STRATEGIC

MANAGEMENT
(PAPER 9)
FOR CMA INTERMEDIATE
GROUP II
(SYLLABUS 2016)

SANKET PANDIT
EMAIL: sanketpandit28@gmail.com
WEBSITE: sanketpandit.com
STRATEGIC MANAGEMENT.

Day before exam self notes-

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STRATEGIC MANAGEMENT.

INDEX

S.NO. CONTENTS PAGE

NO.
1. STRATEGIC MANAGEMENT 3
INTRODUCTION

2. STRAREGIC ANALYSIS AND 11

STRATEGIC PLANNING

3. FORMULATION AND 24
IMPLEMENTATION OF
STRATEGY

4. OBJECTIVES 35

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STRATEGIC MANAGEMENT.

STRATEGIC MANAGEMENT
INTRODUCTION
VISION, MISSION AND OBJECTIVE
Strategy:
Strategy is all about integrating organizational activities and utilizing and
allocating the scarce resources within the organizational environment so as to meet
the present objectives. Strategy can also be defined as knowledge of the goals, the
uncertainty of events and the need to take into consideration the likely or actual
behaviour of others. strategy is the outline of decisions in an organization that
shows its objectives and goals, reduces the key policies, and plans for achieving
these goals, and defines the business the company is to carry on, the type of
economic and human organization it wants to be, and the contribution it plans to
make to its shareholders, customers and society at large.

Features of Strategy:
(i) Strategy is important to foresight, the uncertain events of firms/ Industries.
(ii) Strategy deals with long term developments rather than routine operations.
(iii) Strategy is created to deal behaviour of customers and competitors.
(iv) Strategy is a well-defined roadmap of an organization. It defines the overall
mission, vision and direction of an organization.

Strategic Management:
Strategic management is considered as either decision making and planning or a
set of activities related to the formulation and implementation of strategies to
achieve organisational objectives.

The advantages of Strategic Management:

• discharges board responsibility
• Forces an Objective assessment: strategic management enables the board and
senior management to actually take a step back from the day-to-day business to
think about the future of the organization.
• Supports understanding & buy-in: allowing the board and staff participation in
the strategic discussion enables them to better understand the direction, why that
direction was chosen, and the associated benefits
• Enables Measurement of Progress: a strategic management process forces an
organization to set objectives and measures of success.
• Provides a Framework for decision-Making: Strategy provides a framework
within which all staff can make day-to-day operational decisions and understand that
those decisions are all moving the organization in a single direction.

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The disadvantages of Strategic Management:

• The Future doesn’t unfold as anticipated: strategic management requires the
organization to anticipate the future environment in order to develop plans, but,
predicting the future is not an easy undertaking.
• Long Term Benefit vs. Immediate Results: Strategic management processes are
designed to provide an organization with long-term benefits. If we want strategic
management process to address an immediate crisis within your organization, it
won’t. It always makes sense to address the immediate crises prior to allocating
resources (time, money, people, opportunity, and cost) to the strategic management
process.
• It can be expensive.
• Prevents Flexibility.

Strategic Management Framework:

The basic framework of strategic management involves five stages:
Stage 1: in this stage, organisation analyse about their present situation in terms
of their strengths, Weaknesses, opportunities and threats.
Stage 2: in this stage, organisations setup their missions, goals and objectives
by analysing where they want to go in future.
Stage 3: in this stage organisation analyses various strategic alternatives to
achieve their goals and objectives.
Stage 4: in this organisations select the best suitable alternatives in line with
their SWOT analysis.
Stage 5: this is implementation stage in which organisation implement and
execute the selected alternatives to achieve their strategic goals and objectives.

Analysis of present situation.

Setting goals and objectives for future.

Analyses of various alternatives to achieve the goals and objectives.

Selecting best alternatives in line with strengths of organisation.

Implementing and executing the alternatives and monitoring of the same overtimes.

Importance of Strategic Management: (D2I2P-B)

(i) Discover organisation strengths and weaknesses.
(ii) Identify the available opportunities and possible threats.
(iii) Discover the objectives and goals in line with organisations strengths and
available opportunities.
(iv) Implement changes to overcome weaknesses and manage the threats.

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STRATEGIC MANAGEMENT.

(v) Provide vision/mission or direction to future of organisations.

(vi) Build a dynamic and strong organisation.

Strategic Management Process:

The basic steps of the strategic management process are:
STEP 1: identifying or defining business mission,
purpose and objectives
STEP 2: environmental (including global)
analysis

STEP 3: revise organisational direction

STEP 4: alternative strategic choice

STEP 5: strategy implementation

STEP 6: strategic evaluation and control.

Steps of Strategic Management Process:

Step 1: Identifying Defining Business Mission, Purpose and Objectives:
Identifying or defining an organisation’s existing mission, purpose and objectives
is the logical starting point as they lay foundation for strategic management.
Step 2: environmental analysis: environmental factors — both internal
environment and external environment. Organisational environment encompasses
all factors both inside and outside the organisation that can influence the
organisation positively and negatively.
Step 3: revise Organisational direction: a thorough analysis of organisation’s
environment pinpoints its strengths, weaknesses, opportunities and threats
(SWOT). This can often help management to reaffirm or revise its organisational
direction.
Step 4: Strategic alternatives and choice: many alternative strategies are
formulated based on possible options and in the light of organisational analysis and
environmental appraisal. Alternative strategies will be ranked based on the SWOT
analysis. The best strategy out of the alternatives will be chosen.
Step 5: Strategy implementation: The logically developed strategy is to be put
into action. The organisation cannot reap the benefits of strategic management,
unless the strategy is effectively implemented.
Step 6: Strategic evaluation and control: It focuses on monitoring and evaluating
the strategic management process in order to improve it and ensure that it functions
properly.
(STEP 1 to STEP 4 is called as STRATEGY FORMULATION.)

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Vision:
Vision is a statement of the future. It articulates the basic characteristic that shape
organisations strategy. It indicates where the organisation is headed and what it
intends to be.
There is a quote that ‘great visionary can foresee the future in advance and take
steps accordingly to be at forefront so, we can conclude that:
1. Vision provide a road map to company’s future
2. Vision indicates the company management is trying to create for future.
3. Vision specifies about company intention and capabilities to adapt to new
technologies.
4. Vision also specifies management policies towards customers and societies.
Strategic vision specifies primarily three elements:
1. Forming a mission statement that defines what business the company presently is
in? And “who we are and where we are now?”
2. Using this mission statement as base to define long term path by indicating choices
about “Where we are going?”
3. Finally, communicating above strategic vision in clear and committed term.

Importance of vision:
1. clearly provide the direction that company wants to follow
2. identify the need of changing from existing direction or products, if stated in
vision statement
3. Create passionate environment in the organisation to steer the company with
great excitement in selected direction.
4. Promote entrepreneurship.

Meaning and use of Mission:

The term ‘mission’ implies the fundamental and enduring objectives of an
organisation that set it apart from other organisations of similar nature. The mission
is a general enduring statement of instruction of an organisation. The corporate
mission is the purpose or reason for its existence. It refers the philosophy of
business to the static decision maker to build the image of the company. The
corporate mission highlights the organisation self-concept and indicates the nature
of product or service to be offered or rendered for fulfilment of the requirements
of the customers as also for the community and society as a whole.
The mission may, as such, be described as the scope of operations in terms of
product, market or the service as well as customers and clients. An organisation
may define its mission highlighting the philosophy and purpose. The philosophy
establishes the values, beliefs and guidelines for the business plan and business
operation. The mission of a firm defines its reasons for existence.

Mission includes:
• A definition of products and services the organisation provides.
• Technology used to provide these products and services.
• Types of markets.

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• Customer need or requirement.

• Distinctive Competencies.

Defining the company mission:

What is a company Mission?

the mission embodies the business philosophy of strategic decision makers; implies
the image the company seeks to project; reflects the firm’s self-concept; indicates
the principal product or service areas and primary customer needs the company
will attempt to satisfy. Simply, the mission describes the product, market, and
technological areas of emphasis for the business. And it does so in a way that
reflects the values and priorities of strategic decision makers.

The Need for an explicit Mission:

Defining the company mission is time consuming, tedious, and not required by any
external body. The mission contains few specific directives, only broadly outlined
or implied objectives and strategies. Characteristically, it is a statement of attitude,
outlook, and orientation rather than of details and measurable targets.

Formulation of Organisational Mission:

Organisation cannot declare the mission just on some great whim and fancy, it
should be based on organisations’ existing capabilities and achievable milestones.
Here are some guidelines for formulation of “mission” statement
• It should be based on existing business capabilities “Who we are and what we
do?”
• It should follow the long term strategy principles.
• Profit making should not be the only mission of organisation.
• It should be logical extension of business existing capabilities.
• It should clearly and precisely present the future orientation of business.
• It should include achievable missions.
• Mission statement once formed shall be communicated to every member of
organisations.
• It should include interest of customers and society.

Difference between VISION & MISSION:

BASIS FOR MISSION VISION
COMPARISION
Meaning A statement that A short
describes the statement that
company’s depicts the
objectives and company’s
its approach to aspiration for
the future

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reach those position of the

objectives. company.
What it is? Cause Effect
Talks about Present Future
Shows Where we are at Where we wants
present? to be?
Term Short term Long term
Purpose To inform To inspire

Objectives, Goals and Targets:

The term “objective and goals” set target of any particular aspect like profit and
revenue growth, etc.
Here are some common definitions of Objectives;
• Objectives are performance targets which organisations wants as result or
outcomes in the specified periods.
• Objectives achievements are used as benchmark of organisation performance
and success.
• Objectives are formed from visions and mission statement of organisations.
• Objectives are interchangeably used with goals.
• Goals are defined as more precise and specific with closed ended attribute (in
precise quantity form) whereas objectives are open ended for future states or
outcome not as precise as goals. Objectives are for long term whereas goals are
for short term.

Characteristics of Objectives: Objectives characterise business long-term

prospective, such as:
• Facilitate to achieve mission and goals
• Clear the relationship of organisation with environment
• Should be measurable and controllable
• Should be related to time frame
• Should be challenging
• Should be concrete and specific
• Should motivate people.

Formal strategies contain three elements:

1. Goals to be achieved.
2. Policies that guide or limit action.
3. Action sequences or programs that accomplish goal.

Objectives and goals: ‘Desired states or outcomes are objectives. Goals are
objectives that are scheduled for attainment during planned period’. Thus
objectives and goals defined in this way convey two different concepts.

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The distinction between these two concepts may be drawn in terms of the following
four dimensions.
Particulars Objectives Goals
Time Frame. Objectives are Goals are
timeless, temporal, time-
enduring, and phased, and
unending (OPEN intended to be
ENDED). superseded by
subsequent
goals.
Specificity. Objectives are Goals are much
stated in broad, more specific,
general terms, stated in terms of
dealing with a particular result
matters of image, that will be
style, and self- accomplished by
perception. a specific date.
These are
aspirations to be
worked in the
future.
Focus. Objectives are Goals are more
usually stated in internally
terms of some focused and
relevant carry important
environment implications
which is external about how
to the resources of the
organisation. organisation are
utilised or will be
utilised in future.
Measurement. Objectives may Goals are
not be strictly measurable and
measurable or tangible.
tangible.

Company Goals: (Survival, Growth, Profitability)

Three economic goals guide the strategic direction of almost every viable business
organisation. Whether or not they are explicitly stated, a company mission
statement reflects the firm’s intention to secure its survival through sustained
growths and profitability.

Mission and Strategy:

Mission sets the direction for the strategic development of the organisation. As
Drucker remarks in his managing for the Future, the mission “focuses the

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organisation on action. It defines the specific strategies needed to attain the crucial
goals. It creates a disciplined organisation. it alone can prevent the most common
degenerative disease of organisations, especially large ones, splintering their
always limited resources on things that are ‘interesting’ or look ‘profitable’ rather
than concentrating them on a very small number of productive efforts”.
Derect Abell has suggested defining business along three dimensions, viz,
customer groups (i.e., who is being satisfied) customer functions (i.e., what need
of the customer is being satisfied) and alternative technologies (i.e., how the need
is being satisfied). Such a three dimensional definition of the business would
clearly delineate the boundaries and nature of the business. However, not many
mission statements are so clear and comprehensive.

Strategic Levels in Organisation: (CBF)

Three levels of strategies in the organisation:
1. Corporate Level
2. Business Level
3. Functional Level

1. corporate Level:
The corporate level of management consists of the chief executive officer (CEO), other senior
executives, the board of directors, and corporate staff. This role includes defining the
mission and goals of the organisation, determining what businesses it should be in,
allocating resources among the different businesses, formulating and implementing
strategies that span individual businesses, and providing leadership for the organisation.
2. business Level:
A business unit is a self-contained division that provides a product or service for a particular
market. The principal general manager at the business level, or the business-level manager,
is the head of the division. The strategic role of these managers is to translate the general
statements of direction and intent that come from the corporate level into concrete
strategies for individual businesses.
3. Functional Level :
Functional-level managers are responsible for the specific business functions or operations that
constitute a company or one of its divisions. Thus, a functional manager’s sphere of
responsibility is generally confined to one organisational activity, whereas general
managers oversee the operation of a whole company or division.

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STRAREGIC ANALYSIS AND

STRATEGIC PLANNING

SITUATIONAL ANALYSIS:
After deciding the vision, mission, goals and objectives of the organization, turns
its focus to scanning of both external environment and internal environment. A
company’s macro environment consists of all related dimensions and influences
outside the company’s boundaries; by relevant factors like direction, objectives,
strategy, and business model. But influences coming from the outer globe of the
macro environment have a small impact on a company’s business situation. They
only shape the limits of the company’s direction and strategy. SWOT & PEST
analyses are two methods through which companies plan ahead by conducting
research.

PEST analysis refers to political, economic, social, and technological factors

which manipulate the business environment. SWOT analysis refers to strengths,
Weaknesses, opportunity and threats. These factors are prime determinants of
strategic planning. Without SWOT and PEST analysis companies might fail to
achieve desired goals.
PEST analysis looks at external factors and is primarily used for market research.
It is used as an alternative to SWOT analysis:
(i) Political – These are the external factors that influence the business environment.
Government decisions and policies affect a firm’s position and structure, Tax laws,
monetary and fiscal policies as well as reforms of labour and workforce.
(ii) Economical – Economical factors are the most important since it impacts business
in the long run. Inflation, interest rates, economic growth and demand/supply
trends are to be considered and analysed effectively before planning and
implementing. Economic factors affect both consumers and enterprises.
(iii) Social – social factors involve the trends of population, domestic markets, cultural
trends and demographics. These factors help businesses assess the market and
improve their products/service accordingly.
(iv) Technological – this analyses the technology trends and advancements in business
environment, innovations and advancements lowers barriers to entry plus
decreased production levels as it results in unemployment.

Advantages & disadvantages of PEST & SWOT Analysis:

Both SWOT & PEST analyses are simple and easy to list but hard to implement
fully. It takes time and research to completely analyse the situation. SWOT analysis
might not be able to provide results for each factor plus for the analysis to be
successful, it requires expertise which would analyse all possible threats and
weaknesses and turn them into strength and opportunity. It requires resources and
capital to perform and a positive outcome cannot be guaranteed.
PEST analysis is to be used if the SWOT analysis of a company fails and they need
to study markets. It focuses on external factors and not on the firm’s internal factors
which can cause conflict. PEST analysis works on a macro scale as it includes

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economic factors. These factors are uncertain and change constantly depending on
the state of the country. SWOT analysis is considered the best because it focuses
on internal and external factors both while pest only focuses on external factors.

SWOT ANALYSIS:
SWOT stands for strengths, Weaknesses, opportunities, and threats. The purpose
of the analysis is to express, qualitatively or quantitatively, which areas of the
business have strengths to exploit, and which areas have weaknesses which must
be improved. Although every area of the business should be investigated, only the
areas of significant strength or weakness should warrant further attention.
Corporate strengths and weaknesses can be broadly enumerated as under:

Corporate Strengths:
(i) Financially very sound
(ii) good products and product-mix with high demand including future prospects
(iii) Full capacity utilisation, locational advantages
(iv) good industrial relations
(v) Technologically rich and with expertise these are the corporate strengths within
and outside the organisation.

Corporate Weaknesses:
(i) Under-utilisation of capacity due to economic slump
(ii) High debt burden in the capital structure
(iii) Lack of managerial strengths
(iv) technology gap
(v) competition war

Opportunities:
(i) seasonal/climatically demand of products
(ii) global markets for the company’s products/services (export opportunities)
(iii) to explore the markets in the undeveloped/under-developed/developing
states/places
(iv) to avail of the incentives/concessions declared by central and state governments
(v) Diversifications opportunities

Threats:
(i) globalisation
(ii) competition
(iii) price cutting war
(iv) political instability
(v) Quality thrusts

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Portfolio Analysis:
Portfolio analysis is a term used in describing methods of analysing a product -
market portfolio with the following aims.
(i) To identify the current strengths and weaknesses of an organisation’s products in
its markets, and the state of growth or decline in each of these markets.
(ii) To identify what strategy is needed to maintain a strong position or improve a weak
one.

Factors influencing Portfolio Strategy:

1. Mission/Vision
2. future of Current Business
3. Government Policy
4. Competitive environment
5. Company resources
6. Supply/demand Conditions
7. Competitive Moves
8. Business environment
9. Value system
10. Position on the Portfolio Matrix
11. Portfolio Strategy of Parent

BCG Matrices:

Boston Matrix- The Boston consulting group (BCG)’s matrix analyses ‘products
and businesses by market share and market growth.’

This growth/share matrix for the classification of products into cash cows, dogs,
rising stars and question marks is known as the Boston classification for product-
market strategy.

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STRATEGIC MANAGEMENT.

(i) Stars are products with a high share of a high growth market. In the short term,
these require capital expenditure, in excess of the cash they generate, in order to
maintain their market position, but promise high returns in the future.
(ii) Stars will become cash cows, with a high share of a low-growth market. Cash
cows need very little capital expenditure and generate high levels of cash income.
The important strategic feature of cash cows is that they are already generating high
cash returns, which can be used to finance the stars.
(iii) Question marks are products in a high-growth market, but where they have a
low market share. A decision needs to be taken about whether the products justify
considerable capital expenditure in the hope of increasing their market share, or
whether they should be allowed to ‘die’ quietly as they are squeezed out of the
expanding market by rival products.
(iv) Dogs are products with a low share of a low growth market. They may be ex-
cash cows that have now fallen on hard times. Dogs should be allowed to die, or
should be killed off. although they will show only a modest net cash outflow, or
even a modest net cash inflow, they are ‘cash traps’ which tie up funds and provide
a poor return, on investment, and not enough to achieve the organisation’s target
rate of return.
There are also infants (i.e. products in an early stage of development) and
warhorses (i.e. products that have been cash cows in the past, and are still making
good sales and earning good profits even now).

Limitations of the BCG Model:

1. BCG matrix classifies businesses as low and high but generally businesses can be
medium also. Thus, true nature of businesses may not be reflected.
2. Market is not clearly defined in this model.
3. High market share does not always leads to high profits. There are high costs also
involved with high market share.
4. Growth rate and market share are not the only indicators of profitability. This
model other indicators.
5. It is too simplistic.
6. It ignores the threat of substitute products.
The product life cycle concept can be added to a market share/market growth
classification of products:

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Introduction Growth Maturity Decline

Warhorses
Stars
Cash Cows
High share,
High share,
High share,
negative
High growth
low growth,
growth, positive
s till needing
large positive
cash
c ash for
cash flow
flow
Further

investment

d ogs

Low share, low

growth,

Question modest positive or

Marks negative cash flow

i nfants d Ogs
Low share,
Low share,
n egative High growth,
n egative
cash flow large
Growth,
negative
Negative cash
cash flow
flow

Time

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STRATEGIC MANAGEMENT.

Ansoff’s Model:
The Ansoff Matrix: Ansoff (1965) demonstrates the choices of strategic direction
open to a firm in the form of a matrix.

Firm increases its sales in its present line of business by:

(i) price reductions;
(ii) increases in promotional and distribution support;
(iii) acquisition of a rival in the same market;
(iv) Modest product refinements.

Product development Strategy:

This involves extending the product range available to the firm’s existing markets.
These products may be obtained by:
(i) investment in the research and development of additional products;
(ii) acquisition of rights to produce someone else’s product;
(iii) buying-in the product and ‘badging’ it;
(iv) Joint development with owners of another product who need access to the firm’s
distribution channels or brands.

Market development Strategies:

Here firm develops through finding another group of buyers for its products like:

(i) different customer segments

(ii) industrial buyers for a good that was previously sold only to households;
(iii) new areas or regions of the country;
(iv) foreign markets;

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Diversification Strategies:
Here the firm is becoming involved in an entirely new industry, or a different stage
in the value chain of its present industry. Ansoff distinguishes several forms of
diversification:
1. Related Diversification:
Here there is some relationship, and therefore potential synergy, between the firms
exists business and the new product/market space:
(a) Concentric diversification means that there is a technological similarity between
the industries which means that the firm is able to leverage its technical know-how
to gain some advantage.
(b) Vertical integration means that the firm is moving along the value system of its
existing industry towards its customers (forward vertical integration) or towards its
suppliers (backward vertical integration).
2. Unrelated Diversification:
This is otherwise termed conglomerate growth because the resulting corporation is
a conglomerate, i.e. a collection of businesses without any relationship to one
another. The strategic justifications advanced for this strategy are to:
• take advantage of poorly managed companies which can then be turned around and
either run at a gain to the shareholders or sold-on at a profit;
• spread the risks of the firm across a wide range of industries;
• Escape a mature or declining industry by using the positive cash flows from it to
develop into new and more profitable areas of business.

Arthur D Little Portfolio Matrix:

The ADL portfolio matrix suggested by Arthur D. Little (ADL) consists of 20 cells,
identified by competitive position and its stage of industry maturity. In this matrix,
the stage of industry maturity is identified in four stages viz., embryonic, growth,
maturity and ageing. The competitive position is categorized into five classes viz.,
dominant, strong, favourable, tenable and weak. The purpose of the matrix is to
establish the appropriateness of a particular strategy in relation to these two
dimensions.
The position within the life cycle and of the company is determined in relation to
eight external factors (or disciplines) of the evolutionary stage of the industry.
These are:
(a) market growth rate
(b) growth potential
(c) breadth of product line
(d) number of competitors
(e) spread of market share among the competitors
(f) customer loyalty
(g) entry barriers
(h) technology

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Competitive Stage of industry Maturity

position
embryonic mature
growth ageing
Dominant start-up Fast growth Defend position Defend
Fast growth attain cost attain cost position
Build barriers leadership leadership cost focus
renew renew renew
Defend Fast growth Harvest or
position act offensive divest
act offensive
strong start up Fast growth attain cost Find niche
Differentiate renew leadership Hold niche
Fast growth Differentiate renew Hang on
cost focus Differentiate grow with
act offensive grow with industry
industry Harvest
Favourable start up Differentiate Harvest Harvest
Differentiate cost focus Find niche Divest
Fast growth catch up Hold niche
grow with Hang on
industry renew
turnaround
cost focus
Differentiation
focus
grow with
industry
tenable start up Hold niche Harvest Divest
grow with Find niche turnaround retrench
industry Hang on Find niche
cost focus Harvest retrench
Differentiation catch up Hold niche
focus turnaround
cost focus
Differentiation
focus
grow with
industry
Weak Find niche turnaround Withdraw Withdraw
catch up retrench Divest
grow with Withdraw
industry

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The competitive position of a company’s SBU or product line can be classified

as:
Dominant - it is comparatively a rare situation where the SBU enjoys monopoly
position or very strong market ability of its products. This may be due to high level
of entry barriers or protected technology leadership.
Strong - When a SBU enjoys strong competitive position, it can afford to chalk out
its own strategies without too much concern for the competitors.
Favourable - In this competitive position, no firm will enjoy dominant market
share and the competition will be intense. The strategy formulation much depends
on the competitors moves. The market leader will have a reasonable degree of
freedom. Analysis of their product portfolio and learning from them would help
others while framing their own strategies.
Tenable - The tenable competitive position implies that a firm can survive through
specialization and focus. These firms are vulnerable to stiff competition in the
market. They can withstand with cost focus and differentiation focus strategies.
Weak - The weak firms will generally show poor performance. They can withstand
with niche strategy and can become strong players in their area. The consistent
weak performance may need to divest or withdraw from the product line.

Stages in strategic planning

The stages in strategic planning are given below:
Stage 1-Strategic Option Generations
At this stage, a variety of alternatives are considered, relating to the firm’s product
and markets, its competitors and so forth.
Stage 2-Strategic option evaluation
Each option is then examined on its merit.
(a) Does it increase existing strengths?
(b) Does it alleviate existing weaknesses?
(c) Is it suitable for the firm’s existing position?
Stage 3-Strategic Selection
It involves choosing between the alternative strategies. This process is strongly
influenced by the values of the managers in selecting the strategies.

Steps in Strategic Planning:

1. An internal analysis that encompasses assessing company strengths and
weaknesses, financial performance, people, operational limitations etc.
2. An external analysis that focuses on analysing competitors, assessing market
opportunities and threats, evaluating changing technology etc.
3. Summarizing the current situation based on the information gathered and
evaluated in steps one and two.
4. Development of a mission, vision or purpose statement.
5. Goal setting.
6. Defining objectives that support the goals.
7. Development of strategies.

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8. While not all strategic plans include tactics, a good strategic plan will include at
least the key tactics thought to be important to supporting the strategies developed
in step 7. Tactics are the specific tasks associated with carrying out strategies.

Approaches in Strategic Planning:

(i) A top-down process, in which managers are given targets to achieve which they
pass on down the line.
(ii) A bottom-up process, in which functional and line managers in conjunction with
their staff submit plans, targets and budgets for approval by higher authority.
(iii) An iterative process, which involves both the top-down and bottom-up setting of
targets. There is a toe and-from movement between different levels until agreement
is reached. The iterative approach, which involves the maximum number of people,
is the one most likely to deliver worthwhile and acceptable strategic plans.

Strategic Management and Strategic Planning:

Strategic Management Strategic Planning
1. it is focused on producing 1. It is focused on making
strategic results; new optimal strategic
markets; new products; decisions.
new technologies etc.
2. It is management by 2. It is management by
results. plans.
3. It is an organizational 3. It is an analytical
action process. process.
4. It broadens focus to 4. It is focused on
include psychological, business, economic and
sociological and political technological
variables. variables.
5. It is about choosing 5. It is about choosing
things to do and also things to do.
about the people who will
do them.

Corporate Planning and long-range Planning:

Corporate Planning –
 It is concerned with determination of objectives treating the company as a whole.
 Develops means to achieve the company’s overall objectives.
 Corporate plans may relate to achieve corporate objectives for short-run and/or
long-run.
 It is an integrated systems approach considering different functions, divisions and
units of the organization.
 Corporate plans are framed at the corporate level by the top management.

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STRATEGIC MANAGEMENT.

 Corporate planning is concerned with the existing products in existing markets as

well as new products and new markets.

Long-range Planning –
 It is a systematic and formalized process concerned with directing and controlling
future operations of an enterprise towards desired objectives for periods spreading
generally over 5 or more years.
 It provides an opportunity to management to anticipate future problems and have
got more flexibility in framing the long-range plans.
 Long-range planning takes care of only the existing products in existing markets.

Strategic Planning
Strategic planning assumes that an organisation must be ready to respond to a
dynamic environment and future environmental conditions are not known with
perfect certainty.
There is a need to emphasise and understand how the environment assumed is
charging. Accordingly, courses of action in response to these changes will have to
be taken up.

Difference between long-range planning and strategic planning:

l ong range planning

Forecast based on extrapolation

Budgets p rogrammes Profits Plan

implementation

o peration control

As shown in the figure above, in case of long-range planning, objectives forecasted

through extrapolation are translated into budgets, programmes and profit plans.
These are finally implemented. An operating control system is established and the
feedback is provided which suggests a change in objectives, if required.

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STRATEGIC MANAGEMENT.

Strategic Planning
prospects o bjectives

Strategy

performance goals

o perating programmes s trategic programmes/

/budgets budgets

implement by units implement by projects

Operating control strategic control

The strategic planning leads to the setting-up of two sets of goals – operating
performance goals and strategic goals. The operating performance goals are
translated into operating budgets and strategic goals are translated into strategic
budgets. Accordingly two types of control namely, operating control and strategic
control are established.

Alternatives in strategic planning:

 Also known as contingency planning.
 Contingency plans can be defined as alternative plans that can be put into effect if
certain key events do not occur as expected.
 Contingency plans should be as simple as possible.

Steps in Contingency Planning-

Robert Linnemam and Rajan Chandran have suggested that a seven step process as
follows:
Step 1 - Identify the beneficial and unfavourable events that could possibly derail
the strategy or strategies.
Step 2 - specify trigger points. Calculate about when contingent events are likely
to occur.
Step 3 - Assess the impact of each contingent event. Estimate the potential benefit
or harm of each contingent event.
Step 4 - Develop contingency plans. Be sure that contingency plans are compatible
with current strategy and are economically feasible.
Step 5 - assess the counter impact of each contingency plan. That is, estimate how
much each contingency plan will capitalize on or cancel out its associated
contingent event. Doing this will quantify the potential value of each contingency
plan.
Step 6 - Determine early warning signals for key contingency event. Monitor the
early warning signals.

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STRATEGIC MANAGEMENT.

Step 7 - For contingent event with reliable early warning signals, develop advance
action plans to take advantage of the available lead time.

Benefits of Contingency Planning

 It will make the future through their proactive planning and advanced preparation.
 It will introduce original action by removing present difficulties.
 It enables to anticipate future problems.
 It will attempt to shape the future and create a more desirable environment.
 it permits quick response to change,
 It prevents panic in crisis situations.

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STRATEGIC MANAGEMENT.

FORMULATION AND
IMPLEMENTATION OF STRATEGY

STRATEGY FORMULATION FUNCTIONWISE-

Formulation of strategy-
1. Develop and evaluate strategic alternatives
2. select appropriate strategies for all levels in the organisation that provide relative advantage
over competitors
3. match organizational strengths to environmental opportunities
4. correct weaknesses and guard against threats

Implementation of strategy-
(i) effectively fitting organizational structure and activities to the
environment
(ii) The environment dictates the chosen strategy; effective strategy
implementation requires an organisational structure matched to its requirements.
evaluating results
(iii) How effective have strategies been?
(iv) What adjustments, if any, are necessary

Strategy formulation function wise-

Strategy often require changes in the way an organization is structured for two major reasons:
1. Structure largely dictates how objectives and policies will be established;
2. Structures dictates how resources will be allocated.

Production Strategy-
The key to successful survival of an enterprise as an independent unit is how efficiently
production activity is managed. The two major factors that contribute to business failures are
obsolescence of the product line and excessive production costs.

Formulating Production Strategy: The steps are-

(i) Study the overall corporate plan and define the objectives.
(ii) Analyse the present production operations and the present and future environment.
(iii) Review sales- forecast and marketing.
(iv) make strategic decisions for production
(a) extent of Production activity:
(b) (b) choice of Manufacturing Process
(c) (c) capacity decisions:
(d) (d) choosing Machines and equipment
(e) equipment Investment:
(f) Physical Facilities decisions.

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STRATEGIC MANAGEMENT.

Plant location:
Plant location is essentially an investment decision having long-term significance
and implied economic effects. Once a plant is acquired, it is a permanent site that
cannot readily be sold. Before a location for a plant is sought, long range forecasts
should be made anticipating the future needs of the company. These should be based
on the company’s expansion policy, the anticipated diversification of products, the
trends in market demand, geographical distribution, material and labour supply, and
any other foreseeable influences. Thus, plant location decisions require intensive study
of economic and socio-political circumstances.

Plant Building:
Once the company has chosen the plant site, due consideration must be given to
providing physical facilities. A company requiring extensive space will always
construct new buildings. Oil planning a building for the manufacturing facilities, a
number of factors will have to be kept in mind such as nature of the manufacturing
process, plant layout and space requirements, lighting, heading, ventilating, air
conditioning, service facilities and future expansion.

Plant layout:
Plant layout involves the arrangement and location of production machinery, work
centres and auxiliary facilities and activities (inspection, handling of material storage
and shipping) for the purpose of achieving efficiency in manufacturing products or
supplying consumer services. Plant layout should co-ordinate use of material, men
and machines. In designing plant layout a number of factors such as nature of product,
volume of production, quality, equipment, type of manufacture, building plant site
personnel and materials handling plan should be kept in view.

Maintenance of equipment:
Maintenance of equipment is an important facility of planning consideration. every
manufacturing enterprise follows some maintenance routine in order to avoid
unexpected breakdowns and thus minimise costs associated with machine breakdowns
such as machine down time and possible loss of potential sales, idle direct and indirect
labour, delays in other processes that may depend for material supply on the machine
that is down, increased scrap, customer dissatisfaction from possible delays in
deliveries and the actual cost of repairing the machine
A number of strategies can be adopted for maintenance of machines and equipment.
Two most important ones are carrying excess capacity and preventive maintenance.
Carrying excess capacity method an organisation carries stand-by capacity which is
thrown into the breach if trouble occurs. This excess capacity can be whole machines
or it can be major parts or components which ordinarily take time to obtain.
Preventive maintenance is based on the premise that good maintenance prevents
breakdowns. Preventive maintenance means preventing break downs by replacing
worn-out machines or their parts before their breakdown. It anticipates likely
difficulties and does the expected needed repairs at a convenient time before the
repairs are actually needed. Preventive maintenance depends upon the past knowledge
that certain wearing parts will need replacement after a normal interval of vies. Another

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and quite different kind of preventive maintenance can better be called maintenance
prevention. It is concerned with designing machines which will be both trouble-free
and easily repaired.

Marketing Strategy-
Market- market is an arrangement that provides an opportunity of exchange of goods and
services, for money or money’s worth. It is the means to settle the terms of exchange.

Marketing- is “a social process by which individuals and groups obtain what they need and
what through creating and exchanging products and value with others.”

Role of Marketing:
 The first and foremost role is that is stimulates potential aggregate demand and thus
enlarges the size of the market.
 Another important role which marketing plays is that it helps in the discovery of
entrepreneurial talent.
 Still another important contribution which marketing makes is that it helps in sustaining
and improving the existing levels of employment.

Marketing Functions:
Marketing involves eight important functions: Buying, Selling, Storage, Transportation,
Financing, Standardisation, grading and risk-taking.

Marketing Environment:
It is the sum-total of external factors within which the enterprise operates. It is the compendium
of forces external in nature like social, economic, ethical, political, physical and technological.
These are uncontrollable external forces that provide opportunities and challenges to the firm.

Universal Functions of Marketing:

Universal functions of marketing consist of buying, selling, transporting, storing,
standardisation and grading, financing, risk-taking and market information.

Marketing Plan:
Marketing plan is a written document that specifies in detail the firms marketing objectives
and how marketing management will use the controllable marketing tools such as product
design, channels, promotion and pricing to achieve these objectives.

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STRATEGIC MANAGEMENT.

The selling and marketing concepts-

s tarting Focus m eans e nds

point

Factory p roducts s elling and Profits through

p romoting s ales volume

The Selling Concept

t arget c ustomer c o-ordinated Profit through

m arket needs m arketing customer
satisfaction

The Market Concept

Social Marketing:
Societal marketing concept calls for a customer orientation backed by integrated marketing
aimed at generating customer satisfaction and long-run consumer welfare as the key to
attaining long-run profitable volume.

Marketing Management:
Marketing management is the crucial and creative task of delivering consumer satisfaction and
thereby earning, profits through consumer demand.

Marketing Strategies:
There are four types of competitive settings.
1. no direct competition
2. pure competition
3. monopolistic competition
4. oligopolistic competition
A marketing strategy should be used as a working paper that guides the store’s operations for
the next 1-2 years. The format of a marketing strategy has three sections:
 Basic assumptions- based on survey results and past planning processes;
 Strategic goals- goals for growth and fiscal health of the company.
 Achieving goals -- operational ideas for changes that will alter the perception of the
storefront by the public to conform to the strategic goals.

Manpower Strategy: HRD is defined as a process by which employees are encouraged

and helped in a continuous and planned way to
(a) Acquire and sharpen capabilities to perform functions relating to their present or future
positions,
(b) Develop their general abilities as individuals,

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(c) Identify and make use of their own inner potentials for their own and/or organisational
purposes and
(d) Develop an organisational culture whereby superior-subordinate relations, team work and
collaboration among sub-units may lead to strengthening healthy work ethos, motivation and pride
of employees.

The more important features are as follows:

1. Orientation of the members
2. Facilitation of organisational changes as and when called for.
3. Coping with diversity of workforce.
4. Maintaining competent and committed workforce in a competitive environment.
5. Development of core competency.
6. Empowered workforce as an active resource.
7. Appropriate work culture and ethical norms.

There are several strategies for motivating organisation members some of these strategies are-
 Managerial communication: the most important and basic strategy for a manager is
simply to communicate well with the organisational people. This satisfies
such basic human needs as recognition, a sense of belonging,
and security.
 Theory X and Theory Y: another motivation strategy involves manager’s assumptions
about the nature of people. Douglas McGregor identified two sets of
assumptions. According to him, Theory X involves negative assumptions that
managers often use as the basis for dealing with people. Theory Y represents positive
assumptions which managers strive to use.
 Job design: managers can use to motivate organisation members involves the design
of jobs that organisation members perform. Earliest attempt to overcome job boredom
was job rotation in which individuals are moved from job to job and thus they are not
required to perform a particular job for over the long-term. This may enable the
management in recruiting and attracting qualified employees.
 Behaviour Modification: Behaviour modification is anotherstrategy
which can be used to motivate members of an
organisation. Behaviour modification focuseson encouraging appropriate
behaviour as a result of the consequences of that behaviour.
According to the law of effect, behaviour that is rewarded tends to be repeated and
behaviour that punished tends to be eliminated.
 Participative Management: another strategic approach to employee’s motivation is to
adopt the system of involving employees in decision making. This will elicit
employee’s commitment in executing decisions. Further, the successful process of
making a decision, executing it and then seeing the positive consequences can help
satisfy one’s need for achievement, provides recognition and responsibility and enhance
self-esteem. Maintenance aspect of human resources is concerned with creation and
maintenance of such working conditions in the organisation as are necessary to attract
the most talented people, retain them and motivate them to give their best.

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STRATEGIC MANAGEMENT.

STRATEGIC IMPLEMENTATION
Implementation of strategies is concerned with the design and management of systems to
achieve the best integration of people, structures, processes, and resources in reaching
organisational purposes.

McKinsey’s 7-S Framework

The researchers Peters and Waterman found after examining America’s
best run companies that the problem in strategy lay in its implementation and structure was
only one lever in the hands of management. The other levers were systems, staff, style, skills
and superordinate goals. A strategy is usually successful when the other S’s
in the 7-S framework fit into or support the strategy.

• Strategy: a set of decisions and actions aimed at gaining a sustainable competitive

advantage.
• Structure: the organisation chart and associated information that shows who reports to
whom and how tasks are both divided and integrated.
• Systems: The flow of activities involved in the daily operation of a business, including
its core processes and its support systems.
• Style: How managers collectively spend their time and attention and how they use symbolic
behaviour. How management acts is more important than what management says.
• Staff: How companies develop employees and shape basic values.
• Shared Values: commonly held beliefs, mind-sets and assumptions that shape how an
organisation behaves— its corporate culture.
• Skills: an organisation’s dominant capabilities and competencies.

Organizational Structure-
The successful implementation of strategy requires an effective organization structure.
Organizational structure means the framework in which the organization defines how tasks are

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divided, resources are deployed and departments are co-ordinated. There are several types of
organizational structure:
(1) Functional structure
(2) geographic structure
(3) matrix structure
(4) Hybrid structure

Functional structure: the functional structure is characterized by the simultaneous

combination of similar activities and the separation of dissimilar activities on the basis of
function.
Geographic structure: another basic form structural grouping is geographic structure, in
which activities and personnel are grouped by specific geographic locations. Each
geographic unit includes all functions required to produce and market products in that
region.
Matrix structure: another way to achieve focus on multiple outcomes is with the matrix
structure. The matrix structure creates a dual chain of command; two lines of budget
authority and two sources of performance and reward. The key feature of the matrix is that
product (or business) and functional lines of authority are overlaid to form a matrix or grid,
between the product manager and functional manager.
Hybrid Organization and supplemental Methods: A single type of structural design is
not always sufficient to meet the requirements of strategy. When this occurs, one opinion is
to mix and blend the basic organizations forms, matching structure to strategy, requirement
by requirement, and unit by unit, Hybrid structure is a form of departmentalization that
adopts parts of both functional and divisional structures at the same level of management.

STRATEGIC BUSINESS UNIT-

SBU groups similar divisions into “Strategic Business Units” and then delegate’s authority and
responsibility of each unit to a senior executive who is normally identified as CEO or MD of that
SBU. It is an extension of Divisional structure.
The above structures (Functional, Divisional and SBU) consist of flow of authority from
top to bottom i.e. vertical flow.

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Advantages:
(i) Promotes accountability since units’ heads are responsible for individual
SBU profitability
(ii) career development opportunities are further higher in this structure
(iii) allow better control of categories of products manufacturing, marketing and distributions
(iv) Helps to expand in different related and unrelated businesses

Disadvantages:
(i) may provide inconsistent approach to tackle customers, etc., because each unit may work
in its own way to handle situations
(ii) High cost approach

Strategic Business Units (SBU) & core competence:

 SBU is a grouping of related businesses, which is open to complex planning
treatment.
 Multi-business enterprise groups its various businesses into a few distinct business
units in a scientific way known as SBUs.
 The purpose is to provide effective strategic planning treatment to each one of
its products/businesses.
 SBU concept is relevant to a multi-product.

The three most important characteristics of SBU are:

• It is a single business or a collection of related businesses which offer
scope for independent planning and which might feasibly standalone from
the rest of the organisation.
• Has its own set of competitors.
• Has a manager who has responsibility for strategic planning and profit
performance, and who has control of profit-influencing factors.

Matrix Organisation Structure:

Matrix structure contains both vertical and horizontal flow of communications or authority.
This type of structure is frequently used in it organisation for managing different projects. Each
individual project is managed by a project manager and projects manager will have his team
arranged under him.

Advantages:
(i) Useful for some specific industries like Information Technology, Healthcare etc.
(ii) employee can see visible results of their efforts
(iii) remove barrier to communications
(iv) managing projects are easy
(v) Effective structures when environment is very dynamic.

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STRATEGIC MANAGEMENT.

Disadvantages:
(i) Complex structure as this contains both vertical and horizontal flow of information
(ii) High cost approach due to more management positions
(iii) Dual lines of authority
(iv) Conflicts arises in the allocation of resources

Business process re-engineering (BPR)-

 Focuses on the analysis and design of workflows and processes within an organization.

 BPR seeks to help companies radically, restructure their organizations by focusing on

the ground-up design of their business processes.
 Business process re-engineering is also known as business process redesign, business
transformation, or business process change management.
 Re-engineering emphasized a holistic focus on business objectives and how processes
related to them, encouraging full-scale recreation of processes rather than iterative
optimization of sub processes.
 BPR aimed to help organisations fundamentally rethink how they do their work in order
to dramatically improve customer service, cut operational costs and become world class
competitors.

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STRATEGIC MANAGEMENT.

Principle of BPR-
 Process should be designed to achieve a desired outcome rather than focusing on
existing task.
 Personnel who use the output from a process should perform the process.
 Information processing should be included in the work, which produces the
information.
 Geographically dispersed resources should be treated, as if they are centralized.
 Parallel activities should be linked rather than integrated.
 Doers should be allowed to be self-managing.
 Information should be captured once at source.

Redesign, Retooling & Reorchestrating- (3R’s of Re-engineering)

These are the key components of BPR that are essential for an organisation to focus on the
outcome that it needs to achieve. Each step principle embodies the action and resources and
are-
REDESIGN RETOOL REORCHESTRATE
Simplify Networks Synchronize
Standardise Intranets  Process
Empowering Extranets  IT
Emplyoeeship workflow  Human resources
Groupware
measurements

Methodology of a BPR project implementation / alternative techniques-

• Selection of the strategic (added-value) processes for redesign.
• Simplify new processes - minimize steps - optimize efficiency.
• Organize a team of employees for each process and assign a role for process coordinator.
• Organize the workflow - document transfer and control.
• Assign responsibilities and roles for each process.
• Automate processes using IT(Intranets, Extranets, Workflow, Management)
• Train the processteam to efficiently manage and operate the new process
• Introduce the redesigned process into the business organizational structure

All methodologies could be divided in general ‘model’ stages:

• The envision stage: the company reviews the existing strategy and business processes and
based on that review business processes for improvement are targeted
and IT opportunities are identified.
• The Initiation stage: project teams are assigned, performance goals, project
planning and employee notification are set.

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STRATEGIC MANAGEMENT.

• The diagnosis stage: documentation of processes and sub-processes takes place in terms
of process attributes (activities, resources, communication, roles, it and costs).
• The Redesign stage: new process design is developed by devising process design
alternatives and through brainstorming and creativity techniques.
• The Reconstruction stage: management technique changes occur to ensure smooth
migration to the new process responsibilities and human resource roles.
• The evaluation stage: the new process is monitored to determine if goals are met and
examine total quality programs.

Types of firms /organizations that BPR can be applied-

BPR could by implemented to all firms (manufacturing firms, retailers, services, etc.) and
public organizations that satisfy the following criteria:
• Minimum Number of employees: 20 (at least 4 in management positions).
• Strong management commitment to new ways of working and innovation.
• Well-formed IT infrastructure.

Business Process Reengineering could be applied to companies that confront problems

such as the following:
• High operational costs
• Low quality offered to customers
• High level of ‘’bottleneck” processes at pick seasons
• Poor performance of middle level managers
• Inappropriate distribution of resources and jobs in order to achieve maximum
performance, etc.

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OBJECTIVE TYPE QUESTION AND ANSWER

MODULE QUESTIONS

1. A corporate strategy can be defined as:

(a) A list of actions about operational planning and statement of organisation structure and
control system;
(b) A statement of how to compete, direction of growth and method of assessing environment;
(c) abatement of organisation’s activities and allocation of resources;
(d) A course of action or choice of alternatives, specifying the resources required to achieve
certain stated objectives;
(e) A statement of where and how the company will prefer to operate.
Answer: (d) A corporate strategy can be defined as: a course of action or choice of alternatives,
specifying the resources required to achieve certain stated objectives.

2. Strategic analysis is concerned with stating the position of the organisation in terms of:
(a) Mission, choice of market segments, product selection, financial targets, and external
appraisal;
(b) Mission, goals, corporate appraisal, and position audit and gap analysis;
(c) Mission goals, identification of key competitors, SWOT and environmental appraisal;
(d) Mission, targeted roi, manpower planning, position audit;
(e) Mission, SWOT, competitive strategies, stakeholder’s position and institutional goal.
Answer: (b) Strategic analysis is concerned with stating the position of the organization in
terms of: mission, goals, corporate appraisal, and position audit and gap analysis.

3. Strategic choice makes a statement about the corporate strategy as well as business
strategy:
(a) They are one and the same;
(b) One is an external planning and another resource planning statement;
(c) Corporate strategy is a general statement and business strategy defines how a SBU shall
operate;
(d) Both states certain course of action - one for the total unit and another for a particular
businesaajnit;
(e) One refers to the whole business and another helps in the formulation of marketing
decisions.
Answer: (a) Strategic choice makes a statement about the corporate strategy as well as business
strategy : the former refers to the whole business while the latter helps in the formulation of
marketing and other decisions.

4. Board of directors has certain basic taks as follows:

(a) To define the corporate mission and stop irregular practice;
(b) to design the course of strategic options and appointment of top management;
(c) to set the roi and other business performance targets;
(d) To monitor plan and keep abreast of external threats;
(e) to evaluate and monitor courses of actions.

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STRATEGIC MANAGEMENT.

answer: (a) & (b) Board of directors has certain basic tasks as follows:
• to define the corporate mission and stop irregular practices; and
• to design the course of strategic options and appointment of top management.

5. Degree of involvement of Board of Directors may vary from passive to active level. It
may participate in one or more of the following activities (state which ones are more
appropriate as a judicious mix):
(a) It constantly oversees the company’s mission, objectives and policies;
(b) It approves issues like R&D, foreign collaborations, linkages with financial institutions;
(c) Capital budgeting, new product launch and competitive strategy building;
(d) It tries to ensure that the company remains aligned with changing social, political and
economic milieu;
(e) Oversees only the financial performance of the company.
Answer: (a) & (b) Degree of involvement of board of directors may vary from passive to
active level. It may participate in one or more activities. As a judicious mix, the more
appropriate ones are:
• It constantly oversees the company’s mission, objectives and policies; and
• It approves issues like R&D, foreign collaborations, linkages with financial institutions.

6. A strategic business unit (SUB) is defined as a division of an organisation:

(a) That help in the marketing operation;
(b) That enable managers to have better control over the resources;
(c) That help in the choice of technology;
(d) That help in the allocation of scarce resources;
(e) That help in identifying talents and potentials of people.
Answer: (b) A strategic business unit (SBU) is defined as a division of an organization: that
enable managers to have better control over the resources.

7. The essential ingredients of Business Process Re-engineering are:

(a) Continuous improvements of products, processes and technologies.
(B) Advanced planning in the areas of technologies, processes and strategic partnerships etc.
(c) Fundamental rethinking and radical redesign of business process to achieve dramatic
results.
(d) Generation, comparison and evolution of many ideas to find out one worthy of
development.
(e) Identification and selection of layouts most suited for products and processes.
Answer: The essential ingredients of Business Process Re-engineering are: (c) Fundamental
rethinking and radical redesign of business process to achieve dramatic results.

8. McKinney’s 7-s framework consists of:

(a) Structure, strategy, software, skills, styles, staff and supervision
(b) Structure, strategy, systems, skills, styles, syndication and shared values.
(c) Structure, strategy, systems, skills, steering power, styles and shared values.
(d) Structure, strategy, staff, skills, systems, shared values, super ordinate goal.
(e) None of the above.

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STRATEGIC MANAGEMENT.

Answer: McKinney’s 7-s framework consists of: (d) structure, strategy, staff, skills, systems,
shared values, super ordinate goal.

9. Offensive strategy is a strategy:

(a) For small companies that consider offensive attacks in the market.
(b) For those companies that search for new inventory opportunities to create competitive
advantage.
(c) For the market leader who should attack the competitor by introducing new products that
make existing ones obsolete.
(d) For those companies who are strong in the market but not leaders and might capture a
market share from the leader.
(e) None of the above.
Answer: Offensive strategy is a strategy: (d) for those companies who are strong in the market
but not leaders and might capture a market share from the leader.

10. Benchmarking is:

(a) The analytical too! To identify high cost activities based on the ‘pareto analyses.
(b) The search for industries best practices that lead to superior performance;
(c) The simulation of cost reduction schemes that help to build commitment and improvement
of actions;
(d) The process of marketing and redesigning the way a typical company works;
(e) The framework that earmarks a linkage with suppliers and customers;
Answer: M Benchmarking is: (b) the search for industries best practices that lead to superior
performance;

11. SAIL’s famous advertising campaign of “there is a bit of steel in everyone’s life was
meant to:
(a) Gain buyers awareness about its versatile product range;
(b) Create an image of superior performance:
(c) Inform new buyers about its special produces;
(d) Enhance product quality perception:
(e) Achieve its mission.
Answer: SAIL’s famous advertising campaign of “there is a bit of steel in everyone’s life” was
meant to: (e) achieve its mission. Or (a) gain buyers awareness about its versatile product range.

12. Marketing Research studies are undertaken:

(a) To measure brand loyalty of a class of consumers
(b) To predict market potential of a product on a future date
(c) To understand product-price relationships
(d) To make out a case for revision of an existing strategy
(e) All of the above
Answer: (e) all of the above

13. Successful differentiation strategy allows the company to:

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(a) Gain buyer loyalty to its brands

(b) Charge too high a price premium
(c) Depend only on intrinsic product attributes
(d) Have product quality that exceeds buyers’ needs
(e) Segment a market into distinct group of buyers
Answer: (a) gain buyer loyalty to its brands

14. Organization culture is:

(a) Appreciation for the arts in the organization
(b) Ability of the organization to act in a responsible manner to its employees
(c) Combination of (a) and (b) above
(d) Deeper level of basic assumptions and beliefs that are shared by the members of the firm
(e) None of the above
Answer: (d) deeper level of basic assumptions and beliefs that are shared by the members of
the firm.

15. Innovation strategy is:

(a) Defensive strategy
(b) Offensive strategy
(c) Responding to or anticipating customer and market demands
(d) Guerrilla strategy
(e) Harvesting strategy
Answer: (c) responding to or anticipating customer and market demands

16. Intensity of competition is ——— in low return industries.

(a) Low; (b) non-existent; (c) high; (d) not important: (e) dependant on industry nature.
Answer: (c) high

17. What are enduring statements of purpose that distinguish one business from other
similar Firms?
(a) Policies;
(b) Mission statements;
(c) Objectives;
(d) Rules;
(e) Nature of ownership.
Answer: (b) mission statements

18. Ansoff proposed that for filling the corporate planning gap, one follows four strategies
namely.
(a) Market penetration, product differentiation, market identification and diversification;
(a) Market penetration, product development, marketing research and diversification;
(b) Market penetration, product development, market development and diversification;
(c) Market identification, product development, positioning and diversification;
(d) Differentiation, product innovation, market opportunity and diversification.
Answer: (c) market identification, product development, positioning and diversification

38
STRATEGIC MANAGEMENT.

19. The essential ingredients of Business Process Re-engineering (BPR) are

(a) Continuous improvements of products, processes and technologies;
(b) Planning for the technologies, processes and strategic partnerships etc.
(c) Fundamental re-thinking and radical redesign of business process to achieve dramatic
results;
(d) generation, comparison and evolution of many ideas to find one worthy of development;
(e) identification and selection of lay-outs most suited for products and processes.
Answer: (c) fundamental re-thinking and radical redesign of business process to achieve
dramatic results.

20. Directional Policy Matrix is the same as

(a) The BCG model;
(b) The 9-cell GE matrix;
(c) The Life cycle portfolio analysis;
(d) The PIMS matrix;
(e) The 3 X 3 competitive positioning matrix.
Answer: (b) the 9-cell GE matrix

21. For an actress in Bollywood, her pretty face would be a/an

(A) asset
(b) Strategic asset
(c) Core competency
(d) Capability
(e) All of the above
Answer: (b) strategic asset

22. for an entrepreneur

(a) Vision is before the mission
(b) Mission is before the vision
(c) Both are developed simultaneously
(d) Vision or mission are un-important issue
(e) Profitability is most crucial.
Answer: (a) Vision is before the mission

23. Which of the following market structures would be commonly identified with FMCG
products:
(a) Monopoly
(b) Monopolistic competition
(c) Oligopoly
(d) Perfect competition
(e) None of the above
Answer: (b) monopolistic competition

24. The Product Market matrix comprising of Strategies of Penetration, Market

Development Product Development and Diversification was first formulated by
(a) Ansoff

39
STRATEGIC MANAGEMENT.

(b) Drucker
(c) Porter
(d) Andrews
(e) prahlad
Answer: (a) ansoff

25. Indian Airlines decreasing the airfare on the Delhi-Mumbai sector following the
introduction of the no frills airlines would be an example of
(a) Cost Leadership
(b) Price Leadership
(c) Product Differentiation
(d) Focus
(e) Market retention
Answer: (b) price Leadership

26. A product line is a group of products that

(1) Are closely related
(2) Are marketed through the same channel
(3) Perform a similar function for being sold to the same customers
(4) All of the above
Answer: (4) a product line is a group of products that are closely related are marketed through
the same channel and perform a similar function for being sold to the same customers

27. The BCG growth matrix is based on the two dimensions:

(1) Market size and market share
(2) Market Size and Profit Margins
(3) Market size and competitive intensity
(4) None of the above
Answer: (4) none of the above. BCG Growth Matrix is based on two dimensions - Market
Growth Rate and relative market share.

28. Outsourcing is the

(1) Spinning off of a value-creating activity to create a new firm
(2) Selling of a value-creating activity to other firms
(3) Purchase of a value-creating activity from an external supplier
(4) Use of computers to obtain value-creating data from the Internet
Answer: (3) Outsourcing is the purchase of a value-creating activity from external sup plier.

29. New entrants to an industry are more likely when.

(1) It is difficult to gain access to distribution channels
(2) Economies of scale in the industry are high
(3) Product differentiation in the industry is low
(4) Capital requirement in the industry are high
Answer: (3) new entrants to an industry are more likely when product differentiation in the
industry is low.

40
STRATEGIC MANAGEMENT.

30. The existence of price-wars in the airline industry in India indicates that
(1) Customers are relatively weak because of the high switching costs created by frequent flyer
proms.
(2) The industry is moving towards differentiation of services
(3) The competitive rivalry in the industry is severe
(4) The economic segment of the external environment has shifted, bat the airline strategies
have not changed
Answer: (3) The existence of price -Wars in the airline industry in India indicates that the
competitive rivalry in the industry is severe.

31. The managerial task of implementing strategy primarily falls upon the shoulders of:
(a) The Chief Executive Officer (CEO);
(B) First line supervisors, who have day-to-day responsibility for seeing that key activities are
done properly;
(c) All managers, each attending to what needs to be done in their respective areas of authority
and responsibility;
(D) all of the above.
Answer: (c) all managers, each attending to what needs to be done in their respective areas of
authority and responsibility.

32. Marketing Research Studies are undertaken:

(a) To measure brand loyalty of a class of consumers;
(B) To predict market potential of a product on a future date;
(c) To understand product-price relationships;
(D) all of the above.
Answer: (D) all of the above.

33. Price fixation for the first time takes place when:
(a) A company develops or acquires a new product;
(B) Introducing existing product into a new geographic area or a new distribution channel;
(c) A service, the company bids for a new contract work;
(D) all of the above.
Answer: (D) all of the above

34. Which of the following market structures would be commonly identified with FMCG
products?
A. Monopoly B. Monopolistic competition C. Oligopoly D. Perfect competition
Answer: B-Monopolistic Competition

35. The product-market matrix comprising of strategies of Penetration, Market

development. Product development and Diversification was first formulated by
a. ansoff B. Drucker C.Porter D. prahlad
Answer: (a) ansoff

36. Typically Profits are highest in which stage of the industry life-cycle?
A. introduction B. Growth c. maturity D. Decline

41
STRATEGIC MANAGEMENT.

Answer: (B) Growth

37. The strategy which concentrates around a production market is:

a. Vertical integration B. Niche C. Horizontal Expansion D. Diversification
Answer: (B) Niche

38. ‘Corporation vision’ is the same as

(a) Corporate dream (B) Corporate mission (c) corporate goal (D) corporate strategy
Answer: (a) corporate dream

39. ‘Niche’ is similar to the

(a) Growth strategy (B) Milking strategy (c) Flanking strategy (D) survival strategy
Answer: (c) Flanking strategy

40. Successful ‘differential strategy’ allows a company to

(a) Gain buyer loyalty to its brands
(B) Charge too high a price premium
(c) Have product quality that exceeds buyers’ needs
(D) Depend only on intrinsic product attributes.
Answer: (a) gain buyer loyalty to its brands

41. For an actor in Bollywood, his outstanding performance would be a/an

(a) Asset (B) Strategic asset (c) core competency (D) capability
Answer: (c) core competency

42. Intensity of competition is in lower-return industries

(a) Lowest (B) non-existent (c) highest (D) not important
Answer: (c) Highest

43. A supplier group is powerful if

(a) It is not concentrated
(B) Offers unique products
(c) Its customers can backward integrate
(D) There are no switching costs
Answer: (B) offers unique products

44. A company’s actual strategy is

(a) Mostly hidden to outside view and is known only to top-level managers
(B) Typically planned well in advance and usually deviates little from the planned set of actions
and business approaches because of the risks of making on-the-spot changes
(c) Partly proactive and partly reactive to changing circumstances
(D) Mostly a function of the strategies being used by rival companies (particularly those
companies that are industry leaders)
Answer: (c) partly proactive and partly reactive to changing circumstances

45. The reason for failure of strategic management may be ascribed to

42
STRATEGIC MANAGEMENT.

A. Over-estimation of resource competence

B. Failure to obtain senior management commitment
c. Failure to obtain employee commitment
D. all of the above
Answer: (D) all of the above

46. Blue Ocean Strategy is concerned with

A. moving into new market with new products
B. creating a new market places where there is no competition
C. developments of products and markets in order to ensure survival
D. making the product unique in terms of attributes
Answer: (B) creating a new market places where there is no competition.

47. For an actor in Bollywood, his outstanding performance would be a /an

A. asset B. Strategic Asset c. core competency D. capability
Answer: (c) core competency

48. A Question Mark in BCG Matrix is an investment, which

a. Yields low current income but has bright growth prospects.
B. Yields high current income and has bright growth prospects.
c. Yields high current income and has bleak growth prospects.
D. Yields low current income and has bleak growth prospects.
Answer: (a) Yields low current income but has bright growth prospects.

49. The strategy of the TATA group in India could be viewed as a good example of
A. Conglomerate diversification
B. Market development
C. cost Leadership
D. Concentric diversification.
Answer: (a) Conglomerate diversification.

50. Risk management strategies are

A. avoid risk, reduce risk, retain risk, and combine risk
B. Transfer Risk, Share Risk and Hedge Risk
C. Both (A) and (B)
D. none of the above.
Answer: (c) Both (A) and (B)

51. Business Process Re-engineering is

A. Eliminating loss-making process;
B. Redesigning operational processes;
C. redesigning the product and services;
D. recruiting the process engineers.
Answer: (B) redesigning operational processes.

52. The best test of a successful strategy implementation is

43
STRATEGIC MANAGEMENT.

A. Whether the structure is well matched to strategy;

B. Whether the strategies and procedures are observed in a strategy supportive fashion;
C. Whether actual organizational performance matches or exceeds the targets spelt out in the
strategic plan;
D. Whether it is made after the strategy is formulated, so that it is supportive to the strategy.
Answer: (c) Whether actual organizational performance matches or exceeds the targets spelt
out in the strategic plan.

53. Offensive strategy is a strategy

A. For small companies that consider offensive attacks in the market;
B. For those companies that search for new inventory opportunities to create competitive
advantage.
c. For the market leader who should attack the competitor by introducing new products that
makes existing ones obsolete;
D. For those companies who are strong in the market but not leaders and might capture a market
share from the leader.
Answer: (D) For those companies who are strong in the market but not leaders and might
capture a market share from the leader.

State whether the following statement is true or false:

1. “Dogs” are the products in a high-growth market but where they have a low market share.
2. ‘Dogs’ are products with a low share, negative growth and negative cash flow.
3. Penetration pricising is the use of price to drive a competitor out of business.
4. “Strategic management” is concerned with the formulation of possible courses of actions,
their evaluation and the choice between them.
5. ‘Cash cows’ are products in a high-growth market but where they have a low market share.
6. ‘Divestment’ is pulling out from certain product market areas.
7. Business Process Re-engineering is an important ingredient of Reverse Engineering.
8. Synergy signifies a condition where the whole is greater than the sum of its parts.
9. Brand equity is the added value to the shares held by the equity share-holders of a company.
10. “Benchmarking” is the simulation of cost reduction schemes that help to build commitment
and improvement of actions.
11. “Balanced Strategy” is about translating the version, communicating and linking, business
planning, target setting, etc.

Answer:
1. False — As per BCG Matrix, “Dogs” are units with low market share in a mature, slow-
growing industry.
2. False — the correct statement is: ‘Dodos’ are products with a low share, negative growth
and negative cash flow.
3. False — the correct statement is: predatory pricing is the use of price to drive a competitor
out of business.
4. False — the appropriate term is ‘strategic choice’, instead of ‘strategic management’.
Strategic management concerns itself with corporate values, managerial capabilities and
organizational responsibilities and systems in a way that links strategic and operational

44
STRATEGIC MANAGEMENT.

decision making leading to an effective strategy or strategies. But the given statement is
indicative of choice of strategy.
5. False — the appropriate term is ‘question marks’ instead of ‘cash cows’. Cash cows have
high market share in low growth market. Hence the given statement in false.
6. True
7. False
8. True
9. False
10. False — Benchmarking is the search for industries best practices that leads to superior
performance.
11. False — “Balanced Score Card” is about translating the vision, communicating and linking,
business planning, target setting, etc.

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STRATEGIC MANAGEMENT.

WORKBOOK OBJECTIVES

Fill in the blanks with the appropriate word.

a. _______sets the direction for the strategic development of an organisation.
b. Desired states/outcomes are _________.
c. ________ are objectives which have been scheduled for attainment during the planned
period.
d. ______________is considered as either planning or a set of activities related to the
formulation and implementation of strategies to achieve the organisational objectives.
e. Identifying or defining business mission, purpose and objective is a part of the
_______________.
f. Strategic management processes are designed to provide an organisation with the
____________benefits.
g. The __________of a firm defines its reasons for existence.
Answer:
a. Mission b. objectives c. Goals d. Strategic Management e. strategic management
process f. long-term g. mission

Multiple Choice Questions

(i) Question mark in the BCG Matrix is an investment, which
a. yields low current income but has bright growth prospect.
b. yields high current income and has bright growth prospect.
c. yields high current income and has bleak growth prospect.
d. yields low current income and has bleak growth prospect.

(ii) Directional Policy Matrix is the same as the

a. BCG Model.
b. 9-cell GE Matrix.
c. Life Cycle Portfolio Analysis.
d. PIMS Matrix. e. 3x3 Competitive Positioning Matrix.

(iii) Successful Differentiation Strategy allows the company to

a. gain buyer loyalty to its brands.
b. charge too high a premium price.
c. depend only on intrinsic product attributes.
d. have product quality that exceeds buyer’s needs.
e. segment a market into distinct buyer groups.

(iv) The condition of Low Share, Negative Growth, and Negative Cash Flow indicates
a. Dog. b. Dodo. c. Donkey. d. Dinosaur.

(v) The condition of market which denotes High Share, Negative Growth and Positive
Cash Flow is known as
a. Star. b. Warhorse. c. Cash Cow. d. Question Mark.

(vi) As per the ADL Matrix, which among these is not the external factor?

46
STRATEGIC MANAGEMENT.

a. Market Growth Rate b. Growth Potential c. Customer Switch Over d. Customer Loyalty

Answer: (i) - a (ii) – b (iii) – a (iv) –b (v) – b (vi) - c

Fill in the Blanks.

(i) Dogs are products with a ____________ share of a ____________ growth market.
(ii) ________________ denote negative cash flows in the condition of a Product Life
Cycle with market share/ market growth classification.
(iii) ____________ and ______________ have suggested a seven-step process for
Contingency Planning.
(iv) The ADL Portfolio Matrix suggested by Arthur D. Little (ADL) consists of
__________ cells.
(v) Joint development with owners of another product who need access to the firm‟s
distribution channels or brands is an example of _______________.
Answer:
(i) low low
(ii) Infants
(iii)Robert Linneman and Ranjan Chandran
(iv) 20
(v)Product Development Strategy

True or False
(i) Concentric Diversification means that there is a technological similarity between
the industries which means that the firm is able to leverage its technical know-how
to gain some advantage.
(ii) The condition of market which denotes High Share, Negative Growth and Positive
Cash Flow is known as Star.
(iii) As per the ADL Matrix, „Dominant‟ position denotes a rare situation where the
SBU enjoys a monopoly position or very strong market ability of its products.
(iv) As per the ADL Matrix, in „Favourable‟ competitive position, no firm will enjoy
dominant market share and the competition will be intense
(v) Introducing the products to a new branch of users is an example of Product
Development Strategy.
(vi) Approaching the industrial buyers for a good that was previously sold only to the
households is a part of Market Development Strategy.
(vii) The consistent weak performance may need a firm to divest or withdraw from the
product line.

Answer: (i) - True (ii) - False (iii) - True (iv)- True (v) - False (vi) - True (vii) – True

Fill in the blanks with the suitable words.

a. ___________stands for the arrangement/location of production machinery, work centres
and auxiliary facilities and activities for the purpose of achieving efficiency in manufacturing
the products &/or rendering the consumer services.

47
STRATEGIC MANAGEMENT.

b. Preventing break downs by replacing worn-out machines is called_____________.

c. The part of business performance that directs the flow of goods and services from the
producer to the consumer/ user is called _____________.
d. The concept that calls for a customer-orientation backed by integrated marketing, for
generating customer satisfaction and long-run customer welfare, as the key to attaining long-
run profitable volume is ________________.
e. _________________________ is the framework necessary for any organization in the
context of division of tasks, deployment of resources and co-ordination of departments.
f. ________________ is the sum-total of the external factors within which the enterprise
operates.

Answers:
a. Plant layout b. Preventive Maintenance c. Marketing d. Societal Marketing
e. Organizational Structure f. Marketing Environment

Choose the correct answer.

1. Reorchestration includes
A. synchronization, process, IT, human resources.
B. networks, intranets, extranets.
C. simplification, standardisation, empowerment.
D. groupware, measurements, work flow.
Answer:
synchronization, process, IT, human resources

2. Matrix Structure
A. is structural grouping in the geographical sense.
B. Simultaneously combines similar activities on the basis of function.
C. adopts parts of both functional structure and divisional structure at the same level of
management.
D. creates a dual chain of command.
Answer:
creates a dual chain of command

3. McKinsey‟s 7-S Framework does not include

A. skills. B. structure. C. SBU. D. shared values.
Answer:
SBU

4. Theory X
A. stands for positive assumptions which managers try to use.
B. relates to good communication with the people in the organisation.
C. stands for negative assumptions that managers often use as the basis for dealing with
people.
D. helps become better acquainted with the sub-ordinates
Answer:
Stands for negative assumptions that managers often use as the basis for dealing with people

48
STRATEGIC MANAGEMENT.

RTP (JUNE 2018)OBJECTIVES

M.C.Q.
(i) The BCG growth matrix is based on two dimensions:
(A) market size and competitive intensity
(B) relative market share and market/industry growth rate
(C) profit margins and market size
(D) market size and market share

(ii) The essential ingredients of Business Process Re-engineering are:

(A) Continuous improvements of products, processes and technologies.
(B)Advanced planning in the areas of technologies, processes and strategic partnerships etc.
(C)Fundamental rethinking and radical redesign of business process to achieve dramatic
results.
(D)Generation, comparison and evolution of many ideas to find out one worthy of
development.

(iii) Marketing Research studies are undertaken:

(A) to measure brand loyalty of a class of consumers
(B) to predict market potential of a product on a future date
(C) to understand product-price relationships
(D) all of the above.

(iv) The Product Market matrix comprising of Strategies of Penetration, Market

Development, Product Development and Diversification was first formulated by
(A) Ansoff (B) Drucker (C) Porter (D) Andrews

(v) The strategy of the Reliance Group in India would be a good example of
(A) Conglomerate diversification (B) Market development (C) Price Transfers
(D) Concentric Diversification

(vi) For an actor in Bollywood, his outstanding performance would be a/an

(A) Asset (B) Strategic asset. (C) Core competency (D) Capability

(vii) In product life cycle, ‘cash cows’ indicates

(A) High share
(B) Low growth and negative cash flow
(C) High share, low growth and large positive cash flow
(D) Low share, high growth and large positive cash flow

(viii) If an organisation acquires its supplier, it is an example of:

(A) Horizontal integration
(B) Forwards vertical integration
(C) Backwards vertical integration
(D) Downstream vertical integration.

49
STRATEGIC MANAGEMENT.

(ix) Typically Profits are highest in which stage of the industry life-cycle?
(A) Introduction (B) Growth (C) Maturity (D) Decline

(x) Delphi Technique:

(A) is an attempt to describe a sequence of events that demonstrates how a particular goal
might be reached
(B) is a method of obtaining a systematic refined consensus from a group of experts
(C)is assessing the desirability of future goals and thereafter selecting those areas of
development that are necessary to achieve the desired goals
(D) is concentrating on the impact which various forecasted technological developments
might have on particular industries

Answer:
(i)-(B) (ii)-(C) (iii)-(D) (iv)-(A) (v)-(A) (vi)-(C) (vii)-(C) (viii)-(C) (ix)-(B) (x)-(B)

50
STRATEGIC MANAGEMENT.

MTP (JUNE 2018-SET 1) OBJECTIVES

Choose the correct answer:

(i) Behaviour modification includes

A. Involving employees in decision making
B. Positive reinforcement
C. Job enlargement
D. Job enrichment and Flexi time.

(ii) Successful differentiation strategy allows the company to:

A. gain buyer loyalty to its brands
B. charge too high a price premium
C. depend only on intrinsic product attributes
D. have product quality that exceeds buyers needs E. segment a market in to distinct group of
buyer

(iii) Matrix structure

A. structural grouping is geographic
B. simultaneous combination of similar activities on the basis of function
C. adopts parts of both functional and divisional structures at the same level of management
D. creates a dual chain of command

(iv) The conditional of Low share, Negative growth, and negative cash flow indicates –
A. Dogs B. Dodos C. Donkey D. Dinosaurs

(v) Benchmarking is :
A. The analytical tool to identifying high cost activities based on the ‘Pareto Analysis’
B. The search for industries best practices that lead to superior performance
C. The simulation of cost reduction schemes that help to build commitment and improvement
of actions
D. The process of marketing and redesigning the way a typical company works
E. The framework that earmarks a linkage with suppliers and customers

(vi) A product line is a group of product that

A. are closely related
B. are marketed through the same channel
C. performance a similar function for being sold to the same customers
D. all of the above

Answer:
(i) B (ii) A (iii) D (iv) B (v) B (vi) D

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STRATEGIC MANAGEMENT.

MTP (JUNE 2018-SET 2) OBJECTIVES

Choose the correct answer:
(i) McKinsey’s 7-s Framework does not include
A. Skills B. Structure C. SBU D. Shared Values.

(ii) Typical profits are highest in which stage of the industry life-cycle?
A. Introduction B. Growth C. Maturity D. Decline

(iii) A strategic business unit (SBU) is defined as a division of an organization:

A. That help in the marketing operations
B. That enable managers to have better control over the resources
C. The help in the choice of technology
D. That help in the allocation of scarce resources
E. That help in identifying talents and potentials of people

(iv) Intensity of competition is__________________ in low return industries

A. low B. non - existent C. high D. not important dependent on industry nature

(v) Successful differentiation strategy allows the company to:

A. gain buyer loyalty to its brands
B. charge too high a price premium
C. depend only on intrinsic product attributes
D. have product quality that exceeds buyers needs
E. segment a market in to distinct group of buyer

(vi) What are enduring statements of purpose that distinguish one business from other
similar firms?
A. Policies B. Mission statements C. Objectives D. Rules A. Nature of ownership

Answer: (i) C (ii) C (iii) B (iv) C (v) A (vi) B

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STRATEGIC MANAGEMENT.

MTP (DEC 2017-SET 1) OBJECTIVES.

Choose the correct answer

(i) Benchmarking is :
(a) The analytical tool to identifying high cost activities based on the ‘Pareto Analysis’
(b) The search for industries best practices that lead to superior performance
(c) The simulation of cost reduction schemes that help to build commitment and improvement
of actions
(d) The process of marketing and redesigning the way a typical company works
(e) The framework that earmarks a linkage with suppliers and customers

(ii) Question mark in BCG Matrix is an investment, which :

(a) Yields low current income but has bright growth prospects
(b) Yields high current income and has bright growth prospects
(c) Yields high current income and has bleak growth prospects
(d) Yields low current income and has bleak growth prospects

(iii) Directional policy matrix is the same as :

(a) the BCG model
(b) the 9 – cell GE matrix
(c) the life cycle portfolio analysis
(d) the PIMS matrix
(e) the 3x3 competitive positioning matrix

(iv) For an entrepreneur :

(a) Vision is before the mission
(b) Mission is before the vision
(c) Both are developed simultaneously
(d) Division or mission are un-important issue
(e) Profitability is most crucial

(v) Indian Airlines decreasing the airfare on the Delhi – Mumbai sector following the
introduction of the no frills airlines would be an example of
(a) Cost leadership (b) Price leadership (c) Product differentiate (d) Focus (e) Market retention

(vi) A product line is a group of product that

(a) are closely related
(b) are marketed through the same channel
(c) perform a similar function for being sold to the same customers
(d) All of the above

Answer:
(a) (i) (b) (ii) (a) (iii) (b) (iv) (a) (v) (b) (vi) (d)

53
STRATEGIC MANAGEMENT.

MTP (DEC 2017-SET 2) OBJECTIVES

Choose the correct Answer

(i) A strategic business unit (SBU) is defined as a division of an organization :

(a) That help in the marketing operations;
(b) That enable managers to have better control over the resources;
(c) The help in the choice of technology;
(d) That help in the allocation of scarce resources;
(e) That help in identifying talents and potentials of people

(ii) Indian Airlines decreasing the airfare on the Delhi – Mumbai sector following
the introduction of the no frills airlines would be an example of :
(a) Cost leadership
(b) Price leadership
(c) Product differentiate
(d) Focus.
(e) Market retention

(iii) Typically profits are highest in which stage of the industry life-cycle?
(a) Introduction (b) Growth (c) Maturity (d) Decline

(iv) Successful differentiation strategy allows the company to:

(a) gain buyer loyalty to its brands
(b) charge too high a price premium
(c) depend only on intrinsic product attributes
(d) have product quality that exceeds buyers needs
(e) segment a market in to distinct group of buyer

(v) The managerial task of implementing strategy primarily falls upon the
shoulders of : (a) The Chief Executive Officer (CEO);
(b) First line supervisors, who have day-to-day responsibility for seeing that key
activities are done properly;
(c) All managers, each attending to what needs to be done in their respective areas of
authority and responsibility;
(d) All of the above.

(vi) What are enduring statements of purpose that distinguish one business from
other similar Firms?
(a) Policies (b) Mission statements (c) Objectives (d) Rules (e) Nature of ownership

Answer:
(a) (I) (b) (ii) (b) (iii) (b) (iv) (a) (v) (c) (vi) (b)

54