ARAB ACADEMY FOR SCIENCE, TECHNOLOGY & MARITIME TRANSPORT

COLLEGE OF MANAGEMENT & TECHNOLOGY

MBA

FINAL EXAM

Module Title: Strategies for competitive advantage

Exam Duration: 3 hours Lecturer: Dr/ Heba Sadek
Exam Date: Semester:
Question 1: Essay questions (20 marks)

1) If your company, which is a market follower, was labeled as an imitator,

what would its strategies for meeting competition be? Explain by using
examples. (5 marks)

Market imitator is such companies which follow the trend in the market and they do not
have any product,process and procedure of their own. They react to the strategies
adopted by the competitors by imitating them with slightly modification of the strategy
which can suit their organization. There are 4 strategies adopted by the market folllower
and these are

1-Adapter- It is also regarded as white collared market follower strategy.Here followers

adapt different approaches of market leaders like Strategy, Product, Policy, Quality,etc.
Followers have similar products but they try to adapt from their closest competitor. In
this way the adapter become the market leader by improving their process which is
better than the competitors. Generally Automobile industry follow this strategy.

2-Imitation- It is one of the best form of flattery where imitators make use of market
leaders' brands equity and give a product which has the same characteristics as that of
the market leader.Here the imitator generally use poor and ow grade materials and low
service delivery then the original brand.Best example is Jewellery. The company using
this strategy can become market leader.

3-Cloner - There is slight difference between imitator and cloner, in cloner make the
same product as the original one but they slightly change the name of the brand like
Gucci become Guccia, cloning of Samsung phone is also predominant by other
smartphone makers.

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4-Counterfeiter -In this strategy original is sold by pirated copy.Like in music industry
we can get pirated DVD, BD which have pirated music, movies and even softwares.It is
a kind of theft use by the market follower.

2) In your company, why and how do managers exercise control, explain by

using examples? (10 marks)

Why
Importance of Controlling

(1) Accomplishing Organizational Goals:

The controlling process is implemented to take care of the plans. With the help of
controlling, deviations are immediately detected and corrective action is taken.
Therefore, the difference between the expected results and the actual results is reduced
to the minimum. In this way, controlling is helpful in achieving the goals of the
organization.

(2) Judging Accuracy of Standards:

While performing the function of controlling, a manager compares the actual work
performance with the standards. He tries to find out whether the laid down standards
are not more or less than the general standards. In case of need, they are redefined.

(3) Making Efficient Use of Resources:

Controlling makes it possible to use human and physical resources efficiently. Under
controlling, it is ensured that no employee deliberately delays his work performance. In
the same way, wastage in all the physical resources is checked

(4) Improving Employee Motivation:

Through the medium of controlling, an effort is made to motivate the employees. The
implementation of controlling makes all the employees to work with complete dedication
because they know that their work performance will be evaluated and if the progress
report is satisfactory, they will have their identity established in the organization.

(5) Ensuring Order and Discipline:

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Controlling ensures order and discipline. With its implementation, all the undesirable
activities like theft, corruption, delay in work and uncooperative attitude are checked.

(6) Facilitating Coordination in Action:

Coordination among all the departments of the organization is necessary in order to

achieve the organizational objectives successfully. All the departments of the
organization are interdependent. For example, the supply of orders by the sales
department depends on the production of goods by the production department.

Through the medium of controlling an effort is made to find out whether the production
is being carried out in accordance with the orders received. If not, the causes of
deviation are found out and corrective action is initiated and hence, coordination
between both the departments is established.

HOW
Managers Exercising Control

1. Establish the Standards:

Within an organization’s overall strategic plan, managers define goals for organizational
departments in specific, precise, operational terms that include standards of
performance to compare with organizational activities. However, for some of the
activities the standards cannot be specific and precise.

Standards, against which actual performance will be compared, may be derived from
past experience, statistical methods and benchmarking (based upon best industry
practices). As far as possible, the standards are developed bilaterally rather than top
management deciding unilaterally, keeping in view the organization’s goals.

Standards may be tangible (clear, concrete, specific, and generally measurable) –

numerical standards, monetary, physical, and time standards; and intangible (relating to
human characteristics) – desirable attitudes, high morale, ethics, and cooperation.

2. Measure Actual Performance:

Most organizations prepare formal reports of performance measurements both

quantitative and qualitative (where quantification is not possible) that the managers
review regularly. These measurements should be related to the standards set in the first
step of the control process.

For example, if sales growth is a target, the organization should have a means of
gathering and reporting sales data. Data can be collected through personal observation
(through management by walking around the place where things are happening),
statistical reports (made possible by computers), oral reporting (through conferencing,

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one-to-one meeting, or telephone calls), written reporting (comprehensive and concise,
accounting information – normally a combination of all. To be of use, the information
flow should be regular and timely.

3. Compare Performance with the Standards:

This step compares actual activities to performance standards. When managers read
computer reports or walk through their plants, they identify whether actual performance
meets, exceeds, or falls short of standards.

Typically, performance reports simplify such comparison by placing the performance

standards for the reporting period alongside the actual performance for the same period
and by computing the variance—that is, the difference between each actual amount and
the associated standard.

The manager must know of the standard permitted variation (both positive and
negative). Management by exception is most appropriate and practical to keep
insignificant deviations away. Timetable for the comparison depends upon many factors
including importance and complexity attached with importance and complexity.

4. Take Corrective Action and Reinforcement of Successes:

When performance deviates from standards, managers must determine what changes,
if any, are necessary and how to apply them. In the productivity and quality-centered
environment, workers and managers are often empowered to evaluate their own work.
After the evaluator determines the cause or causes of deviation, he or she can take the
fourth step— corrective action.

The corrective action may be to maintain status quo (reinforcing successes), correcting
the deviation, or changing standards. The most effective course may be prescribed by
policies or may be best left up to employees’ judgment and initiative. The corrective
action may be immediate or basic (modifying the standards themselves).

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3) Based on what you have studied, can a business ever be successful with a
combined cost leadership and differentiation strategy? Explain by using
examples. (5 marks)

There is a variant of the generic strategies that is named as a best cost strategy. The best cost
strategy is the combination of cost leadership strategy and differentiation strategy. A firm
applying best cost strategy, offers value for money by offering products at low prices as well as
offering products of superior quality having differentiating features. So, the firm can achieve the
cost leadership and differentiation strategy together, if the firm follows best cost strategy.
Hence, it is possible for the firms to do so, but it requires the firms to reduce the overhead cost
that makes it possible for the firms to offer the product & services at low prices with quality. For
example, Netflix offers movie rentals and other related products to the consumers and it is
offered with superior quality delivery. Here, the competitive advantage is that, Netflix offers
these products and services at low price and quality services brings differentiation. It is possible
only, because overhead cost is at a lower level. The best cost strategy is also applied by the
eCommerce retailers such as Amazon that sells directly to the consumers and offers low price,
but exclusive services. So, best cost strategy is achieved.
it does not work for everyone. Some businesses rather follow the low-cost way by striving for
efficiencies and economies of scale rather than focusing on differentiating themselves from the
competitors in a way other than price. Some companies like Toyota have actually joined both. A
company lacking one of the competitive strategies is easily left with no competitive advantage.
Businesses that join overall low cost and high-quality differentiation strategy offer high quality
and low prices which eventually complicates things following cost leadership. Franchising is in a
dilemma because their decline in revenue. Many are out looking for answers from the
franchisers about unknown marketing expenses and ghost
money. Franchise owners like Cold stone ones are paying too much money for product and
making less every year. Economic pressure plays a great part in this outcome especially when
franchisers do not adapt to less expensive products due to the peoples limiting of discretionary
spending. A problem is that due to lengthy agreements franchisees are required to sign, many
rules must be followed which usually require arbitration for a dispute to be fixed, therefore
restricting individual lawsuits. After a lawsuit to Edible Arrangements, management took the
smart route into investing more in e-commerce and social media which are the best ways into
getting higher probability due to keeping up with consumer taste
but, if the company cannot control those techniques simultaneously, it can get caught within the
middle role and might have hard opposition with rivals.
accordingly, if the company desires to manage each technique simultaneously, it need to
successfully examine, experiment, and put in force the plans

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Question 2: Case Study (20 marks)

HEWLETT-PACKARD
Managing on a Global Scale
Hewlett-Packard (HP) is a global organization that has experienced tremendous success in the
technology sector. This success was achieved through a broad product offering as well as a clearfocus on
innovation, so that it could remain competitive in such a dynamic industry. It has triumphed in significant
challenges throughout its tenure in this tumultuous market by focusing on its management of such an
enormous organization. This styleof management has a direct correlation to its success within the
technology industry. Without the proper strategic plan and direction in place, HP could have turned out
quite differently from its current form and position of prominence. The level of management to which HP
has grown is not without controversy or challenges. To meet these challenges, HP developed key
processes to prepare its staff to manage issues that crop up, and ultimately overcome barriers that lie in
its path to continued success.

Computing a Path to Success

Hewlett-Packard was founded in 1939 by Stanford University classmates Bill Hewlett
and Dave Packard. Its first product, built in a garage, was an audio oscillator used by
sound engineers as an electronic test instrument. By 1940, it had moved out of the garage
and into its first leased space. Then, in 1942, HP began construction of its first corporate-
owned building, designed with an open door plan with an environment for creativity
within the workspace of their eight employees. By 1951, HP had grown to 215 employees
and was earning over US$5.5 million in revenues.

In 1957, HP introduced a stock option plan for all employees who had at least six months
of service with the company. It also introduced its corporate objectives focused on
empowerment and decentralized decision making, breaking away from the traditional
top-down management style employed by most other companies. The year 1963 brought
to fruition HP’s first joint venture in the Asian market—Yokogawa-Hewlett-Packard
(YHP) in Tokyo. Then in 1966, the HP lab was created, with a clear focus on developing
new ideas. In the same year, HP’s first computer was created, and then expanded upon
over the next two years, to bring about the first “personal computer”—a desk- top
scientific calculator that could process information at a rate 10 times the speed of most
machines at the time.

HP continued its dramatic growth, and by 1975, its revenues outside of the U.S. had
exceeded those within the U.S. In fact, by 1981, HP products were available in China.
Throughout the 1980s, HP continued to expand its product offerings, introducing the first
mass- market printer as well as the portable personal computer. The year 1998 brought
about HP’s first Personal Digital Assistant, which marked the precursor to its cellular
phone designs. In 2002, HP merged with Compaq, creating a new entity that served more

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than a billion customers in 162 countries. HP continued its success with the acquisition of
Electronic Data Systems in 2008, 3Com in 2009, and Palm, Inc. in 2010. The future looks
bright for HP as long as its management is up to the task of managing the challenges and
opportunities that lie ahead.

Global Management
Creating a successful company such as HP does not come without a great deal of hard
work and dedication on the part of those managing the operations. Forbes magazine
ranked HP #67 on its Global 2000 list. This distinguished achievement required a great
deal of commitment from all levels of management at HP. With this recognition comes a
great deal of responsibility to effectively manage its nearly 350,000 employees.
Operating such a large organization is no small feat and must be done carefully if it is to
remain successful.

A company that has purely a domestic reach will not encounter the same level of
opportunities and challenges that a global firm does. There are many more considerations
involved when you step outside of your home borders and enter other countries with your
product offering. This is especially true with a firm such as HP. Part of this global reach
struggle is illustrated in HP’s move into India in 1988—this operation was under the
leadership of Mr. Suresh Rajpal, and he described the process as follows:

. . . the making of an excellent organization consists of two very important aspects—

employee satisfaction and customer satisfaction. Traditionally the literature has pointed
out very strongly towards customer satisfaction. However in HP it has been a belief that
customer satisfaction is not possible without employee satisfaction.

Therefore, in order to achieve success on a global scale, you must have the proper staff in
place to handle the global challenge. Your employees are going to look towards the
corporate management for support and direction to guide the work being done within the
organization. This is an area in which HP has been applauded as well.

Developing Your Management

Having the right employees in the right jobs is not something that happens by chance. It
takes a considerable amount of forethought to determine how best to run an organization.
When it comes to an organization the size of HP, this process is further complicated. This
is precisely why it was vitally important that management at the company received the
proper training, and that HP also devised a corporate direction for developing its talent
within the organization. One initiative at HP to prepare for the future and insure it had the
proper staff in place was the creation of the Business Excellence program. Created as a

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way to develop management members that HP needed to take them into the future, the
program is described as follows:

The curriculum evolved out of the needs of the business subgroups. Data was obtained
from leadership team meetings; interviews; and complete surveys by support function
financial leaders, the marketing department, HR, and employees. Course participants
learn about company and business sector strategy, financial management, operational
inspection, and the regional and business unit priorities. Managers also gain knowledge
about how to leverage training solutions and how to deliver all constituencies of business.

Through the Business Excellence program, HP could develop the staff necessary to
effectively manage and grow its business in the future.

Questions:

1. Based on the above case study, what are the strategies used by HP? (10
marks)

2. What are the main reasons behind HP’s success? (10 marks)