SOUTHERN UNIVERSITY COLLEGE

SEMESTER C

YEAR 2020 / 2021

FINAL EXAM

BBMN4013 BUSINESS STRATEGY AND INTEGRATED STRATEGY

DATE : 27 JANUARY 2021 DURATION : 3 HOURS 15 MINUTES

BACHELOR IN ACCOUNTING (HONOURS)

YEAR FOUR

Student’s Name : LIM JEI YIN

Student’s ID : B170219B

Batch No. : BAC17C1

QUESTION 1 2 3 4

MARKS

TOTAL MARKS:

100

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BBMN4013 BUSINESS STRATEGY AND INTEGRATED CASE STUDY

Question 1(a)

Stakeholders is defined as those individuals, groups and organizations who have interest
or stake in the company. Stakeholders also defined as those groups or individuals that have the
power to affect or will be affected by the achievement of an organization’s objectives and
strategies.

The examples of stakeholder are shareholders, management, employees, trade unions,

customers, suppliers and host communities.

There are three types of stakeholders which are capital market stakeholders, product
market stakeholders and organizational stakeholders.

Capital market stakeholders provides external capital to fund the needs for business
expansion. Capital market stakeholders will have impacts on the availability and cost of
company capital. It consists of shareholders who bought company shares and creditors who are
debt holders of the company.

Product market stakeholders are those people where the firm shares the industry with
including suppliers and customers.

Lastly, the organizational stakeholders which mainly refers to the employees of the
company. The employees are expected the company to give them dynamic, stimulating and
rewarding work environment.

Stakeholder analysis is referred to a wide range of techniques or tools that is used by

the company to identify and understand the needs and expectations of stakeholders from both
inside and outside the organization environment. There are several advantages that we can gain
if we perform stakeholder analysis.

Firstly, the managers will gain better understanding of the variety and range of
individuals, groups and organization who are not only have a vested interest in the company,
and also the formulation and implementation of strategy, but who also will have power to
influence the performance of a firm. By performing stakeholder analysis, we will able to define
who are the key stakeholders for the company. This will ensure the company to know who

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should we look for and gain the support from. The chances for success of a company will
increase if the company takes time to consider the needs and interest of the stakeholders and
figure out the way that we could accommodate their needs and interests.

Secondly, the stakeholder analysis helps the company to improve communication

among the stakeholders. A firm who could effectively manage their relationships with
stakeholders will gain competitive advantages or outperform those that do not. By knowing the
needs and priority of each stakeholders, we will be able to help them to fully understand what
is really going on with the operation of the company and how they should act to give fully
support. A balance will be achieved as well if we keep communicating with stakeholders where
they usually will have different and contrast interests and expectation.

Thirdly, a good performed stakeholder analysis will show us how people will react to
the changes of strategies of the company and will guide us to win over the difficult stakeholders.
This means that stakeholder analysis helps us to better manage the stakeholders. Stakeholder
analysis helps us to quantify the interest and power of the stakeholders and furthermore giving
us a numerical value for their influence within the organization.

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Answers 1(b)

The five stakeholders of private-owned hospital are government regulatory agencies,

customers which include patients or public, physician or other healthcare service providers,
industry representatives or suppliers and non-government organizations.

Firstly, government regulatory agencies such as Public Health Department, Boards of

Medicine Nursing, Pharmacy and Dentistry and Attorney General’s office. The government
regulatory agencies usually concerned about the welfare of the whole population. They will
required the data on the overall clinical activity in order to make assessments and plan for
policies related to healthcare for public health purposes. The government regulatory agencies
will also required and expected the hospital to provide registry information for health
technology assessment and subsequent reimbursement policies. The government regulatory
agencies will ensure the private-owned hospital to provide high-quality and complication-free
healthcare to the people. The agencies will also undergo supervision on the private-owned
hospital to make sure they provide high-quality and complication-free healthcare services to
the people. The government regulatory agencies also concerns on the implant systems as they
want the industrial specifications of both nationally manufactured and imported implants are
safe, efficient and reliable for public usage. Therefore, they will make policies that will become
the guidelines to regulate the operations and services provided by the hospital.

Secondly, the patients who can be said as the most important stakeholder group for the
healthcare system. They are the donors of clinical and scientific data and also they are the
ultimate beneficiaries from the knowledge gained. They will expect the services and treatment
received are professional and low price. For example, if they receive joint replacement
treatment, the patients will expect the implants given to them are long-lasting, functional and
pain-free. When they undergo operations, they will also expects the operations to be tissue
sparing and free of complication, followed by rapid rehabilitation. The patients also expect the
information given on their treatment to be comprehensible, enables them to make decision
properly. The patients also expect the registry within the hospital to be built in a way that will
respect and protects the privacy of the patients and takes into account his or her ownership. The
patients also expect the hospital to give short hospitalization times, minimal delays and quick
return to work.

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Thirdly, the physician or other healthcare service providers such as surgeons,
pharmacist, nurse and physical therapists. Physician pay attention and have interests in ensuring
that their patient receive adequate and quality healthcare. They also needs to pay attention on
the rising costs of healthcare. The physicians and find a balance between being a gatekeeper
for insurance companies and being an advocate for the patient. For surgeons and nurse, they
are more concerned on avoiding complications and shortcomings from the treatment given to
their individual patients. They wants the implants given to the patients are high in quality and
avoid problems such as early loosening, infection or chronic pain. Surgeons and nurse also
concerns on complete information in the data collection system with minimal interference in
their work. The

Fourthly, the industry representatives or suppliers of medications or implants for

hospital such as pharmaceutical companies. They seek to fulfil the requirement and regulations
by hospital and authority. They pay interests and affected by the policies made by the policy
maker as they are required to strictly comply with the law and regulations. The industry
representatives or suppliers are expected to have the moral responsibility to make sure that the
people or patients could afford their products. The industry representatives also relied on the
clinical data and information from the hospital to adjust on their supplies of medications. They
expect enough and accurate data including the side-effects of the medications provided to
undergo further research and development process. They also have interest in the disease
control programme and distribution of vaccines which directly relates to their profitability.

Lastly, the non-governmental organization such as red crescent society also act as an
important stakeholder for the private-owned hospital. They are concern in the costs that are
needed for proper treatment to each patient. These organizations usually are administered by
autonomous boards which they will hold meetings and collect funds from private sources with
the purpose to provide health services and educations to individuals, family and community.
They spend their fund mostly in helping the poor people to make sure they gain equal
opportunity with the wealthy ones in receiving proper healthcare services. They also paid
attention and have interest in executing programme for the prevention of diseases. They also
helps in blood bank and first aid for the hospital.

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Question 2

Competitive rivalry or intensity of rivalry among competitors is one of the Porter’s Five
Forces in understanding the competitive forces in the environment or within the industry. For
most of the companies, the intensity of rivalry or competitive rivalry is the largest determinant
of the competitiveness of the firm in the industry. The bigger the number of competitors, the
more the number of products and services will be offered, the lesser the power of the company.
A firm must always pay attention to the competitors’ marketing strategies and pricing. When
the rivalry is strong and intense, the companies will attract the customers or promote their
products and services using aggressive price cut and high-impact marketing campaigns. There
are five factors that had influence the competitive rivalry of a firm.

Firstly, the numerous or equally balanced competitors will affect the intensity of rivalry.
The company will face higher level of competition if the industry has numerous or many
competitors who have equal level of product or service quality. The companies will not be able
to charge higher prices and gain more profits as the products and services can be easily
substituted. The customers will switch and search for the companies that are able to offer
cheaper price more easily compared with the industry that has lesser equally balance
competitors. The marketing strategies and positioning for equal level of product or service will
be almost the same over the industry. The company could face difficulties to gain sustainable
competitive advantage or standout among the competitors. This is because the promotion
packages that can be offered by the companies within the industry will be almost the same.
Therefore, equally balanced competitors will increase the intensity of competitive rivalry.

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Secondly, slow industry growth will affect the competitive rivalry within the industry
as well. In a slow or sluggish growth market, the company will not be able to enjoy rapid growth
rate as well because the number of consumers of products and services within the industry will
be almost unchanged. The industry is nearly close to saturation with slow growth. Since the
number of consumers will be the same, therefore the only way for the firm to increase the
market share is to implement strategies that will take away consumers from the competitors.
This situation will eventually leads the competitions to be cutthroat and lower down the
profitability of the industry. This is because the companies will offer lower prices and attractive
incentives to protect their existing share in the market. It will also really hard for the company
to regain their market share once lost. Therefore, slow industry growth will increase the
intensity of competitive rivalry.

Thirdly, high fixed costs of the products and services will influence the intensity of
rivalry as well. If the fixed costs for an industry is high, there will be more pressure for the
company to product at full capacity in order to achieve economies of scale that will helps them
to lower down the costs of products and services. This will cause the new company in the
industry to put in high level of capital with higher risk of loss. In order to make sure that the
stock is able to clear up, the companies will take more aggressive step to defend their market
share and try their best to obtain more. For example, by lower prices. This will again lead to
cutthroat competition and bring down the profitability of the whole industry. However, once
the price is decreased, the competition will be intensified. The power of the company will be
lowered down as well.

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Next, differentiation of the products and services. The degree of differentiation will also
affects the intensity of competition rivalry. If the main product or services for an industry is
generic, which there are no grounds or ways to make differentiation from others in the same
industry, the products will be treated as commodity. For example, foods products and clothing.
There is limited room for those products to be differentiated. This means the competitor can
easily imitate and copy the idea of the product, and thus increasing the rivalry. The customers
will make choice based on the price and value for money. This will ultimately cause price-
based competition. However, if the company able to offer highly differentiated goods and
services which cannot be easily imitated by competitors, less competition will be faced by the
company.

Lastly, the barriers for the competitors to exit the industry will affects the intensity of
competitive rivalry as well. High barrier to exist will prevent the competitors from leaving the
industry. The company with low profit and growth will be forced to remain active. In such
situation, there will be competitive pressure on those companies, they will strive to earn profits
by any means if necessary. They will tried to earn low or even negative returns on their
investments. The other exit barriers might caused by specialized assets, fixed costs of exit,
strategic interrelationships, emotional barriers or government and social restrictions. Therefore,
if there is high barrier to exit, the competitive rivalry will be intensified.

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Answers for Question 3(a)

Balanced Scorecard (BSC) is a framework used by the company to evaluate whether it

has achieve an appropriate balance between the strategic and financial controls in order to attain
the desired level of performance. This framework is most suitable in evaluating business-level
strategies. Companies use this framework to prevent overemphasis of financial controls at the
expense of strategic controls. If a company is overemphasis on financial controls, this may
promote a managerial behaviour that will sacrifice long-term, value-creating potential for short-
term performance gain.

The four perspectives of balanced scorecard are financial perspective, customer

perspective, internal business processes perspective and learning and growth perspective.

Firstly, financial perspective measure and develop organization’s financial performance

and shows us the utilize of the finance resources. For most of the company, profitability is the
most important indicator of the performance at that year. Therefore, financial perspective can
be said as the most important perspective compared to the others. This is all about financial
objectives. In this perspective, the key objective is to measure the financial health of a firm and
also the financial performance. Revenues and profits are mainly being measured. The other
financial objectives include profits margins, cast flow, return on equity or assets, costs savings
and efficiencies and lastly the revenue sources.

Secondly, the customer perspective. In this perspective, the performance objectives or

indicators are all related to providing service to customers and feedback from the market. This
perspective shows the company what should they deliver and what policies they should make
in terms of customers and markets, so that they could able to achieve the financial objectives.
For this perspective, it measures the performance of organization through the eyes of the
customers. So that the company will retains their attention or focus on the customer needs and
satisfaction. In order to achieve the best performance, the companies must incorporate
reasonable consumer needs with their mission, and also take into account as part of their
planning. In the customer perspective, we will find the objectives include customer service and
satisfaction, market share, brand awareness, effectiveness of customer service practices and
quality of communications with customers.

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Thirdly, internal business processes perspective. This perspective is mainly about the
processes or operations done by the organization in order to create and deliver the customer
value proposition. In this perspective, the firm focuses on the key processes required to create
value expected by the customers in both short-term and long-term. The company will set out
internal operational goals and objectives. The examples of internal business processes
objectives are quality optimisation, capacity utilisation, asset utilisation improvement, changes
in turnover rates and improvements in employee morale.

Lastly, the learning and growth perspective. In this perspective, intangible assets such
as human capital, infrastructure, technology, culture and other capacities are identified as key
to breakthrough performance. This perspective mostly cover the internal skills and capabilities
required to give support to the value-creating internal processes. This perspective usually being
broken down into human capital, information capital and organizational capital. The examples
of this perspectives are databases, leadership, teamwork, talent and knowledge, increases in
employees’ skills and improvements in innovation ability.

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Answer for Question 3(b)

Firstly, for the financial perspective. The first goal is to increase the revenue. The
performance measure of this goal is the percentage of increment in the revenue from each
customer. The objective for this goal is to increase the spending by each customer. This can be
done by offering promotion package such as lunch set package for the customer

The second performance measure for this goal is the amount of gross profit margin. The
objective or target for this goal is to increase gross profit margin. This can be done by offering
food that is special and differentiated from the competitors. The consumers will willing to pay
for higher price for the special offers.

Next, for customer perspective. The main goal is to increase the customers satisfaction.
The performance measure for this goal is the number of complaints received. The objective for
this goal is to reduce the percentage of the complaints received from customers. This can be
done by take initiative action to collect feedback from the customers and make improvements.

The next performance measure for this goal is the number of loyal customers and
recommendations. The objective for this goal is the retaining of the existing customers This
can be done by giving offers to the customers who came back for second time and more.

Thirdly, for internal business processes perspective. The main goal is to improve the
service experience of the customers. The performance measure for this goal is the length of
time between the taking and delivering the orders to customers. The objective is to reduce and
decrease the time taken between taking orders and delivering the orders. This can be done by
improving the process of cooking and the management of orders.

The next performance measure is the number of employees left the companies during
the year. The objective is to reduce the turnover rates among the staff. This can be done by
giving better benefits for the staffs because low turnover rates will save training costs by the
companies.

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Lastly, for the learning and growth perspective. The goal of this perspective is to have
new launch. The performance measure is the amount of revenue from the new dishes launched
in the restaurant. The objective is to increase the revenue earned from each new dishes. This
can be done by proper promotion of new dishes such as introduction to customers whenever
they begins their orders.

The other performance measure for this goal is the number of days to train the staff.
The objective is to increase the hours spent in training the employee. The more the training
given to the staff, the more professional they will behave.

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Answer for Question 4(a)

There are several differences between these two strategies.

Firstly, Merger happens when two companies agree to integrate their operations on a
relatively co-equal basis and create a new, joint organization. However, the acquisition happens
when one entity buys and takeover the another firm with the intention in making the acquired
firm a subsidiary business within its portfolio.

Next, a merger usually implemented to decrease the competition within the industry and
also to increase operational efficiency. Whereas, the acquisition is implemented to gain
instantaneous growth of the company.

Besides, the size of companies also differs. The size of the merging firms are usually
almost the same. But for acquisition, the acquiring firm will be much more larger than the
acquired one.

Lastly, the terms are also different. The terms for merger are considered as friendly and
planned for. But the acquisition can be considered as either voluntary or involuntary and can
be hostile.

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BBMN4013 BUSINESS STRATEGY AND INTEGRATED CASE STUDY

Question 4(b)

There are four benefits that can be gained by Cortina through acquisition.

Firstly, Cortina can reduce the entry barriers to new market and product lines. By
acquiring an existing firm in the market, Cortina can overcome challenging market barriers
imposed formerly using the existing resources and experience by the firm while reducing the
risks of adverse competitive reactions. The brand for the existing brand is already recognized
by the consumers and competitors. It can also reduce the costs for Cortina to carry out market
research and development of a new product. The time that is spent in order to build substantial
client base can be saved as well. The target audience can be broaden as well.

Secondly, Cortina can have access to new resources and competencies. Cortina can gain
resources and competencies which cannot be accessed before the acquisition. The company can
access to large loan funds and enabling the business to make investment without investing their
own money in growth of the business. The access to new resources and competencies will gain
the company competitive advantages and improve their long term financial outlook which will
enables the company to raise capital more easily.

Thirdly, by acquisition, Cortina can build market presence faster and increasing the
market share. Cortina can gain more market power and reduce capacity of the competitor by
acquisition. Market synergies can be achieved as well while reducing the competition’s
stronghold.

Lastly, acquisition will enables Cortina to access to experts. When a small business join
a larger organization, they will be able to gain access to the specialists such as financial, legal
or human resource specialist. Many fresh ideas and perspectives can be put out by the experts.
Those ideas and perspectives will eventually help the business to reach the goals and increase
the revenue. The experts will also helps to maintain the innovation for the company.

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Question 4(c)

Firstly, the quality of earnings. It is extremely important for a company to determine

whether the current financial reports is an accurate representation of the acquired firm’s true
earning power. Because the financial statements will include all items of income and expenses.
We need to know that the fundamentals elements of driving earnings of the company and what
items should be excluded from the calculation. The accounting treatments and the reasons of
the estimates need to be known as well. We also need to know whether is there any future
capitalization requirement for the acquired firm.

Secondly, the financial and operational trends for the company. An understanding and
focus on identifying and analyzing key financial and operational trends will likely to tell us the
future earning power of the target firm. Generally, the acquiring firm should consider the key
factors that drive the rate of cash conversion and also the return on capital and assets. We also
need to know the impact of regulatory change on the potential earnings of the acquired firm.
The key performance indicators and the quality of the benchmark needs to be paid attention as
well.

Lastly, the tax diligence exposed on the firm. Is there any additional opportunities or
risks imposed by the taxes? The tax complications to complete the acquisition needs to be
calculated. The best structure to optimize the tax attributes need to be consider as well in order
to meet the needs of the buyer. We also needs to know what is the ongoing tax liabilities of the
target and also the impact of it in the internal rate of return.

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