Section - A

Q1. Explain the term strategic management.

Ans. Strategic Management is the art & science of implementing, formulating, and evaluating,
cross-functional decisions that enable any establishment to achieve its goals. It includes elements
geared toward a company’s long duration survival and accomplishment of management goals.

Strategic management recommends that the company commits to its decisions on the future
course of action over an extended period of time. This long-term commitment on the portion of
the company necessitates availability of substantial resources like physical assets, manpower etc

Q2. What is Benchmarking?

Ans. The idea of finding what is the best presentation being accomplished, whether your
organization, by a contender, or by an extraordinary industry is known as benchmarking. It is a
procedure device used to look at the presentation of the business cycles and items with the best
exhibitions of different organizations inside and outside the industry. It is the quest for industry
best practices that lead to prevalent execution.

There are various kinds of benchmarking the supervisors can utilize. Tuominen and Bogan and
English recognized these 3 significant sorts:
● Strategic Benchmarking: Administrators utilize this sort of benchmarking to distinguish
the most ideal approach to contend on the lookout. During the interaction, the
organizations recognize the triumphant systems (typically outside their industry) that
effective organizations utilize and apply them to their essential cycle. It is additionally
basic to contrast the essential objectives all together with spot new essential decisions.

● Performance Benchmarking: It is worried about contrasting your organization's items

and services. As indicated by Bogan and English the instrument for the most part centres
around the item and service quality, highlights, value, speed, dependability, plan, and
consumer loyalty, yet it can quantify whatever has the quantifiable measurements,
including measures. Execution benchmarking decides how solid our items and services
are contrasted with our opposition.

● Process Benchmarking: It needs to take a gander at different organizations that

participate in comparative exercises and to distinguish the prescribed procedures that can
be applied to your cycles to improve them. Cycle benchmarking is a different sort of
benchmarking; however, it normally gets from execution benchmarking. This is because

1/25
 organizations initially distinguish the frail contending points of their items or services and
afterward centre on the critical cycles to kill those weaknesses.

Q3. Elaborate Vision, Mission, and Objectives.

Ans. Vision Statement: The general objective of an association that all business exercises and
cycles should contribute toward accomplishing. The vision statement permits the organization to
depict itself in ideal terms. In the ideal future, what will the organization be known for; what will
the organization have accomplished; what will the clients consider about the organization; what
services and items will the organization give.

A dream verbalizes the position that an association might want to accomplish in the distant
future. It helps in making a typical personality and a common feeling of direction. A decent
vision encourages hazard taking and experimentation. It answers the inquiry: 'What will
achievement resemble?'

Mission Statement: It is an explanation that pronounces what business an organization is in and

who its clients are. The organization's statement of purpose clarifies the explanation behind
existence. Why on earth does anybody need an organization's specific item or service; what sort
of a hole would an organization say it is filling in individuals' lives.

Mission alludes to the reason for an association. Mission expresses the business purpose behind
the association's presence. It relates the association to the general public. The mission of an
association should reach skyward and simultaneously it should be sensible. It ought to give an
essential course to the association.

Objectives: It is an open-finished explanation of what one needs to accomplish with no

evaluation of outcomes or time limit. Targets are characterized as objectives that the association
needs to accomplish throughout some undefined time frame. These are the establishment of
preparation. Strategies are created in an association to accomplish these targets.

Detailing of targets is the undertaking of high-level service. Viable objectives have the following
highlights:

● These are not single for an association, yet different.

● Objectives ought to be both present moments just as long haul.
● Objectives should react a lot to changes in climate, i.e., they should be adaptable.
● These should be possible, practical, and operational.

2/25
Q4. Explain the five factors of Porter's model.

Ans. Porter's Five Forces is a framework for analyzing a company's competitive environment. is
a business analysis model that helps to explain why various industries are able to sustain
different levels of profitability. The model was published in Michael E. Porter's book,
"Competitive Strategy: Techniques for Analyzing Industries and Competitors" in 1980.

Porter's five forces are:

1) Competition in the industry: The first of the five forces refer to the number of
competitors and their ability to undercut a company. The larger the number of
competitors, along with the number of equivalent products and services they offer, the
lesser the power of a company. Suppliers and buyers seek out a company's competition if
they are able to offer a better deal or lower prices. Conversely, when competitive rivalry
is low, a company has greater power to charge higher prices and set the terms of deals to
achieve higher sales and profits.

2) Potential of new entrants into the industry: A company's power is also affected by the
force of new entrants into its market. The less time and money it costs for a competitor to
enter a company's market and be an effective competitor, the more an established
company's position could be significantly weakened. An industry with strong barriers to
entry is ideal for existing companies within that industry since the company would be
able to charge higher prices and negotiate better terms.

3) Power of suppliers: Suppliers can drive up the cost of inputs. It is affected by the
number of suppliers of key inputs of a good or service, how unique these inputs are, and
how much it would cost a company to switch to another supplier. The fewer suppliers to
an industry, the more a company would depend on a supplier. As a result, the supplier has
more power and can drive up input costs and push for other advantages in trade. On the
other hand, when there are many suppliers or low switching costs between rival suppliers,
a company can keep its input costs lower and enhance its profits

4) Power of customers: The ability that customers have to drive prices lower or their level
of power is one of the five forces. It is affected by how many buyers or customers a
company has, how significant each customer is, and how much it would cost a company
to find new customers or markets for its output. A smaller and more powerful client base
means that each customer has more power to negotiate for lower prices and better deals.
A company that has many, smaller, independent customers will have an easier time
charging higher prices to increase profitability.

3/25
 5) Threat of substitute products: Substitute goods or services that can be used in place of
a company's products or services pose a threat. Companies that produce goods or services
for which there are no close substitutes will have more power to increase prices and lock
in favorable terms. When close substitutes are available, customers will have the option
to forgo buying a company's product, and a company's power can be weakened.

Q5. Explain Mintzberg’s 5p’s of strategy.

Ans. Mintzberg developed his 5 Ps of Strategy as five different definitions of (or approaches to)
developing strategy. He first wrote about the 5 Ps of Strategy in 1987. Each of the 5 Ps is a
different approach to strategy. They are Plan, Ploy, Pattern, Position, and Perspective.

● Plan - the default, automatic approach that we adopt brainstorming options and planning
how to deliver them.

● Ploy - Mintzberg says that getting the better of competitors, by plotting to disrupt,
dissuade, discourage, or otherwise influence them, can be part of a strategy. This is where
strategy can be a ploy, as well as a plan. Here, techniques and tools such as the Futures
Wheel, Impact Analysis, and Scenario Analysis can help you explore the possible future
scenarios in which competition will occur. Our article on Game Theory Then gives you
powerful tools for mapping out how the competitive "game" is likely to unfold, so that
you can set yourself up to win it.

● Pattern - Strategic plans and ploys are both deliberate exercises. Sometimes, however,
strategy emerges from past organizational behavior. Rather than being an intentional
choice, a consistent and successful way of doing business can develop into a strategy.

● Position - "Position" is another way to define strategy, that is, how you decide to position
yourself in the marketplace. In this way, strategy helps you explore the fit between your
organization and your environment, and it helps you develop a sustainable competitive
advantage.

● Perspective - The choices an organization makes about its strategy rely heavily on its
culture just as patterns of behavior can emerge as strategy, patterns of thinking will shape
an organization's perspective and the things that it is able to do well. To get an insight
into your organization's perspective, use cultural analysis tools like the Cultural Web,
Deal and Kennedy's Cultural Model, and the Congruence Model.

4/25
Q6. Explain vertical and horizontal integration strategy.

Ans. Vertical Integration: Expanding the company's scope of exercises in reverse into the
sources of supply and additionally forward into the conveyance channels. While seeking after a
vertical reconciliation methodology, a firm engages in new parts of the value chain.

This methodology can be alluring when an association's providers or purchasers have an

excessive amount of control over the firm and are getting progressively productive at the
association's cost. By entering the area of a provider or a purchaser, chiefs can diminish or kill
the influence that the provider or purchaser has over the firm.

Considering vertical incorporation close by Porter's five powers model features that such moves
can make more prominent benefit potential. Firms can seek after vertical incorporation all alone,
for example, when Apple opened stores bearing its image, or through a consolidation or
obtaining

Horizontal Integration: Flat incorporation is the procurement of a business working at a similar

level of the value chain in a similar industry. This is as opposed to vertical incorporation, where
firms venture into upstream or downstream exercises, which are at various phases of creation.

The flat mix is a serious technique that can make economies of scale, increment market control
over wholesalers and providers, increment item separation, and assist organizations with growing
their market or enter new business sectors. By combining two organizations, they might have the
option to create more income than they would have had the option to do autonomously.

Q7. Explain diversification strategy.

Ans. Diversification strategy is applied when companies wish to grow. It is the practice of
introducing a new product into your supply chain in order to increase profits. These products
could be a new segment of the industry your company already occupies, known as business-level
diversification. Alternatively, corporate-level diversification occurs if you penetrate a new
market.

There are three types of Diversification strategies:

1) Concentric Diversification: It refers to the development of new products and services

that are similar to the ones you already sell. For example, an orange juice brand releases a
new “smooth” orange juice drink alongside its hero product, the orange juice “with bits”.

5/25
 2) Horizontal Diversification: It refers to the development of new products that are
somewhat related to your original lines. For example, while your original product was
plant pots, you are now selling seeds for many varieties of herbs and flowers.

3) Conglomerate Diversification: It refers to the development of new products that are

unrelated to your original lines. For example, your t-shirt company has now decided to
start stocking apple products.

Q8. Define strategy implementation.

Ans. Strategy Implementation refers to the execution of the plans and strategies, so as to
accomplish the long-term goals of the organization. It converts the opted strategy into the moves
and actions of the organisation to achieve the objectives.

It is the fourth stage of the Strategic Management process, the other three being a determination
of strategic mission, vision and objectives, environmental and organisational analysis, and
formulating the strategy. It is followed by Strategic Evaluation and Control. The process of
strategy implementation has an important role to play in the company’s success. The process
takes place after environmental scanning, SWOT analyses and ascertaining the strategic issues.

Process of Strategy Implementation:

1) Building an organization that possesses the capability to put the strategies into action
successfully.
2) Supplying resources, in sufficient quantity, to strategy-essential activities.
3) Developing policies which encourage strategy.
4) Such policies and programs are employed which helps in continuous improvement.
5) Combining the reward structure, for achieving the results.
6) Using strategic leadership.

Q9. Define Social Responsibility

Ans. Social responsibility means that businesses, in addition to maximizing shareholder value,
must act in a manner that benefits society. Social responsibility means that individuals and
companies have a duty to act in the best interests of their environment and society as a whole.
Social responsibility, as it applies to business, is known as corporate social responsibility (CSR),
and is becoming a more prominent area of focus within businesses due to shifting social norms.

6/25
The crux of this theory is to enact policies that promote an ethical balance between the dual
mandates of striving for profitability and benefiting society as a whole. These policies can be
either ones of commission (philanthropy: donations of money, time, or resources) or omission
(e.g., "go green" initiatives like reducing greenhouse gases or abiding by EPA regulations to
limit pollution).

Q10. Explain process of evaluating strategies.

Ans. Strategy Evaluation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results. The
managers can also assess the appropriateness of the current strategy in today's dynamic world
with socio-economic, political and technological innovations. Strategic Evaluation is the final
phase of strategic management.

The process of Strategy Evaluation consists of following steps:

1) Fixing benchmark of performance - While fixing the benchmark, strategists encounter

questions such as - what benchmarks to set, how to set them and how to express them. In
order to determine the benchmark performance to be set, it is essential to discover the
special requirements for performing the main task. The performance indicator that best
identifies and expresses the special requirements might then be determined to be used for
evaluation. The organization can use both quantitative and qualitative criteria for
comprehensive assessment of performance. Quantitative criteria include determination of
net profit, ROI, earning per share, cost of production, rate of employee turnover etc.
Among the Qualitative factors are subjective evaluation of factors such as - skills and
competencies, risk taking potential, flexibility etc.

2) Measurement of performance - The standard performance is a benchmark with which

the actual performance is to be compared. The reporting and communication system help
in measuring the performance. If appropriate means are available for measuring the
performance and if the standards are set in the right manner, strategy evaluation becomes
easier. But various factors such as the manager's contribution are difficult to measure.
Similarly divisional performance is sometimes difficult to measure as compared to
individual performance. Thus, variable objectives must be created against which
measurement of performance can be done. The measurement must be done at the right
time else evaluation will not meet its purpose. For measuring the performance, financial
statements like - balance sheet, profit and loss account must be prepared on an annual
basis.

7/25
3) Analyzing Variance - While measuring the actual performance and comparing it with
standard performance there may be variances which must be analyzed. The strategists
must mention the degree of tolerance limits between which the variance between actual
and standard performance may be accepted. The positive deviation indicates a better
performance but it is quite unusual to always exceed the target. The negative deviation is
an issue of concern because it indicates a shortfall in performance. Thus, in this case the
strategists must discover the causes of deviation and must take corrective action to
overcome it.

4) Taking Corrective Action - Once the deviation in performance is identified, it is

essential to plan for a corrective action. If the performance is consistently less than the
desired performance, the strategists must carry a detailed analysis of the factors
responsible for such performance. If the strategists discover that the organizational
potential does not match with the performance requirements, then the standards must be
lowered. Another rare and drastic corrective action is reformulating the strategy which
requires going back to the process of strategic management, reframing of plans according
to new resource allocation trends and consequent means going to the beginning point of
the strategic management process.

8/25
 Section - B

Q1. What are the factors that organisations consider while making a choice of
strategy?

Ans. Strategic choice is the mental process of selecting the best or most appropriate strategy
from the stock of alternatives that serves the enterprise objectives. This choice takes place in not
thin air but a framework of reference made up of a variety of elements and the choice made is the
product of the basic elements that work in the framework. Strategic choices are the result of
elements like judgement, bargaining and analysis among other things.

This choice may be based on the individual’s judgement. When it is a group exercise, choice is
made by a group where each member has his own calculations and final selection is by bargain.
It is also possible that choice of strategy is the result of systematic evaluation of alternatives
based on facts analysed by experts such analysis is followed by judgement or bargaining or both.

To choose a good strategic option, past data, current data, forecasted data, and various other
factors should be examined carefully. The selection process becomes a complex job because it is
influenced by various factors.

Factors considered while making a choice of strategy:

Factor 1 - Environmental Constraints: The dynamic elements of the environment affect the
way in which choice of strategy is made. The survival and prosperity of a firm depend largely on
the interaction of the elements of the environment—such as shareholders, customers, suppliers,
competitors, the government and the community. These elements constitute the external
constraints. The flexibility in the choice of strategy is often governed by the extent and degree of
the firm’s dependence on the environment.

Pearce and Robinson state, “A major constraint on strategic choice is the power of environmental
elements. If a firm is highly dependent on one or more environmental factors, its strategic
alternatives and ultimate choice must accommodate this dependence. The greater a firm’s
external dependence, the lower its range and flexibility in strategic choice.” Well established,
large companies in different industries are more powerful vis-a-vis their environments and

9/25
therefore have greater flexibility in the strategic choice than their counterparts in the respective
fields.

Factor 2 - Dynamism of Market Sector: Glueck has said, “The strategic choice is affected by
the relative volatility of the market sector the firm chooses to operate in.” Market forces
vehemently influence the choice of strategy. For example, a firm which obtains bulk supply of its
raw materials or components in a competitive market will have greater flexibility in its strategic
choice than another firm which has to depend for its supplies on an oligopolistic market.

Factor 3 - Intra - Organizational: Organisational factors also affect the strategic choice. These
include organisational mission, strategic intent, goals, organisation’s business definition,
resources, policies, etc. Besides these factors, organisational strengths, weaknesses, and
capability to implement strategic alternatives also affect the strategic choice.

Factor 4 - Corporate Culture: In choosing a strategic alternative, strategy makers must

consider pressures from the corporate culture. They must assess a strategy’s compatibility with
that culture. Every organisation has its own corporate culture. It is made of a set of shared values,
beliefs, attitudes, customs, norms, etc. The successful functioning of an organisation depends on
‘strategy-culture fit’.

The strategy choice has to be compatible with the firm's culture. The strategic choice should not
be out of tune with the cultural framework of the firm. The culture has substantial influence on
the strategic choice. In case of mismatch between strategic choice and the cultural framework of
a company, either one is to be redefined.

The Management should decide to:

● Take a chance on ignoring the culture
● Manage around the culture
● Try to change the culture to fit the strategy
● Change the strategic alternative to fit the culture.

Factor 5 - Industry and Cultural Backgrounds: Industry and cultural backgrounds affect
strategic choice. For example, executives with strong ties within an industry tend to choose
strategies commonly used in that industry. Other executives who have come to the firm from
another industry and have strong ties outside the industry tend to choose different strategies from
what is being currently used in their industry.

Country of origin often affects preferences. For example, Japanese managers prefer a cost-
leadership strategy more than do United States managers. Research reveals that executives from

10/25
Korea, the U.S. Japan, and Germany tend to make different strategic choices in similar situations
because they use different decision criteria and weights.

Factor 6 - Pressures from Stakeholders: The attractiveness of a strategic alternative is affected

by its perceived compatibility with the key stakeholders in a corporation’s task environment.
Creditors want to be paid on time. Unions exert pressure for comparable wage and employment
security. Governments and interest groups demand social responsibility. Shareholders want
dividends. All these pressures must be given some consideration in the selection of the best
alternative.

Stakeholders can be categorized in terms of their (i) interest in the corporation’s activities and
(ii) relative power to influence the corporation’s activities. Each stakeholder group can be shown
graphically based on its level of interest (from low to high) in a corporation’s activities and on its
relative power (from low to high) to influence a corporation’s activities.

Strategic managers should ask four questions to assess the importance of stakeholder concerns in
a particular decision:

1) How will this decision affect each stakeholder, especially those given high and medium
priority?

2) How much of what each stakeholder wants is he likely to get under this alternative?

3) What are the stakeholders likely to do if they don’t get what they want?

4) What is the probability that they will do it?

Strategy makers should choose strategic alternatives that minimize external pressures and
maximize the probability of gaining stakeholder support. Managers may, however, ignore or take
some stakeholders for granted—leading to serious problems later. (Thomas Wheelen and David
Hunger)

Factor 7 - Impact of Past Strategies: It has been noticed that the choice of current strategy may
be influenced by what type of strategies have been used or followed in the past. Pearce and
Robinson have said, “A review of past strategy is the point at which the process of strategic
choice begins. As such past strategy exerts considerable influence on the final strategic choice.”

Hence, it is said that ‘past strategies are often the principal architects of current strategies.’
Pearce and Robinson explain the reason in this way – “Because they have invested substantial
time, resources and interest in these strategies, the strategists would logically be more

11/25
comfortable with a choice that closely parallels past strategy or represents only incremental
alterations.”

Henry Mintzberg says, “the past strategy strongly influences current strategic choice.” On the
other hand, Barry M. Staw has remarked, “the older and more successful a strategy has been, the
harder it is to replace. It is very difficult to change because organisational momentum keeps it
going.”

Factor 8 - Personal Characteristics: Personal factors like your own perception, views,
interests, preferences, needs, aspirations, personal disposition, ambitions, etc., are important and
play a vital role in affecting strategic choice. Even the most attractive alternative might not be
selected if it is contrary to the attitude, mindset, needs, desires and personality of the
selector/strategist himself.

Thus, personal characteristics and experience affect a person’s assessment and choice of strategic
alternatives.For example, one study found that narcissistic (self-absorbed and arrogant) type of
managers favour bold actions that attract attention.

Factor 9 - Value System: The role of value system in choosing a strategic alternative is well
recognized. While evaluating the strategic alternatives, different executives may take different
positions because of differences in their personal values. Guth and Tagiuri found that personal
values were important determinants of the choice of corporate strategy. Similarly, the value
system to top management affects the types of strategy that an executive chooses.

Factor 10 - Managerial Attitude towards risk: Managerial attitude towards risk is an

important factor that influences the choice of strategy. Individuals differ considerably in their
attitude towards risk taking. Some are risk prone, others are risk averse.

Conceptually, one may distinguish between the following attitudes reflecting the order of risk
preferences:

● Risk is necessary for success;

● Risk is a fact of life and some risk is desirable; and
● High risk destroys enterprises and needs to be minimized.

These attitudes may vary from risk taking to strong aversion to risk, and they influence the range
of available strategy choices. Pearce and Robinson have suggested that, “where attitudes favour
risk, the range and diversity of strategic choice expand. High risk strategies are acceptable and
desirable. Where management is risk averse, the diversity of choice is limited, and risky
alternatives are eliminated before strategic choices are made. Risk-oriented managers prefer
offensive, opportunistic strategies. Risk averse managers prefer defensive safe strategies.”

12/25
Those who consider some risk is desirable, balance high with low-risk choices and prefer a
combined strategy. Also, executives may overlook the risks involved if they perceive an
opportunity with optimism, i.e., where the tradeoff between risk and return weighs heavily in
favour of the gains from the potential opportunity.

Q3. What is External Strategic Analysis?

Ans. Strategic management is a popular method for running businesses which involves an
analytical approach to setting goals and managing resources. Like strategic planning, strategic
management often involves a good dose of business analysis. External analysis is less about the
organization itself, and more about its business environment (including its competitors).

The number of new competitors entering your industry, the cost of materials used to manufacture
your products, or the regulatory frameworks set out by governments — these are all examples of
variables which are out of your organization’s control, and should be taken into account in
external analysis. For example, an increased tax rate applies to all organizations — not just yours
— so you know it’s an external factor.

External analysis is also very important in the context of strategic management. When evaluating
your organization’s goals and resources, you absolutely need to look at the surrounding business
environment. In a perfect world, it would be enough just to look inside your organization; in the
real world, you need to be conscious of external forces that might affect your business’
operations and throw you off course.

For analyzing external factors, the PESTLE model is a tool. PESTLE stands for Political,
Economic, Sociocultural, Technological, Legal, and Environmental, which are the six categories
of environmental factors you should take into account during business analysis (like in strategic
management).

Political: Tax policy; environmental regulations; trade restrictions and reform; tariffs; political
stability. These determine the extent to which government and government policy may impact on
an organisation or a specific industry. This would include political policy and stability as well as
trade, fiscal and taxation policies too.

Economic: Economic growth/decline; interest, exchange, inflation and wage rates; minimum
wage; working hours; unemployment (local and national); credit availability; cost of living. It
has a direct impact on the economy and its performance, which in turn directly impacts on the
organisation and its profitability. Factors include interest rates, employment or unemployment
rates, raw material costs and foreign exchange rates.

13/25
Sociocultural: Cultural norms and expectations; health consciousness; population growth rates;
age distribution; career attitudes; health and safety. The focus here is on the social environment
and identifying emerging trends. This helps a marketer to further understand consumer needs and
wants in a social setting. Factors include changing family demographics, education levels,
cultural trends, attitude changes and changes in lifestyles.

Technological: New technologies are continually emerging (for example, in the fields of
robotics and artificial intelligence), and the rate of change itself is increasing. How will this
affect the organisation’s products or services? These factors consider the rate of technological
innovation and development that could affect a market or industry. Factors could include
changes in digital or mobile technology, automation, research and development. There is often a
tendency to focus on developments only in digital technology, but consideration must also be
given to new methods of distribution, manufacturing and logistics.

Legal: Changes to legislation impacting employment, access to materials, quotas, resources,

imports/exports, and taxation. An organisation must understand what is legal and allowed within
the territories they operate in. They also must be aware of any change in legislation and the
impact this may have on business operations.

Factors include employment legislation, consumer law, health and safety, international as well as
trade regulation and restrictions. Political factors do cross over with legal factors; however, the
key difference is that political factors are led by government policy, whereas legal factors must
be complied with.

Environmental: Global warming and the increased need to switch to sustainable resources;
ethical sourcing (both locally and nationally), including supply chain intelligence. Pandemics
and other emergencies. These factors are those that are influenced by the surrounding
environment and the impact of ecological aspects. With the rise in importance of CSR
(Corporate Sustainability Responsibility) and sustainability, this element is becoming more
central to how organisations need to conduct their business. Factors include climate, recycling
procedures, carbon footprint, waste disposal and sustainability.

PESTLE of Amazon Inc.:

Political: Amazon is an e-tailing platform which is serving millions of customers worldwide.

The company has to face political influences and government activities that can affect Amazon
success. Political stability can affect Amazon e-commerce business. For example, the political
stability of developed countries like Australia gave Amazon.com an opportunity to expand its
business in the region. Even a stable political government can create threats for a company.

14/25
The European Union is investigating Amazon.com regarding the use of retailers’ data who sell
on Amazon Marketplace. If the regulators found Amazon guilty it can face severe consequences.
Such political issues affect Amazon brand image and profitability at the same time.

Another political factor that is worth mentioning is the government laws for e-commerce
businesses. For example, a few months back the Indian government stopped Amazon and
Flipkart from selling products of those companies that have equity stakes. Government supports
companies like Amazon due to their huge investments but it still has to comply with government
laws and regulations which is sometimes very difficult. However, this political factor becomes a
threat when it supports other companies in the industry. For example, in China the government
supports Chinese e-commerce companies to flourish their businesses.

Other external environment factors that can affect Amazon Inc. is cybercrime. If any government
wants to improve the e-tailing business environment it must fight against cybercrime. This can
create an opportunity for the businesses.

Economic: The company will grow fast if the economic conditions are positive in the areas
where it is operating. Retailing is a medium through which producers offer their products and
services to consumers. Consumers buy from retailers in any economic condition and sometimes
the retail business survives even in the worst economic conditions.

Consumers’ disposable income is increasing which is a great opportunity for Amazon.com.

Higher disposable income means consumers will shop products of their choice. This will
provide companies like Amazon, Walmart, Ebay an opportunity to expand its business to
increase their market share and brand presence.

No doubt Amazon is an advanced Technology Company and facing criticism for offering fewer
job opportunities and prefer to use technology where it is possible. The company denied the
news and replied that Amazon is looking forward to hiring highly skilled staff in the UK. But in
May 2019 the company announced a program for those employees who want to quit. It will offer
$10,000 plus three months gross salary for those who want to quit jobs and start their own
delivery services for Amazon Packages.

Economic recession is another key macro environment indicator that can affect Amazon. For
example, the Chinese economy is slowing these days and this Chinese recession is considered a
threat to Amazon business expansion. The Chinese market is one of the key markets where
Amazon wants to penetrate.

Flourishing retail industry creates opportunities but not only for Amazon. It means more
competition for Amazon. Like the retail industry retailers are also flourishing their business and

15/25
creating more competition in the market. For example, Walmart is increasing its online presence
to not only compete with Amazon but also to improve their thin profit margins.

Sociocultural: Social factors, trends and behaviors can affect the performance of Amazon
negatively and positively. Amazon makes people lazy, allows them to stay at home and the
Amazon delivery system will take care of everything like streaming movies, food items and
groceries. Staying at home and eating junk food affected the health of American adults and
children. The government is under immense pressure to take necessary measures to improve the
lifestyle of every citizen.

The Younger generation is enthusiastic and crazy for online shopping. The easy internet access
and mobile devices increased this ratio. The senior citizens who don’t walk or don’t like to go
outside can also use Amazon online shopping facility. Online shopping is becoming a hobby
these days. Amazon can capitalize this opportunity to reach more and more people around the
globe.

Technological: Technology is the backbone of Amazon. Technology made amazon one of the
most profitable companies in the globe. Amazon is focusing on technology in terms of cloud
computing (amazon web service) anvery system to satisfy its customers.

Amazon is looking to use technology to the fullest for the delivery systems. Amazon Prime Air
is a new future delivery system to deliver packages to consumers using Unnamed Aerial
Vehicles also known as drones. Amazon is working with different regulatory authorities to
comply with their requirements and design a sound air traffic management system.

Cybercrime is a threat to Amazon. The whole business model is on stacks. Amazon consumers
and third-party sellers have concerns about their sensitive data like credit card and debit card and
any personal / confidential information stored on Amazon website. In this amazon pestle analysis
cybercrime is a real threat to Amazon. According to CJ Rosenbaum, A Lawyer who is working
for Amazon sellers, said that his several clients informed him that they were hacked and lost
their monthly sales.

Technology obsoletes with the passage of time and amazon is facing the same issues which
pressurize it to regularly work on technological assets. All the investments in information
technology creates a competitive advantage for amazon.

Legal: Amazon business operations must comply with different laws and regulations. There are
many legal factors that can affect Amazon for example anti-trust laws, discrimination laws,
consumer protection laws for ecommerce businesses, data protection laws.

16/25
Counterfeit product regulations are necessary and demand of the consumers. This can be
considered as an opportunity for amazon to increase its efforts to minimize the counterfeit sales
on e-commerce platforms. Amazon already has an Anti-counterfeit policy in place. Every
product offered by sellers on amazon platform must be authentic. The sale of such types of
products is strictly prohibited.

There are different Consumer Privacy Acts that could create a threat in the macro environment of
Amazon. California Consumer Privacy Act 2018 is one of them and will take effect from 2020.
Giant Tech Companies like Amazon, Apple and Facebook will be required to inform users what
type of data they collect and how they share or use this data.

Another legal factor is EU GDPR (General Data Protection Regulations) affects Amazon and all
those companies who collect customer data like name, emails and bank information. All the
consumer data must be protected. The European Union launched an investigation and fined
Google and Facebook. This is considered a huge threat to Amazon.

Environmental: Amazon Inc. has resisted pressure from investors and other stockholders to
disclose information relevant to environmental impact. Recently Amazon.com committed that it
will disclose all such information later this year. Another challenge for Amazon is reducing
organizational emissions. It is quite complicated to estimate the emission from e-commerce
business. Ordering online requires less energy than driving to physical stores and buying or
picking up groceries.

Amazon is also looking for half of its shipment emission free by 2030. Amazon has more than
100 million prime members who are eligible for two days delivery. As a result, “When
customers want to receive a product in one or two days, the carbon emissions increase
substantially,” he said. “If you are willing to wait a week, it’s like killing just 20 trees instead of
100 trees.”

Q4. Discuss different strategic levels in organizations.

Ans. Strategy is at the foundation of every decision that has to be made within an organization. If
the strategy is poorly chosen and formulated by top management, it has a major impact on the
effectiveness of employees in pretty much every department within the organization. The three
levels of strategies are: Corporate-level strategy, Business-level strategy and Functional-level
strategy. These three levels of strategies are also known as ‘Strategy Pyramid’.

17/25
Functional Level Strategy: It is concerned with the question “How do we support the business-
level strategy within functional departments, such as Marketing, HR, Production and R&D?”.
These strategies are often aimed at improving the effectiveness of a company’s operations within
departments. Within these departments, workers often refer to their ‘Marketing Strategy’,
‘Human Resource Strategy’ or ‘R&D Strategy’.

The goal is to align these strategies as much as possible with the greater business strategy. If the
business strategy is for example aimed at offering products to students and young adults, the
marketing department should target these people as accurately as possible through their
marketing campaigns by choosing the right (social) media channels. Technically, these decisions
are very operational in nature and are therefore NOT part of strategy. As a consequence, it is
better to call them tactics instead of strategies.

Business Level Strategy: It is what most people are familiar with and is about the question
“How do we compete?”, “How do we gain (a sustainable) competitive advantage over rivals?”.
In order to answer these questions, it is important to first have a good understanding of a
business and its external environment. At this level, we can use internal analysis frameworks like
the Value Chain Analysis and the VRIO Model and external analysis frameworks like Porter’s
Five Forces and PESTEL Analysis.
When good strategic analysis has been done, top management can move on to strategy
formulation by using frameworks such as the Value Disciplines, Blue Ocean Strategy and

18/25
Porter’s Generic Strategies. In the end, the business-level strategy is aimed at gaining a
competitive advantage by offering true value for customers while being a unique and hard-to-
imitate player within the competitive landscape.

Corporate Level Strategy: At the corporate level strategy however, management must not only
consider how to gain a competitive advantage in each of the line of businesses the firm is
operating in, but also which businesses they should be in in the first place. It is about selecting an
optimal set of businesses and determining how they should be integrated into a corporate whole:
a portfolio. Typically, major investment and divestment decisions are made at this level by top
management.

Mergers and Acquisitions (M&A) is also an important part of corporate strategy. This level of
strategy is only necessary when the company operates in two or more business areas through
different business units with different business-level strategies that need to be aligned to form an
internally consistent corporate-level strategy. That is why corporate strategy is often not seen in
small-medium enterprises (SME’s), but in multinational enterprises (MNE’s) or conglomerates.

Example of Samsung:

Samsung is a conglomerate consisting of multiple strategic business units (SBU’s) with a diverse
set of products. Samsung sells smartphones, cameras, TVs, microwaves, refrigerators, laundry
machines, and even chemicals and insurances. Each product or strategic business unit needs a
business strategy in order to compete successfully within its own industry.

However, at the corporate level Samsung has to decide on more fundamental questions like:
“Are we going to pursue the camera business in the first place?” or “Is it perhaps better to invest
more into the smartphone business or should we focus on the television screen business
instead?”. The BCG Matrix or the GE McKinsey Matrix are both portfolio analysis frameworks
and can be used as a tool to figure this out.

19/25
The most common level of strategy is Business strategy and exists within strategic business units
with a goal to gain competitive advantage in a certain market. If a company has multiple SBU’s,
there needs to be an overarching Corporate strategy that ties all SBU’s together through
corporate configuration. Here, top management must decide on resource allocation and where to
invest and where to divest. Lastly, Functional strategy exists within departments such as
Marketing, HR and Production. Ideally, we should refer to tactics instead of strategies because of
the operational nature of the decisions made within these departments.

Q6. Explain the model of strategy implementation.

Ans. Strategy implementation is the translation of chosen strategy into organizational action so
as to achieve strategic goals and objectives. It 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.

Organizational structure allocates special value developing tasks and roles to the employees and
states how these tasks and roles can be correlated so as to maximize efficiency, quality, and
customer satisfaction-the pillars of competitive advantage. But organizational structure is not
sufficient in itself to motivate the employees.

20/25
An organizational control system is also required. This control system equips managers with
motivational incentives for employees as well as feedback on employees and organizational
performance. Organizational culture refers to the specialized collection of values, attitudes,
norms and beliefs shared by organizational members and groups.

Steps in implementing a strategy:

● Developing an organization having the potential of carrying out strategy successfully.

● Disbursement of abundant resources to strategy-essential activities.
● Creating strategy-encouraging policies.
● Employing best policies and programs for constant improvement.
● Linking reward structure to accomplishment of results.
● Making use of strategic leadership.

Prerequisites of Strategy Implementation:

● Institutionalization of Strategy: First of all the strategy is to be institutionalized, in the

sense that the one who framed it should promote or defend it in front of the members,
because it may be undermined.

● Developing proper organizational climate: Organizational climate implies the

components of the internal environment, that includes the cooperation, development of
personnel, the degree of commitment and determination, efficiency, etc., which converts
the purpose into results.

21/25
 ● Formulation of operating plans: Operating plans refers to the action plans, decisions and
the programs that take place regularly, in different parts of the company. If they are
framed to indicate the proposed strategic results, they assist in attaining the objectives of
the organization by concentrating on the factors which are significant.

● Developing proper organisational structure: Organization structure implies the way in

which different parts of the organisation are linked together. It highlights the
relationships between various designations, positions and roles. To implement a strategy,
the structure is to be designed as per the requirements of the strategy.

● Periodic Review of Strategy: Review of the strategy is to be taken at regular intervals so

as to identify whether the strategy so implemented is relevant to the purpose of the
organisation. As the organization operates in a dynamic environment, which may change
anytime, so it is essential to take a review, to know if it can fulfil the needs of the
organization.

● Even the best-formulated strategies fail if they are not implemented in an appropriate
manner. Further, it should be kept in mind that, if there is an alignment between strategy
and other elements like resource allocation, organizational structure, work climate,
culture, process and reward structure, then only the effective implementation is possible.

Aspects of Strategy Implementation:

● Creating budgets which provide sufficient resources to those activities which are relevant
to the strategic success of the business.

● Supplying the organization with skilled and experienced staff.

● Conforming that the policies and procedures of the organisation assist in the successful
execution of the strategies.

● Leading practices are to be employed for carrying out key business functions.

● Setting up an information and communication system, that facilitates the workforce of the
organisation, to perform their roles effectively.

● Developing a favourable work climate and culture, for proper implementation of the
strategy.

Strategy implementation is the time-taking part of the overall process, as it puts the formulated
plans into actions and desired results.

22/25
Q7. Explain Behavioural issues in strategy implementation.

Ans. Organizational change is not an intellectual process concerned with the design of ever-
more-complex and elegant organization structures. It is to do with the human side of enterprise
and is essentially about changing people’s attitudes, feelings and – above all else – their
behavior. The behavior of the employees affects the success of the organization. Strategic
implementation requires support, discipline, motivation and hard work from all managers and
employees.

Influence Tactics: The organizational leaders have to successfully implement the strategies and
achieve the objectives. Therefore, the leader has to change the behavior of superiors, peers or
subordinates. For this they must develop and communicate the vision of the future and motivate
organizational members to move into that direction.

Power: It is the potential ability to influence the behavior of others. Leaders often use their
power to influence others and implement strategy. Formal authority that comes through a leader's
position in the organization (He cannot use the power to influence customers and government
officials) the leaders have to exercise something more than that of the formal authority
(Expertise, charisma, reward power, information power, legitimate power, coercive power).

Empowerment as a way of Influencing Behavior: The top executives have to empower lower-
level employees. Training, self-managed work groups eliminating whole levels of management
in organization and aggressive use of automation are some of the ways to empower people at
various places.

Political Implications of Power: Organization politics is defined as those set of activities

engaged in by people in order to acquire, enhance and employ power and other resources to
achieve preferred outcomes in organizational settings characterized by uncertainties.
Organizations must try to manage political behavior while implementing strategies.

They should:

● Define job duties clearly.

● Design job properly.
● Demonstrate proper behaviors.
● Promote understanding.
● Allocate resources judiciously.

23/25
Leadership Style and Culture Change: Culture is the set of values, beliefs, behaviors that help
its members understand what the organization stands for, how it does things and what it
considers important. Firms' culture must be appropriate and support their firm. The culture
should have some value in it. To change the corporate culture involves persuading people to
abandon many of their existing beliefs and values, and the behaviors that stem from them, and to
adopt new ones.

The first difficulty that arises in practice is to identify the principal characteristics of the existing
culture. The process of understanding and gaining insight into the existing culture can be aided
by using one of the standard and properly validated inventories or questionnaires that a number
of consultants have developed to measure characteristics of corporate culture. These offer the
advantage of being able to benchmark the culture against those of other, comparable firms that
have used the same instruments.

The weakness of this approach is that the information thus obtained tends to be more superficial
and less rich than material from other sources such as interviews and group discussions and from
study of the company’s history. In carrying out this diagnostic exercise, such instruments can be
supplemented by surveys of employee opinions and attitudes and complementary information
from surveys of customers and suppliers or the public at large.

Values and Culture: Value is something that has worth and importance to an individual. People
should have shared values. This value keeps everyone from the top management down to factory
persons on the factory floor pulling in the same direction.

Ethics and Strategy: Ethics are contemporary standards and a principle or conduct that govern
the action and behavior of individuals within the organization. In order for the business system to
function successfully the organization has to avoid certain unethical practices and the
organization has to be bound by legal laws and government rules and regulations.

Managing Resistance to Change: To change is almost always unavoidable, but its strength can
be minimized by careful advance. Top management tends to see change in its strategic context.
Rank-and-file employees are most likely to be aware of its impact on important aspects of their
working lives.

Some resistance planning, which involves thinking about such issues as: Who will be affected by
the proposed changes, both directly and indirectly? From their point of view, what aspects of
their working lives will be affected? Who should communicate information about change, when
and by what means? What management style is to be used?

24/25
Managing Conflict: Conflict is a process in which an effort is purposefully made by one person
or unit to block another that results in frustrating the attainment of the others goals or the
furthering of his interests. The organization has to resolve the conflicts.

Linking Performance and Pay to Strategies: In order to implement the strategies effectively
the organization has to align salary increases, promotions, merit pay, bonuses etc., more closely
to support the long-term objectives of the organization.

25/25