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FACULITY OF COMMERCE &

MANAGEMENT

DEPARTMENT OF MASTERS OF BUSINESS

ADMINISTRATION

MANAV BHARTI UNIVERSITY SOLAN

Project file of :-
“Strategic management”
Prepared by:-Naveen Kumar
Course:-MBA 4th
Sem roll no:-R17MBAD0005
Q1.What are the characterstics of enviorment scanning and discuss its
various techniques?
Environment scanning helps the signals of potential changes in the environment. It also detects
the changes that are already under way. It normally reveals ambiguous, incomplete, or
unconnected data and information. It involves a detailed and micro study of the environment.
Hence, it is also called the X-ray of the environment. The environment uncertainty, complexity
and dynamism are studies to assess the trend of environment. It is the base of environment
analysis. It is normally done when there is high level of uncertainty in the environment. It is a
continuous process.

Some of the features or characteristics of Environmental scanning are:


 Holistic View: Environmental Analysis is a holistic exercise in the sense that it must comprise
a total view of the environment rather than viewing a trend piecemeal. The corporate must
scan the circumference of its environment in order to minimize the chances of surprises and to
maximize its utility.
 Continuous Process: The analysis of environment must be a continuous process rather than
being an intermittent scanning system. It must operate continuously in order to keep track of
the rapid pace of development. So, Environmental analysis becomes essential due to the
dynamic nature of the environment.
 Exploratory Process: While the Monitoring aspect of the environment is concerned with the
present development, a large part of the process seeks to explore the unknown dimensions of
possible future. The analysis emphasizes on "What could happen" and not necessarily
"What will happen."

Techniques/Methods of Environmental scanning:

Executive opinion method:


It is also called executive judgement method. Under this environment is forecasted on the
basis of opinion and views of top executives. A panel is formed consisting of these
executives.

Expert opinion method:


Under this environment forecasting is based an opinion of outside experts or specialist. The
experts have better knowledge about market conditions and customer taste and
preferences. This method is similar to executive opinion method. However, it uses external
experts.

Dephi method:
This method is extension of expert opinion method. It involves forming a panel of experts
and questioning each member of the panel about the future environmental trend. Later, the
responses and summarized and returned to the members for assessment. This process
continues till the acceptable consensus is achieved.
Extrapolating method:
Under this method, the past information is used to predict the future. Different methods
used to extrapolate the future are time series, trend analysis and regression analysis.

Historical analogy:
Under this, the environmental trends are analyzed with the help of other trends which are
parallel to historical trend.

Intuitive reasoning:
Under this, rational and unbiased intuition is used for environmental scanning.
Environmental dynamics are guessed individual judgement. Reliability of this method is
questionable.

Scenario building:
Scenarios are the pictures of possible future. They are built on the basis of time ordered
sequence of events that have logical cause and effect relationship with each other.
Scenarios are built to address future contingencies.

Cross-impact matrix:
Under this, environmental forecasts through various methods are combined to form and
integrated and consistent description of future. Cross impact matrix is used to assess the
internal consistency of the forecasts.

Q2:-Discuss various styles of leadership and its various theories?

Ans2:- Leadership theories

1. Great Man Theory


The 'great man' theory was originally proposed by Thomas Carlyle.
Gender issues were not on the table when the 'Great Man' theory was proposed. Most leaders
were male and the thought of a Great Woman was generally in areas other than leadership.
Most researchers were also male, and concerns about androcentric bias were a long way from
being realized.
It has been said that history is nothing but stories of great men. Certainly, much has this bias,
although there is of course also much about peoples and broader life.

2. Trait Theory

Early research on leadership was based on the psychological focus of the day, which was of
people having inherited characteristics or traits. Attention was thus put on discovering these
traits, often by studying successful leaders, but with the underlying assumption that if other
people could also be found with these traits, then they, too, could also become great leaders.
There have been many different studies of leadership traits and they agree only in the general
saintly qualities needed to be a leader.
For a long period, inherited traits were sidelined as learned and situational factors were
considered to be far more realistic as reasons for people acquiring leadership positions.
Paradoxically, the research into twins who were separated at birth along with new sciences such
as Behavioral Genetics have shown that far more is inherited than was previously supposed.
Perhaps one day they will find a 'leadership gene'.

Behavioural ideals leadership theories


Blake and Mouton’s grid theory suggested ideal ‘team style’ behaviour are very
reasonable in an ‘ideal world’. However, as James Scouller and others have
noted, the model does not naturally or fully address two particularly important
dimensions of leadership: the need to adapt behaviour/style/methods according
to different situations, and the psychological make-up of the leader (Blakes and
Mouton, 1978). The style of leadership adopted by a leader will among other
factors determine the success or failure of strategy implementation. Leadership
styles that encourage participation and open communication contribute
positively in the successful implementation of corporate strategies. Those that
discourage involvement and open communication hinder successful
implementation of strategy.

Situational/Contingency Leadership Theories


This sub-group of leadership theories is based on an important assumption,
that: there is not one single ideal approach to leading because circumstances
vary. So, situational leadership theory says, effective leaders must change their
behaviour according to the situation (Fielder, 1997). These particular
‘situational’ or ‘contingency’ models/theories offer a framework or guide for
being flexible and adaptable when leading (Bass, 1985).
Fiedler’s contingency theory
Fred Fiedler’s contingency model was the third notable situational model of
leadership to emerge. This model appeared first in Fiedler’s 1967 book, A
Theory of Leadership Effectiveness. The essence of Fiedler’s theory is that a
leader’s effectiveness depends on a combination of two forces: the leader’s
leadership style, and ‘situational favourableness’. Fiedler called this combination
(of leadership style and ‘situational favourableness) Situational Contingency
(Fielder, 1997). It is commonly utilized in war situations by military generals
who are constantly faced with dynamic situations in the war front to execute
their war strategies. However, in the competitive business, the theory come to
play in strategy execution given the ever changing external business
environment.

LEADERSHIP STYLES

Cherry (2009) notes that Kurt Lewin model gives three basic leadership styles
including:
. Authoritarian leadership, also known as autocratic leaders, provide clear
expectations for what needs to be done, when it should be done, and how it
should be done. There is also a clear division between the leader and the
followers. Authoritarian leaders make decisions independently with little or no
input from the rest of the group. Abuse of this style is usually viewed as
controlling, bossy, and dictatorial. Authoritarian leadership is best applied to
situations where there is little time for group decision-making or where the
leader is the most knowledgeable.

1. Participative leadership (democratic) – is generally the most


effective leadership style. Democratic leaders offer guidance to group
members, but they also participate in the group and allow input from
other members. Participative leaders encourage group members to
participate, but retain the final say over the decision-making process.
Group members feel engaged in the process and are more motivated and
creative.
2.Delegative (also known as laissez-fair leadership). Delegative
leaders offer little or no guidance to group members and leave decision-
making to them. While this style can be effective in situations where
group members are highly qualified in an area of expertise, it often leads
to poorly defined roles and lack of motivation.
Q3.Explain porters five force model with example?

Ans: Porter’s Five Forces


Porter’s Five Forces analysis is a framework that helps analyzing the level of competition
within a certain industry. It is especially useful when starting a new business or when
entering a new industry sector. According to this framework, competitiveness does not only
come from competitors. Rather, the state of competition in an industry depends on five
basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of
buyers, threat of substitute products or services, and existing industry rivalry. The collective
strenght of these forces determines the profit potential of an industry and thus its
attractiveness.

Threat of new entrants


New entrants in an industry bring new capacity and the desire to gain market share. The seriousness
of the threat depends on the barriers to enter a certain industry. The higher these barriers to entry, the
smaller the threat for existing players. Examples of barriers to entry are the need for economies of
scale, high customer loyalty for existing brands, large capital requirements (e.g. large investments in
marketing or R&D), the need for cumulative experience, government policies, and limited access to
distribution channels. More barriers can be found in the table below.
Example
The threat of new entrants in the airline industry can be considered as low to medium. It takes quite
some upfront investments to start an airline company (e.g. purchasing aircrafts). Moreover, new
entrants need licenses, insurances, distribution channels and other qualifications that are not easy to
obtain when you are new to the industry (e.g. access to flight routes). Furthermore, it can be expected
that existing players have built up a large base of experience over the years to cut costs and increase
service levels.

Bargaining power of suppliers


This force analyzes how much power and control a company’s supplier (also known as the market of
inputs) has over the potential to raise its prices or to reduce the quality of purchased goods or
services, which in turn would lower an industry’s profitability potential. The concentration of
suppliers and the availability of substitute suppliers are important factors in determining supplier
power. The fewer there are, the more power they have. Businesses are in a better position when there
are a multitude of suppliers.

Example
The bargaining power of suppliers in the airline industry can be considered very high. When looking
at the major inputs that airline companies need, we see that they are especially dependent on fuel and
aircrafts. These inputs however are very much affected by the external environment over which the
airline companies themselves have little control. The price of aviation fuel is subject to the
fluctuations in the global market for oil, which can change wildly because of geopolitical and other
factors.
Bargaining power of buyers
The bargaining power of buyers is also described as the market of outputs. This force analyzes to
what extent the customers are able to put the company under pressure, which also affects the
customer’s sensitivity to price changes. The customers have a lot of power when there aren’t many of
them and when the customers have many alternatives to buy from. Moreover, it should be easy for
them to switch from one company to another. Buying power is low however when customers
purchase products in small amounts, act independently and when the seller’s product is very different
from any of its competitors.

Example
Bargaining power of buyers in the airline industry is high. Customers are able to check prices of
different airline companies fast through the many online price comparisons websites such as
Skyscanner and Expedia. In addition, there aren’t any switching costs involved in the process.
Customers nowadays are likely to fly with different carriers to and from their destination if that
would lower the costs. Brand loyalty therefore doesn’t seem to be that high.

Threat of substitute products


The existence of products outside of the realm of the common product boundaries increases the
propensity of customers to switch to alternatives. In order to discover these alternatives one should
look beyond similar products that are branded differently by competitors. Instead, every product that
serves a similar need for customers should be taken into account. Energy drink like Redbull for
instance is usually not considered a competitor of coffee brands such as Nespresso or Starbucks.

Example
In terms of the airline industry, it can be said that the general need of its customers is traveling. It
may be clear that there are many alternatives for traveling besides going by airplane. Depending on
the urgency and distance, customers could take the train or go by car. Especially in Asia, more and
more people make use of highspeed trains such as Bullet Trains and Maglev Trains. Furthermore, the
airline industry might get some serious future competition from Elon Musk’s Hyperloop concept in
which passengers will be traveling in capsules through a vacuum tube reaching speed limits of 1200
km/h.

Rivalry among existing competitors


This last force of the Porter’s Five Forces examines how intense the current competition is in the
marketplace, which is determined by the number of existing competitors and what each competitor is
capable of doing. Rivalry is high when there are a lot of competitors that are roughly equal in size
and power, when the industry is growing slowly and when consumers can easily switch to a
competitors offering for little cost. A good indicator of competitive rivalry is the concentration
ratio of an industry.
Example
When looking at the airline industry in the United States, we see that the industry is extremely
competitive because of a number of reasons which include the entry of low cost carriers, the tight
regulation of the industry wherein safety become paramount leading to high fixed costs and high
barriers to exit, and the fact that the industry is very stagnant in terms of growth at the moment.
Q4.Explain value chain analysis in detail?
Ans: Value chain analysis (VCA)is a process where a firm identifies its primary and
support activities that add value to its final product and then analyze these activities to
reduce costs or increase differentiation.Value chainrepresents the internal activities a
firm engages in when transforming inputs into outputs.

Understanding the tool


Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is
to recognize, which activities are the most valuable (i.e. are the source of cost or
differentiation advantage) to the firm and which ones could be improved to
provide competitive advantage. In other words, by looking into internal activities, the
analysis reveals where a firm’s competitive advantages or disadvantages are. The firm
that competes through differentiation advantage will try to perform its activities better
than competitors would do. If it competes through cost advantage, it will try to perform
internal activities at lower costs than competitors would do. When a company is capable
of producing goods at lower costs than the market price or to provide superior products,
it earns profits.

Using the tool


There are two different approaches on how to perform the analysis, which depend on
what type of competitive advantage a company wants to create (cost or differentiation
advantage). The table below lists all the steps needed to achieve cost or differentiation
advantage using VCA.

Competitive advantage types

Cost advantage Differentiation advantage


Competitive advantage types

Cost advantage Differentiation advantage

This approach is used when organizations try to compete The firms that strive to create
on costs and want to understand the sources of their cost superior products or services use
advantage or disadvantage and what factors drive those differentiation advantage approach.
costs.(good examples: Amazon.com, Wal- (good
Mart, McDonald's, Ford, Toyota) examples: Apple, Google, Samsung
Electronics, Starbucks)

 Step 1. Identify the firm’s primary and support activities.  Step 1. Identify the customers’
 Step 2. Establish the relative importance of each activity value-creating activities.
in the total cost of the product.  Step 2. Evaluate the differentiation
 Step 3. Identify cost drivers for each activity. strategies for improving customer
 Step 4. Identify links between activities. value.
 Step 5. Identify opportunities for reducing costs.  Step 3. Identify the best sustainable
differentiation

Cost advantage
To gain cost advantage a firm has to go through 5 analysis steps:

Step 1. Identify the firm’s primary and support activities. All the activities (from
receiving and storing materials to marketing, selling and after sales support) that are
undertaken to produce goods or services have to be clearly identified and separated
from each other. This requires an adequate knowledge of company’s operations
because value chain activities are not organized in the same way as the company itself.
The managers who identify value chain activities have to look into how work is done to
deliver customer value.
Step 2. Establish the relative importance of each activity in the total cost of the
product.The total costs of producing a product or service must be broken down and
assigned to each activity. Activity based costing is used to calculate costs for each
process. Activities that are the major sources of cost or done inefficiently (when
benchmarked against competitors) must be addressed first.

Step 3. Identify cost drivers for each activity. Only by understanding what factors
drive the costs, managers can focus on improving them. Costs for labor-intensive
activities will be driven by work hours, work speed, wage rate, etc. Different activities
will have different cost drivers.

Step 4. Identify links between activities. Reduction of costs in one activity may lead
to further cost reductions in subsequent activities. For example, fewer components in
the product design may lead to less faulty parts and lower service costs. Therefore
identifying the links between activities will lead to better understanding how cost
improvements would affect he whole value chain. Sometimes, cost reductions in one
activity lead to higher costs for other activities.

Step 5. Identify opportunities for reducing costs. When the company knows its
inefficient activities and cost drivers, it can plan on how to improve them. Too high wage
rates can be dealt with by increasing production speed, outsourcing jobs to low wage
countries or installing more automated processes.

Q5.Explain porters matrix of generic business stratigies?

Porter's Generic Competitive Strategies (ways of


Ans:

competing)
A firm's relative position within its industry determines whether a firm's profitability is above or
below the industry average. The fundamental basis of above average profitability in the long run is
sustainable competitive advantage. There are two basic types of competitive advantage a firm can
possess: low cost or differentiation. The two basic types of competitive advantage combined with
the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for
achieving above average performance in an industry: cost leadership, differentiation, and focus.
The focus strategy has two variants, cost focus and differentiation focus.

1. Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of
cost advantage are varied and depend on the structure of the industry. They may include the
pursuit of economies of scale, proprietary technology, preferential access to raw materials and
other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can
achieve and sustain overall cost leadership, then it will be an above average performer in its
industry, provided it can command prices at or near the industry average.
2. Differentiation
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are
widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive
as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness
with a premium price.

3. Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an industry.
The focuser selects a segment or group of segments in the industry and tailors its strategy to serving
them to the exclusion of others.
The focus strategy has two variants.
(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus
a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on
differences between a focuser's target segment and other segments in the industry. The target
segments must either have buyers with unusual needs or else the production and delivery system
that best serves the target segment must differ from that of other industry segments. Cost focus
exploits differences in cost behaviour in some segments, while differentiation focus exploits the
special needs of buyers in certain segments.

Q6Explain various tractrics for business strategies?


Ans: Different Types of Business Strategies
It is said that everything is fair in love and war. Well, business is nothing less
than a war. If you want to stay ahead of your competitors, you not only have to
give a good fight but also win it. Just the way a warrior sharpens his weapons
before getting ready for the battle, a businessman has to design a strategy to take
on the competitors.
Since the size and nature of every business are different, there can’t be a ‘one-
size-fits-all’ strategy. There are three broad types of business strategies that
most strategic management courses in india talk about:

Cost Differentiation Strategy


This strategy is all about pricing your product right. It should tempt customers to
purchase your products instead that of the competitors. However, at the same
time, the price should not be too low or too high. If it is exorbitant, then
customers would not pay for it. It is too low; they may think the quality is poor.
Also, keeping prices lower may not cover the cost of production and generate
expected revenues. So, price your product in such a way that it is a win-win
situation for your business and customers.

Product Differentiation Strategy


In this strategy, you have the leverage to keep the prices that you deem
necessary. The reason behind this strategy is that your product offers unique or
additional features that your competitors do not. For example, if you are selling
handmade shoes instead of machine-manufactured, you are giving customers
benefit of the customized product. The customer is ready to pay more because of
the nature of the product. Similarly, let’s say you are providing professional
home cleaning services. If your competitor provides only five services in the
package whereas you provide seven in the same price, it is called product
differentiation. This kind of strategy allows you to sell the product on the terms
and conditions you want because your product delivers superior value.

Growth Strategy
This strategy comes into picture when the business is doing well yet the revenues
are static. You want to grow your business – it could be either by adding new
products, new product lines, improvising the existing product or selling the same
product beyond the current geographical reach. You may also consider merger
and acquisition strategy – you could either buy a new business or let another
business acquire yours.
Now, if you are wondering which strategy is best, the answer is none. Each of
these strategies can be used independently or holistically depending on your
business goals and circumstances.
Q7.Explain various types of expansion strategies?
Ans Types of Expansion Strategies
There are several other ways of business growth strategies. They are as
follows:
 Expansion via concentration: This is the type of expansion strategy
where businesses invest in resources towards a particular product
line with proven technology facilitation. Using market penetration
strategies, the firm may focus on existing market or existing
products may be offered new segments of customers. Moreover it
can also be done by offering new products for the existing customer
database.
 Expansion with the help of integration: This is done by expanding the
scope of the business by serving the same set of customers.
 Expansion through mergers, acquisition and strategic alliances: In this
way two companies syndicate their core competencies, resources
and capabilities to look forward for the mutual benefits.
 Begin a chain: There are some businesses that can be easily
replicated and turned in to a chain. For example retail stores,
restaurant, bars etc. Take a close look at what made your original
store successful and follow the same rules for your chain. New
campaign can be initiated every time you open a new branch.
Q8.Explain any three corporate level analysis technique in detail?
Ans: Business Diversification Strategy
Diversification strategy looks at the company's products and services, and then develops a strategy
for successful marketing and sales. Two main diversification strategies exist: a single-business
strategy and a dominant-business diversification strategy. The single-business strategy limits the
number of products or services to a few, if not one. A company using this strategy seeks to be the
leader in the niche.

An example of single-business strategy is a carpet cleaner that exclusively markets services for
carpet cleaning to homeowners and restoration services. This single-business strategy could
transition to a dominant-business diversification strategy by also offering restoration services. The
transition might involve other cleaning and general contracting services, along with the primary
carpet cleaning services.

Business Stability Strategy

It is possible for a company to reach its optimal market share goals. Rather than scale up, company
leaders might choose a stability strategy that takes the existing success under existing platforms to
maintain market share. Methods include making processes more cost efficient through automation,
cutting costs where possible and negotiating better costs on materials or distribution margins.

This strategy also requires leaders to focus on customer retention. This is a popular strategy during
adverse economic periods. However, there are times when this strategy makes sense for a small
business, regardless of the external business environment. A dentist who doesn't have the space or
time to take on additional patients but who needs to keep his existing patients happy and to also
develop a list of new patients as his base, would fall off via natural attrition and would benefit by
using a stability strategy.
Business owners need targeted corporate level strategies to position themselves for success.
Corporate-level strategies define a plan to hit a specific target needed to achieve business goals.
Strategies tend to be long-term in nature, but allow for dynamic adjustments, based on uncertainty
and changing market conditions.
Q9.What do you mean by stregic management.Discuss its
nature,importance,benefits and scope?

Ans: Strategic management is the continuous planning, monitoring, analysis and


assessment of all that is necessary for an organization to meet its goals and
objectives. Fast-paced innovation, emerging technologies and customer expectations
force organizations to think and make decisions strategically to remain successful. The
strategic management process helps company leaders assess their company's present
situation, chalk out strategies, deploy them and analyze the effectiveness of the
implemented strategies. The strategic management process involves analyzing cross-
functional business decisions prior to implementing them.

Nature and Scope of Strategic Management


Strategic management is both an Art and science of formulating, implementing, and evaluating,
cross-functional decisions that facilitate an organization to accomplish its objectives. The
purpose of strategic management is to use and create new and different opportunities for future.
The nature of Strategic Management is dissimilar form other facets of management as it demands
awareness to the "big picture" and a rational assessment of the future options. It offers a strategic
direction endorsed by the team and stakeholders, a clear business strategy and vision for the
future, a method for accountability, and a structure for governance at the different levels, a
logical framework to handle risk in order to guarantee business continuity, the capability to
exploit opportunities and react to external change by taking ongoing strategic decisions.
Strategic management process encompasses of three phases.

1. Establishing the hierarchy of strategic intent


2. Strategic formulation.
3. Implementation
4. Evaluation and control.

Strategy formulation comprises of developing a vision and mission, identifying an organization's


external opportunities and threats, determining internal strengths and weaknesses, establishing
long-term objectives, creating alternative strategies, and choosing particular strategies to follow.
Strategy implementation needs a company to ascertain annual objectives, formulate policies,
stimulate employees, and assign resources so that formulated strategies can be implemented.
Strategy implementation includes developing a strategy-supportive culture, creating an effective
organizational structure, redirecting marketing efforts, preparing budgets, developing and
utilizing information systems, and relating employee reward to organizational performance.
Strategy evaluation is the last stage in strategic management. Managers must know when
particular strategies are not working well. Strategy evaluation is the main process for obtaining
this information.
Q10.Explain any three corporate level analysis technique?
Ans: The Three Levels of Strategy
Strategy is at the heart of business. All businesses have competition, and it is strategy that
allows one business to rise above the others to become successful. Even if you have a great
idea for a business, and you have a great product, you are unlikely to go anywhere without
strategy. Many of the most successful business men and women throughout history have been
great strategic thinkers, and that is no accident. If you wish to take your business to the top of
the market as quickly as possible, it is going to be strategy that leads the way.

Corporate Strategy
The first level of strategy in the business world is corporate strategy, which sits at the
‘top of the heap’. Before you dive into deeper, more specific strategy, you need to
outline a general strategy that is going to oversee everything else that you do. At a most
basic level, corporate strategy will outline exactly what businesses you are going to
engage in, and how you plan to enter and win in those markets. It is easy to overlook
this planning stage when getting started with a new business, but you will pay the price
in the long run for skipping this step. It is crucially important that you have an overall
corporate strategy in place, as that strategy is going to direct all of the smaller decisions
that you make.

Business Strategy
It is best to think of this level of strategy as a ‘step down’ from the corporate strategy
level. In other words, the strategies that you outline at this level are slightly more
specific and they usually relate to the smaller businesses within the larger organization.

Carrying over our previous example, you would be outlining separate strategies for
selling cookies and selling cookie-making equipment at this level. You may be going
after convenience stores and grocery stores to sell your cookies, while you may be
looking at department stores and the internet to sell your equipment. Those are
dramatically different strategies, so they will be broken out at this level.
Functional Strategy
This is the day-to-day strategy that is going to keep your organization moving in the
right direction. Just as some businesses fail to plan from a top-level perspective, other
businesses fail to plan at this bottom-level. This level of strategy is perhaps the most
important of all, as without a daily plan you are going to be stuck in neutral while your
competition continues to drive forward. As you work on putting together your functional
strategies, remember to keep in mind your higher level goals so that everything is
coordinated and working toward the same end. It is at this bottom-level of strategy
where you should start to think about the various departments within your business and
how they will work together to reach goals. Your marketing, finance, operations, IT and
other departments will all have responsibilities to handle, and it is your job as an owner
or manager to oversee them all to ensure satisfactory results in the end.

Q11.What is industry analysis.Explain various techniques of enviormental appraisal?

Ans: An industry analysis is a business function completed by business owners and other
individuals to assess the current business environment. This analysis helps businesses understand
various economic pieces of the marketplace and how these various pieces may be used to gain a
competitive advantage. Although business owners may conduct an industry analysis according to
their specific needs, a few basic standards exist for conducting this important business function.

ENVIRONMENTAL SCANNING

Environmental Scanning can be defined as the process by which organizations monitor their
relevant environment to identify opportunities and threats affecting their business for the purpose
of taking strategic decisions.

Factors to be Considered for Environmental Scanning

The external environment in which an organization exists consists of a bewildering variety of


factors. These factors (could also be termed as influences) are events, trends, issues and
expectations of different interested groups. These factors are explained below:

Events are important and specific occurrences taking place in different environmental sectors.
Trends are the general tendencies of the courses of action along which events
These approaches may range from an informal assessment of the environmental factors to a highly
systematic and formal procedure. Informal assessment may be adopted as a reactive measure to a
crisis and ad hoc studies may be undertaken occasionally. A highly systematic and formal
procedure may be used as a proactive measure in anticipation of changes in environmental factors
and structured data collection and processing system may be used continuously.

Methods and Techniques Used for Environmental Scanning

The range of methods and techniques available for environmental scanning is wide. There are
formal and systematic techniques as well as intuitive methods available. Strategists may choose
from among these methods and techniques, those which suit their needs in terms of the quantity,
quality, availability, timeliness, relevance and cost of environmental information.

Various authors have mentioned the methods and techniques used for environmental scanning.
LeBell and Krasner outline nine groups of techniques: single-variable extrapolation, theoretical
limit envelopes, dynamic modes, mapping, multivariable interaction analysis, unstructured expert
opinion, structured expert opinion, structured inexpert opinion and unstructured inexpert
speculation.

Fahey, King and Narayanan have included ten techniques in their survey of environmental
scanning

Q12.What is stretigic control process.What are the component of this process?


Ans: Strategic management process is a method by which managers conceive of and
implement a strategy that can lead to a sustainable competitive advantage.]

Strategic planning process is a systematic or emerged way of performing strategic


planning in the organization through initial assessment, thorough analysis, strategy
formulation, its implementation and evaluation.

Components of strategic planning process


There are many components of the process which are spread throughout strategic
planning stages. Most often, the strategic planning process has 4 common phases:
strategic analysis, strategy formulation, implementation and monitoring (David[5],
Johnson, Scholes & Whittington[6], Rothaermel[1], Thompson and Martin[2]). For clearer
understanding, this article represents 5 stages of strategic planning process:
 Initial Assessment
 Situation Analysis
 Strategy Formulation
 Strategy Implementation
 Strategy Monitoring

Initial Assessment
Components: Vision statement & Mission statement
Tools used: Creating a Vision and Mission statements.

The starting point of the process is initial assessment of the firm. At this phase
managers must clearly identify the company’s vision and mission statements.

Business' vision answers the question: What does an organization want to become?
Without visualizing the company’s future, managers wouldn’t know where they want to
go and what they have to achieve. Vision is the ultimate goal for the firm and the
direction for its employees.

In addition, mission describes company’s business. It informs organization’s


stakeholders about the products, customers, markets, values, concern for public image
and employees of the organization (David, p. 93)[5]. Thorough mission statement acts as
guidance for managers in making appropriate (Rothaermel, p. 34)[1] daily decisions.

Situation Analysis
Components: Internal environment analysis, External environment analysis and
Competitor analysis
Tools used: PEST, SWOT, Core Competencies, Critical Success Factors, Unique
Selling Proposition, Porter's 5 Forces, Competitor Profile Matrix, External Factor
Evaluation Matrix, Internal Factor Evaluation Matrix, Benchmarking, Financial Ratios,
Scenarios Forecasting, Market Segmentation, Value Chain Analysis, VRIO Framework

When the company identifies its vision and mission it must assess its current situation in
the market. This includes evaluating an organization’s external and internal
environments and analyzing its competitors.

During an external environment analysis managers look into the key external forces:
macro & micro environments and competition. PEST or PESTEL frameworks represent
all the macro environment factors that influence the organization in the global
environment. Micro environment affects the company in its industry. It is analyzed using
Porter’s 5 Forces Framework.

Competition is another uncontrollable external force that influences the company. A


good example of this was when Apple released its IPod and shook the mp3 players
industry, including its leading performer Sony. Firms assess their competitors using
competitors profile matrix and benchmarking to evaluate their strengths, weaknesses
and level of performance.

Internal analysis includes the assessment of the company’s resources, core


competencies and activities. An organization holds both tangible resources: capital,
land, equipment, and intangible resources: culture, brand equity, knowledge, patents,
copyrights and trademarks (Rothaermel, p. 90)[1]. A firm’s core competencies may be
superior skills in customer relationship or efficient supply chain management. When
analyzing the company’s activities managers look into the value chain and the whole
production process.

As a result, situation analysis identifies strengths, weaknesses, opportunities and


threats for the organization and reveals a clear picture of company’s situation in the
market.

Strategy Formulation
Components: Objectives, Business level, Corporate level and Global Strategy Selection
Tools used: Scenario Planning, SPACE Matrix, Boston Consulting Group Matrix, GE-
McKinsey Matrix, Porter’s Generic Strategies, Bowman’s Strategy Clock, Porter’s
Diamond, Game Theory, QSP Matrix.

Successful situation analysis is followed by creation of long-term objectives. Long-term


objectives indicate goals that could improve the company’s competitive position in the
long run. They act as directions for specific strategy selection. In an organization,
strategies are chosen at 3 different levels:

 Business level strategy. This type of strategy is used when strategic business
units (SBU), divisions or small and medium enterprises select strategies for only
one product that is sold in only one market. The example of business level
strategy is well illustrated by Royal Enfield firms. They sell their Bullet motorcycle
(one product) in United Kingdom and India (different markets) but focus on
different market segments and sell at very different prices (different strategies).
Firms may select between Porter’s 3 generic strategies: cost leadership,
differentiation and focus strategies. Alternatively strategies from Bowman’s
strategy clock may be chosen (Johnson, Scholes, & Whittington, p. 224 [6]).
 Corporate level strategy. At this level, executives at top parent companies
choose which products to sell, which market to enter and whether to acquire a
competitor or merge with it. They select between integration, intensive,
diversification and defensive strategies.
 Global/International strategy. The main questions to answer: Which new markets
to develop and how to enter them? How far to diversify? (Thompson and Martin,
p. 557[2], Johnson, Scholes, & Whittington, p. 294[6])
Managers may choose between many strategic alternatives. That depends on a
company’s objectives, results of situation analysis and the level for which the strategy is
selected.

Strategy Implementation
Components: Annual Objectives, Policies, Resource Allocation, Change Management,
Organizational chart, Linking Performance and Reward
Tools used: Policies, Motivation, Resistance management, Leadership, Stakeholder
Impact Analysis, Changing organizational structure, Performance management

Even the best strategic plans must be implemented and only well executed strategies
create competitive advantage for a company.

At this stage managerial skills are more important than using analysis. Communication
in strategy implementation is essential as new strategies must get support all over
organization for effective implementation. The example of the strategy implementation
that is used here is taken from David’s book, chapter 7 on implementation[5]. It consists
of the following 6 steps:

 Setting annual objectives;


 Revising policies to meet the objectives;
 Allocating resources to strategically important areas;
 Changing organizational structure to meet new strategy;
 Managing resistance to change;
 Introducing new reward system for performance results if needed.

The first point in strategy implementation is setting annual objectives for the company’s
functional areas. These smaller objectives are specifically designed to achieve financial,
marketing, operations, human resources and other functional goals. To meet these
goals managers revise existing policies and introduce new ones which act as the
directions for successful objectives implementation.

The other very important part of strategy implementation is changing an organizational


chart. For example, a product diversification strategy may require new SBU to be
incorporated into the existing organizational chart. Or market development strategy may
require an additional division to be added to the company. Every new strategy changes
the organizational structure and requires reallocation of resources. It also redistributes
responsibilities and powers between managers. Managers may be moved from one
functional area to another or asked to manage a new team. This creates resistance to
change, which has to be managed in an appropriate way or it could ruin excellent
strategy implementation.

Strategy Monitoring
Components: Internal and External Factors Review, Measuring Company’s
Performance
Tools used: Strategy Evaluation Framework, Balanced Scorecard, Benchmarking

Implementation must be monitored to be successful. Due to constantly changing


external and internal conditions managers must continuously review both environments
as new strengths, weaknesses, opportunities and threats may arise. If new
circumstances affect the company, managers must take corrective actions as soon as
possible.

Usually, tactics rather than strategies are changed to meet the new conditions, unless
firms are faced with such severe external changes as the 2007 credit crunch.

Measuring performance is another important activity in strategy monitoring.


Performance has to be measurable and comparable. Managers have to compare their
actual results with estimated results and see if they are successful in achieving their
objectives. If objectives are not met managers should:

 Change the reward system.


 Introduce new or revise existing policies.

The key element in strategy monitoring is to get the relevant and timely information on
changing environment and the company’s performance and if necessary take corrective
actions.

Q13.Write short note on:


1.Discuss social responsibility of business
2.Discuss environmental scanning process
3.Diff b/w goals and objectieves
4.BCG Matrix
5.Bench Marking
6.GE 9 cell Matrix
Ans:
1.Social Responsibility of Business
Social responsibility of business implies the obligations of the
management of a business enterprise to protect the interests of the
society.

According to the concept of social responsibility the objective of


managers for taking business decisions is not merely to maximize
profits or shareholders’ value but also to serve and protect the
interests of other members of a society such as workers, consumers
and the community as a whole.
2Enviormental scanning process

Every organization has an internal and external environment. In order


for the organization to be successful, it is important that it scans its
environment regularly to assess its developments and understand factors
that can contribute to its success. Environmental scanning is a process
used by organizations to monitor their external and internal
environments.

3.Diff b/w goals and objectives?

Ans.
Goals Objectives
Broad in scope Narrow in scope
General intention or direction Specific/ Precise
Intangible or “soft” Tangible
Abstract Solid/ Concrete
Can’t be easily measured/ validated Can be easily measured/ validated
Large in size Chunks
The end Ends in themselves
The result The means to the end
The whole Part of the whole, often with
milestones
Longer term Shorter term
4.BCG Matrix
BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to
portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis
(horizontal axis) and speed of market growth (vertical axis) axis.

Growth-share matrix is a business tool, which uses relative market share and industry
growth rate factors to evaluate the potential of business brand portfolio and suggest
further investment strategies.

5.Bench Marking:
Benchmarking is a process of measuring the performance of a company’s products,
services, or processes against those of another business considered to be the best in the
industry, aka “best in class.” The point of benchmarking is to identify internal
opportunities for improvement. By studying companies with superior performance,
breaking down what makes such superior performance possible, and then comparing
those processes to how your business operates, you can implement changes that will
yield significant improvements.

5. GE 9 cell Matrix

GE-McKinsey nine-box matrix is a strategy tool that offers a systematic approach for
the multi business corporation to prioritize its investments among its business units.

GE-McKinsey is a framework that evaluates business portfolio, provides further


strategic implications and helps to prioritize the investment needed for each business
unit (BU)
In the business world, much like anywhere else, the problem of resource scarcity is affecting the
decisions the companies make. With limited resources, but many opportunities of using them,
the businesses need to choose how to use their cash best

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