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Strategic management

Part -A
Q1. Describe the benefits of Good Strategic Planning? Define and giveexamples
of key terms of Strategic Management?
Ans Strategic management allows and organization to be more proactive than reactive
inshaping its own future; it allows an organization to initiate and influence activities and thus
toexert control over its own destiny.Small business owners, chief executive
officers,presidents andmanagers of many for-profit and non-profit organizations have
recognized and realized the benefits of strategic management.Historically, the principle
benefit of strategic management has been to help organizationsformulate better strategies
through the use of the more systematic,logical and rational approachto strategic choice.
Financial Benefits:
1.Improvement in sales.2.Improvement in profitability.3.Improvement in productivity.
Non-Financial Benefits:
1.improved understanding of competitors strategies.2.Enhanced awareness of
threats.3.Reduced resistance to change.4.Enhanced problem-prevention capabilities.Strategic
planning is an involved, intricate, and complex process that takes an organization
intouncharted territory. It does not provide a ready-to-use prescription for success; instead,
takes theorganization through a journey and offers a framework for addressing questions and
solving problems. Being aware of potential pitfalls and being prepared to address them is esse
ntial tosuccess.Some pitfalls to watch for and avoid in strategic planning are these:

Using strategic planning to gain control over decisions and resources

Doing strategic planning only to satisfy accreditation or regulatory requirements

Too hastily moving from mission development to strategy formulation

Failing to communicate the plan to employees, who continue working in the dark

Top managers making many intuitive decisions that conflict with the formal plan

Top managers not actively supporting the strategic-planning process

Failing to use plans as a standard for measuring performance

Delegating planning to a planner rather than involving all managers

Failing to involve key employees in all phases of planning

Failing to create a collaborative climate supportive of change

Q2. Explain the concept of SBU in a Multi Business Organization.Identify the

Three levels of Strategy-Corporate, Business and Functional. How do Goals and
Objectives vary at each Level?
Ans Strategic business units are absolutely essential for multi product organizations.These business
units are basically known as profit centers. They are focused towards a set of products and are
responsible for each and every decision / strategy to be taken for that particular set of products.
Strategic business units can be best explained with an example.Example of Strategic business units

The best example of strategic business unit would be totake organizations like HUL, P&G or LG in
focus. These organizations are characterized bymultiple categories and multiple product lines. For
example, HUL may have a line of products inthe shampoo category, Similarly LG might have a line
of products in the television category.Thus to track the investments against return, they may classify
the category as a different SBUitself.
There are several reasons SBUs are used in an organization and they are mentioned in my poston the
importance for using SBUs in a multi product organization. However, along with thereasons for
using SBUs there are also some
powers which needs to be inferred on an SBU.Planning independence, Empowerment and others are
such powers which influence a SBU. 3 of such features are discussed below.
1) Empowerment of the SBU manager

Several times the empowerment of SBU managers iscrucial for the success of the SBU / products.
This is mainly because this manager is the one whois actually in touch with the market and knows the
best strategies which can be used for optimumreturns. Thus several times, the SBU manager might
need a higher investment for his products.At such times the manager should be supported from the
organization. Only this confidence willhelp the manager in the progress of the SBU.
2) Degree of sharing of one SBU with another

This point is directly connected to the firstone. What if one SBU needs some budget but the same is
not offered because the budget is being
shared by 2 other SBUs and as it is the budget is short. Thus the first SBU does not get the
independence to implement some important strategies. Similarly there might be other
restrictionsapplied to one SBU as it is using some resources which are shared by another SBU. This
mightnot always be negative. Of one SBU gains more profit than usual, this revenue might
also become useful for the other SBU thereby promoting growth of both of them. This is wheresharin
g actually plays a positive role.
3) Changes in the market

An SBU absolutely needs to be flexible because it needs to adaptto any major changes in the market.
For example

if an LCD manager
knows that LEDs are
more in demand now, he needs to communicate to the top management that he would also like arange
of LED products to make the SBU even more profitable. Thus by adding LED to its
portfolio, the SBU can immediately become double profitable. Thus by adjusting to change onSBU
levels, the organization as a whole can become profitable.The key to Strategic business management
is to have a strict watch on the investment and returnsfrom each SBU. The SBU manager too plays a
crucial role in this and hence he is recruited fromthe industry with extensive experience of that

particular industry. Portfolio / Multi SBUmanagement and is done at the absolute top level of the
management. Each and every change in
the market, and its affect on SBUs is
anticipated which is then taken into consideration. Hence,for a multi product organization, business
management may actually mean product portfoliomanagement or SBU management.Strategy may
operate at different levels of an organization -corporate level, business level, andfunctional level.
Corporate Level Strategy
Corporate level strategy occupies the highest level of strategic decision-making and coversactions
dealing with the objective of the firm, acquisition and allocation of resources andcoordination of
strategies of various SBUs for optimal performance. Top management of theorganization makes such
decisions. The nature of strategic decisions tends to be value-oriented,conceptual and less concrete
than decisions at the business or functional level.
Business-Level Strategy.
Business-level strategy is

applicable in those organizations, which have different businesses-and each business is treated as
strategic business unit (SBU). The fundamental concept in SBU isto identify the discrete independent
product/market segments served by an organization. Sinceeach product/market segment has a distinct
environment, a SBU is created for each suchsegment. For example, Reliance Industries Limited
operates in textile fabrics, yarns, fibers, and avariety of petrochemical products. For each product
group, the nature of market in terms of customers, competition, and marketing channel differs.Therefore, it requires different strategies for its different product groups. Thus, where SBUconcept is
applied, each SBU sets its own strategies to make the best use of its resources (itsstrategic
advantages) given the environment it faces. At such a level, strategy is a comprehensive plan
providing objectives for SBUs, allocation of re-sources among functional areas andcoordination
between them for making optimal contribution to the achievement of corporate-level objectives. Such
strategies operate within the overall strategies of the organization. Thecorporate strategy sets the longterm objectives of the firm and the broad constraints and policieswithin which a SBU operates.
The corporate level will help the SBU define its scope of operations and also limit or enhance
the SBUs operations by the resources the corporate levelassigns to it. There is a difference between
corporate-level and business-level strategies. For example, Andrews says that in an organization of
any size or diversity, corporate strategyusually applies to the whole enterprise, while business
strategy, less comprehensive, defines thechoice of product or service and market of individual
business within the firm. In other words,
business strategy relates to the how and corporate strategy to the what . Corporate strategy
defines the business in which a company will compete preferably in a way that focuses resources
to convert distinctive competence into competitive advantage.
Corporate strategy is not the sum total of business strategies of the corporation but it deals
withdifferent subject matter. While the corporation is concerned with and has impact on
businessstrategy, the former is concerned with the shape and balancing of growth and renewal rather
thanin market execution.
Functional-Level Strategy.
Functional strategy, as is suggested by the title, relates to a single functional operation
and theactivities involved therein. Decisions at this level within the organization are often described
astactical. Such decisions are guided and constrained by some overall strategic
considerations.Functional strategy deals with relatively restricted plan providing objectives for
specificfunction, allocation of resources among different operations within that functional area
andcoordi-nation between them for optimal contribution to the achievement of the SBU andcorporatelevel objectives. Below the functional-level strategy, there may be operations levelstrategies as each
function may be dividend into several sub functions. For example, marketingstrategy, a functional
strategy, can be subdivided into promotion

Q3. What should be the key Traits of a CEO? What are the forces thatdesign the
Strategic Management Systems?

Ans Strategic management analyzes the major initiatives taken by a company's top management on behalf of
owners, involving resources and performance in internal and external environments.[1] It entails specifying
the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and
programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and
plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of
the business and its progress towards objectives. Recent studies and leading management theorists have advocated
that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all
Strategic management is a level of managerial activity below setting goals and above tactics. Strategic management
provides overall direction to the enterprise and is closely related to the field ofOrganization Studies. In the field of
business administration it is useful to talk about "strategic consistency" between the organization and its environment or
"strategic consistency." According to Arieu "there is strategic consistency when the actions of an organization are
consistent with the expectations of management, and these in turn are with the market and the context." [2]

"Strategic management is an ongoing process that evaluates and controls the business and the industries in which the
company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential
competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been
implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances,
new technology, new competitors, a new economic environment., or a new social, financial, or political environment."

Strategic Management can also be defined as "the identification of the purpose of the organisation and the plans and

actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term
performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the
organization and its environment to achieve organisational goals."
Strategic management can depend upon the size of an organization, and the proclivity to change of its business
environment. These points are highlighted below:

Concepts/approaches of strategic manageme

A global/transnational organization may employ a more structured strategic management model, due to its
size, scope of operations, and need to encompass stakeholder views and requirements.

An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. This is due to its
comparatively smaller size and scope of operations, as well as possessing fewer resources. An SME's CEO (or
general top management) may simply outline a mission, and pursue all activities under that mission.

Whittington (2001) highlighted four approaches to strategic management. These are Classical, Processual,
Evolutionary and Systemic approaches[5].


Mintzberg stated there are prescriptive (what should be) and descriptive (what is) approaches. Prescriptive
schools are "one size fits all" approaches that designate "best practice" while descriptive schools describe how
strategy is implemented in specific contexts.

Q4. Discuss the various grand strategies at the Corporate Level i.e.Stability,
Growth and Retrenchment.
Ans Corporate Level StrategiesKinds of Grand Strategies:* Stability Strategies* Growth
Strategies* Retrenchment Strategies* Combination StrategiesStability Strategies
The basic approach is maintain present course: steady as it goes.
In an effective stability strategy, companies will concentrate their resources where
the company presently has or can rapidly develop a meaningful competitive advantage in the
narrowest possible productmarket scope consistent with the firms resources and market requirement
Types of

Stability Strategies* No change strategy:* Firms adopting this

strategy maintain the same level of operations* Small business firms
desire satisfactory level of operations rather than growth* Pause and
proceed strategy:* Slow growth is more desired rather than
maintenance of status quo* A sustainable growth strategy is more
optimistic than the zero growthStability Strategy of Indian
Companies* Many companies in different industries have been forced
to adopt stability strategy because of over capacity in the industries
concerned.For Example:Steel Authority of India has adopted stability
strategy because of over capacity in steel sector.Instead it has
concentrated on increasing operational efficiency of its various plants
rather thangoing for expansion.
Others industries are heavy commercial vehicle, coal industry .
Example:Apart from over capacity, regulatory restrictions in some
industries have forced companies toadopt stability strategy.Cigarette,
liquor industries fall in this category because of strict control over
capacity expansion.Both these industries require license under the
provisions of Industries (Development andregulations) Act,
1951.Growth or expansion StrategiesIf we look at the corporate
performance in the recent years, we find how the variousorganizations
have grown both in terms of sales and profit as well as assets
Q5.Discuss the following Factors affecting Strategic Choices in brief:Nature of
environment -stable?Firm's internal realitiesAmbition of CEO /ownersCompany
cultureFirm's capacity to execute the strategy.Resource allocation.

Ans Even a cursory study of business history, however, reveals plenty of cases in which firms strategies
shaped industry structure, from Fords Model T to Nintendos Wii. For the past 15 years, we have been developing
a theory of strategy, known as blue ocean strategy, that reflects the fact that a companys performance is not
necessarily determined by an industrys competitive environment.2The blue ocean strategy framework can help
companies systematically reconstruct their industries and reverse the structure-strategy sequence in their favor.
Blue ocean strategy has its roots in the emerging school of economics called endogenous growth3, whose central
paradigm posits that the ideas and actions of individual players can shape the economic and industrial
landscape. In other words, strategy can shape structure. We call this approach reconstructionist.
While the structuralist approach is valuable and relevant, the reconstructionist approach is more appropriate in
certain economic and industry settings. Indeed, todays economic difficulties have heightened the need for a
reconstructionist alternative. The first task of an organizations leadership, therefore, is to choose the appropriate
strategic approach in light of the challenges the organization faces. Choosing the right approach, however, is not
enough. Executives then need to make sure that their organizations are aligned behind it to produce sustainable
performance. Most executives understand the mechanics of making the structuralist approach work, so this article
will focus on how to align an organization behind the reconstructionist approach to deliver high and sustainable

Assignment B

Q 1. Explain the concept of Porter's five forces Model used for

IndustryAnalysis? What are the major factors that become barriers to
entry in the NewIndustry?
Ans Porter five forces analysis is a framework for industry analysis and business strategy development. It
draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity
and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability.
An "unattractive" industry is one in which the combination of these five forces acts to drive down overall
profitability. A very unattractive industry would be one approaching "pure competition", in which available profits
for all firms are driven to normal profit.
Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.
Porter referred to these forces as the micro environment, to contrast it with the more general term macro
environment. They consist of those forces close to a company that affect its ability to serve its customers and
make a profit. A change in any of the forces normally requires a business unit to re-assess the marketplace given
the overall change in industry information. The overall industry attractiveness does not imply that every firm in the
industry will return the same profitability. Firms are able to apply their core competencies, business model or
network to achieve a profit above the industry average. A clear example of this is the airline industry. As an
industry, profitability is low and yet individual companies, by applying unique business models, have been able to
make a return in excess of the industry average.
Porter's five forces include - three forces from 'horizontal' competition: the threat of substitute products or
services, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical'
competition: the bargaining power of suppliers and the bargaining power of customers.

This five forces analysis, is just one part of the complete Porter strategic models. The other elements are
the value chain and the generic strategies.[citation needed]
Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which he found
unrigorous and ad hoc.[1] Porter's five forces is based on the Structure-Conduct-Performance paradigm in
industrial organizational economics. It has been applied to a diverse range of problems, from helping businesses
become more profitable to helping governments stabilize industries

Barriers to entry for firms into a market[edit]

Barriers to entry into markets for firms include:

Advertising - Incumbent firms can seek to make it difficult for new competitors by spending heavily on
advertising that new firms would find more difficult to afford. This is known as the market power theory of
advertising.[5] Here, established firms' use of advertising creates a consumer perceived difference in its
brand from other brands to a degree that consumers see its brand as a slightly different product.[5] Since the
brand is seen as a slightly different product, products from existing or potential competitors cannot be
perfectly substituted in place of the established firm's brand.[5] This makes it hard for new competitors to gain
consumer acceptance.[5]

Capital - need the capital to start up such as equipment, building, and raw materials
Control of resources - If a single firm has control of a resource essential for a certain industry, then
other firms are unable to compete in the industry.

Cost advantages independent of scale - Proprietary technology, know-how, favorable access to raw
materials, favorable geographic locations, learning curve cost advantages.

Customer loyalty - Large incumbent firms may have existing customers loyal to established products.
The presence of established strong brands within a market can be a barrier to entry in this case.

Distributor agreements - Exclusive agreements with key distributors or retailers can make it difficult for
other manufacturers to enter the industry.

Economy of scale - The increase in efficiency of production as the number of goods being produced
increases. Cost advantages can sometimes be quickly reversed by advances in technology. For example,
the development of personal computers has allowed small companies to make use
of database and communications technology which was once extremely expensive and only available to
large corporations.

Government regulations - A rule of order having the force of law, prescribed by a superior or
competent authority, relating to the actions of those under the authority's control. Requirements for licenses
and permits may raise the investment needed to enter a market, creating an effective barrier to entry.

Inelastic demand - One strategy to penetrate a market is to sell at a lower price than the incumbents.
This is ineffective with price-insensitive consumers.

Intellectual property - Potential entrant requires access to equally efficient production technology as
the combatant monopolist in order to freely enter a market. Patents give a firm the legal right to stop other
firms producing a product for a given period of time, and so restrict entry into a market. Patents are intended

to encourage invention and technological progress by guaranteeing proceeds as an incentive.

Similarly, trademarks and servicemarks may represent a kind of entry barrier for a particular product or
service if the market is dominated by one or a few well-known names.

Investment - That is especially in industries with economies of scale and/or natural monopolies.
Network effect - When a good or service has a value that depends on the number of existing
customers, then competing players may have difficulties in entering a market where an established company
has already captured a significant user base.

Predatory pricing - The practice of a dominant firm selling at a loss to make competition more difficult
for new firms that cannot suffer such losses, as a large dominant firm with large lines of credit or cash
reserves can. It is illegal in most places; however, it is difficult to prove. See antitrust. In the context of
international trade, such practices are often called dumping.

Restrictive practices, such as air transport agreements that make it difficult for new airlines to obtain
landing slots at some airports.

Research and development - Some products, such as microprocessors, require a large upfront
investment in technology which will deter potential entrants.

Supplier agreements - Exclusive agreements with key links in the supply chain can make it difficult for
other manufacturers to enter an industry.

Sunk costs - Sunk costs cannot be recovered if a firm decides to leave a market. Sunk costs therefore
increase the risk and deter entry.

Switching barriers - At times, it may be difficult or expensive for customers to switch providers

Tariffs - Taxes on imports prevent foreign firms from entering into domestic markets.

Case Study
Haier and ThereWalking down the aisles of one of its 22
factories in Qingdao, China, seeingrows of steel being
converted into stylish front-loading washing machines,
onecouldn't help but marvel that only 23 years ago, Haier,
China's largest and theworld's second largest consumer
durables brand, was on the verge of bankruptcy.In fact, the
'Haier Group' - as it is known today - did not even exist.
Whatexisted was a bleeding company called Qingdao General
Refrigerator Factory thatproduced sub-standard refrigerators for
local consumption.What caught the eye was the pin-drop
silence among the workers. The company'sIndian head, Pranay

Dhabhai, explains later: "Each factory consists of severallines.

And each line has targets such as 450 pieces of whatever
product tohandle in a day, leaving no time for small talk. Also,
the work culture is suchthat it is self-stimulatory and that of
assuming individual accountability ofone's work." Quite the
opposite of India where daily banter forms an integralpart of
work.Actually, this is all the doing of the Group's Chairman and
CEO, Zhang Ruimin,very often referred to as the Jack Welch
(once Chairman and CEO of General Electric, known for his uncanny business
instincts and unique leadershipstrategies) of China. Three of the most unique management practices
that Ruimininstilled in the company's culture were that of individual accountability, theOEC model
and that of attracting the 'stunned fish'.Under individual accountability, if a product doesn't sell in the
market orsells very poorly, everyone from design to manufacturing to sales is responsible for it. In
fact, the employees' salaries are directly related to the product'smarket performance. OEC is an
abbreviation for 'Overall', 'Everything, Everyone, Everyday' and 'Control', meaning control over
everyone's everyday performance in the company. And attracting the 'stunned fish' is Ruimin's unique
theory ofmergers and acquisitions where the company buys out the 'stunned fish' orcompanies that
have good products, facilities, equipment and distributionchannels but poor management.Put together,
these theories and management practices have today catapulted thecompany from a one-room facility
manufacturing low-quality products, 76 of which Ruimin sledge hammered to death in 1984, thus
marking a new beginning for thecompany, to now one with a global revenue of around $16.2 billion,
240subsidiaries, over 50,000 employees, over 7,880 patented technologies, withoperations and
facilities in countries such as the US, Jordan and Pakistan and30 overseas plants and manufacturing
bases. In fact, the group's headquarters in Qingdao is spread across two estates of 1,500 acres and
2,500 acres, consistingof several manufacturing units and facilities, the most noteworthy feature
being the completely automated warehouse with 21-ft-long compartments, operated bymachines.India
and HaierWhat importance does all this hold for India? Well, as Diao Yunfeng, theManaging Director
of the Group's Overseas Business Division, says, "Currently,Indian revenues comprise 2 per cent of
the global revenues. However, India is of great importance to us as a group, given its high potential in
the marketstoday, and we want the country to have greater stake in the global group." Infact, Haier,
which set up shop on Indian soil three years ago, is moving fast to make India a manufacturing and
exporting hub given the convenient geographicallocation of the country and its proximity to the global
headquarters in China.However, not everything has been hunky dory. It entered the currently overRs35,000 crore durables market in India almost seven years after rivals LG andSamsung did, and had
to deal with the whole notion of being a 'Chinese' company. Pranay Dhabhai, Wholetime Director and
COO of the Group's Indian subsidiary,Haier Applainces (India) Pvt Ltd, says, "Well, we at Haier like
to do thingsdifferently. We consider ourselves a global brand with the right productoffering and good
quality as well. It will be unfair to compare us to othercompanies because what others took to achieve
in nearly a century, Haierglobally has done in merely 23 years."Aggressive plansHaier and there: Left:
A Haier store in ShanghaiHaving established the distribution network and understood the
requirements ofthe Indian market over the past three years, it is now ready to get moreaggressive.
Dhabhai says, "So far we have been spending around 10 per cent ofour revenues on promotions and
brand building initiatives. We will be spending a lot more beginning this year." The company will also
start consolidating itsdistribution network, Dhabhai says. Industry watchers say it has spent around Rs

200 crore in India so far, having recently acquired the 40-acre Anchor

Daewoofacility in Pune for manufacture of refrigerators, to be followed by televisions and washing

machines.Says Dhabhai, "Rather than expanding our distribution network, we will focus
onconsolidating it in such a way as to get more visibility in each of the outletsthat we are present in.
We want the brand to be a profitable proposition notonly for us but also for our trade partners. Haier
globally has been growing at65 per cent on a yearly basis and we want to be able to do the
same."Haier, as part of its expansion strategy in India, plans to not only launch newranges of its
televisions, air-conditioners, refrigerators and washing machines, but advertising campaigns also."We
are already working on different campaigns that will run on TV as well asthe print medium. Besides
doing holistic range campaigns, we will also doseason-specific campaigns," says Dhabhai.Haier is
also going to invest substantially in R&D. According to the company,innovation based on
localizations is one of the key strengths that it wouldcontinue to focus on.Meanwhile, industry
analysts who have been tracking the growth in the durablessector as well as in individual companies
say Haier is a global company that has a very good reputation in terms of product quality and
technology, but has lowmarket share, similar to other big companies such as Sony and
Sharp.However, what Haier could do with right now is some aggressive marketing tocatapult itself
into more prominence, they add. That would not be very difficult to do considering the Chairman's
mission statement in 1984, soon after thecompany was created, comparing it to a sea.He said in the
statement: "Haier is like a sea. Like the sea it has noboundaries, it is a blue ambition. Haier wants to
attract talent from the fivelakes and the four seas to make it a success both in China and the
overseas."Question 1. The Company foresees continued growth and expansion in the comingfew
years globally driven by it's operations in India and hopes to realignIndia's strengths and world-class
market capabilities to deliver services to its customers. Conduct the SWOT Analysis of Haier's foray
in to Indian market inlight of facts given in the narration
Q1. The Company foresees continued growth and expansion in the coming
fewyears globally driven by it's operations in India and hopes to realign
India'sstrengths and world-class market capabilities to deliver services to
itscustomers. Conduct the SWOT
Ans However, India is of great importance to us as a group, given its high potential in the

marketstoday, and we want the country to have greater stake in the global group." Infact, Haier, which
set up shop on Indian soil three years ago, is moving fast to make India a manufacturing and
exporting hub given the convenient geographicallocation of the country and its proximity to the global
headquarters in China.However, not everything has been hunky dory. It entered the currently overRs35,000 crore durables market in India almost seven years after rivals LG andSamsung did, and had
to deal with the whole notion of being a 'Chinese' company. Pranay Dhabhai, Wholetime Director and
COO of the Group's Indian subsidiary,Haier Applainces (India) Pvt Ltd, says, "Well, we at Haier like
to do thingsdifferently. We consider ourselves a global brand with the right productoffering and good
quality as well. It will be unfair to compare us to othercompanies because what others took to achieve
in nearly a century, Haierglobally has done in merely 23 years

Assignment - C1.
1.Which approach to the study of leadership emphasizes the role of
situationalfactors and how these moderate the relationship between
leader traits orleadership behaviors and leadership effectiveness?
(a) Leader-oriented approach.
(b) Contingency approach.

(c) Transactional approach.

(d) Transformational approach
2. Porter has designed a framework to help understand why certain
countriesachieve global competitive advantage in certain industries. It
also helpsinternationalizing firms to make location decisions. The
framework is called:
(a) Porter's value chain
(b) Porter's Five Forces
(c) Porter's Generic Strategies

d) Porter's Diamond
3.)It is generally agreed that the role of strategy is to:

(a) Make best use of resources

b) Make profits for the organization
(c) Make the best products and services

(d) Achieve competitive advantage

4. Kay (1993) sees the strategy of an organization as matching
internalcapabilities with:
(a) Its external relationships
(b) Its customer needs
(c) The industry life cycle
(d) The external environment
5. An organization's external environment consists of the
general or macroenvironment and:
(a) The internal environment

(b) The competitive environment

c) The specific environment
(d) The micro-environment
6. The term 'corporate strategy' concerns strategy and
strategic decisions
(a) In the private sector only.
(b) Developed by the senior management in an organization.
(c) In certain types of organizations.
(d) At all levels in an organization.
7. A key characteristic of strategic decisions is:
(a) They are normally definite decisions about the future of
(b) They identify specific areas of strategic interest for the
management ofan organization.
(c) They result in better organizational performance.

(d) They are likely to be concerned with, or

affect, the long-term directionof an organization.

8. It is possible to identify different levels of strategy in an

organization,these are:
(a) Corporate and functional.
(b) Corporate and Business
(c) Strategic and tactical.

(d) Corporate; strategic business unit;

9. An organisation's mission can be defined as:

(a) The overriding purpose in line with the values

or expectations ofstakeholders.
(b) The overriding purpose regardless of the values or
expectations ofstakeholders.
(c) The organisation's business plan.
(d) The desired future state of the organisation.
10. Strategic choices require an understanding of:
(a) the business environment, the competition and the strategic
capability of the organisation.
(b) The key drivers of change.
(c) The organisational strengths and weaknesses.

(d) The underlying bases for future strategy at

business unit and corporatelevels; the options
for developing strategy in terms of directions
and methods of development.
11. In Porter's Five Forces, the 'threat of new entrants' relates
(a) Substitutes
(b) Switching costs
(c) Buyer power

(d) Barriers to entry

12. Brandenburg and Nalebuff added a sixth force to Porter's
Five Forces. It is known as
a) Seller power

(b) Complementors
(c) Substitutes
d) Government regulation

13. Barriers to entry into an industry are likely to be high if:

(a) Switching costs are low

(b) Differentiation is low

(c) Access to distribution channels is high

(d) Requirement for economies of scale is high

14. Buyer power is high if:
(a) They have little information
(b) The buyer requires a high quality product for their own

(c) Differentiation is low

(d) Switching costs are low
15. Competitive rivalry will be high if:

(a) There are a few strong players in the industry

(b) There is a high degree of differentiation
(c) The industry is in its infancy
(d) The industry is fragmented
16. A strategic group can be defined as:
(a) A group of key resources and competences that are
necessary to achievecompetitive advantage
(b) A group of customers that have similar characteristics
(c) An industry recipe
(d) A group of firms in an industry following the

same or a similar strategy

17. The key activities in the strategic management process are:
(a) Analysis, formulation, review
(b) Analysis, implementation, review
(c) Formulation, analysis, implementation

(d) Analysis, formulation, implementation

18. Strategy analysis is also referred to as:
(a) Strategy diagnosis
(b) Rational analysis

(c) Situation analysis

(d) SWOT analysis
19. Strategy formulation takes place at two levels. These are:
(a) Conscious and sub-conscious
(b) Implicit and explicit
(c) Values and operational

(d) Corporate and business

20. The Policies of an organization derive from its:
(a) Purpose
(b) Vision

(c) Objectives
(d) Strategy
21. The statement of an organization's aspirations can be found
in the organization's:
(a) Policies
(b) Mission
(c) Strategy

(d) Vision
22. A substitute product or service is:
(a) A new entrant into the industry

(b) A competitor's product or service

(c) A less attractive way of meeting the same need
(d) An alternative way of meeting the same need
23. Cross-functional teams are:
(a) The representative voice of senior management.
(b) A small group of specialists who collaborate on a task force.
(c) A small group of people who come together to
resolve business unit
d)government regulation
24. The business unit strategy has three major components:
(a) business mission, department mission, and daily plans
(b) competencies, abilities, and problem statements
(c) marketing, advertising and pricing objectives
(d) mission, business unit goals, and competencies
25. Disney is in the business of:
(a) Building theme parks.
(b) Designing new imaginative characters.
(c) Making money.
(d) Creating entertainment, fun and fantasy.
26. A useful framework used to assess a company's investments/divisions
(a) corporate insight analysis
(b) company productivity analysis
(c) SBU knowledge analysis
(d) business portfolio analysise)
27. Cash cows are SBU's that typically generate:

(a) large awareness levels but few sales

(b) paper losses in the long run
(c) problems for product managers
(d) large amounts of cash
28. Business unit competencies should be distinctive enough to provide
(a) clear understanding of who you want to lead the company
(b) opportunity to compete on a productivity basis
(c) additional strategic mission
(d) competitive advantage
29. TQM is a strategy that is designed to change the quality of a product
tosatisfy customer needs by using the concept of
(a) reverse brainstorming
(b) brainstorming
(c) product life cycle analysis
(d) benchmarking
30. Firms may view growth opportunities in these terms:
(a) New markets, and current and new products
(b) New markets and new products
(c) Current markets and current products
(d) Current and new markets, and current and new products
31. The strategic marketing process is how an organization allocates
itsmarketing mix resources to reach its:
(a) target markets
(b) area of expertise
(c) competition
(d) stated business ideas
32. An effective short-hand summary of the situation analysis is a:

(a) SWOT analysis

(b) SBU analysis
(c) BCG analysis
(d) Competition analysis
33. In the strategic marketing process, once you get results you go into the:
(a) control phase
(b) marketing plan
(c) planning phase
(d) marketing program
34. off had four market-product strategies to expand sales. They included
(1) market penetration,
(2) product development,
(3) market development and:
(a) diversification
(b) current customer retention
(c) distribution enhancement
(d) product simplification
35. Aggregating prospective buyers into groups is called:
(a) market segmentation
(b) BCG matrix analysis
(c) grouping
(d) market categorization
36. One key to effective implementation is setting:
(a) schedule of events
(b) milestones
(c) good managers in motion
(d) goals

37. When actual performance results are better than what the plan called
for,managers should:
(a) Find creative ways to exploit the situation.
(b) Issue more stock options to employees.
(c) Increase prices.
(d) Ignore it.
38. Value for shareholders of a firm is measured by:
(a) stock performance and profitability
(b) sales revenue
(c) satisfactory employee targets
(d) profitable year-end balance sheet
39. The _____ for PepsiCo is "We believe our commercial success depends
uponoffering quality and value to our consumers and customers; providing
productsthat are safe, wholesome, economically efficient and environmentally
sound; andproviding a fair return to our investors while adhering to the highest
standards of quality."
(a) mission
(b) organizational code of conduct
(c) functional code
(d) benefits statement
40. A firm can acknowledge the critical importance of its _____, by
havingexplicit goals that state its intention to improve work conditions by
addingmore lighting and providing the workers with more and better safety
(a) employee welfare
(b) market share
(c) sales revenue
(d) satisfaction