follows:

* Strategic managements elements: "...to determine mission, goals, and values of the firm and the
key decision makers."

* Analysis and diagnosis: "  ...to search the environment and diagnose the impact of the threats and
opportunities."

* Choice: ...to consider various alternatives and assure that the appropriate strategy is chosen."

* Implementation: "...to match plans, policies, resources, structure, and administrative style with the
strategy."

* Evaluation: "...to ensure strategy and implementation will meet objectives."

As major contribution to the strategic management process, Glueck considered two elements: "enterprise
objectives" (the mission and objectives of the enterprise," and "enterprise strategists" (who are involved in
the process).

Moreover, Glueck broke down the planning process into analysis and diagnosis, choice, implementation, and
evaluation functions. This model also treats leadership, policy, and organizational factors.

However, Glueck omitted the important medium- and short-range planning activities of strategy
implementation.

3. The Schendel And Hofer Model

Dan Schendel and Charles Hofer developed a strategic management model, incorporating both planning and
control functions.

Their model consists of several basic steps:

(1) goal formulation,

(2) environmental analysis,

(3) strategy formulation,

(4) strategy evaluation,

(5) strategy implementation, and

 (6) strategic control.

According to Schendel and Hofer, the formulation portion of strategic management consists of at least three
subprocesses:

- environmental analysis,

- resources analysis,

- and value analysis.

Resource and value analyses are not specifically shown, but are considered to be included under other items
(strategy formulation).

4. The Thompson And Strickland Model

Thompson and Strickland developed several models of strategic management.

According to Thompson and Strickland strategic management is an ongoing process: "nothing is final and all
prior actions and decisions are subject to future modification."

This process consists of five major five ever-present tasks:

1. Developing a concept of the business and forming a vision of where the organization needs to be
headed.

2. Converting the mission into specific performance objectives.

3. Crafting a strategy to achieve the targeted performance.

4. Implementing and executing the chosen strategy efficiently and effectively.

5. Evaluating performance, reviewing the situation, and initiating corrective adjustments in mission,
objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas,
and new opportunities.

Thompson and Strickland suggest that the firm's mission and objectives combine to define "What is our
business and what will it be?" and "what to do now" to achieve organization's goals. How the objectives will
be achieved refers to the strategy of firm.

In general, this model highlights the relationships between the organization's mission, its long- and short-
range objectives, and its strategy.

5. Korey's Model
Modern theorist and writer, Jerzy Korey-Krzeczowski, founder and President Canadian School of
Management, have proposed an integrated model of strategic management.

Korey's model consists of three discrete major phases:

(1) preliminary analysis phase,

(2) strategic planning phase,
(3) strategic management phase.

Further, Korey states that the systematic planning consists of at least four continuous subprocesses:

(1) planning studies,

(2) review and control,
(3) feasibility studies, and
(4) feasibility studies.

The planning is ongoing process, thus all these sub processes are integrated and they are interacted each
other; creating the fully dynamic model.

Korey's model incorporates both planning and control functions. Moreover, it describes not only long-range
strategic planning process, but also includes elements of medium and short range planning.

Korey's model is based on existing models; but it differs in content, emphasis, and process.

This model adds several facets to the planning process that the reader has not seen in other models. Some of
these are: development of educational philosophy, analysis of the value systems, review of community
orientation and social responsibilities, definition of planning parameters, planning studies, and feasibility
studies.

6. Schematic Model

As an aid in envisioning the strategic management process in this paper.

This model was developed by Peter Wright, Charles Pringle and Mark Kroll (1994). It consists of five stages:

1. Analyze the environmental opportunities and threats.

2. Analyze the organization's internal strengths and weaknesses.
3. Establish the organizational direction: mission and goals.
4. Strategy formulation.
5. Strategy Implementation.
6. Strategic Control.
The model begins with an analysis of environmental opportunities and threats. The organization is affected
by environmental forces; but the organization can also have an impact upon its environment.

The organization's mission and goals are linked to the environment by a dual arrow. This means that the
mission and goals are set in the context of environmental opportunities and threats.

The next arrow depicts the idea that strategy formulation sets strategy implementation in motion.
Specifically, strategy is implemented through the organization's structure, its leadership, and its culture.

Then, the final downward arrow indicates that the actual strategic performance of the organization is
evaluated.

The control stage is demonstrated by the feedback line that connects strategic control to the other parts of
the model.

Question 8

A Comprehensive Strategy-Formulation Framework

Important strategy-formulation techniques can be integrated into a three-stage decision-
making framework, as shown below. The tools presented in
this framework are applicable to all sizes and types of organizations
and can help strategists identify, evaluate, and select strategies.

Stage-1 (Formulation Framework)

1. External factor evaluation

2. Competitive matrix profile

3. Internal factor evaluation

Stage-2 (Matching stage)

1. TWOS Matrix (Threats-Opportunities-Weaknesses-Strengths)

2. SPACE Matrix (Strategic Position and Action Evaluation)

3. BCG Matrix (Boston Consulting Group)

4. IE Matrix (Internal and external)

5. GS Matrix (Grand Strategy)

Stage-3 (Decision stage)

1. QSPM (Quantitative Strategic Planning Matrix)
Stage 1:  of the formulation framework consists of the EFE Matrix, the IFE Matrix, and the Competitive

Profile Matrix. Called the Input Stage, Stage 1 summarizes the basic input information needed to formul
ate strategies. 

Stage 2, called the Matching Stage, focuses upon generating feasible alternative strategies by
aligning key external and internal factors. Stage 2 techniques include the Threats-Opportunities-
Weaknesses-Strengths (TOWS) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the
Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and the Grand Strategy Matrix.

Stage 3, called the Decision Stage, and involves a single technique, the Quantitative Strategic Planning M
atrix (QSPM). A QSPM uses input information from Stage 1
to objectively evaluate feasible alternative strategies identified in Stage 2. A QSPM reveals the
relative attractiveness of alternative strategies and, thus, provides an
objective basis for selecting specific strategies. All nine techniques included in the strategy-
formulation framework require integration of intuition and analysis. Autonomous divisions in an
organization commonly use strategy-formulation techniques to develop
strategies and objectives. Divisional analyses provide a basis for identifying, evaluating, and selecting a
ong alternative corporate-level strategies.

Strategists themselves, not analytic tools, are always responsible and accountable for strategic decisions
. Lenz emphasized that the shift from a words-oriented to a numbers
oriented planning process can give rise to a false sense of certainty;
it can reduce dialogue, discussion, and argument as a means to explore
understandings, test assumptions and foster organizational
learning. Strategists, therefore, must be wary of this possibility and use analytical tools to facilitate,
rather than diminish, communication. Without objective
information and analysis, personal biases, politics, emotions, personalities, and halo error (the tendency 
to put too much weight on a single factor) unfortunately may play a dominant role in the strategy-
formulation process.

Question 9

1. Identify Your Strategic Position

The first stage prepares you for the rest of the strategic planning process. To achieve your goals, you
must first have a clear vision. Start by defining both your short-term and long-term objectives. In short,
what do you hope to achieve? Next, determine what steps you will take to accomplish these objectives.
When identifying your strategic position, remember that your goals should be realistic and measurable.
For help with this step, look back to your mission statement, corporate values, and work culture.

2. Gather People and Information

Once you have established your strategic position, you will want to bring in the people who will be
involved in the planning process. You will also want to bring in as much up-to-date information to the
table as possible. Ensure that any data you use is accurate so that you make informed decisions backed
up by facts. Once you have people and information to draw from, examine any internal or external
issues that could possibly affect your objectives. It may be useful to ask other people in your business for
their input, such as employees, customers, or partners.

3. Perform a SWOT Analysis

SWOT, which is an acronym for strengths, weakness, opportunities, and threats, acts as a powerful tool
during the strategic planning process. A SWOT analysis is often performed to help identify the strengths
and weaknesses of a business, as well as identify any opportunities and threats that could arise. Once
the team has identified all strengths, weaknesses, opportunities and threats, you can work together to
develop new goals that will help your business face these possibilities in a more positive way. A SWOT
analysis can also lead you in the right direction and towards your goals.

4. Formulate a Strategic Plan

Once you have successfully identified your strategic position and have a set of goals that align with your
company’s mission, you can begin working on your strategic plan. When developing your plan, consider
which initiatives will have the greatest impact on your business and which will help improve your
position the most. Also consider which initiatives are most urgent and put these at the front of the line.
To ensure that your strategic plan is working, you will need to determine the best way to measure your
progress. With measurable goals you can visibly see improvements as they happen.

5. Execute Your Strategic Plan

Once you have your strategic plan in place, you are ready to implement it. This step is the action phase
of the strategic planning process. Start by making everyone involved in the plan aware of your strategy.
Ideally, you want to distribute tasks among different individuals or departments to prevent one person
or group of people from becoming overwhelmed. Also take the time to check back with these individuals
or groups to ensure that you are staying on track. If you find that you are not meeting your objectives,
make any necessary changes.

6. Constantly Monitor Performance

Your strategic planning process will not be effective unless everyone is doing their part. This requires
you to constantly monitor and manage performance and tweak any components that are not leading to
satisfactory results. It is also important to hold those involved in the strategic planning process
accountable for their assigned tasks. Know that it may be necessary to repeat the strategic management
process if any corrective actions you take are not successful. Continue to collect new and relevant data
to help with any future strategic planning that may occur.
Question 10.

A mission statement defines what line of business a company is in, and why it exists or what purpose it
serves. Every company should have a precise statement of purpose that gets people excited about what
the company does and motivates them to become part of the organization. A mission statement should
also define the company’s corporate strategy and is generally a couple of sentences in length.

A mission statement is a short statement of an organization's purpose that:

 Identifies the scope of its operation

 Identifies what kind of products or services it provides
 Identifies it's intended audience
 Identifies what values it adheres it.

Question 11

 clear mission statement is essential throughout all aspects of a company, influencing it in these
key ways:
 Creating identity
 Attracting talent
 Guiding culture
 Developing purpose
 Improving performance
 Building community
 A clear vision statement defines the direction the organization is going, sets the stage
for strategic plans, and illustrates exactly what an organization “stands for”. It can also
provide other significant benefits for the people in your organization.

Question 12.

 The Vision is your North Star and paints a tangible pen portrait of where your organisation
ultimately wants to get in the future.
 The Mission explains at a very high level what you organisation does (your purpose) in order to
reach the Vision and the Core values describe the way the organisation should behave as it
carries out its Mission.
 Goals are high-level milestones that must be achieved to make reaching the Vision possible
and Objectives are the more detailed milestones that are required to reach a Goal.
 A policy is a deliberate system of principles to guide decisions and achieve rational outcomes. A
policy is a statement of intent, and is implemented as a procedure or protocol. Policies are
generally adopted by a governance body within an organization. Policies can assist in
both subjective and objective decision making.
Question 13.

The five forces Porter recognizes in its industry analysis method are:

 Intensity of competitive rivalry

 Bargaining power of suppliers
 Bargaining power of buyers
 Threat of substitutes
 Threat of new entrants

I. Intensity of Competitive Rivalry

The number and strength of competitive rivals in an industry impact relationships with customers and
suppliers. Industries with a larger number of competitive rivals make it difficult for a company to secure
loyal customers because they have more options. Cost leadership and product differentiation can be
effective strategies for helping to alleviate the risks that your client may face in a highly competitive
industry.

II. Bargaining Power of Suppliers

Expensive supplies and unpredictable shifts in supplier pricing impact company profitability. Ideally, your
client should position themselves in an industry where there is already a number of preexisting suppliers
they can work with. If there are only a few suppliers available, it’s important to ensure that those
relationships are strong, and they see the value of working with your client.

If you look at a niche industry where there is a very limited number of suppliers, for example, those
suppliers have massive power over pricing and quality. Since there are little to no alternatives available,
a company’s primary supplier has more freedom to dictate the terms of the relationship versus an
industry with many suppliers.

III. Bargaining Power of Buyers

The size of a company’s customer base can impact their ability to influence pricing and quality. For
example, this is why a large grocery store chain that has stores in most states has more freedom to offer
discount pricing versus a small convenience store located in a remote area. That said, as the only store
around, a remote convenience store may also have more power to charge more for groceries.

IV. Threat of Substitutes

If there are a number of substitutes for a product or service on the market, buyers have more options to
seek out similar products or services. It’s important for your client to ensure their product or service
maintains demand among customers. That way, even if a substitute appears at some point, customers
will trust the quality of their product or service regardless. For example, Microsoft Excel can be viewed
as a substitute for project management software or different calendar apps.

V. Threat of New Entrants

 If it’s easy to gain access into your industry, the chance of new competitive rivals entering into it is high.
This can lead to a crowded industry where many new competitive rivals start appearing regularly. Most
of us can recall the 3D TV craze that saw a flood of high-profile TV makers quickly enter the scene, only
for the industry to almost die out completely just a few years later.

Question 14.

The steps in the process of strategic evaluation are:

I. The first step is a strategic analysis in order to gain a clear understanding of the
circumstances affecting the organization’s strategic situation.
II. The second step is to produce a range of strategic options.
III. The third step is to develop a basis of comparison. This may be available from the
strategic analysis or may need to be specially developed.
IV. It is helpful to establish the underlying rationale for each strategy by explaining why the
strategy might succeed. This is often done in qualitative terms and by using techniques
like scenario building product portfolio analysis and the assessment of synergy.
V. At this stage, the large number of strategic alternatives may be narrowed down, before a
more detailed analysis is undertaken. Strategic alternatives may be ranked, based on
their relative merits and demerits.
VI. Suitability of each alternative should be tested. There are a number of techniques for
testing. The specific choice of technique will depend upon the circumstances.
VII. The next stage is assessing the feasibility and acceptability of strategies which appear
reasonably suitable based on the analysis. The choice of the technique should be based
on the circumstances of the company.
VIII. Finally, the company will need some system for selecting future strategies as a result of
these evaluations.

Six Steps Of The Strategic Control Process

Whether your organization is using one or all four of the previous techniques of strategic evaluation and
control, each involves six steps:

I. Determine what to control.

What are the organization’s goals? What elements directly relate to your mission and vision? It’s
difficult, but you must prioritize what to control because you cannot monitor and assess every minute
factor that might impact your strategy.
 II. Set standards.

What will you compare performance against? How can managers evaluate past, present, and future
actions? Setting control standards—which can be quantitative or qualitative—helps determine how you
will measure your goals and evaluate progress.

III. Measure performance.

Once standards are set, the next step is to measure your performance. Measurement can then be
addressed in monthly or quarterly review meetings. What is actually happening? Are the standards
being met?

IV. Compare performance.

When compared to the standards or targets, how do the actuals measure up? Competitive
benchmarking can help you determine if any gaps between targets and actuals are normal for the
industry, or are signs of an internal problem.

V. Analyze deviations.

Why was performance below standards? In this step, you’ll focus on uncovering what caused the
deviations. Did you set the right standards? Was there an internal issue, such as a resource shortage,
that could be controlled in the future? Or an external, uncontrollable factor, like an economic collapse?

VI. Decide if corrective action is needed.

Once you’ve determined why performance deviated from standards, you’ll decide what to do about it.
What actions will correct performance? Do goals need to be adjusted? Or are there internal shifts you
can make to bring performance up to par? Depending on the cause of each deviation, you’ll either
decide to take action to correct performance, revise the standard, or take no action.

Question 15.

Retrenchment strategy is a corporate level strategy that aims to reduce the size or diversity of
organizational operations. At times, it also becomes a means to ensure an organization’s financial
stability. This is done by reducing the expenditure. A retrenchment strategy is a design to fortify an
organization’s basic distinctive competence.

In simple terms, a retrenchment strategy involves the abandonment of those products or services,
which are no longer profitable for the organization. It also includes withdrawal of the business from
those markets where even sustenance is difficult. For example, a corporate hospital may decide to focus
only on specialized treatments, and thus, realize higher revenues.
Question 16.

BASIS FOR
INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT
COMPARISON

Meaning Internal Environment refers to all the External Environment is a set of all the
inlying forces and conditions present exogenous forces that have the potential
within the company, which can affect to affect the organization's performance,
the company's working. profitability, and functionality.

Nature Controllable Uncontrollable

Comprise of Strengths and weaknesses Opportunities and threats

Affects Company only All companies operating in the industry

Bearing on Business Strategy, functions and Business survival, growth, reputation,

decisions expansion, etc.

Question 17.

Levels of Strategy

Corporate Level

Corporate level strategy defines the business areas in which your firm will operate. It deals with aligning
the resource deployments across a diverse set of business areas, related or unrelated. Strategy
formulation at this level involves integrating and managing the diverse businesses and realizing synergy
at the corporate level. The top management team is responsible for formulating the corporate strategy.
The corporate strategy reflects the path toward attaining the vision of your organization. For example,
your firm may have four distinct lines of business operations, namely, automobiles, steel, tea, and
telecom. The corporate level strategy will outline whether the organization should compete in or
withdraw from each of these lines of businesses, and in which business unit, investments should be
increased, in line with the vision of your firm.

Business Level
Business level strategies are formulated for specific strategic business units and relate to a distinct
product-market area. It involves defining the competitive position of a strategic business unit. The
business level strategy formulation is based upon the generic strategies of overall cost leadership,
differentiation, and focus. For example, your firm may choose overall cost leadership as a strategy to be
pursued in its steel business, differentiation in its tea business, and focus in its automobile business. The
business level strategies are decided upon by the heads of strategic business units and their teams in
light of the specific nature of the industry in which they operate.

Functional Level

Functional level strategies relate to the different functional areas which a strategic business unit has,
such as marketing, production and operations, finance, and human resources. These strategies are
formulated by the functional heads along with their teams and are aligned with the business level
strategies. The strategies at the functional level involve setting up short-term functional objectives, the
attainment of which will lead to the realization of the business level strategy.

Question 18.

The Boston Consulting group’s (BCG) product portfolio matrix (BCG matrix) is designed to help with
long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio
of products to decide where to invest, to discontinue or develop products. It's also known as
the Growth/Share Matrix.

To apply the BCG Matrix you can think of it as showing a portfolio of products or services, so it tends to
be more relevant to larger businesses with multiple services and markets. However, marketers in
smaller businesses can use similar portfolio thinking to their products or services to boost leads and
sales as we'll show at the end of this article.

The GE McKinsey matrix is a nine-box matrix which is used as a strategy tool. It helps multi-business
corporations evaluate business portfolios and prioritize investments among different business units in a
systematic manner.
This technique is used in brand marketing and product management. The analysis helps companies
decide what products need to be added to a product portfolio as well as what other opportunities
should continue to receive investments. Though similar to the BCG matrix, the GE version is a lot more
complex. The analysis begins as a two-dimensional portfolio matrix but the dimensions are multifactorial
with nine industry attractiveness measures and twelve business strength measures.

Question 19.

The SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis looks at the organization itself
or a business proposition or indeed a competitor Without a clear understanding of an organization’s
strengths, weaknesses, opportunities and threats business plans may fail, goals will be missed and new
product or service development programmers will fail to live up to their potential. The analysis of
strengths and weaknesses looks inwards on the organization.

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 tracks a strategy's implementation and
subsequent results.

A DuPont analysis is used to evaluate the component parts of a company's return on equity (ROE). This
allows an investor to determine what financial activities are contributing the most to the changes in
ROE. An investor can use analysis like this to compare the operational efficiency of two similar firms.

Question 20.

I. Economical Environment:

Economic Environment consists of Gross Domestic Product, Income level at national level and per capita
level, Profit earning rate, Productivity and Employment rate, Industrial, monetary and fiscal policy of the
government etc.

II. Social Environment:

Social Environment consists of the customs and traditions of the society in which business is existing. It
includes the standard of living, taste, preferences and education level of the people living in the society
where business exists.

III. Political Environment:

Political environment constitutes all the factors related to government affairs such as type of
government in power, attitude of government towards different groups of societies, policy changes
implemented by different governments etc. The political environment has immediate and great impact
on the business transactions so businessman must scan this environment very carefully.
IV. Legal Environment:

Legal environment constitutes the laws and various legislations passed in the parliament. The
businessman cannot overlook the legislations because he has to perform his business transactions
within the framework of legal environment.

V. Technological Environment:

Technological environment refers to changes taking place in the method of production, use of new
equipment and machineries to improve, the quality of product. The businessman must closely monitor
the technological changes taking place in his industry because he will have to implement these changes
to remain in the competitive market.