National Institute of Business Management

Higher National Diploma in Business Management (18.1F)

Strategic Management (HDBM 2425)

Time: 3 hours 27th September 2018

Answer question No. 1 in Part 1 and any 03 (three) other questions from questions Nos. 2-7
(Part 2). Answering question no. 1 is compulsory. This paper contains three (03) pages.

Part 1

Following is a hypothetical case study of Ceylon Cold Stores PLC.

At 152 years of history, Ceylon Cold Stores PLC(CCS) popularly known as elephant house is one
of the oldest companies in Sri Lanka with an enviable heritage of serving Sri Lankans with
excellence, quality and value in beverages, frozen confectionery and retail. Over the years CCS
has expanded and improved their products and manufacturing capabilities, greatly enhancing the
value they create for the customers, suppliers, communities and their shareholders.

CCS is Sri Lanka’s leading manufacturer of carbonated soft drinks (CSD) and frozen confectionery
food products. The Company’s unique ability to identify and respond to evolving customer
preferences has enabled it to maintain its leadership position for over 15 decades offering a
diverse and attractive product portfolio. The retail arm, Jaykay Marketing Services (Pvt) Ltd
(JMSL) operates the Keells Supermarket chain, which through its network of 80 outlets has
redefined modern trade industry standards in freshness, customer convenience and service
quality. The Group is a part of John Keells Holdings PLC, Sri Lanka’s premier diversified
conglomerate and the most valuable listed entity in the country in terms of market capitalization.
CCS products are distributed across the island through a multi-channel network of general trade
outlets, modern trade outlets as well as hotels and restaurants. The Company’s extensive
geographical reach is a key source of competitive advantage.

Page 1 of 3
Despite all the success CCS Profits fell 30 percent from a year earlier to 577 million rupees in the
March 2018 quarter, interim accounts showed. The group top line (revenue) rose 13 percent
year-on-year (YoY) to Rs.13.9 billion but the cost of sales increased at a faster rate of 19 percent
YoY to Rs.12.7 billion. The decline in profitability is on account of the Beverages business which
recorded a 37% reduction in sales quantity. This is due to the implementation of a sugar tax from
November 2017, which resulted in substantial price increases across the industry. The financial
results and the tone of the recent commentary by the group key executives reflect that the
company has been slow to respond to some of the rapid shifts in consumer tastes, particularly
with regards to healthier alternatives.

The Chairman of CCS has said “moderation in economic growth and the increase in food inflation
led to a contraction in the FMCG sector. Meanwhile, the government imposed an excise duty
based on the quantum of added sugar contained in beverages. Despite these challenges, we
continued to place strategic emphasis on further developing our product portfolio and driving
process and manufacturing efficiencies to support long-term growth. This year (2018) marked
the launch of 14 new products”.

In response to the regulatory developments CCS developed a sugar free CSD variant “GO Sugar
Free”, a beverage portfolio with no calorific sugar content, which was introduced to the market
in April 2018. The sugar free CSD variants currently accounts for approximately 23% of total
beverage volumes. In addition to the Beverage business’ strategy to diversify its portfolio to
create a more balanced mix of CSD and non-CSD variants, the business launched dairy and water
products in April and June 2018, respectively. The dairy range, launched in Vanilla, Chocolate and
Strawberry flavours under the ‘Elephant House’ brand has been very well-received.

Assuming you are the newly appointed CEO of Ceylon Cold Stores, answer the following questions.
In addition to the information provided in the case study you may use your own knowledge on the
beverage industry of Sri Lanka.

a. Create five strategic objectives and five financial objectives for the company. (10 marks)

Page 2 of 3
b. Conduct a Porter’s five competitive forces analysis for the company based on an acceptable
scale. (10 marks)

c. Identify and explain two strategies that could be used to mitigate the bad impacts of the sugar
tax imposed by the Government. (10 marks)

d. If CCS is planning to change its current competitive strategy for soft drinks, what new
competitive strategy would you suggest? Justify your answer. (10 marks)

Part II

2. Discuss the concept of strategic management emphasizing on sustainable competitive

advantage. You may use suitable examples to further elaborate your answer. (20 marks)

3. SWOT analysis is a commonly used analytical tool in situation analysis. Explain how SWOT
analysis could be used to trace suitable strategies for a given business organization. (20 marks)

4. Compare and contrast low cost, differentiation and best cost provider strategies with regard
to pricing, cost of production and quality. (20 marks)

5. Write an essay on “The CEO’s involvement in strategy making and strategy execution as the
Leader of the organization”. Your essay should contain at least 300 words. (20 marks)

6. Explain the components of the business level strategy and functional strategy of a company.
Use a suitable diagram elaborate your answer. (20 marks)

7. Write short notes on the following; (05 marks for each part, 20 marks total)
a. Corporate governance b. Diversification strategies
c. Process improvement d. Organizational culture

Page 3 of 3