BUSINESS STRATEGY

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I Nov- Dec 2012

Ans. to Q. No.l. (a)

The SWOT analysis stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses are
internal to the organisation and opportunities and threats are external challenges to the organisation.
A SWOT analysis identifies the strengths and weaknesses of the organisation relative to the opportunities and
threats it faces its marketing environment. The SWOT analysis leads to an understanding of realistic market
opportunities through the process of a detail marketing audit, covering market and environment analysis,
competitor and supplier analysis, customer analysis and internal analysis.
This analysis will highlight potential market gaps, new customer needs, marketing channel developments,
competitor's strategies and their strengths and weaknesses. The organisation can evaluate market opportunities
against its strengths and weaknesses and identifies threats and determine what actions to take to exploit the
opportunity.

Ans. to Q. No.1.(b) (i) Business risks

Rights to operate: The exclusive rights to operate are only effective until December 20X9. The right to operate
may have been granted provided that certain conditions are met. If Ferry does not continue to satisfy these terms
its operational existence may be called into question.

Future competition: Profitability could be affected by future competition. This might be the case if a new
bridge is constructed or if the rights were no longer exclusive to Ferry.

Age of the Ferries

It is likely that running costs will be higher than those for newer ships.

Fuel Consumption
Fuel consumption is likely to be higher as the engines will be less efficient. This of particular concern in period
when fuel prices are volatile. Ongoing maintenance is also more likely to be required.

Emission standards
The company will be required to meet the emission standards which will come into force in 20X6. If the
necessary modifications are not made the company could incur substantial penalties.

Surplus capacity:
The ferries are currently only operating at 40% capacity
2 boats x 40 vehicles x 6 crossing x 365 days=l75,200
70,000/175,200=40%

As a high proportion of the cost of each trip is likely to be fixed, consideration needs to be given as to whether
the business is viable at this level. The company is also likely to be sensitive to any downturn in business.

Health and safety:

Ferry may not be awarded its Safety Management Certificate if it fails to meet the performance and
documentation standards.

Ferry will find ii difficult to find and retain staff if working condition do not comply with health and safety
regulation.
Subsidy
Ferry may depend on the subsidy to continue business. Cash flow problems could arise if the subsidy stopped.
Health and Safety
Ferry my not be awarded its safety managcmcnl ccrti ficalc if it fails to meet the performance and documentation
standards.
 Litigation
Ferry may be sued by customers for personal injury and damage to, or loss of property. In the case of serious
injury or death damages could be substantial.

Ans. to Q.No.l (b) (ii)

Rights to operate: •
It is unlikely that the business is in a position to change the situation regarding the period for which the rights
have been granted and therefore is a risk that the business has to accept.
Management should be aware of any condition which will affect the renewal of rights and take steps to ensure
that these are complied with.
Relevant staff should be made aware of any contractual conditions and their responsibility for ensuring that
these are met Compliance should reviewed a d monitored by an appropriate level of management.

Future competition:
Management should monitor any plans which would introduce new competition, for example, the building of a
new bridge. Management should also consider how it can maintain its competitive advantage.,
Age of the ferries:
Running costs should be adequately budgeted for and cash flows monitored to ensure that these can be met.
Price structures should be flexible to allow increased fuel costs to be passed on to the customer. Forward
contracts could be used to hedge against the effect of changing oil prices.

Surplus capacity:

Management need to be aware of the capacity required to ensure that revenue at least covers costs. This should
be reviewed and monitored on a continual basis.

Marketing strategies should be used to encourage bookings and maximize revenues, for example discounts for
regular user and different price structures for peak and off peak travel.

Franchise arrangements:
The performance of other business/franchisees should be monitored by Ferry through the press, observation etc.

Franchise agreements should stipulate minimum quality standards and should include penalties/termination
clauses for consistent unsatisfactory performance.

Health and safety:

Management should monitor activities and the completion of safety documents. This function could be
performed by internal audit.

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Ans. to Q. no 2.(a)
Information management entails identifying the current and future information needs, identifying
information sources, collecting and storing the information and facilitating existing methods of
using information and identifying new ways of using it. It should also ensure that the information
is communicated to those who need it and not to those who are not entitled to see it.

Mayo defines knowledge management (KM) as 'the management of the information, knowledge
and experience available to an organization - its creation, capture, storage, availability and .'
utilization - in order that organizational activities build on what is already known and extend it
further'.

More specifically, knowledge is interpreted in terms of potential for action and distinguished from
information in terms of its more immediate link with performance. This interpretation is consistent
with what the information systems philosopher and professor Charles West Churchman observed
three decades ago in his pioneering work The Design of Inquiring Systems: 'knowledge resides in
the user and not in the collection of information ... it is how the user reacts to a collection of
information that matters'.

Databases, or more correctly knowledge bases; need to be designed and developed to store the organization's
knowledge. This will be particularly difficult because of the tacit nature of much of the knowledge and also
because it is largely inside the heads of individuals. Recording this knowledge will be very different to
recording the fields and records of a traditional database. An expert system seems one way forward as this has a
knowledge base made up of facts, rules, and conditions. But much of this knowledge may have to be represented
pictorially as images and 'knowledge maps'. An intranet that lends itself to full multimedia representation and
intelligent searching may therefore be the way forward.

Knowledge-based companies will vary from industry to industry but there are some broad common principles
about where knowledge resides and how to capture its value. The intellectual capital can be divided between
hwnan capital (the bodies that go home at night), and structural capital. Structural capital includes innovation
capital (intellectual property), customer capital ·(address lists and client records), and organizational capital
(systems for processing policies and claims). A number of organizations are creating knowledge management'
programs for protecting and distributing knowledge resources that they have identified and for discovering new
sources of knowledge.

One such program is the identification and development of informal networks and Communities of
practice within organizations. [These self-organizing groups share common work interests, usually cutting
across a company's functions and processes.
D Another means of establishing the occurrence of knowledge is to look at knowledge-related business
outcomes e.g., product development and service innovation. While the knowledge embedded within these
innovations is invisible, the products themselves arc tangible.'
Every day companies make substantial investments in improving their employees' knowledge and
enabling them to use it more effectively. Analysis of these investments is a third way of making KM
activities visible. For example how much technical and non-technical training are individuals consuming?
How much is invested in competitive and environmental scanning, and in other forms of strategic
research?
The process by which an organization develops its store of knowledge is sometimes called organizational
learning. A learning organization is centered on the people that make up the organization and the knowledge
they hold. The organization and employees feed off and into the central pool of knowledge. The organization
uses the knowledge pool as a tool to teach itself and its employees.
There are dozens of different approaches to KM, including document management, information management,
business intelligence, competence management, information systems management, intellectual asset
management, innovation, business process design, and so on. Many KM projects have a significant element of
information management. After all, people need information about where knowledge resides, and to share
knowledge they need to transform it into more or less transient forms of information.

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Answer to Q. No.2 (b)
a. Forces for and against change:

Forces for change:

The forces for change Timber mate appear to be both external and internal

External factors would include:

i) Overseas competitors: Current suppliers may be able to undercut Timber mate if they set up their own
operation in Bangladesh. It will be essential for them to bring down their cost base to survive.
ii) Exchange rates: Weakening sterling will make imports more expensive, putting up Timber mate's costs
still further.

Internal factors would include:

i) Brian Parsons' determination to make the changes needed.

ii) Customers: Increasing dissatisfaction with the current standard of service has already given rise to
complaint and may, if not addressed, lead to loss of current customers and brand image.
iii) Shareholders: A period of poor results cannot have been satisfactory for the shareholders which is
presumably why they have appointed Persons.

Forces against Change:

i) Attitude of Manager: The managers lack a sense of urgency and are therefore likely to resist any major
change programme as unnecessary disruptive.
ii) Attitude of staff: It is likely that the laid back culture permeates the whole organization and staff may not
understand the need for change. They will undoubtedly also be fearful for their job.

b) Managing change

Unfreezing

The forces for change must be used to encourage the change, the forces against it must be weakened. Methods
might include:

Carrying out a PEST analysis to identify the exact nature of the threats from the outside environment.
These issues and their consequences should then be stressed to the managers. Forecasts of market performance
if no change is made should be communicated. Workshops to involve senior managers in the process may help
them to appreciate the urgency of the situation. !
Change:
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Toe new information system must be introduced. Training in all aspects ·will be required-not just in how to use
the system, but in its potential benefits, so that staff to identify ways in which it could further improve business.

New working practices will need to be introduced. Some process may need re-engineering. Greater
collaboration between different divisions needs to be encouraged.
 Refreezing:

This is the process of trying to ensure planned changes become the norm.

Reward system should be developed to focus on issues such as cost management, customer satisfaction,
productivity and innovation.

Continual Training: The staff should be given regular training updates to deepen their understanding of new
system.

c) Managing the project

Objectives:

One of the first things the project team will need to establish is the scope, the deadlines and budget available.

Tools

Once they have a clear set of objectives, the team can use tools such as network or critical path analysis to
establish the order in which the various parts of project should be carried out and weather the objectives can be
achieved.

Reporting:
Regular project reporting will then keep key stakeholders up to date. The e-procurement project will need
significant liaison with the overseas suppliers and may involve overseas visits to ensure the project is fully
coordinated. Project reports in this area will therefore need to be more frequent than those to shareholders.

Ans. to Q. No.3.(a) To successfully launch a new customer product into the Bangladesh market the organization
needs to have clear and realistic objectives and identification and understanding of its target
market segment. Its channel of distribution, branding, packaging and communications activity
need to be in place support the launch. Forecasts of future demand, and return on investment need
to be assessed and projected. ·

A formalized marketing planning system that involves all departments, customers, agents and
suppliers, .the complexity and timing of activities is required to support the launch to prevent lack
of coordination, resource and ultimate failure. A monitoring system is also required to evaluate the
effectiveness of the launch and take actions as required. A successful launch requires a planning
process that pulls all the people and activities together, co-ordinates what is done, by who, when
and with what resources.

c) Marketing planning involves the following stag

1., Market analysis

2.
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Objective setting

3.
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Strategy development .\ .,5
3.7f'
4.
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Implementation

s. Evalullion and control

 1) Market analysis:

This phase involves -establishing an audit processes that assesses the macro and micro market environment,
market segment analysis, customers, competitors and development strategy. Without a clear understanding of
these issues it is difficult to set objectives and develop strategy.

2) Objective setting:

Once the issues arising from market analysis have been understood, objectives can be set. Objective should be
consistent with -the overall mission of the organization and goals and they must be realistic.

3) Strategy development

This phase can begin once the objectives have been agreed. In this process alternative strategic options will be
evaluated to determine the best way forward for the organization. Strategy evaluation should consider the
organization's current strengths and weaknesses, market attractiveness, resource requirements and profitability.

4) Implementations

This is frequently the hardest part of the marketing planning process. Effective implementation requires co
ordination between different organizations, people and departments. An organizations structure and culture
should support this co-ordination; provide good communication and access to information and appropriate levels
of resources. In reality, many issues, conflicts and trade offs occur within organizations that act as barriers to
effective implementation.

5) Evaluation and control

The final phases of the process involves setting an effective system of monitoring and control to measure and
evaluate performance.

Answer to Q. No.3(b)
Report

To: Davis & Ahmed Associates

Preparing a business Plan:

The presentation of a comprehensive business plan to your bank is an important step towards obtaining the finance
you heed to launch and expand your new enterprise. Banks make use of a range of criteria in making lending
decisions and a sound business plan will provide information relevant to many of them. Your business plan should
be authoritative, comprehensive and logical. It should, therefore, be based on reasonable assumptions, careful I

estimation and rational thought. You must present a very clear view of your business goals and the strategy you ¢,
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intend to use in order to achieve them.

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As your proposed partnership is based on two existing business, you should give a brief account of the history
and performance of each. Many of your forecasts for the combined business will be based on extrapolation from
past experience, so you must establish the credibility of his foundation. An important input into credit decisions
is the personal history of the owners of the business, so this section could include a summary of your personal
details, qualifications and experience.

The main part of your business plan should start with a statement of the nature and commercial purpose of your
business. You should also mention any special features that differentiate it from similar enterprises. This would
be the place in which to introduce, briefly and in general terms your views on improved customer service and
use of the internet.
You migh t then go on to give a more detailed account of your strategy, giving details of your prod ucts, your
target markets and your marketing plan. This could be based on the service marketing mix, product, price,
promotion, place, people, processes and physical evidence.

You should give a full, though not over detailed statement of your financial targets. A series of budgeted
accounts for the first three years would be a good start. You should be realistic in your forecasts, building on
your current experience and making reasonable assumptions. Associated with these purely financial details
could be other quantities measures, such as an anticipated client numbers and growth. If you are able to provide
extensive data it is probably a good idea to put most of the information into an appendix and present a summary
in the main part of your plan.

An essential feature of your submission to the bank will be a detailed statement of requirement for finance. The
bank will expect you to have a very clear forecast of how much cash you will need, when you will need it and
where it is to come from. The whole purpose of the document is to help you to obtain funds from the bank, so
you must be realistic and specific about your need for finance. Bear in mind that your ability to pay interest and
repay principle will be a major consideration for bank in deciding whether to finance you: the amounts you ask
for must be reasonable in the light of your forecasts for your business, both in terms of what they will enable
you to do and what you will be able to repay.

Finally when you are happy with your overall business plan, you should prepare an executive summary. This
will precede the main body of the document and summaries Its most important elements, such as the nature and
main features of the business; and leading indicators of growth and profitability,
Ans. to Q. No.4(a)
The Balanced Scorecard model was developed as a means to integrate an organization's vision, strategy and
operations. It is a multi-dimensional model which contains four perspectives which embrace both financial and
non-financial control measures.

The four perspectives are:

D Financial: where the question posed is 'To succeed financially how should we appear to· our
shareholders?'
:, Customer: similarly asks, 'To achieve our vision how should we appear to our customers?'
D Learning and growth: demands, To achieve our vision, how will we sustain our ability to change and
improve?'
© Internal' business process: asks, 'To satisfy our shareholders and customers, what business processes we
must excel at?'

The inclusion of the organization's vision is central to the model.

Ans. to Q. No.4(b)
The following are sample measures which would be appropriate for RTF to use within the Balanced Scorecard
model.

Financial measures:

Gross profit: it is expected that RTF already calculates this but it is an important measure which should
be reported upon regularly.
Net profit: the same comment applies as for gross profit.
Profit per contract: as RTF undertakes a variety of work it should be able to identify the profitability of
each of these aspects.
Return on Capital employed: an important and well-known measure which captures the totality of the
business.
 Customer measure s:
:> Number of new customers in period: it is important for RTF, as with any company, that it continues to
attract new business.
= Number of customer complaints: this measure gives an indication of the quality of the work produced by
RTF.
© Amount of repeat business: RTF has built up relationships with local government and also spends time
and money maintaining its corporate contacts database. This measure will give an indication if this effort
is worthwhile.
D Market share: RTF operates in a competitive market and needs to know the size of its market share and
the trend in its growth or decline.
Learning and growth measures:

:> Number of academic and professional qualifications possessed by staff: in what is essentially a
knowledge and craft industry, it is important that RTF maintains a high level of academic and
professional ability within its personnel.
Number of technical qualifications possessed by staff: this measure demonstrates the level of technical
expertise possessed by the business.
p Number of new designs added to library: this measure indicates directly one aspect of RTF's creativity
:> Number of 'one-off houses designed in period: these houses give opportunity for RTF lo express their
creativity. This measure indicates the degree of innovation within the business.
Internal business process measures:
:> Average design time spent per contract it is important that the time of the business's staff is used
efficiently. This measure gives an indication of staff efficiency.
© Time spent each week by partner on design work: it is important to utilize the design skills of the partners
to best advantage.
D Number of contacts in corporate database: relationships are important in this business and this measure
shows how extensive these relationships are.
:> Number of contacts added to database in period: this measure supplements the one immediately above
and it shows the rate at which the corporate contracts are growing.
Ans. to Q. No.4(c)
The use of the Balanced Scare card is a departure from RTF's previous practice it will now have a systematic
way of reporting on its performance from four difTcrent perspectives which arc linked to the achievement of its
vision. It is also going to be transformed from a purely architectural practice to one that has a valuable
commercial computerized.design package to market and sell. Furthermore, it will be bringing people into the
business that may not necessarily have a background in architecture.

Although there is not a single' right way to help RTF successfully make the transition, a number of elements can
be identified which are important
Translating the vision
Vision is at the centre of the B.alall.ced Scorecard. With the developments that arc taking place within the
company it may be that the vision, 'Your future designed by RTF: Today!' should be re-negotiated. There needs
to be an opportunity for this to be discussed and for a consensus to be formed within RTF about what their
vision should be. The implications of the (new) vision need to be understood by all the participants in the
business.
Communication and linkage
An important part of the .cultural change introduced by the Balance Scorecard is the system of performance
management which has not existed within RTF previously. The essence of the Balanced Scorecard is one of