Internal Assignment No. 1
MBA– 208 Strategic
Management
1.Define the term business policy.
Business Policy defines the scope or spheres within
which decisions can be taken by the subordinates in an organization. It permits
the lower level management to deal with the problems and issues without
consulting top level management every time for decisions.Business policies are
the guidelines developed by an organization to govern its actions.
2.State the primary activities of a
value chain.
The primary activities of Michael
Porter's value chain are
inbound logistics, operations, outbound logistics, marketing and sales, and
service. The primary activities within Michael Porter's value chain are used to
provide a company with a competitive
advantage in any one of the five activities so it has an
advantage in the industry in which it operates.The goal of the five activities
are to create value that exceeds the cost of conducting that activity,
therefore generating a higher profit.Inbound logistics
includes the receiving, warehousing and inventory control of a company's raw materials.
3.What do you mean by strategic control?
“ It is the process by which managers monitor the
ongoing activities of an organization and its members to evaluate whether
activities are being performed efficiently and effectively and to take
corrective action to improve performance if they are not” -Sam Walton
4.Name
any two external environment appraisal tools
External environment appriasal techniques are generally accepted
methods of inquiry to (a)assess the opportunities and threat an organization or
entity has given the emerging environment as well as (b) the impact that
organizational decisions/ actions can have on other organizations in the
external environment. For business / corporate planning,
5.Mention
any two factors affecting organizational design.
Although many things can affect the choice of an appropriate
structure for an organization, the following five factors are the most common:
size, life cycle, strategy, environment, and technology The larger an
organization becomes, the more complicated its structure. When an organization
is small — such as a single retail store, a two‐person consulting firm, or a restaurant — its structure can
be simple.
In reality, if the organization is very small, it may not
even have a formal structure. Instead of following an organizational chart.
Note: Answer any two questions. Each
question carries 5 marks (Word limits 500)
Q.
2. Discuss various steps involved
in the process of strategic management.
Clarify Your Vision
The purpose of goal-setting is to clarify the vision
for your business. This stage consists of identifying three key facets: First,
define both short- and long-term objectives. Second, identify the process of
how to accomplish your objective.
Gather and Analyze Information
Analysis is a key stage because the information gained
in this stage will shape the next two stages. In this stage, gather as much
information and data relevant to accomplishing your vision. The focus of the
analysis should be on understanding the needs of the business as a sustainable
entity, its strategic direction and identifying initiatives that will help your
business grow.
Implement Your Strategy
Successful strategy implementation is critical to the
success of the business venture. This is the action stage of the strategic
management process. If the overall strategy does not work with the business'
current structure, a new structure should be installed at the beginning of this
stage.
Formulate a Strategy
The first step in forming a strategy is to review the
information gleaned from completing the analysis. Determine what resources the
business currently has that can help reach the defined goals and objectives.
Identify any areas of which the business must seek external resources
Evaluate and Control
Strategy evaluation and control actions include
performance measurements, consistent review of internal and external issues and
making corrective actions when necessary. Any successful evaluation of the
strategy begins with defining the parameters to be measured. These parameters
should mirror the goals set in Stage 1. Determine your progress by measuring
the actual results versus the plan. Monitoring internal and external issues
will also enable you to react to any substantial change in your business
environment.
Q.
3. Explain various types of mergers
along with examples.
1. Horizontal mergers:
It refers to two firms operating in same industry or producing ideal products
combining together. For e.g., in the banking industry in India, acquisition of
Times Bank by HDFC Bank, Bank of Madura by ICICI Bank, Nedungadi Bank by Punjab
National Bank etc. in consumer electronics, acquisition of Electrolux’s Indian
operations by Videocon International Ltd., in BPO sector, acquisition of Daksh
by IBM, Spectramind by Wipro etc.
2. Vertical merger:
A vertical merger can happen in two ways. One is when a firm acquires another firm
which produces raw materials used by it. For e.g., a tyre manufacturer acquires
a rubber manufacturer, a car manufacturer acquires a steel company, a textile
company acquires a cotton yarn manufacturer etc.
3. Conglomerate merger:
It refers to the combination of two firms operating in industries unrelated to
each other. In this case, the business of the target company is entirely
different from those of the acquiring company. For e.g., a watch manufacturer
acquiring a cement manufacturer, a steel manufacturer acquiring a software
company etc.
4. Concentric merger:
It refers to combination of two or more firms which are related to each other
in terms of customer groups, functions or technology. For eg., combination of a
computer system manufacturer with a UPS manufacturer.
5. Forward merger: In a forward merger, the
target merges into the buyer. For e.g., when ICICI Bank acquired Bank of
Madura, Bank of Madura which was the target, merged with the acquirer, ICICI
Bank.
6. Reverse merger: In this case, the buyer merges
into the target and the shareholders of the buyer get stock in the target. This
is treated as a stock acquisition by the buyer.
7. Subsidiary merger: A subsidiary merger is said
to occur when the buyer sets up an acquisition subsidiary which merges into the
target.
Internal Assignment No. 2
Q.
1. Answer all the questions:
(i)
What were the
two dimensions used under BCG matrix?
The BCG Matrix was developed by the Boston
Consulting Group (BCG) and is used for the evaluation of the organization's
product portfolio in marketing and sales planning. It aims to evaluate each
product, i.e. the goods and services of the business in two dimensions.
The BCG Matrix (Growth-share
matrix) is a method that comes from the consulting company Boston
Consulting Group (BCG), thus the name BCG matrix or Boston
matrix. The BCG matrix is used for the evaluation of a organization’s product
portfolio in marketing and
sales planning.
(ii)
What do you mean
by turnaround strategy?
A
turnaround is the financial recovery of a company that has been performing
poorly for an extended time. To effect a turnaround, a company must acknowledge
and identify its problems, consider changes in management, and develop and
implement a problem-solving strategy. In some cases, the best strategy may be
to cut losses by liquidating the company rather than trying to turn it around.
(iii)
Define core
competence
Core
competencies are the resources and/or strategic advantages of a business,
including the combination of pooled knowledge and technical capacities, that
allow it to be competitive in the marketplace. They are what the company does
best and consist of the combined activities, operations, and resources that
distinguish the company from competitors.
(iv)
Distinguish
between joint venture and strategic alliance.
Joint
ventures and strategic alliances allow companies with complementary skills to
benefit from one another's strengths. They are common in technology,
manufacturing and commercial real estate development, and whenever a company
wants to expand its sales or operations into a foreign country. In a joint
venture, the companies start and invest in a new company that's jointly owned
by both of the parent companies. A strategic alliance is a legal agreement
between two or more companies to share access to their technology, trademarks
or other assets. A strategic alliance does not create a new company.
(v)
What is SWOT
Analysis?
SWOT
analysis is a framework used to evaluate a company's competitive position by
identifying its strengths, weaknesses, opportunities and threats. Specifically,
SWOT analysis is a foundational assessment model that measures what an
organization can and cannot do, and its potential opportunities and threats.
When using SWOT analysis, an organization needs to be realistic about its good and bad points.
When using SWOT analysis, an organization needs to be realistic about its good and bad points.
Note: Answer any two questions. Each
question carries 5 marks (Word limits 500)
Q.
2. Discuss the types of generic
strategies given by Michael Porter.
Which do you prefer when you fly: a
cheap, no-frills airline, or a more expensive operator with fantastic service
levels and maximum comfort? And would you ever consider a small company with
just a few routes?
The choice is up to you, of course.
But the point we're making here is that when you come to book a flight, there
are some very different options available. Why is this so? The answer is that
each of these airlines has chosen a different way of achieving competitive advantage
in a crowded marketplace.
The no-frills operators have opted to
cut costs to a minimum and pass their savings on to customers in lower prices.
This helps them grab market share and ensure their planes are as full as
possible, further driving down cost. The luxury airlines, on the other hand,
focus their efforts on making their service as wonderful as possible, and the
higher prices they can command as a result make up for their higher costs.
Meanwhile, smaller airlines try to
make the most of their detailed knowledge of just a few routes to provide
better or cheaper services than their larger, international rivals.
These three approaches are examples of
"generic strategies," because they can be applied to products or
services in all industries, and to organizations of all sizes. They were first
set out by Michael Porter in 1985 in his book, "Competitive Advantage: Creating
and Sustaining Superior Performance."
Porter called the generic strategies
"Cost Leadership" (no frills), "Differentiation" (creating
uniquely desirable products and services) and "Focus" (offering a
specialized service in a niche market). He then subdivided the Focus strategy
into two parts: "Cost Focus" and "Differentiation Focus."
These are shown in Figure 1 below.
These three approaches are examples of
"generic strategies," because they can be applied to products or
services in all industries, and to organizations of all sizes. They were first
set out by Michael Porter in 1985 in his book, "Competitive Advantage: Creating
and Sustaining Superior Performance."
Porter called the generic strategies
"Cost Leadership" (no frills), "Differentiation" (creating
uniquely desirable products and services) and "Focus" (offering a
specialized service in a niche market). He then subdivided the Focus strategy
into two parts: "Cost Focus" and "Differentiation Focus."
Q.
3. Critically explain the GE Nine
Cell matrix.
Another popular “Corporate Portfolio Analysis” technique is the result of pioneering effort
of General Electric Company along with McKinsey Consultants which is1 known as the GE NINE CELL MATRIX.
GE nine-box matrix is a
strategy tool that offers a systematic approach for the multi business
enterprises to prioritize their investments among the various business
units. It is a framework that evaluates business portfolio and
provides further strategic implications.
Each business is appraised in
terms of two major dimensions – Market Attractiveness and Business Strength. If
one of these factors is missing, then the business will not produce desired
results. Neither a strong company
operating in an unattractive market, nor a weak company operating in an
attractive market will do very well.
The vertical axis denotes
industry attractiveness, which is a weighted composite rating based on eight
different factors. They are:
1. Market size and growth rate
horizontal
axis represent?
It
indicates business strength or in other words competitive position, which is
again a weighted composite rating based on seven factors as listed below:
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