Q1).

Define strategy and strategic management.

Ans. Strategy - A plan of action designed to achieve a long-term or overall aim.
Strategic Management - Strategic Management is a stream of decisions and actions which lead to
the development of an effective strategy or strategies to help achieve corporate objectives.
The Strategic Management process is how strategists determine objectives and make strategic
decisions. Strategic Management can be found in various types of organizations, businesses,
services, cooperatives, governments, and the like.

Explain the following terms

1. Vision
Ans. Vision is a future-oriented concept of the business. Forming a strategic vision is an exercise
in thinking about where a company needs to head to be successful. A vision is a mental image of a
possible and desirable future state of the organization. A vision describes aspirations for the future
– a destination for the organization.

2. Mission
Ans. The mission is the core purpose of an organization or a company. It is a summary of the aims
and core values. A mission tells what you as an organization does for customers.

3. Objectives
Ans. An objective is a result that a company aims to achieve. It also includes the strategies that
people will use to get there. A business objective usually includes a time frame and lists the
resources available.

Q2).
A) Describe the BCG matrix.
Ans. BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic
position of the business brand portfolio and its potential. It classifies a business portfolio into four
categories based on industry attractiveness (growth rate of that industry) and competitive
position (relative market share). These two dimensions reveal the likely profitability of the
business portfolio in terms of cash needed to support that unit and cash generated by it. The
general purpose of the analysis is to help understand, which brands the firm should invest in and
which ones should be divested.
Relative market share. One of the dimensions used to evaluate business portfolio is relative
market share. Higher corporate’s market share results in higher cash returns. This is because a firm
that produces more, benefits from higher economies of scale and experience curve, which results
in higher profits. Nonetheless, it is worth to note that some firms may experience the same
benefits with lower production outputs and lower market share.
Market growth rate. High market growth rate means higher earnings and sometimes profits but it
also consumes lots of cash, which is used as investment to stimulate further growth. Therefore,
business units that operate in rapid growth industries are cash users and are worth investing in
only when they are expected to grow or maintain market share in the future.
There are four quadrants into which a firm’s brands are classified:
Dogs. Dogs hold low market share compared to competitors and operate in a slowly growing
market. In general, they are not worth investing in because they generate low or negative cash
returns. But this is not always the truth. Some dogs may be profitable for long period of time; they
may provide synergies for other brands or SBUs or simple act as a defense to counter competitors
moves. Therefore, it is always important to perform deeper analysis of each brand or SBU to make
sure they are not worth investing in or have to be divested.
Strategic choices: Retrenchment, divestiture, liquidation.
Cash cows. Cash cows are the most profitable brands and should be “milked” to provide as much
cash as possible. The cash gained from “cows” should be invested into stars to support their
further growth. According to growth-share matrix, corporates should not invest into cash cows to
induce growth but only to support them so they can maintain their current market share. Again,
this is not always the truth. Cash cows are usually large corporations or SBUs that are capable of
innovating new products or processes, which may become new stars. If there would be no support
for cash cows, they would not be capable of such innovations.
Strategic choices: Product development, diversification, divestiture, retrenchment
Stars. Stars operate in high growth industries and maintain high market share. Stars are both cash
generators and cash users. They are the primary units in which the company should invest its
money, because stars are expected to become cash cows and generate positive cash flows. Yet,
not all stars become cash flows. This is especially true in rapidly changing industries, where new
innovative products can soon be outcompeted by new technological advancements, so a star
instead of becoming a cash cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market penetration, market
development, product development
Question marks. Question marks are the brands that require much closer consideration. They hold
low market share in fast-growing markets consuming large amount of cash and incurring losses. It
has potential to gain market share and become a star, which would later become cash cow.
Question marks do not always succeed and even after large amount of investments they struggle
to gain market share and eventually become dogs. Therefore, they require very close
consideration to decide if they are worth investing in or not.
Strategic choices: Market penetration, market development, product development, divestiture.

B) Explain the GE Nine Cell model. What is the advantage of GE Nine Cell over
the BCG matrix?
Ans. This matrix was developed in the 1970s by the General Electric Company with the assistance
of the consulting firm, McKinsey & Co, USA. This is also called GE multifactor portfolio matrix.
The GE matrix has been developed to overcome the obvious limitations of the BCG matrix. This
matrix consists of nine cells (3X3) based on two key variables:
i)  Business strength
ii) Industry attractiveness
The horizontal axis represents business strength and the vertical axis represents industry
attractiveness
The business strength is measured by considering such factors as:
 relative market share
 profit margins
 ability to compete on price and quality
 knowledge of customer and market
 competitive strengths and weaknesses
 technological capacity
 caliber of management
Industry attractiveness is measured considering such factors as:
 market size and growth rate
 industry profit margin
 competitive intensity
 economies of scale
 technology
 social, environmental, legal, and human aspects
The industry product lines or business units are plotted as circles. The area of each circle is
proportionate to industry sales. The pie within the circles represents the market share of the
product line or business unit.
The nine cells of the GE matrix represent various degrees of industry attractiveness (high, medium,
or low) and business strength (strong, average, and weak). After plotting each product line or
business unit on the nine-cell matrix, strategic choices are made depending on their position in the
matrix.

The advantage of GE Nine Cell over the BCG matrix:-

BCG is only a four-cell matrix, while GE McKinsey is a nine-cell matrix. Nine cells provide a better
visual portrait of where business units stand in the matrix. It also separates the invest/grow cells
from harvest/divest cells that are much closer to each other in the BCG matrix and may confuse
others about what investment decisions to make.
1)   It used 9 cells instead of 4 cells of BCG
2)   It considers many variables and does not lead to simplistic conclusions
3)   High/medium/low and strong/average/low classification enables a finer distinction among
business portfolio
4)   It uses multiple factors to assess industry attractiveness and business strength, which allows
users to select criteria appropriate to their situation.
Q3). What do you understand by Mergers & Acquisitions? What are various
types of mergers? What are the issues in implementing a ‘merger strategy’
successfully? Cite the latest Indian & Global examples relevant to the merger
strategy.
Ans. Mergers and acquisitions (M&A) are defined as the consolidation of companies.
Differentiating the two terms, Mergers is the combination of two companies to form one,
while Acquisitions are one company taken over by the other. M&A is one of the major aspects of
the corporate finance world. The reasoning behind M&A generally given is that two separate
companies together create more value compared to being on an individual stand. With the
objective of wealth maximization, companies keep evaluating different opportunities through the
route of merger or acquisition.
Types of Mergers and Acquisitions:
Merger or amalgamation may take two forms: merger through absorption or merger through
consolidation. Mergers can also be classified into three types from an economic perspective
depending on the business combinations, whether in the same industry or not, horizontal (two
firms are in the same industry), vertical (at different production stages or value chain), and
conglomerate (unrelated industries). From a legal perspective, there are different types of mergers
like short-form mergers, statutory mergers, subsidiary mergers, and mergers of equals.
Merger & Acquisition Strategy is the process undertaken in which one corporate buys, sells, or
combines with the other corporate to achieve certain specific goals of the market or to attain rapid
growth in the competitive market, taking into consideration different factors like the market value
of corporate’s stock, the financial health of both the companies, threats of both the companies,
new opportunities that can arise along with market conditions.
Generally, the bigger companies in the market hunt for smaller companies for the acquisition
process. Companies have different policies for mergers & acquisitions like expanding an existing
business, research, development, etc. All these policies should be kept in mind while entering the
M&A Strategy by both companies. Failure to implement proper planning, study, and lack of
strategies, also fails the merger & acquisition strategy. The resulting company formed cannot
survive in the long run. Hence, proper planning, understanding of the market and the business of
both the companies, and proper strategies should be done well in advance before implementing
merger & acquisition strategies.
 Indian & Global examples of the merger strategy: -
1. Zee Entertainment – Sony India Merger
2. Indus Tower – Bharti Infratel Merger
3. Vodafone Idea Merger
4. Arcelor Mittal
5. Tata and Corus Steel
6. Walmart Acquisition of Flipkart
Q4. Write short notes on any three:
A) Porter’s five forces framework.
Ans. Porter's Five Forces is a model that identifies and analyses 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.
Porter's Five Forces 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 Analysing Industries and Competitors" in 1980.The
Five Forces model is widely used to analyze the industry structure of a company as well as its
corporate strategy. Porter identified five undeniable forces that play a part in shaping every
market and industry in the world, with some caveats. The five forces are frequently used to
measure competition intensity, attractiveness, and profitability of an industry or market.
Porter's five forces are:
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

B) SWOT Analysis.
Ans. SWOT analysis or Strength, Weakness, Opportunity, and Threat analysis is a business
strategy building tool which helps the firm to understand better their current position in the
market before taking up a new strategy where it lists down the internal factors like the company’s
own strength and weakness and the external factors like opportunities and threat prevailing in the
market in terms of newer areas or venture or competition which exists.
SWOT analysis is a strategy building tool which is commonly used by business to assess their
position in the market before taking up any new ventures. It has always proved to be helpful both
in designing new strategies and upgrading the current ones. SWOT stands for strength, weakness,
opportunity, and threat. It includes both internal and external factors that affect the firm. Strength
and weakness are the internal factors which depend on the firm’s own abilities and drawbacks
whereas opportunity and threat are the external factors which relate to the areas of opportunity
the firm can utilize upon or the threat in terms of competition prevailing in the market.
It is an efficient and effective planning tool which helps business, develop a strategy either when
building a start-up or driving forward an existing company. A SWOT analysis organizes the
strength, weaknesses, opportunities, and threats faced by a business into a two grid list and thus
the presentation part about it is simpler and easy to understand. A SWOT analysis to be an
effective one needs constant involvement of the founders and leaders who need to be thoroughly
and deeply involved in the process. But only leaders giving their ideas are not enough for SWOT as
it requires a holistic approach and a mix of people giving their ideas.

c) Value chain.
Ans. A value chain is a business model that describes the full range of activities needed to create
a product or service. For companies that produce goods, a value chain comprises the steps that
involve bringing a product from conception to distribution, and everything in between—such as
procuring raw materials, manufacturing functions, and marketing activities.
A company conducts a value-chain analysis by evaluating the detailed procedures involved in each
step of its business. The purpose of a value-chain analysis is to increase production efficiency so
that a company can deliver maximum value for the least possible cost.

D). Core competencies.

Ans. Core competencies are the resources and capabilities that comprise the strategic
advantages of a business. A modern management theory argues that a business must define,
cultivate, and exploit its core competencies in order to succeed against the competition.
A variation of the principle that has emerged in recent years recommends that job seekers focus
on their personal core competencies in order to stand out from the crowd. These positive
characteristics may be developed and listed on a resume. Some personal core competencies
include analytical abilities, creative thinking, and problem resolution skills.
Core competencies are the defining characteristics that make a business or an individual stand
out from the competition.
Identifying and exploiting core competencies is seen as important for a new business making its
mark or an established company trying to stay competitive.
A company's people, physical assets, patents, brand equity, and capital can all make a
contribution to a company's core competencies.
The idea of core competencies was first proposed in the 1990s as a new way to judge business
managers compared to how they were judged in the 1980s.
Examples of companies that have core competencies that have allowed them to remain
successful for decades include McDonald's, Apple, and Walmart.
Q:5. CASE
TATA MOTORS NANO TO ROLL OUT the world’s cheapest car, the widely
awaited Nano, will be launched on 23 – 03 – 09. Tata Motors will display the
Nano at the dealership from the first week of April, 09 and will accept
bookings from the second week of April, 09. The launch of Nano whose
potential to revolutionize the automobile industry has been widely
acknowledged in India and abroad will be one of the bright spots in a bleak
landscape for the global automobile industry. Sales have plunged by double-
digit percentages, or worse, in the market across the world from the US to
China. In India, Nano’s entry might lead to growth in the domestic market.
The car may also find a niche abroad, a cash-strapped consumers are likely to
look for bargains. In 2008, Tata Motors displayed the Nano at the Geneva
Motor show and plans to present the European version at the show in March
2009. It plans to sell Nano in Europe at 5000 Euros. Tata Motors will roll out
60,000 – 80,000 units of the Nano from another plant in Pantnagar in
Uttarkhand till the sanand unit is geared up to produce 2.5lakh units a year.
Tata Motors has begun aggressively gearing up its distribution network to sell
a car, which will primarily focus on semi-urban and rural areas. The base
version of the Nano, which will be without an A.C. will be priced at around Rs.
one lakh while the A.C. model will carry a higher price tag. It is learned that
Tata Motors Finance is working on various packages through SBI and HDFC
Bank, to offer competitive interest rates. Dealer of Tata Motors said that the
company might take full payment for booking. Sona Koyo steering systems
executive chairman said. “Nano is the most awaited car, and, therefore, its
launch is welcomed by the world”.
Case Study Questions:
1) Carry out an Environment Analysis for Tata Motors.
Ans.
2) With the launch of Nano Car, will Tata Motors have a Sustainable
Competitive Advantage (SCA)? Justify your
Ans.