MBA (Pharmaceutical)

Subject: Strategic Management Sem : III

Marks: 70
Note: Attempt any Seven questions. All questions carry equal marks.

1. What is meant by strategic management? Explain the strategic management

process.
2. What is meant by internal analysis? What are different techniques for conducting
internal analysis?
3. What are corporate level strategies? Explain the various types of corporate level
strategies.
4. What is the use of GE Nine Cell analysis? Taking example of a corporate house,
apply the GE Nine Cell analysis.

5. What is Porter’s five forces model? Apply the five forces model to the airlines
industry.
Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and
helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an
industry's structure to determine corporate strategy. Porter's model can be applied to any  segment of the
economy to understand the level of competition within the industry and enhance a company's long-term
profitability. The Five Forces model is named after Harvard Business School professor, Michael E. Porter.
Supplier Power
The power of suppliers in the airline industry is immense because of the fact that the three inputs that airlines
have in terms of fuel, aircraft, and labor are all affected by the external environment. For instance, the price of
aviation fuel is subject to the fluctuations in the global market for oil, which can gyrate wildly because of
geopolitical and other factors. Similarly, labor is subject to the power of the unions who often bargain and get
unreasonable and costly concessions from the airlines. Third, the airline industry needs aircraft either on
outright sale or wet lease basis which means that the airlines have to depend on the two biggies, Airbus, and
Boeing for their aircraft needs. This is the reason the power of the suppliers in terms of the three inputs needed
for them is categorized as high according to the Porter’s Five Forces framework.
Buyer Power
With the proliferation of online ticketing and distribution systems, fliers no longer have to be at the mercy of
the agents and the intermediaries as well the airlines themselves for their ticketing needs. Apart from, the
entry of low cost carriers and the resultant price wars has greatly benefited the fliers. Moreover, the tight
regulation on the demand side of the airline industry meaning that passengers and fliers have been protected by
the regulators means that the balance of power is tipped in their favor. All these factors make the airline
industry cede power to the consumers and hence, the power of buyers is moderate to high as per Porter’s Five
Forces methodology. Apart from this, the buyers can engage in “price discovery” meaning that price fluctuations
do not deter them as they have multiple channels through which they can book their tickets.
Entry and Exit Barriers
The airline industry needs huge capital investment to enter and even when airlines have to exit the sector,
they need to write down and absorb many losses. This means that the entry and exit barriers are high for the
airline industry. As entry into the airline industry needs a high infusion of capital, not everybody can enter the
industry, which in addition, needs sophisticated knowledge and expertise on part of the players, which is a
deterrent. The exit barriers are also subject to regulation as regulators in the United States do not let airlines
exit the industry unless they are satisfied that there is a genuine business reason for the same. Moreover, the
airline industry leverages the efficiencies and the synergies from the economies of scale and hence, the entry
barriers are high. Therefore, applying Porter’s Five Forces framework, we find that the airlines pose significant
entry and exit barriers, which means that the impact of this dimension is quite high.
Threat of Substitutes and Complementarities
The airline industry in the United States is not at threat from substitutes and complementarities as unlike in the
developing world, consumers do not necessarily take the train or the bus for journeys. What this means is that
flying is a natural phenomenon for the consumers and hence, the substitutes in terms of the train and bus is
minimal in its impact. Of course, many Americans motor down (use their cars for longer travel as well) which
means that there is the threat of this substitute. As for complementarities, the provision of services like free Wi-
Fi, a la carte meals, and passenger amenities offered by the full service airlines does not really translate into
more passengers as in the recent past; fliers have been induced more by lower fares than these aspects.
Intensity of Competitive Rivalry
As mentioned in the introduction, the airline industry in the United States is extremely competitive because of a
number of reasons which include entry of low cost carriers, the tight regulation of the industry wherein safety
become paramount leading to high operating expenses, and the fact that the airlines operate according to a
business model that is a bit outdated especially in times of rapid turnover and churn in the industry. Apart from
anything else, the airline industry is regulated on the supply side more than the demand side, which means that
instead of the airlines being free to choose which markets to operate and which segments to target, it is the
fliers who get to be pampered by the regulators. This is the reason why low cost carriers have literally grounded
the full service airlines and when combined with the intense competition that was always the case in the United
States, the result is that the sector is one of the most competitive in the country.

6. What is meant by operational control?

Command authority that may be exercised by commanders at any echelon at or below the level of comba
tant command. Operational control is inherent in combatant command (command authority) and may be 
delegated within the command. When forces are transferred between combatant commands, the comma
nd relationship the gaining commander will exercise (and the losing commander will relinquish) over thes
e forces must be specified by the Secretary of Defense. Operational control is the authority to perform tho
se functions of command over subordinate forces involving organizing and employing commands and for
ces, assigning tasks, designating objectives, and giving authoritative direction necessary to accomplish th
e mission. Operational control includes authoritative direction over all aspects of military operations and j
oint training necessary to accomplish missions assigned to the command. Operational control should be 
exercised through the commanders of subordinate organizations. Normally this authority is exercised thro
ugh subordinate joint force commanders and Service and/or functional component commanders. Operati
onal control normally provides full authority to organize commands and forces and to employ those forces 
as the commander in operational control considers necessary to accomplish assigned missions; it does n
ot, in and of itself, include authoritative direction for logistics or matters of administration, discipline, intern
al organization, or unit training. Also called OPCON. See also combatant command; combatant command 
(command authority); tactical control.

7. What is strategy evaluation?

1. Ans 1. STRATEGY EVALUATION PREPARED BY: MD TAHER AHMED ROLL: 08 M.COM 4TH
SEM COURSE CODE: MC-401 ASSAM UNIVERSITY, SILCHAR
2. 2. STRATEGY EVALUATION:  Finding out what is going on is what evaluation is all about.
Strategy evaluation means collecting information about how well the strategic plan is progressing. 
Strategic Evaluation is defined as the process of determining the effectiveness of a given strategy in
achieving the organizational objectives and taking corrective action wherever required.  Strategy
evaluation is the final step of strategy management process. The key strategy evaluation activities
are: (1)examining the underlying bases of a firm’s strategies, (2)comparing actual results with
expected results, and (3)taking remedial/corrective actions. Evaluation makes sure that the
organizational strategy as well as it’s implementation meets the organizational objectives.
3. 3. NATURE OF STRATEGY EVALUATION:  Nature of the strategic evaluation and control process
is to test the effectiveness of strategy.  There has to be a way of finding out whether the strategy
being implemented will guide the organisation towards its intended objectives. Strategic evaluation
and control, therefore, performs the crucial task of keeping the organisation on the right track. 
Through the process of strategic evaluation and control, the strategists attempt to answer set of
questions, as below.  Are the premises made during strategy formulation proving to be correct? 
Is the strategy guiding the organization towards its intended objectives?  Are the organization and
 its managers doing things which ought to be done?  Is there a need to change and reformulate the
strategy?  How is the organization performing?
4. 4. Contd.  Are the time schedules being adhered to?  Are the resources being utilized properly?
 What needs to be done to ensure that resources are utilized properly and objectives met?  Has
there been an increase in profitability?  Have sales increased?  Have profit margin, ROI, EPS
ratios increased?  Adequate & timely information is the cornerstone of effective Strategy
Evaluation.  Strategy Evaluation is operated at two levels– (1) Strategic Control & (2) Operational
Control. At Strategic level we are concerned more about the consistency of strategy with the
Environment. At the Operational Level, the effort is given towards assessing how well the
organization is pursuing a given strategy.
5. 5. IMPORTANCE OF STRATEGY EVALUATION:  Strategy Evaluation helps to keep a check on
the validity of a strategic choice.  An ongoing process of evaluation would, in fact, provide
feedback on the continued relevance of the strategic choice made during the formulation phase.
This is due to the efficacy of strategic evaluation to determine the effectiveness of strategy. 
Strategy Evaluation can help to assess whether decisions match the intended strategy
requirements.  Strategy Evaluation, through its process of control, feedback, rewards and review,
helps in a successful culmination of the Strategic Management process.  In the absence of such
evaluation process, managers would not know explicitly how to exercise such discretion.  The
process of Strategic Evaluation provides a considerable amount of information and experience to
strategists that can be useful in new strategic planning.
6. 6. PARTICIPANTS IN STRATEGIC EVALUATION:  Shareholders  Board of Directors  Chief
Executives  Profit-Centre Heads or SBU Heads  Financial Controllers  Company Secretaries 
External and Internal Auditors  Audit and Executive Committees  Corporate Planning Staff or
Department  Middle-Level Managers
7. 7. BARRIERS IN EVALUATION : Ф Limits of Control Ф Difficulties in measurements Ф Resistance to
evaluation Ф Short-termism Ф Relying on efficiency (doing things right) versus effectiveness(doing
right things) DIFFICULTIES IN EVALUATION: Strategy Evaluation is becoming increasingly difficult
due to the following reasons:  A dramatic increase in the environment’s complexity.  The
increasing difficulty of predicting future with accuracy.  The increasing numbers of variables.  The
rapid rate of obsolescence of even the best plans.  The increase in the number of both domestic &
world events affecting the organizations.  The decreasing time span for which planning can be
done with any degree of certainty.
8. 8. REQUIREMENTS FOR EFFECTIVE EVALUATION:  Control should involve only minimum
amount of information as too much information creates confusion.  Control should monitor only
managerial activities and results.  Controls should be timely so that corrective actions can be taken
quickly.  Long-term and short-term controls should be used so that a balanced approach can be
adopted.  Controls should aim at pinpointing exceptions as nitpicking does not result in effective
evaluation. The ‘80:20 principle’ where 20 per cent of the activities results in 80 per cent of
achievements, needs to be emphasized.  Reward of meeting or exceeding standards should be
emphasized so that managers are motivated to perform.  Unnecessary emphasis on penalties tend
to pressurise the managers to rely on efficiency rather than effectiveness
9. 9. CRITERIA FOR EVALUATING STRATEGIES:  CONSISTENCY: Strategy must not present
mutually inconsistent goals and policies.  CONSONANCE: The Strategy must represent an
adaptive response to the external environment and to the critical changes occurring within it. 
ADVANTAGE: A Strategy must provide for the creation and/or maintenance of competitive
advantage in a selected area of the activity.  FEASIBILITY: A Strategy must neither overtax
available resources nor create unsolvable sub-problems. The final broad test of Strategy is its
feasibility, that is, can the Strategy be attempted within the physical, human and financial resources
of the enterprise?
10. 10. STRATEGY EVALUATION FRAMEWORK: ACTIVITY ONE: REVIEW UNDERLYING BASES
OF STRATEGY Prepare Revised Internal Prepare Revised External Factor Factor Evaluation (IFE)
Evaluation (EFE) Matrix Matrix Compare Revised to existing Compare Revised to existing IFE
Matrix EFE Matrix Do significant differences occur? YES NO ACTIVITY TWO: MEASURE
ORGANISATIONAL PERFORMANCE Compare planned to actual progress toward meeting stated
objectives YES ACTIVITY THREE: TAKE CORRECTIVE ACTIONS NO CONTINUE PRESENT
COURSE OF ACTION
11. 11. TECHNIQUES OF STRATEGIC EVALUATION: 1)Gap Analysis:  The gap analysis is one
strategic evaluation technique used to measure the gap between the organization’s current position
and its desired position.  The gap analysis is used to evaluate a variety of aspects of business,
from profit and production to marketing, research and development and management information
 systems.  Typically, a variety of financial data is analyzed and compared to other businesses
within the same industry to evaluate the gap between the organization and its strongest competitors.
2) SWOT Analysis:  The SWOT analysis is another common strategic evaluation technique used
as a part of the strategic management process. The SWOT analysis evaluates the organization’s
strengths, weaknesses, opportunities and threats.  Strengths and weaknesses are internal factors,
while opportunities and threats are external factors.  This identification is essential in determining
how best to focus resources to take advantage of strengths and opportunities and combat
weaknesses and threats.
12. 12. Contd.. 3) PEST Analysis:  Another common strategic evaluation technique is the PEST
analysis, which identifies the political, economic, social and technological factors that may impact
the organization’s ability to achieve its objectives.  Political factors might include such aspects as
impending legislation regarding wages and benefits, financial regulations, etc  Economic factors
include all shifts in the economy, while social factors may include demographics and changing
attitudes. Technological pressures are also inevitable as technology becomes more advanced each
day.  These are all external factors, which are outside of the organization’s control but which must
be considered throughout the decision making process. 4) Benchmarking:  Benchmarking is a
strategic evaluation technique that’s often used to evaluate how close the organization has come to
its final objectives, as well as how far it has left to go.  Organizations may benchmark themselves
against other organizations within the same industry, or they may benchmark themselves against
their own prior situation.  A variety of performance measures, as well as policies and procedures,
may be evaluated regularly to identify where adjustments are necessary to maintain the sustainable
competitive advantage.
13. 13. Contd.. 5) The Balanced Scorecard:  The Balanced Scorecard is an important Strategy
Evaluation technique. It is a process that allows firms to evaluate strategies from four key
perspectives: financial performance, customer knowledge, internal business processes and learning
and growth.  It answers the following questions: o How well is the firm continually improving &
creating values such as innovation, product quality? o How well is the firm sustaining & even
improving upon its core competencies & competitive advantage? o How satisfied are the firm’s
customers? 6) PERT & CPM: The Programme Evaluation Review Technique (PERT) & Critical Path
Method (CPM) were developed in order to plan and control activities.
14. 14. Contd.. PERT helps the Management to know:  When will the project be completed?  When
will each individual part of the project start and finish?  Of the many parts in a project, which ones
should be completed on time to avoid delaying the project?  Can resources be shifted from non-
critical parts to the critical parts without affecting the overall project’s completion time? CPM was
developed for the purpose of scheduling. It is concerned with the reconciliation, enumerates the
relationship between applying more resources to shorten the duration of a given project and the
increased cost of these resources.
15. 15. CONCLUSION:  ‘YOU CAN’T MANAGE WHAT YOU DON’T MEASURE’– PETER DRUCKER.
 ‘UNLESS STRATEGY EVALUATION IS PERFORMED SERIOUSLY AND SYSTEMATICALLY,
AND UNLESS STRATEGISTS ARE WILLING TO ACT ON THE RESULTS, ENERGY WILL BE
USED UP DEFENDING YESTERDAY. NO ONE WILL HAVE THE TIME, RESOURCES OR WILL
TO WORK ON EXPLOITING TODAY, LET ALONE TO WORK ON MAKING TOMORROW’–
PETER DRUCKER.

8. What is meant by synergy?

ynergy is an interaction or cooperation giving rise to a whole that is greater than the simple sum of its parts.
The term synergy comes from the Attic Greek word συνεργία synergia[1] from synergos, συνεργός, meaning
"working together".
In the natural world, synergistic phenomena are ubiquitous, ranging from physics (for example, the different
combinations of quarks that produce protons and neutrons) to chemistry (a popular example is water, a
compound of hydrogen and oxygen), to the cooperative interactions among the genes in genomes, the
division of labor in bacterial colonies, the synergies of scale in multi-cellular organisms, as well as the many
different kinds of synergies produced by socially-organized groups, from honeybee colonies to wolf packs
and human societies: compare stigmergy, a mechanism of indirect coordination between agents or actions
that results in the self-assembly of complex systems. Even the tools and technologies that are widespread in
the natural world represent important sources of synergistic effects. The tools that enabled early hominins to
become systematic big-game hunters is a primordial human example. [3][4]
In the context of organizational behavior, following the view that a cohesive group is more than the sum of
its parts, synergy is the ability of a group to outperform even its best individual member. These conclusions
are derived from the studies conducted by Jay Hall on a number of laboratory-based group ranking and
prediction tasks. He found that effective groups actively looked for the points in which they disagreed and in
consequence encouraged conflicts amongst the participants in the early stages of the discussion. In
contrast, the ineffective groups felt a need to establish a common view quickly, used simple decision making
methods such as averaging, and focused on completing the task rather than on finding solutions they could
agree on.[5]: 276  In a technical context, its meaning is a construct or collection of different elements working
together to produce results not obtainable by any of the elements alone. The elements, or parts, can include
people, hardware, software, facilities, policies, documents: all things required to produce system-level
results. The value added by the system as a whole, beyond that contributed independently by the parts, is
created primarily by the relationship among the parts, that is, how they are interconnected. In essence, a
system constitutes a set of interrelated components working together with a common objective: fulfilling
some designated need.[6]
If used in a business application, synergy means that teamwork will produce an overall better result than if
each person within the group were working toward the same goal individually. However, the concept of
group cohesion needs to be considered. Group cohesion is that property that is inferred from the number
and strength of mutual positive attitudes among members of the group. As the group becomes more
cohesive, its functioning is affected in a number of ways. First, the interactions and communication between
members increase. Common goals, interests and small size all contribute to this. In addition, group member
satisfaction increases as the group provides friendship and support against outside threats. [5]: 275 
There are negative aspects of group cohesion that have an effect on group decision-making and hence on
group effectiveness. There are two issues arising. The risky shift phenomenon is the tendency of a group to
make decisions that are riskier than those that the group would have recommended individually.
Group Polarisation is when individuals in a group begin by taking a moderate stance on an issue regarding
a common value and, after having discussed it, end up taking a more extreme stance. [5]: 280 
A second, potential negative consequence of group cohesion is group think. Group think is a mode of
thinking that people engage in when they are deeply involved in cohesive group, when the members' striving
for unanimity overrides their motivation to appraise realistically the alternative courses of action. Studying
the events of several American policy "disasters" such as the failure to anticipate the Japanese attack on
Pearl Harbor (1941) and the Bay of Pigs Invasion fiasco (1961), Irving Janis argued that they were due to
the cohesive nature of the committees that made the relevant decisions. [5]: 283 
That decisions made by committees lead to failure in a simple system is noted by Dr. Chris Elliot. His case
study looked at IEEE-488, an international standard set by the leading US standards body; it led to a failure
of small automation systems using the IEEE-488 standard (which codified a proprietary communications
standard HP-IB). But the external devices used for communication were made by two different companies,
and the incompatibility between the external devices led to a financial loss for the company. He argues that
systems will be safe only if they are designed, not if they emerge by chance. [7]
The idea of a systemic approach is endorsed by the United Kingdom Health and Safety Executive. The
successful performance of the health and safety management depends upon the analyzing the causes of
incidents and accidents and learning correct lessons from them. The idea is that all events (not just those
causing injuries) represent failures in control, and present an opportunity for learning and improvement. [8] UK
Health and Safety Executive, Successful health and safety management (1997): this book describes the
principles and management practices, which provide the basis of effective health and safety management. It
sets out the issues that need to be addressed, and can be used for developing improvement programs, self-
audit, or self-assessment. Its message is that organizations must manage health and safety with the same
degree of expertise and to the same standards as other core business activities, if they are to effectively
control risks and prevent harm to people.
The term synergy was refined by R. Buckminster Fuller, who analyzed some of its implications more
fully[9] and coined the term synergetics.[9]

 A dynamic state in which combined action is favored over the difference of individual component
actions.
 Behavior of whole systems unpredicted by the behavior of their parts taken separately, known
as emergent behavior.
 The cooperative action of two or more stimuli (or drugs), resulting in a different or greater response than
that of the individual stimuli.